U.S. Bank National Association v. Young

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
20-SEP-2024
07:54 AM
Dkt. 173 SO

CAAP-XX-XXXXXXX

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

U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR GSR
MORTGAGE LOAN TRUST 2006-3F, MORTGAGE PASS-THROUGH
CERTIFICATES, SERIES 2006-3F, Plaintiff-Appellee, v.
JEFFERSON HALONA YOUNG; LINDA D. YOUNG; BANK OF AMERICA, N.A.;
DEPARTMENT OF TAXATION-STATE OF HAWAI#I;
PALEHUA COMMUNITY ASSOCIATION, Defendants-Appellees, and
GABI KIM COLLINS, Defendant-Appellant, and
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 FIRST CIRCUIT
(CIVIL NO. 1CC161001282)

SUMMARY DISPOSITION ORDER
(By: Leonard, Acting Chief Judge, Hiraoka and Nakasone, JJ.)

Defendant-Appellant Gabi Kim Collins (Collins), self-

represented, appeals from the March 16, 2020 Judgment (Judgment)

entered by the Circuit Court of the First Circuit (Circuit

Court).1 Collins also challenges, inter alia, the Circuit

Court's March 16, 2020 Findings of Fact, Conclusions of Law and

Order Granting Plaintiff's Motion for Summary Judgment Against

All Defendants and for Interlocutory Decree of Foreclosure

1
The Honorable Jeannette H. Castagnetti presided.
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(Foreclosure Decree), which was entered in favor of Plaintiff-

Appellee U.S. Bank National Association, as Trustee for GSR

Mortgage Loan Trust 2006-3F, Mortgage Pass-Through Certificates,

Series 2006-3F (U.S. Bank), on [U.S. Bank's] Motion for Summary

Judgment Against All Defendants and for Interlocutory Decree of

Foreclosure, filed on March 15, 2019 (Second MSJ).

We construe Collins's opening brief as raising the

following points of error: (1) the Circuit Court erred in

granting the Second MSJ because U.S. Bank did not establish that
it had standing to foreclosure on the subject note (Note); (2)

the Circuit Court erred in entering judgment for U.S. Bank

because U.S. Bank did not establish that it provided a notice of

default to the borrowers; (3) the Circuit Court erred in failing

to order sanctions against U.S. Bank for violating a court order.

In her "Statement of Points of Error," Collins makes

various additional statements and arguments related to, inter

alia, the Circuit Court's rulings on [U.S. Bank's] Motion for

Summary Judgment Against All Defendants and for Interlocutory

Decree of Foreclosure, filed on April 3, 2017 (First MSJ), which

was denied without prejudice.2

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 Collins's points of error as follows:

2
In particular, we note that Collins argues on appeal that the
Circuit Court erred in granting summary judgment in favor of U.S. Bank based
on a statute of limitations error. However, this argument was not raised in
opposition to the Second MSJ and therefore is disregarded. Hawai #i Rules of
Appellate Procedure (HRAP) 28(b).

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(1) Collins argues that U.S. Bank lacks standing

because the declarations attached to the Second MSJ contain

hearsay statements and cannot be the basis for awarding summary

judgment. Collins contends that a bailee letter offered by U.S.

Bank (Bailee Letter) was also hearsay, and did not establish that

U.S. Bank had possession of the Note at the time of filing the

Complaint. Collins also argues, inter alia, that the Declaration

of Karelton Chester (Chester; Chester Declaration) fails to show

personal knowledge, and as such, fails to properly authenticate
the Note pursuant to Bank of America, N.A. v. Reyes-Toledo, 139

Hawai#i 361, 390 P.3d 1248 (2017).

For the Chester Declaration and Declaration of Gina

Santellan (Santellan; Santellan Declaration) to properly

authenticate the Note, Bailee Letter, and other business records,

each declaration must satisfy Hawai#i Rules of Evidence (HRE)

Rule 803(b)(6),3 as interpreted in U.S. Bank N.A. v. Mattos, 140

Hawai#i 26, 398 P.3d 615 (2017), and Wells Fargo Bank, N.A. v.

3
HRE Rule 803 states, in relevant part:

Rule 803 Hearsay exceptions; availability of declarant
immaterial.
. . . .
(b) Other exceptions.

. . . .
(6) Records of regularly conducted activity. A
memorandum, report, record, or data compilation, in any
form, of acts, events, conditions, opinions, or
diagnoses, made in the course of a regularly conducted
activity, at or near the time of the acts, events,
conditions, opinions, or diagnoses, as shown by the
testimony of the custodian or other qualified witness,
or by certification that complies with rule 902(11) or a
statute permitting certification, unless the sources of
information or other circumstances indicate lack of
trustworthiness.

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Behrendt, 142 Hawai#i 37, 414 P.3d 89 (2018), and subsequest

Hawai#i Supreme Court cases. HRE Rule 803 (b)(6) is satisfied in

part because Chester testified that:
(1) he was an employee of [Nationstar Mortgage LLC d/b/a Mr.
Cooper (Nationstar)] authorized to sign the declaration on
behalf of U.S. Bank, (2) Nationstar maintains the records
for the loan on behalf of U.S. Bank, (3) he was familiar
with the recordkeeping practices of Nationstar, (4) the
records for the loan he reviewed were obtained, kept,
maintained and relied upon by Nationstar in the regular
course of its business.

In addition, the Chester Declaration satisfies the

requirement that,
. . . a witness may be qualified to provide the testimony
required by HRE Rule 803(b)(6) even if the witness is not
employed by the business that created the document or lacks
direct, personal knowledge of how the document was created.
There is no requirement that the records have been prepared
by the entity that has custody of them, as long as they were
created in the regular course of some entity's business.
The witness, however, must have enough familiarity with the
record-keeping system of the business that created the
record to explain how the record was generated in the
ordinary course of business.

Behrendt, 142 Hawai#i at 45-46, 414 P.3d at 97-98 (citations and

internal quotation marks omitted).

The Santellan Declaration confirms possession of the

original Note at the time the Complaint was filed, in the first

instance because Santellan testified that:
(1) she has personal knowledge of the matters set forth in
the declaration, (2) she is familiar with [TMLF Hawaii LLLC
(TMLF Hawaii)]'s record keeping practices, and (3) the
records she relied upon are made at or near the time of the
occurrence by a personnel with knowledge, kept in the
regular course of TMLF [Hawaii}'s business and created as a
regular practice.

Here, Santellan, as custodian of records of TMLF Hawaii

- the entity that created the Bailee Letter - appears to satisfy

HRE (b)(6) in part because she testified that,
2. The information in this Declaration is taken
from TMLF Hawaii's business records. I have personal
knowledge of TMLF Hawaii's procedures for creating these
records. They are: (a) made at or near the time of the

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occurrence of the matters recorded by persons with personal
knowledge of the information in the business record, or
from information transmitted by persons with personal
knowledge; (b) kept in the course of TMLF Hawaii's regularly
conducted business activities; and (c) created by TMLF Hawaii
as a regular practice.

Santellan further testified that: (1) she has personal

knowledge of the Bailee Letter, as a record of regularly

conducted activity (she signed it on behalf of The Mortgage Law

Firm PLC (CA-AZ)); and (2) she personally reviewed the Bailee

Letter, which shows receipt and possession of the Note, which was

kept in physical possession of TMLF Hawaii "since it was received
on 01/13/2015" and throughout the duration of this litigation.

For these reasons, we conclude that U.S. Bank properly

authenticated the Note and Bailee Letter via the Chester and

Santellan Declarations, and established that it possessed the

Note at the time of filing the Complaint.

In addition, 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. Reyes-Toledo, 139 Hawai#i at 367, 390 P.3d at 1254.

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 on the note and

mortgage. Id.

The "burden to prove entitlement to enforce the note

overlaps with the requirements of standing in foreclosure

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actions." Id. (citation omitted). 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

(citation omitted). 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.

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 (2008)4 at the time the

foreclosure complaint was filed to satisfy standing and to be

entitled to prevail on the merits. Id. at 368-69, 1255-56; see

also Mattos, 140 Hawai#i at 33, 398 P.3d at 622.

The court in Mattos held that a witness may be

qualified to provide the testimony required by HRE Rule 803(b)(6)

even if the witness is not employed by the business that created

the document or lacks direct, personal knowledge of how the

document was created. 140 Hawai#i at 32, 398 P.3d at 621.

"There is no requirement that the records have been prepared by

the entity that has custody of them, as long as they were created

in the regular course of some entity's business." Id. (quoting

4
HRS § 490:3-301 provides:
§ 490:3-301 Person entitled to enforce instrument . "Person
entitled to enforce" an instrument means (i) the holder of the instrument,
(ii) a nonholder in possession of the instrument who has the rights of a
holder, or (iii) a person not in possession of the instrument who is entitled
to enforce the instrument pursuant to section 490:3-309 or 490:3-418(d). A
person may be a person entitled to enforce the instrument even though the
person is not the owner of the instrument or is in wrongful possession of the
instrument.

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State v. Fitzwater, 122 Hawai#i 354, 366, 227 P.3d 520, 532

(2010)). The witness, however, must have enough familiarity with

the record-keeping system of the business that created the record

to explain how the record was generated in the ordinary course of

business. Id.

Here, the Note was originally created by Countrywide

Home Loans, Inc. and subsequently transferred to U.S. Bank.

Chester declares that he has familiarity with the "record-keeping

practices" of U.S. Bank's loan servicer, Nationstar. As
discussed below, the incorporated records doctrine applies to our

review of the Chester Declaration.

The standard changes when records from one business are

received and incorporated into the receiving business's records.

Mattos, 140 Hawai#i at 32, 398 P.3d at 621. Incorporated records

may in some circumstances be regarded as "created" by the

receiving business; in this case, Nationstar was the receiving

business. See Behrendt, 142 Hawai#i at 45, 414 P.3d at 97.

Incorporated records are admissible under HRE Rule 803(b)(6) when

a custodian or qualified witness testifies that the documents

were incorporated and kept in the normal course of business, that

the incorporating business typically relies upon the accuracy of

the contents of the documents, and the circumstances otherwise

indicate the trustworthiness of the document. Id.; see also

Fitzwater, 122 Hawai#i at 367-68, 227 P.3d at 533-34; Mattos, 140

Hawai#i at 32, 398 P.3d at 621.

In U.S. Bank Tr., N.A. v. Verhagen, the supreme court

stated:

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If each of these three conditions is satisfied, an
incorporated record is admissible even in the absence of
testimony concerning its actual creation. This is because
evidence that a business has incorporated and relied on a
record created by another organization speaks directly to
that record's reliability. When accompanied by testimony
about other circumstances that also indicate the record's
trustworthiness, such evidence is an acceptable substitute
for testimony concerning a record's actual creation.

149 Hawai#i 315, 326, 489 P.3d 419, 430 (2021).

In Verhagen, the pertinent declarations met the first

two requirements of the incorporated records doctrine because

both witnesses had testified that the "records were incorporated

into [the subsequent holder's] own and kept and maintained [by

the subsequent holder] in the ordinary course of its business"

and that the loan servicer "used and relied on the incorporated

records in the regular course of its loan servicing business."

Id.

Here, the Chester Declaration states, in part:
1. I am authorized to sign this Declaration on
behalf of Plaintiff, [U.S. BANK], as an authorized signer of
[Nationstar], which is Plaintiff s servicing agent for the
subject loan ("the loan").

. . . .
4. The information in this Declaration is taken
from Nationstar's business records. I have personal
knowledge of Nationstar's procedures for creating these
records. They are: (a) made at or near the time of the
occurrence of the matters recorded by persons with personal
knowledge of the information in the business record, or from
information transmitted by persons with personal knowledge;
(b) kept in the course of Nationstar's regularly conducted
business activities; and (c) created by Nationstar as a
regular practice.
. . . .
27. The prior loan servicers for this mortgage loan
were Specialized Loan Servicing, LLC and Bank of America,
N.A. ("Prior Servicers").

28. Upon becoming Plaintiff's loan servicer,
Nationstar took custody and control of loan documents and
business records of the Prior Servicers and incorporated all
such records into the business records of Nationstar.

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

33. In performing its services to the Plaintiff,
Nationstar relies upon the accuracy of the Prior Servicer's
records and those records are now a part of and used for all
purposes in the conduct of Nationstar's regularly conducted
activity of keeping and maintaining its own business
records.
34. I am familiar with the record-keeping system of
the Prior Servicers that created the records and can explain
how the records were generated in the ordinary course of
business.

Chester does not purport to be a custodian of

Nationstar's records per se, rather he testifies concerning his

personal knowledge of Nationstar's records and procedures based

on his job responsibilities with Nationstar. The term "other

qualified witness" is given a very broad interpretation if the

witness demonstrates the requisite familiarity with the record-

keeping system of the business in question. Fitzwater, 122

Hawai#i at 366, 227 P.3d at 532. Here, Chester meticulously

delineates Nationstar's acquisition process, further stating in

part:
30. Nationstar's acquisition process is handled
by the Obligation Management Group ("OM Group"). The OM
Group is one of the departments that supports the due
diligence process to determine any deal specific items that
warrant special handling during or post transfer. The due
diligence process often requires a review of seller/prior
servicer operational functions and possibly loan documents.
The OB Group also supports contract review as needed with
direction through the Transaction Management Group
("TM Group"). In some instances, during the contract review,
it may be necessary to negotiate with the seller/prior
servicer and make adjustments to Nationstar's instructions
regarding the transfer of seller/prior servicer records.
These processes are reviewed by Nationstar.

3l. Nationstar has many functions that ensure the
trustworthiness of the records being integrated into

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Nationstar. Nationstar's Acquisition group updates LSAMS
with all relevant information regarding the boarding of
prior servicer records. Nationstar initiates a kick-off
call with the prior servicer to introduce key participants
for both organizations and to set the expectations of the
transfer. This includes confirmation that the prior servicer
has received and read Nationstar's transfer instructions.
Project milestones are also agreed upon by all parties.
The prior servicer and Nationstar initiate the investor
approval requirements and reconcile to confirm the exact
loans expected to transfer. A loan level reconciliation
is also preformed to the list for notices that would tie
to each item. Upon receipt of the prior servicer source data,
reconciliation is performed on the initial set of data received
and remediation is completed and documented as needed. The
Acquisition group then completes a field-level data mapping
process with support and approval from Nationstar and the
prior servicer. The mapping process captures all fields
required for servicer including balances and individual
amounts as well as all other source data elements. Then,
the prior servicer provides location of physical loan
documents and all relative images to support quality control
review. Reconciliation is performed to identify any missing
images and communicated to the prior servicer to support
remediation.

32. Finally, Nationstar completes three sets of test
of preliminary and final data within the servicing platform
test region before going live for servicing. During each
test, the Acquisition group completes reconciliation of data
elements with confirmation from the prior servicer. This
includes key data elements for various servicing areas as
well as monetary values. Nationstar also completes validation
during the testing process and supports remediation of logical
data edit checks as needed. Nationstar also reviews specific
documents as the source of truth to support validation.
Nationstar's Master Audit Group completes a level of documents
to data validation and adjust any data elements as needed.
Exceptions are noted and a review is completed to determine if
additional process improvement or data checks may be implemented
for future transfers.

Thus, as Chester demonstrates detailed familiarity with
Nationstar's record-keeping system, the Circuit Court did not err

in determining that he is a qualified witness with respect to

Nationstar's incorporated records, including the Note and Bailee

Letter. However, we recognize that the circumstances must

otherwise indicate the trustworthiness of the document(s).

Mattos, 140 Hawai#i at 31-32, 398 P.3d at 621-22. In Verhagen,

the supreme court noted that, to establish trustworthiness in the

incorporated records doctrine context, a qualified witness must

testify as to whether the incorporating entity engaged in "due

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diligence" processes or vetting procedures. 149 Hawai#i at 326,

489 P.3d at 430. Here, Chester unequivocally describes

Nationstar's vetting procedures beyond what is specifically

required under Verhagen.

In sum, based on the Declarations and supporting

documents filed in conjunction with the Second MSJ and the

Chester Declaration, U.S. Bank established its standing to

foreclose on the subject Note.

Somewhat relatedly, Collins argues that U.S. Bank
failed to attach a mortgage servicing or agency agreement to the

Second MSJ. However, Collins fails to identify where in the

record that argument was raised in the Circuit Court. As the

issue was not raised before the Circuit Court, it will be

disregarded. See HRAP Rule 28(b)(4).

(2) Collins argues that the Circuit Court erred in

entering judgment for U.S. Bank because U.S. Bank did not

establish that the required notice of default was provided to the

borrowers. However, with the Second MSJ, and as supported by the

Chester Declaration, U.S. Bank provided a copy of the notice of

default and acceleration that was provided to the borrowers by

the loan servicer at the time, Bank of America N.A. In her

opposition to the Second MSJ, Collins did not raise any

evidentiary objection or argue that there was a genuine issue of

material fact related to the notice of default and acceleration.

As Collins's argument regarding the notice of default was not

raised before the Circuit Court in conjunction with the Second

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MSJ, it will be disregarded. See HRAP Rule 28(b)(4); see also

Munoz v. Yuen, 66 Haw. 603, 605–06, 670 P.2d 825, 827 (1983).

(3) Collins argues that the Circuit Court erred in

failing to order sanctions against U.S. Bank for violating a

court order. Collins submits that "monetary sanctions should be

levied" for purported failure to comply with a prior discovery

order. Upon review, to the extent we are able to discern

Collins's argument, we conclude that the Circuit Court did not

abuse its discretion in denying her various requests for
sanctions against U.S. Bank.

For these reasons, the Circuit Court's March 16, 2020

Judgment is affirmed.

DATED: Honolulu, Hawai#i, September 20, 2024.

On the briefs: /s/ Katherine G. Leonard
Acting Chief Judge
Gabi Kim Collins,
Defendant-Appellant Pro Se. /s/ Keith K. Hiraoka
Associate Judge
Andrew J. Lautenbach,
Nainoa J. Watson, /s/ Karen T. Nakasone
(Starn O'Toole Marcus & Associate Judge
Fisher).
for Plaintiff-Appellee.

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