NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
Electronically Filed Intermediate Court of Appeals CAAP-XX-XXXXXXX 05-JUN-2023 08:04 AM Dkt. 62 MO
NO. CAAP-XX-XXXXXXX
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI‘I
THE BANK OF NEW YORK MELLON FKA THE BANK OF NEW YORK AS TRUSTEE FOR THE CERTIFICATEHOLDERS CWABS, INC. ASSET-BACKED CERTIFICATES, SERIES 2004-12, Plaintiff-Appellee, v. CHRISTIAN EDWARD DUNCAN; FATIMA DUNCAN, Defendants-Appellants, COUNTRYWIDE HOME LOANS, INC.; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., AS NOMINEE FOR COUNTRYWIDE HOME LOANS, INC., Defendants-Appellees, JOHN DOES 1-20; JANE DOES 1-20; DOE CORPORATIONS 1-20; DOE ENTITIES 1-20; AND DOE GOVERNMENTAL UNITS 1-20, Defendants.
APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUIT (CIVIL NO. 16-1-0532(3))
MEMORANDUM OPINION (By: Leonard, Presiding Judge, Nakasone and McCullen, JJ.)
Defendants-Appellants Christian Edward Duncan and
Fatima Duncan (Duncans) appeal from the Circuit Court of the
Second Circuit's July 26, 2019 (1) "Findings of Fact,
Conclusions of Law and Order Granting [Plaintiff-Appellee Bank NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
of New York Mellon's (Bank of New York) 1] Motion for Summary
Judgment Against All Defendants and for Interlocutory Decree of
Foreclosure," and (2) Judgment entered in favor of Bank of New
York and against the Duncans. 2
On appeal, the Duncans argue that the circuit court
erred in granting summary judgment because (1) Bank of New York
did not establish it had standing when it commenced the action,
(2) Bank of New York did not establish foundation for the
business records, and (3) Bank of New York's witness was not
qualified to verify prior servicers' incorporation of records.
The standing issue is dispositive; we vacate and remand.
I. BACKGROUND
On October 10, 2016, Bank of New York filed a
complaint (Complaint), seeking to foreclose on the Duncans' real
property in Lahaina, Maui (Property). In the Complaint, Bank of
New York averred that it "is the current holder of the Note with
standing to prosecute the instant action and the right to
foreclose the subject Mortgage" and Bank of New York's
"foreclosure counsel is currently in rightful possession of the
endorsed Note[.]" Bank of New York did not include an original
or photocopy of the Note with the Complaint.
1 Bank of New York's title is Bank of New York Mellon FKA the Bank of New York as Trustee for the Certificateholders CWABS, Inc. Asset-Backed Certificates, Series 2004-12.
2 The Honorable Joseph E. Cardoza presided.
2 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
Over two years later, in January 2019, Bank of New
York moved for summary judgment, averring that "no genuine issue
of material fact exists and that [it] is entitled to judgment as
a matter of law[.]" In its memorandum supporting its motion,
Bank of New York stated that "[a] true and correct copy of the
Note is attached as Exhibit '1.'" Bank of New York also stated
that Exhibit 2 was "[a] true and correct copy of the bailee
letter reflecting possession of the original Note, indorsed in
blank, by [its] attorneys as of the filing date of the
Complaint." Bank of New York claimed that when the Complaint
was filed on October 10, 2016, it "was entitled to enforce the
Note, indorsed in blank, with standing to bring and prosecute
this action."
Attached to the motion was a declaration executed on
November 27, 2018, by Elizabeth Gonzales (Gonzales), an
"authorized signer of Carrington Mortgage Services, LLC,
('Carrington'), which is [Bank of New York's] servicing agent
and attorney-in-fact for the subject loan . . ." (Gonzales
Declaration). Gonzales stated that Bank of New York "has
possession of the Note with standing to prosecute the instant
action and the right to foreclose the subject Mortgage. The
original Note has been indorsed in blank." Gonzales further
stated that Bank of New York "caused the original Note, indorsed
3 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
in blank, to be delivered to [its] attorneys, TMLF Hawaii LLLC,
as agent for the" Bank of New York.
Gonzales then stated that "Carrington's records
indicate that [Bank of New York], by and through counsel, had
possession of the original Note, indorsed in blank, prior to
10/10/2016, the date of the filing of the Complaint for Mortgage
Foreclosure in this matter." Gonzales relied on the bailee
letter, claiming it "reflect[s] possession of the original Note,
indorsed in blank, by [Bank of New York's] attorneys" and noted
it was attached as Exhibit 2.
Exhibit 1 is a photocopy of the Note naming Full
Spectrum Lending as the lender, with an indorsement from Full
Spectrum Lending to Countrywide Home Loans and a blank
indorsement from Countrywide Home Loans. These indorsements are
not dated.
Exhibit 2 is the bailee letter from the Bank of New
York's attorney to Ditech Financial LLC dated April 15, 2016,
which was approximately six months prior to the filing of the
Complaint. The bailee letter stated, "We request the release of
the following Collateral Documents checked below for the purpose
of pursuing a foreclosure or legal action . . ." and the box for
"Original . . . Note/Allonge(s) and POA as applicable" was
checked.
4 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
During the hearing on Bank of New York's motion for
summary judgment, counsel briefly discussed the bailee letter,
but gave no specific explanation regarding how the bailee letter
showed that Bank of New York possessed the original Note. As to
the Duncans' standing argument, Bank of New York did not respond
except to rest on its pleadings.
The circuit court granted Bank of New York's motion
for summary judgment and interlocutory decree of foreclosure,
and entered findings of fact and conclusions of law. The
Duncans timely appealed.
II. STANDARD OF REVIEW
"We review a trial court's grant of summary judgment
de novo." State ex. rel. Shikada v. Bristol-Myers Squibb Co.,
152 Hawai‘i 418, 439, 526 P.3d 395, 416 (2023) (citation
omitted). "To prevail, the moving party must demonstrate that
there's no genuine dispute about the material facts and the
'undisputed facts' show the court should grant summary judgment
as a matter of law." Id. at 442, 526 P.3d at 419. "A court
must consider the evidence in the light most favorable to the
non-moving party at summary judgment." Id. (citation and
internal quotation marks omitted).
5 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
III. DISCUSSION
Again, the Duncans argue, inter alia, that Bank of New
York did not establish it had standing when it commenced this
action.
"A foreclosing plaintiff's burden to prove entitlement
to enforce the note overlaps with the requirements of standing
in foreclosure actions as standing is concerned with whether the
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NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
Electronically Filed Intermediate Court of Appeals CAAP-XX-XXXXXXX 05-JUN-2023 08:04 AM Dkt. 62 MO
NO. CAAP-XX-XXXXXXX
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI‘I
THE BANK OF NEW YORK MELLON FKA THE BANK OF NEW YORK AS TRUSTEE FOR THE CERTIFICATEHOLDERS CWABS, INC. ASSET-BACKED CERTIFICATES, SERIES 2004-12, Plaintiff-Appellee, v. CHRISTIAN EDWARD DUNCAN; FATIMA DUNCAN, Defendants-Appellants, COUNTRYWIDE HOME LOANS, INC.; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., AS NOMINEE FOR COUNTRYWIDE HOME LOANS, INC., Defendants-Appellees, JOHN DOES 1-20; JANE DOES 1-20; DOE CORPORATIONS 1-20; DOE ENTITIES 1-20; AND DOE GOVERNMENTAL UNITS 1-20, Defendants.
APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUIT (CIVIL NO. 16-1-0532(3))
MEMORANDUM OPINION (By: Leonard, Presiding Judge, Nakasone and McCullen, JJ.)
Defendants-Appellants Christian Edward Duncan and
Fatima Duncan (Duncans) appeal from the Circuit Court of the
Second Circuit's July 26, 2019 (1) "Findings of Fact,
Conclusions of Law and Order Granting [Plaintiff-Appellee Bank NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
of New York Mellon's (Bank of New York) 1] Motion for Summary
Judgment Against All Defendants and for Interlocutory Decree of
Foreclosure," and (2) Judgment entered in favor of Bank of New
York and against the Duncans. 2
On appeal, the Duncans argue that the circuit court
erred in granting summary judgment because (1) Bank of New York
did not establish it had standing when it commenced the action,
(2) Bank of New York did not establish foundation for the
business records, and (3) Bank of New York's witness was not
qualified to verify prior servicers' incorporation of records.
The standing issue is dispositive; we vacate and remand.
I. BACKGROUND
On October 10, 2016, Bank of New York filed a
complaint (Complaint), seeking to foreclose on the Duncans' real
property in Lahaina, Maui (Property). In the Complaint, Bank of
New York averred that it "is the current holder of the Note with
standing to prosecute the instant action and the right to
foreclose the subject Mortgage" and Bank of New York's
"foreclosure counsel is currently in rightful possession of the
endorsed Note[.]" Bank of New York did not include an original
or photocopy of the Note with the Complaint.
1 Bank of New York's title is Bank of New York Mellon FKA the Bank of New York as Trustee for the Certificateholders CWABS, Inc. Asset-Backed Certificates, Series 2004-12.
2 The Honorable Joseph E. Cardoza presided.
2 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
Over two years later, in January 2019, Bank of New
York moved for summary judgment, averring that "no genuine issue
of material fact exists and that [it] is entitled to judgment as
a matter of law[.]" In its memorandum supporting its motion,
Bank of New York stated that "[a] true and correct copy of the
Note is attached as Exhibit '1.'" Bank of New York also stated
that Exhibit 2 was "[a] true and correct copy of the bailee
letter reflecting possession of the original Note, indorsed in
blank, by [its] attorneys as of the filing date of the
Complaint." Bank of New York claimed that when the Complaint
was filed on October 10, 2016, it "was entitled to enforce the
Note, indorsed in blank, with standing to bring and prosecute
this action."
Attached to the motion was a declaration executed on
November 27, 2018, by Elizabeth Gonzales (Gonzales), an
"authorized signer of Carrington Mortgage Services, LLC,
('Carrington'), which is [Bank of New York's] servicing agent
and attorney-in-fact for the subject loan . . ." (Gonzales
Declaration). Gonzales stated that Bank of New York "has
possession of the Note with standing to prosecute the instant
action and the right to foreclose the subject Mortgage. The
original Note has been indorsed in blank." Gonzales further
stated that Bank of New York "caused the original Note, indorsed
3 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
in blank, to be delivered to [its] attorneys, TMLF Hawaii LLLC,
as agent for the" Bank of New York.
Gonzales then stated that "Carrington's records
indicate that [Bank of New York], by and through counsel, had
possession of the original Note, indorsed in blank, prior to
10/10/2016, the date of the filing of the Complaint for Mortgage
Foreclosure in this matter." Gonzales relied on the bailee
letter, claiming it "reflect[s] possession of the original Note,
indorsed in blank, by [Bank of New York's] attorneys" and noted
it was attached as Exhibit 2.
Exhibit 1 is a photocopy of the Note naming Full
Spectrum Lending as the lender, with an indorsement from Full
Spectrum Lending to Countrywide Home Loans and a blank
indorsement from Countrywide Home Loans. These indorsements are
not dated.
Exhibit 2 is the bailee letter from the Bank of New
York's attorney to Ditech Financial LLC dated April 15, 2016,
which was approximately six months prior to the filing of the
Complaint. The bailee letter stated, "We request the release of
the following Collateral Documents checked below for the purpose
of pursuing a foreclosure or legal action . . ." and the box for
"Original . . . Note/Allonge(s) and POA as applicable" was
checked.
4 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
During the hearing on Bank of New York's motion for
summary judgment, counsel briefly discussed the bailee letter,
but gave no specific explanation regarding how the bailee letter
showed that Bank of New York possessed the original Note. As to
the Duncans' standing argument, Bank of New York did not respond
except to rest on its pleadings.
The circuit court granted Bank of New York's motion
for summary judgment and interlocutory decree of foreclosure,
and entered findings of fact and conclusions of law. The
Duncans timely appealed.
II. STANDARD OF REVIEW
"We review a trial court's grant of summary judgment
de novo." State ex. rel. Shikada v. Bristol-Myers Squibb Co.,
152 Hawai‘i 418, 439, 526 P.3d 395, 416 (2023) (citation
omitted). "To prevail, the moving party must demonstrate that
there's no genuine dispute about the material facts and the
'undisputed facts' show the court should grant summary judgment
as a matter of law." Id. at 442, 526 P.3d at 419. "A court
must consider the evidence in the light most favorable to the
non-moving party at summary judgment." Id. (citation and
internal quotation marks omitted).
5 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
III. DISCUSSION
Again, the Duncans argue, inter alia, that Bank of New
York did not establish it had standing when it commenced this
action.
"A foreclosing plaintiff's burden to prove entitlement
to enforce the note overlaps with the requirements of standing
in foreclosure actions as standing is concerned with whether the
parties have the right to bring suit." Bank of Am., N.A. v.
Reyes-Toledo, 139 Hawai‘i 361, 367, 390 P.3d 1248, 1254 (2017)
(cleaned up and citations omitted). "Accordingly, in
establishing standing, a foreclosing plaintiff must necessarily
prove its entitlement to enforce the note as it is the default
on the note that gives rise to the action." Id. at 368, 390
P.3d at 1255 (citing Hawaii Revised Statutes § 490:9-601 (2008))
(providing for a secured party's rights after default)). Thus,
"a foreclosing plaintiff must establish its standing to bring a
lawsuit at the commencement of the proceeding, not merely at the
summary judgment stage." Deutsche Bank Nat'l Tr. Co. v. Yata,
152 Hawai‘i 322, 335, 526 P.3d 299, 312 (2023) (citations
omitted).
In its motion for summary judgment, Bank of New York
claimed that it possessed the Note at the time the Complaint was
filed and submitted the following to support its claim: (1) the
6 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
Gonzales Declaration; (2) a photocopy of the Note; and (3) the
bailee letter.
The Gonzales Declaration stated that Bank of New York,
through its counsel, possessed the Note "prior to 10/10/2016,
the date of the filing of the Complaint . . . ." Gonzales
relied on the bailee letter stating, "A true and correct copy of
the bailee letter reflecting possession of the original Note,
indorsed in blank, by [Bank of New York's] attorneys is attached
as Exhibit '2' . . . ."
The bailee letter, however, did not establish that
Bank of New York was in possession of the Note when the
Complaint was filed. Assuming, without deciding, that the
bailee letter was admissible as evidence, it merely requested
that the Note be sent to Bank of New York's attorney. There was
no language in the bailee letter confirming Bank of New York's
attorney received, or was in possession of, the Note. And
although Bank of New York provided a photocopy of the Note, the
blank indorsement was undated and the Note alone provided no
indication that Bank of New York possessed it at the time the
Complaint was filed.
In short, Bank of New York did not establish that it
was entitled to judgment as a matter of law. To the contrary,
in viewing this evidence in the light most favorable to the
Duncans, there was a genuine issue as to whether Bank of New
7 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
York possessed the Note at the time the Complaint was filed.
The circuit court, therefore, erred in granting Bank of New
York's motion for summary judgment. Accordingly, we need not
address the Duncans' remaining issues.
IV. CONCLUSION
Based on the foregoing, we vacate the circuit court's
July 26, 2019 "Findings of Fact, Conclusions of Law and Order
Granting [Bank of New York's] Motion for Summary Judgment
Against All Defendants and for Interlocutory Decree of
Foreclosure" and Judgment, and remand this case for further
proceedings.
DATED: Honolulu, Hawai‘i, June 5, 2023.
On the briefs: /s/ Katherine G. Leonard Presiding Judge Matthew K. Yoshida, for Defendants-Appellants. /s/ Karen T. Nakasone, Associate Judge Charles R. Prather, Robin Miller, /s/ Sonja M.P. McCullen Sun Young Park, Associate Judge Peter T. Stone, for Plaintiff-Appellee.