NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Electronically Filed Intermediate Court of Appeals CAAP-XX-XXXXXXX 09-APR-2024 07:50 AM Dkt. 82 SO
NO. CAAP-XX-XXXXXXX
IN THE INTERMEDIATE COURT OF APPEALS OF THE STATE OF HAWAI#I
WILMINGTON TRUST, NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS TRUSTEE FOR MFRA TRUST 2015-1, Plaintiff-Appellee, v. REID I. TAMAYOSE; NADINE K. TAMAYOSE, Defendants-Appellants, and CADERLOCK JOINT VENTURE, L.P.; ADVANTAGE ASSETS II, INC.; RENEY ANN K.M. CHING; CACH, LLC, Defendants-Appellees, and JOHN AND MARY DOES 1-20; DOE PARTNERSHIPS, CORPORATIONS OR OTHER ENTITIES 1-20, Defendants
APPEAL FROM THE CIRCUIT COURT OF THE FIFTH CIRCUIT (CASE NO. 5CC121000044)
SUMMARY DISPOSITION ORDER (By: Leonard, Acting Chief Judge, Nakasone and McCullen, JJ.)
Defendants-Appellants Reid I. Tamayose and Nadine K.
Tamayose (the Tamayoses) appeal from the October 1, 2019 Judgment
(Judgment) entered against them and in favor of Plaintiff-
Appellee Wilmington Trust, National Association, not in its
Individual Capacity, but Solely as Trustee for MFRA Trust 2015-1
(Wilmington Trust), by the Circuit Court of the Fifth Circuit NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
(Circuit Court).1 The Tamayoses also challenge the Circuit
Court's October 1, 2019 Findings of Fact, Conclusions of Law, and
Order Granting [Wilmington Trust's] Motion for Summary Judgment
and for Interlocutory Decree of Foreclosure (Foreclosure Decree).
The Tamayoses raise a single point of error, contending
that the Circuit Court erred by granting Wilmington Trust's July
31, 2019 Motion for Summary Judgment and for Interlocutory Decree
of Foreclosure (Summary Judgment Motion) because Wilmington Trust
failed to establish its standing to sue, and failed to meet its prima facie burden of proof.
Upon careful review of the record and the briefs
submitted by the parties, and having given due consideration to
the arguments advanced and the issues raised by the parties, we
resolve the Tamayoses' point of error as follows:
The Circuit Court granted the Summary Judgment Motion
based in part on its finding that Residential Credit Solutions,
Inc. (RCS), which had filed the original Complaint to Foreclose
Mortgage (Complaint) on February 2, 2012, possessed the original
subject blank-indorsed Adjustable Rate Note (Note),2 which was
secured by the subject mortgage (Mortgage). The Circuit Court
found that RCS held the Note and Mortgage at the time it filed
the January 27, 2014 First Amended [Complaint], and on that
basis, the Circuit Court concluded that RCS had standing to file
this foreclosure action. Thus, the Circuit Court further
1 The Honorable Randal G.B. Valenciano presided. 2 An Allonge to Note, which contains an indorsement in blank, is attached to the Note (Allonge).
2 NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
concluded that Wilmington Trust, as the current holder of the
Note and Mortgage, and the substituted real-party-in-interest,
also had standing.
The Tamayoses contend that Wilmington Trust did not
meet its burden of demonstrating that RCS was in possession of
the blank-indorsed Note at the time the Complaint was filed.
A foreclosing party must demonstrate that all
conditions precedent to foreclosure under the note and mortgage
are satisfied and that all steps required by statute have been strictly complied with to prove entitlement to foreclose. Bank
of Am., N.A. v. Reyes-Toledo, 139 Hawai#i 361, 367, 390 P.3d
1248, 1254 (2017). Typically, this requires that the plaintiff
prove the existence of an agreement, the terms of the agreement,
a default by the mortgagor under the terms of the agreement, and
giving of the cancellation notice. Id. A foreclosing plaintiff
must also prove that the plaintiff is entitled to foreclose the
note and mortgage. Id.
The "burden to prove entitlement to enforce the note
overlaps with the requirements of standing in foreclosure
actions." Id. (quoting Mottl v. Miyahira, 95 Hawai#i 381, 388,
23 P.3d 716, 723 (2001)). Under the doctrine of standing, a
plaintiff typically must have suffered an injury-in-fact to
"justify exercise of the court's remedial powers on his or her
behalf." Id. at 368, 390 P.3d at 1255 (citing Mottl, 95 Hawai#i
at 389, 23 P.3d at 724). For a foreclosing plaintiff, the
injury-in-fact is the mortgagor's "failure to satisfy its
obligation to pay the debt obligation to the note holder." Id.
3 NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Thus, a person seeking to judicially foreclose on a mortgage
following a promissory note default must establish that it was
the "person entitled to enforce the note," as defined by Hawaii
Revised Statutes (HRS) § 490:3-301 (2016) at the time the
foreclosure complaint was filed to satisfy standing and to be
entitled to prevail on the merits. Id. at 368-69, 390 P.3d at
1255-56; see also U.S. Bank N.A. v. Mattos, 140 Hawai#i 26, 33,
398 P.3d 615, 622 (2017).
Here, Wilmington Trust relied on the Declaration of Melissa Sequete, which was submitted in support of the Motion for
Summary Judgment (Sequete; Sequete Declaration). Sequete was a
former Assistant Vice President-Director of Special Assets at
RCS, and is the current Vice President at Fay, the loan servicing
agent for Wilmington Trust (Fay). Wilmington Trust contends that
Sequete properly authenticated the blank-indorsed Note, the
Mortgage, a notice of default allegedly sent to the Tamayoses by
RCS in 2008 (Notice of Default), and other business records,
because Sequete had personal knowledge of both RCS and Fay's
record-keeping systems.
The Tamayoses argue that Sequete did not aver to having seen the original blank-indorsed Note, did not otherwise attest
to witnessing the Note being in RCS's possession or how it was
kept by RCS, and that Wilmington Trust offered no business
records or other evidence demonstrating RCS was in possession of
the Note when the Complaint was filed. The Tamayoses further
argue that the business records hearsay exception criteria have
not been satisfied.
4 NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Relevant to the issue of RCS's possession of the blank-
indorsed Note, Sequete declared under oath: 10. I was Assistant Vice President-Director of Special Assets of RCS at the time RCS initiated this foreclosure action against Defendants. Accordingly, I have personal knowledge of RCS's business records, including its electronic records and the information relating to the Loan. Based on my personal knowledge of the business records kept by RCS, which were subsequently incorporated into the business records of Fay, RCS was in possession of the original Note at the time the Complaint and First Amended Complaint in this action were filed.
The Sequete Declaration does not assert that she was a
custodian of records for RCS.3 Therefore, the RCS records
attached to her declaration are only admissible under Hawai#i Rules of Evidence (HRE) Rule 803(b)(6) hearsay exception if she
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NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Electronically Filed Intermediate Court of Appeals CAAP-XX-XXXXXXX 09-APR-2024 07:50 AM Dkt. 82 SO
NO. CAAP-XX-XXXXXXX
IN THE INTERMEDIATE COURT OF APPEALS OF THE STATE OF HAWAI#I
WILMINGTON TRUST, NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS TRUSTEE FOR MFRA TRUST 2015-1, Plaintiff-Appellee, v. REID I. TAMAYOSE; NADINE K. TAMAYOSE, Defendants-Appellants, and CADERLOCK JOINT VENTURE, L.P.; ADVANTAGE ASSETS II, INC.; RENEY ANN K.M. CHING; CACH, LLC, Defendants-Appellees, and JOHN AND MARY DOES 1-20; DOE PARTNERSHIPS, CORPORATIONS OR OTHER ENTITIES 1-20, Defendants
APPEAL FROM THE CIRCUIT COURT OF THE FIFTH CIRCUIT (CASE NO. 5CC121000044)
SUMMARY DISPOSITION ORDER (By: Leonard, Acting Chief Judge, Nakasone and McCullen, JJ.)
Defendants-Appellants Reid I. Tamayose and Nadine K.
Tamayose (the Tamayoses) appeal from the October 1, 2019 Judgment
(Judgment) entered against them and in favor of Plaintiff-
Appellee Wilmington Trust, National Association, not in its
Individual Capacity, but Solely as Trustee for MFRA Trust 2015-1
(Wilmington Trust), by the Circuit Court of the Fifth Circuit NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
(Circuit Court).1 The Tamayoses also challenge the Circuit
Court's October 1, 2019 Findings of Fact, Conclusions of Law, and
Order Granting [Wilmington Trust's] Motion for Summary Judgment
and for Interlocutory Decree of Foreclosure (Foreclosure Decree).
The Tamayoses raise a single point of error, contending
that the Circuit Court erred by granting Wilmington Trust's July
31, 2019 Motion for Summary Judgment and for Interlocutory Decree
of Foreclosure (Summary Judgment Motion) because Wilmington Trust
failed to establish its standing to sue, and failed to meet its prima facie burden of proof.
Upon careful review of the record and the briefs
submitted by the parties, and having given due consideration to
the arguments advanced and the issues raised by the parties, we
resolve the Tamayoses' point of error as follows:
The Circuit Court granted the Summary Judgment Motion
based in part on its finding that Residential Credit Solutions,
Inc. (RCS), which had filed the original Complaint to Foreclose
Mortgage (Complaint) on February 2, 2012, possessed the original
subject blank-indorsed Adjustable Rate Note (Note),2 which was
secured by the subject mortgage (Mortgage). The Circuit Court
found that RCS held the Note and Mortgage at the time it filed
the January 27, 2014 First Amended [Complaint], and on that
basis, the Circuit Court concluded that RCS had standing to file
this foreclosure action. Thus, the Circuit Court further
1 The Honorable Randal G.B. Valenciano presided. 2 An Allonge to Note, which contains an indorsement in blank, is attached to the Note (Allonge).
2 NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
concluded that Wilmington Trust, as the current holder of the
Note and Mortgage, and the substituted real-party-in-interest,
also had standing.
The Tamayoses contend that Wilmington Trust did not
meet its burden of demonstrating that RCS was in possession of
the blank-indorsed Note at the time the Complaint was filed.
A foreclosing party must demonstrate that all
conditions precedent to foreclosure under the note and mortgage
are satisfied and that all steps required by statute have been strictly complied with to prove entitlement to foreclose. Bank
of Am., N.A. v. Reyes-Toledo, 139 Hawai#i 361, 367, 390 P.3d
1248, 1254 (2017). Typically, this requires that the plaintiff
prove the existence of an agreement, the terms of the agreement,
a default by the mortgagor under the terms of the agreement, and
giving of the cancellation notice. Id. A foreclosing plaintiff
must also prove that the plaintiff is entitled to foreclose the
note and mortgage. Id.
The "burden to prove entitlement to enforce the note
overlaps with the requirements of standing in foreclosure
actions." Id. (quoting Mottl v. Miyahira, 95 Hawai#i 381, 388,
23 P.3d 716, 723 (2001)). Under the doctrine of standing, a
plaintiff typically must have suffered an injury-in-fact to
"justify exercise of the court's remedial powers on his or her
behalf." Id. at 368, 390 P.3d at 1255 (citing Mottl, 95 Hawai#i
at 389, 23 P.3d at 724). For a foreclosing plaintiff, the
injury-in-fact is the mortgagor's "failure to satisfy its
obligation to pay the debt obligation to the note holder." Id.
3 NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Thus, a person seeking to judicially foreclose on a mortgage
following a promissory note default must establish that it was
the "person entitled to enforce the note," as defined by Hawaii
Revised Statutes (HRS) § 490:3-301 (2016) at the time the
foreclosure complaint was filed to satisfy standing and to be
entitled to prevail on the merits. Id. at 368-69, 390 P.3d at
1255-56; see also U.S. Bank N.A. v. Mattos, 140 Hawai#i 26, 33,
398 P.3d 615, 622 (2017).
Here, Wilmington Trust relied on the Declaration of Melissa Sequete, which was submitted in support of the Motion for
Summary Judgment (Sequete; Sequete Declaration). Sequete was a
former Assistant Vice President-Director of Special Assets at
RCS, and is the current Vice President at Fay, the loan servicing
agent for Wilmington Trust (Fay). Wilmington Trust contends that
Sequete properly authenticated the blank-indorsed Note, the
Mortgage, a notice of default allegedly sent to the Tamayoses by
RCS in 2008 (Notice of Default), and other business records,
because Sequete had personal knowledge of both RCS and Fay's
record-keeping systems.
The Tamayoses argue that Sequete did not aver to having seen the original blank-indorsed Note, did not otherwise attest
to witnessing the Note being in RCS's possession or how it was
kept by RCS, and that Wilmington Trust offered no business
records or other evidence demonstrating RCS was in possession of
the Note when the Complaint was filed. The Tamayoses further
argue that the business records hearsay exception criteria have
not been satisfied.
4 NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Relevant to the issue of RCS's possession of the blank-
indorsed Note, Sequete declared under oath: 10. I was Assistant Vice President-Director of Special Assets of RCS at the time RCS initiated this foreclosure action against Defendants. Accordingly, I have personal knowledge of RCS's business records, including its electronic records and the information relating to the Loan. Based on my personal knowledge of the business records kept by RCS, which were subsequently incorporated into the business records of Fay, RCS was in possession of the original Note at the time the Complaint and First Amended Complaint in this action were filed.
The Sequete Declaration does not assert that she was a
custodian of records for RCS.3 Therefore, the RCS records
attached to her declaration are only admissible under Hawai#i Rules of Evidence (HRE) Rule 803(b)(6) hearsay exception if she
is a qualified witness with respect to those records. Merely
stating that she had "personal knowledge of RCS's business
records, including its electronic records and the information
relating to the Loan" does not establish Sequete as a qualified
witness with respect to the Note and Mortgage. See Mattos, 140
Hawai#i at 26, 398 P.3d at 615. Sequete did not, for example,
state that she had access to or was familiar with the Note and
Mortgage through the regular performance of her duties at RCS, state that the documents to which she referred were created or
maintained in the regular course of RCS's business or consistent
with RCS's regular practice, state that she researched and/or
examined RCS's business records for the Note and Mortgage, or
provide any information whatsoever that would establish her as a
qualified witness. See id. at 32, 398 P.3d at 621. Sequete's
statement of her "personal knowledge" of RCS business records was
3 Sequete does state that she has personal knowledge of the facts stated in the Sequete Declaration "as a custodian based on my review of Fay's business records."
5 NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
inadequate to establish that RCS was in possession of the
original Note at the time the Complaint was filed. The Sequete
Declaration does not state that the Note was indorsed in blank at
the time the Complaint was filed. In short, there is no
admissible evidence that RCS was in possession of the Note or the
Allonge providing the blank endorsement at the time of the filing
of the Complaint.
Wilmington Trust argues, alternatively, that the
Sequete Declaration established, inter alia, that the Note and
Mortgage were incorporated and kept in the normal course of Fay's
business and satisfied the requirements of the incorporated
records doctrine. See Wells Fargo Bank, N.A. v. Behrendt, 142
Hawai#i 37, 45, 414 P.3d 89, 97 (2018); U.S. Bank Tr., N.A. as
Tr. for LSF9 Master Participation Tr. v. Verhagen, 149 Hawai#i
315, 325-27, 489 P.3d 419, 429-31 (2021). Even if the Sequete
Declaration met the requirements of the incorporated records
doctrine (it did not), Wilmington Trust nevertheless failed to
produce admissible evidence that RCS possessed the blank-indorsed
Note at the time the Complaint was filed. Therefore, the Circuit
Court erred in concluding that RCS had standing to foreclose.
The Tamayoses further argue that Wilmington Trust
failed to proffer properly authenticated evidence that the Notice
of Default was given to the Tamayoses. For the same reasons
discussed above with respect to the Note, the Sequete Declaration
does not properly authenticate the Notice of Default. Even if
the Notice of Default had been properly authenticated, the terms
of the Note require in pertinent part:
6 NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
8. GIVING OF NOTICES Unless applicable law requires a different method, any notice that must be given to me under this Note will be given by delivering it or by mailing it by first class mail to me at the Property Address above or at a different address if I give the Note Holder a notice of my different address.
The terms of the Mortgage require in pertinent part: 14. Notices. Any notice to Borrower provided for in this Security Instrument shall be given by delivering it or by mailing it by first class mail unless applicable law requires use of another method. The notice shall be directed to the Property Address or any other address Borrower designates by notice to Lender.
Sequete does not state whether the Notice of Default
was sent via first class mail, nor does Wilmington Trust offer
evidence that the Notice of Default was otherwise delivered to
the Tamayoses. Thus, we conclude that Wilmington Trust failed to
establish that no genuine issue of material fact exists with
respect to whether proper notice was given under the terms of the
Mortgage or Note.
For these reasons, the Circuit Court's October 1, 2019
Judgment and Foreclosure Decree are vacated, and this case is
remanded to the Circuit Court for further proceedings.
DATED: Honolulu, Hawai#i, April 9, 2024.
On the briefs: /s/ Katherine G. Leonard Acting Chief Judge Gary Victor Dubin, Frederick J. Arensmeyer, /s/ Karen T. Nakasone for Defendants-Appellants Associate Judge REID I. TAMAYOSE and NADINE K. TAMAYOSE. /s/ Sonja M.P. McCullen Associate Judge Matthew C. Shannon, Lianne T. Chung, (Bays Lung Rose & Holma), for Plaintiff-Appellee.