Wells Fargo Bank v. Gilbert

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
18-APR-2024
08:05 AM
Dkt. 90 SO

NO. CAAP-XX-XXXXXXX

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI#I

WELLS FARGO BANK, NATIONAL ASSOCIATION AS TRUSTEE FOR
SECURITIZED ASSET BACKED RECEIVABLES LLC 2005-FR5
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-FR5,
Plaintiff-Appellee,
v.
PHONGPUN GILBERT, Defendant-Appellant; MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC.; UNITED STATES OF AMERICA;
DIRECTOR, DEPARTMENT OF TAXATION, STATE OF HAWAII,
Defendants-Appellees,
and
JOHN DOES 1-10; JANE DOES 1-10; DOE PARTNERSHIPS 1-10; DOE
CORPORATIONS 1-10; DOE ENTITIES 1-10; and DOE GOVERNMENTAL
UNITS 1-10, Defendants

APPEAL FROM THE CIRCUIT COURT OF THE FIFTH CIRCUIT
(CASE NO. 5CC181000064)

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

Phongpun Gilbert appeals from the Judgment entered by
the Circuit Court of the Fifth Circuit on July 30, 2019.1
Gilbert challenges the Order granting Wells Fargo Bank's motion
for summary judgment and decree of foreclosure entered on
July 30, 2019. We vacate the Order and the Judgment and remand
for further proceedings.

1
The Honorable Kathleen N.A. Watanabe presided.
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Wells Fargo filed a complaint to foreclose Gilbert's
mortgage on April 27, 2018. Wells Fargo moved for summary
judgment. The circuit court entered the Order and the Judgment.
Gilbert appeals. She argues: (1) Wells Fargo did not prove it
had standing to enforce her Note when its complaint was filed;
(2) Wells Fargo's business records were not authenticated; and
(3) Wells Fargo's foreclosure claim is barred by dismissal of an
earlier lawsuit.
(1) A foreclosing plaintiff must show it had the right
to enforce the note when its complaint was filed. Bank of Am.,
N.A. v. Reyes-Toledo, 139 Hawai#i 361, 368, 390 P.3d 1248, 1255
(2017). Wells Fargo's attorney filed a declaration on August 15,
2018. He stated he received Gilbert's original promissory note
on February 22, 2018 (before the complaint was filed); he
"personally reviewed the original endorsed [sic] Note"; and the
blank indorsement is "on the reverse side of page 4 of the Note."
Counsel's declaration was based on personal knowledge and showed
that Wells Fargo had the right to enforce Gilbert's note when its
complaint was filed.
(2) Wells Fargo's motion for summary judgment was
supported by the declaration of Rebecca C. Wallace. Wallace
worked for Nationstar Mortgage LLC. According to Wallace: the
original lender, Fremont Investment & Loan, assigned Gilbert's
mortgage to Wells Fargo; Nationstar serviced the loan for Wells
Fargo; the servicer before Nationstar was Bank of America; and
Nationstar incorporated Bank of America's business records for
Gilbert's loan into its own business records. Wallace's
declaration stated:

Before [Bank of America]'s records were incorporated into
Nationstar' [sic] own business records, it conducted an
independent check into [Bank of America]'s records and found
them in keeping with industry wide loan servicing standards
and only integrated them into Nationstar' [sic] own business
records after finding [Bank of America]'s records were made
as part of a regularly conducted activity, met industry
standards and determined to be trustworthy.

2
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Wallace didn't describe what Nationstar did to verify
the trustworthiness of Bank of America's records, as required by
Wells Fargo Bank, N.A. v. Behrendt, 142 Hawai#i 37, 45-46, 414
P.3d 89, 97-98 (2018). Compare U.S. Bank Tr., N.A. v. Verhagen,
149 Hawai#i 315, 325-27, 489 P.3d 419, 429-31 (2021) (discussing
"scant" and "nebulously described" circumstances indicating
trustworthiness of incorporated records), with Deutsche Bank
Nat'l Tr. Co. v. Yata, 152 Hawai#i 322, 334-35, 526 P.3d 299,
311-12 (2023) (noting that third Behrendt requirement wasn't
satisfied). Wallace's declaration didn't establish admissibility
of the incorporated Bank of America records under Hawaii Rules of
Evidence Rule 803(b)(6) (2016). Wells Fargo did not meet its
burden as movant under Verhagen, 149 Hawai#i at 328 n.12, 489
P.3d at 432 n.12. It did not prove Gilbert's default under the
terms of the agreements or delivery of the notice of default.
See Wells Fargo Bank, N.A. v. Fong, 149 Hawai#i 249, 253, 488
P.3d 1228, 1232 (2021). The circuit court erred by granting
Wells Fargo's motion for summary judgment.
(3) Gilbert argues that Wells Fargo is "precluded"
from pursuing foreclosure because Wells Fargo's earlier lawsuit
against her was dismissed. She doesn't specify whether claim
preclusion or issue preclusion should apply. But it doesn't
matter because she didn't provide the circuit court with Wells
Fargo's earlier complaint or any information about what claims
were asserted or what issues were presented in the previous
lawsuit. Her preclusion argument is without merit.
The circuit court's "Findings of Fact, Conclusions of
Law and Order Granting Plaintiff's Motion for Default Judgment
Against Defendants Phongpun Gilbert, Mortgage Electronic
Registration Systems, Inc. and Summary Judgment Against All
Defendants and Decree of Foreclosure Against All Defendants on
Complaint Filed April 27, 2018" and "Judgment on Findings of
Fact, Conclusions of Law and Order Granting Plaintiff's Motion
for Default Judgment Against Defendants Phongpun Gilbert,
Mortgage Electronic Registration Systems, Inc. and Summary

3
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Judgment Against All Defendants and Decree of Foreclosure Against
All Defendants on Complaint Filed April 27, 2018," both entered
on July 30, 2019, are vacated, and this case is remanded for
further proceedings consistent with this summary disposition
order.
DATED: Honolulu, Hawai#i, April 18, 2024.

On the briefs:
/s/ Keith K. Hiraoka
Gary Victor Dubin, Presiding Judge
Frederick J. Arensmeyer,
Matthew K. Yoshida, /s/ Karen T. Nakasone
for Defendant-Appellant. Associate Judge

Keith M. Kiuchi, /s/ Sonja M.P. McCullen
for Defendant-Appellant. Associate Judge

J. Blaine Rogers,
Madisson L. Heinze,
for Plaintiff-Appellee.

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