Bank of America v. Alejo-Herring

NOT FOR PUBLICATION IN WEST'S HAWAI‘I REPORTS AND PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
26-JUN-2024
07:53 AM
Dkt. 69 SO

NO. CAAP-XX-XXXXXXX

IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI‘I

BANK OF AMERICA, N.A.,
Plaintiff-Appellee,
v.
GWEN ALEJO-HERRING, AS SUCCESSOR TRUSTEE OF THE
ANTONIA ALVAREZ ALEJO TRUST DATED DECEMBER 4, 1998,
Defendant-Appellant,
and
JOHN AND MARY DOES 1-20, DOE PARTNERSHIPS,
CORPORATIONS OR OTHER ENTITIES 1-20,
Defendants

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CIVIL NO. 1CC171001991)

SUMMARY DISPOSITION ORDER
(By: Hiraoka, Presiding Judge, Wadsworth and Nakasone, JJ.)

This is an appeal from a foreclosure case.
Defendant-Appellant Gwen Alejo-Herring (Alejo-Herring)
appeals from: (1) the "Findings of Fact, Conclusions of Law and
Order Granting [Plaintiff-Appellee Bank of America, N.A.
(BOA)]'s Motion for Summary Judgment Against All Defendants and
for Interlocutory Decree of Foreclosure" (Foreclosure Decree);
NOT FOR PUBLICATION IN WEST'S HAWAI‘I REPORTS AND PACIFIC REPORTER

and (2) "Judgment," both filed and entered on March 6, 2020 by
the Circuit Court of the First Circuit (Circuit Court).1
On appeal, Alejo-Herring contends that the Circuit
Court erred in granting BOA's "Motion for Summary Judgment and
For Interlocutory Decree of Foreclosure" (MSJ), because BOA
"failed to meet its prima facie burden of establishing its
standing through admissible evidence."
Upon careful review of the record and the briefs
submitted by the parties and having given due consideration to
the argument advanced and the issues raised, we resolve Alejo-
Herring's point of error as follows, and vacate and remand.
On December 5, 2017, BOA filed a foreclosure complaint
against Alejo-Herring. On September 4, 2019, BOA filed its MSJ
with a declaration by Elizabeth Ruiz (Ruiz Declaration), an
authorized signer for BOA's loan servicer, Reverse Mortgage
Solutions, Inc. (RMS), to authenticate the attached adjustable
rate note (Note) and mortgage (Mortgage). Alejo-Herring opposed
the MSJ, arguing, inter alia, that BOA "has not produced any
admissible evidence establishing its right to enforce the
agreement at the time the complaint was filed." The Circuit
Court granted the MSJ on December 16, 2019, and on March 6,
2020, the Circuit Court filed the Foreclosure Decree and
Judgment. This appeal followed.
Alejo-Herring argues, inter alia, that BOA failed to
establish its standing to foreclose by presenting the testimony
of a qualified witness who could authenticate the Note and
Mortgage under the incorporated records exception to the hearsay
rule, set forth in U.S. Bank Trust, N.A. as Tr. for LSF9 Master
Participation Tr. v. Verhagen, 149 Hawai i 315, 489 P.3d 419
(2021), and Deutsche Bank Nat'l Tr. Co. as Tr. for Morgan

1 The Honorable Jeannette H. Castagnetti presided.

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Stanley ABS Cap. I Inc. Tr. 2006-NC4 v. Yata, 152 Hawai i 322,
526 P.3d 299 (2023). Alejo-Herring argues that in the
declaration, Ruiz "did not attest[] to being familiar with the
record-keeping systems of either [the prior servicer] or BOA,
nor did [Ruiz] explain how the aforesaid documents were created
in the normal course of [the prior servicer]'s business."
"[W]hen an entity incorporates records prepared by
another entity into its own records, they are admissible as
business records of the incorporating entity provided that it
relies on the records, there are other indicia of reliability,
and the requirements of [Hawaiʻi Rules of Evidence (HRE)] Rule
803(b)(6) are otherwise satisfied." Verhagen, 149 Hawaiʻi at
325, 489 P.3d at 429 (cleaned up).
Incorporated records are admissible under HRE Rule
803(b)(6) when a custodian or qualified witness testifies
that [1] the documents were incorporated and kept in the
normal course of business, [2] that the incorporating
business typically relies upon the accuracy of the contents
of the documents, and [3] the circumstances otherwise
indicate the trustworthiness of the document [(Condition
No.3)].

Id. at 325-26, 489 P.3d at 429-30 (first three brackets in
original) (citation omitted). "If each of these three
conditions is satisfied, an incorporated record is
admissible even in the absence of testimony concerning
its actual creation." Id. at 326, 489 P.3d at 430.
To meet Verhagen Condition No.3, testimony that
establishes the trustworthiness of the incorporated records
should describe "pre-incorporation vetting" by the current
servicer, to ensure that the records of the prior servicer were
not "uncritically incorporated" into the current servicer's
records. Id. at 326, 489 P.3d at 430. The Verhagen court found
the following testimony sufficient to meet Condition No.3:
validating records using methods such as engaging in a due

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diligence phase; reviewing hard copies; and reviewing payment
history and accounting associated with the loan. Id. In Yata,
however, the supreme court found the submitted testimony
insufficient to meet Condition No.3, explaining that such
testimony should describe "specific methods of validation of
documents from the prior loan servicer" and not "merely assert
that [current servicer] has 'quality control and verification
procedures' to ensure the accuracy of incorporated records
without stating what those procedures are." 152 Hawai i at 335,

526 P.3d at 312 (emphasis added).
Here, the Ruiz Declaration stated:
25. Before the Prior Servicer's records were
incorporated into RMS' own business records, it conducted
an independent check into the Prior Servicer's records and
found them in keeping with industry [sic] wide loan
servicing standards and only integrated them into RMS's own
business records after finding the Prior Servicer's records
were made as part of a regularly conducted activity, met
industry standards and determined to be trustworthy.

. . . .

29. RMS did review and determine the Prior Servicer's
business records were trustworthy otherwise it would not
have incorporated it into its own records.

(Emphases added.) Unlike Verhagen and similar to Yata, the Ruiz
Declaration "merely assert[ed]" that RMS did an independent
check and review of the records and found the records to be
trustworthy. See Yata, 152 Hawaiʻi at 335, 526 P.3d at 312. The
Ruiz Declaration did not describe "specific methods of
validation" and verification of RMS's or the prior servicer's
records. See id.; Verhagen, 149 Hawai i at 326, 489 P.3d at 430.
Thus, the Ruiz Declaration did not satisfy the trustworthiness
requirement of Condition No.3, and the Circuit Court erred in
admitting the Note and Mortgage into evidence. See Yata, 152
Hawai i at 335, 526 P.3d at 312 (concluding that the business

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records attached to the declarations at issue were inadmissible
because the declarations did not meet Condition No.3). We
conclude the Circuit Court erred in granting summary judgment in
favor of BOA. See U.S. Bank N.A. v. Mattos, 140 Hawai i 26, 30,
398 P.3d 615, 619 (2017) ("An award of summary judgment is
reviewed de novo and 'is appropriate where there is no genuine
issue as to the material fact and the moving party is entitled
to judgment as a matter of law.'" (citation omitted)).
In light of our disposition, we need not reach Alejo-
Herring's remaining arguments.
For the foregoing reasons, we vacate and remand the
(1) the "Findings of Fact, Conclusions of Law and Order Granting
Plaintiff's Motion for Summary Judgment Against All Defendants
and for Interlocutory Decree of Foreclosure"; and (2)
"Judgment," both filed and entered on March 6, 2020 by the
Circuit Court of the First Circuit.
DATED: Honolulu, Hawai‘i, June 26, 2024.
On the briefs:
/s/ Keith K. Hiraoka
Frederick J. Arensmeyer
Presiding Judge
for Defendant-Appellant.
/s/ Clyde J. Wadsworth
Samuel A. Keesal, Jr.
Associate Judge
for Plaintiff-Appellee.
/s/ Karen T. Nakasone
Associate Judge

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