Case Title: HSBC Bank, NA v. Lyon

Citation: 

Docket Number: 109905

State: oklahoma

Court: Oklahoma Supreme Court

Date: 2012-02-14T00:00:00Z

Document:
HSBC BANK USA v. LYON2012 OK 10Case Number: 109905Decided: 02/14/2012THE SUPREME COURT OF THE STATE OF OKLAHOMA
NOTICE: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION IN 
THE PERMANENT LAW REPORTS. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR 
WITHDRAWAL. 

HSBC BANK USA, NATIONAL, ASSOCIATION, AS TRUSTEE FOR WFHET 
2006-2, Plaintiff/Appellee,v.WESLEY B. LYON and PAMELA LYON, 
Defendants/Appellants.
ON APPEAL FROM THE DISTRICT COURTOF ROGERS 
COUNTYHONORABLE DYNDA POST, DISTRICT JUDGE
¶0 Appeal of a summary judgment granted on June 13, 2011, in favor of HSBC 
BANK USA, NATIONAL ASSOCIATION, AS TRUSTEE FOR WFHET 2006-2, and against Wesley 
B. Lyon and Pamela Lyon. This Court retained the matter on November 18, 2011. 
The Lyons appeal the granting of Summary Judgment asserting HSBC Bank USA, 
NATIONAL ASSOCIATION, AS TRUSTEE FOR WFHET 2006-2, did not have standing to 
bring the action. 
SUMMARY JUDGMENT AFFIRMED
A. Grant Schwabe, KIVELL, RAYMENT AND FRANCIS, P.C., Tulsa, Oklahoma, for 
Plaintiff/Appellee.Mark Edward Hardin, Tulsa, Oklahoma, for 
Plaintiff/Appellee.Kari Y. Hawkins, Oklahoma City, Oklahoma, for 
Plaintiff/Appellee.Philip A. Taylor, Broken Arrow, Oklahoma, for 
Defendant/Appellants.
COMBS, J.
FACTUAL AND PROCURAL HISTORY
¶1 In a petition filed on November 25, 2008, HSBC Bank USA, NATIONAL 
ASSOCIATION, AS TRUSTEE FOR WFHET 2006-2 (hereinafter HSBC), claiming to be the 
present holder of the note, initiated a foreclosure action against Wesley B. 
Lyon and Pamela Lyon (hereinafter Lyons). HSBC claimed, at that time, to hold 
the note and mortgage. HSBC filed a first amended petition on December 15, 2008, 
adding additional defendants, but continuing to assert its status as the 
"present holder of said note and mortgage." The Lyons answered denying all of 
the claims made by HSBC. HSBC then moved for Summary Judgment, on September 29, 
2009, asserting to be the owner and holder of the note sued upon, and the owner 
and holder of the mortgage having received an assignment of the mortgage dated 
August 31, 2009, which was filed in the records of the Rogers County Clerk on 
September 15, 2009. The Lyons, noting the facial deficiencies of the unindorsed 
note filed in the original action, asserted HSBC's lack of standing. The trial 
court, by an order filed December 3, 2009, denied HSBC's Motion for Summary 
Judgment. Additionally, the trial court held the petition was dismissed without 
prejudice to refiling, and allowed HSBC twenty (20) days to file an amended 
petition. HSBC filed its second amended petition on December 22, 2009, asserting 
its status as the holder of the note by reason of an indorsement and the 
assignment of the mortgage recorded on September 15, 2009. A review of the note 
attached to the second amended petition demonstrates a blank indorsement from 
the original lender, Wells Fargo Bank, NA (hereinafter WFB), indorsed "without 
recourse to the bearer" and signed by a vice president of WFB. HSBC then filed a 
renewed Motion for Summary Judgment on February 16, 2011, which was granted on 
April 13, 2011 by the trial court.
STANDARD OF REVIEW
¶2 An appeal on summary judgment comes to this court as a de novo 
review. Carmichael v. Beller, 1996 OK 48, ¶2, 914 P.2d 1051, 1053. All inferences and conclusions 
are to be drawn from the underlying facts contained in the record and are to be 
considered in the light most favorable to the party opposing the summary 
judgment. Rose v. Sapulpa Rural Water Co., 1981 OK 85, 621 P.2d 752. Summary judgment is 
improper if, under the evidentiary materials, reasonable individuals could reach 
different factual conclusions. Gaines v. Comanche County Medical 
Hospital, 2006 OK 
39, ¶4, 143 P.3d 203, 205.
ANALYSIS
¶3 Appellant argues Appellee does not have standing to bring this foreclosure 
action. The face of the note, attached to the second amended petition, indicates 
it was indorsed in blank, and was properly filed with the second amended 
petition on December 22, 2009. The trial court had previously denied the first 
Motion for Summary Judgment based upon the first amended petition by order of 
December 3, 2009. The present review is of the order granting summary judgment 
based upon the second amended petition. 
¶4 The issue presented to this Court is standing. This Court has previously 
held:
Standing, as a jurisdictional question, may be correctly raised at any level 
of the judicial process or by the Court on its own motion. This Court has 
consistently held that standing to raise issues in a proceeding must be 
predicated on interest that is "direct, immediate and substantial." Standing 
determines whether the person is the proper party to request adjudication of a 
certain issue and does not decide the issue itself. The key element is whether 
the party whose standing is challenged has sufficient interest or stake in the 
outcome.
Matter of the Estate of Doan, 1986 OK 15, ¶7, 727 P.2d 574, 576. In Hendrick v. Walters, 
1993 OK 
162, ¶ 4, 865 P.2d 1232, 1234, this Court also held:
Respondent challenges Petitioner's standing to bring the tendered 
issue. Standing refers to a person's legal right to seek relief in a judicial 
forum. It may be raised as an issue at any stage of the judicial process by 
any party or by the court sua sponte. (emphasis original)
Furthermore, in Fent v. Contingency Review Board, 2007 OK 27, footnote 19, 163 P.3d 512, 519, this Court stated "[s]tanding 
may be raised at any stage of the judicial process or by the court on its own 
motion." Additionally in Fent, this Court stated:
Standing refers to a person's legal right to seek relief in a judicial forum. 
The three threshold criteria of standing are (1) a legally protected interest 
which must have been injured in fact- i.e., suffered an injury which is 
actual, concrete and not conjectural in nature, (2) a causal nexus between the 
injury and the complained-of conduct, and (3) a likelihood, as opposed to mere 
speculation, that the injury is capable of being redressed by a favorable court 
decision. The doctrine of standing ensures a party has a personal stake in the 
outcome of a case and the parties are truly adverse.
Fent v. Contingency Review Board, 2007 OK 27, ¶7, 163 P.3d 512, 519-520. In essence, a plaintiff who 
has not suffered an injury attributable to the defendant lacks standing to bring 
a suit. And, thus, "standing [must] be determined as of the commencement of 
suit; . . ." Lujan v. Defenders of Wildlife, 504 U.S. 555, 570, n.5, 112 S. Ct. 2130, 2142, 119 L. Ed. 351 (1992).
¶5 To commence a foreclosure action in Oklahoma, a plaintiff must demonstrate 
it has a right to enforce the note and, absent a showing of ownership, the 
plaintiff lacks standing. Gill v. First Nat. Bank & Trust Co. of Oklahoma 
City, 1945 OK 
181, 159 P.2d 717.1 Because the note is a negotiable instrument, it is 
subject to the requirements of the UCC. A foreclosing entity has the burden of 
proving it is a "person entitled to enforce an instrument" by showing it was 
"(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 
12A-3-309 or subsection (d) of Section 12A-3-418 of this title." 
12A O.S. 2001 §3-301.
¶6 To demonstrate you are the "holder" of the note you must establish you are 
in possession of the note and the note is either "payable to bearer" (blank 
indorsement) or to an identified person that is the person in possession 
(special indorsement).2 Therefore, both possession of the note and an 
indorsement on the note or attached allonge3 are required in order for one to be a "holder" of the 
note.
¶7 In the present case, Appellee has presented evidence of an 
indorsed-in-blank note. Appellee must prove it is the holder of the note or the 
nonholder in possession who has the rights of a holder prior to the 
filing of the foreclosure proceeding. The trial court's actions have cured any 
deficiencies. The dismissal of the original action and the first Motion for 
Summary Judgment filed therein, and requiring the refiling of the second amended 
petition with the attached note demonstrating a proper indorsement, effectively 
cured any lack of standing in the initial filing. Thus, by the filing of the 
second amended petition with a properly indorsed note and a properly assigned 
mortgage attached thereto, HSBC has shown it was a person entitled to enforce 
the instrument as the holder of the note. 12A O.S. 2001 §3-301.
¶8 In the present matter, the trial court properly granted HSBC's Motion for 
Summary Judgment. HSBC established, in support of the motion for summary 
judgement following the second amended petition, it was the current holder of 
the note, and proved the Lyons had not made a payment on the house since their 
July 1, 2008, installment payment. HSBC further proved the Lyons have made no 
tender of sufficient and certified moneys to reinstate the Note; there has been 
no extension or renewal of Note; no arrangement or agreement has been made with 
HSBC to delay the entry of judgment in the foreclosure action; the Lyons did not 
contest the validity of the Mortgage or the validity of HSBC's lien upon the 
property; and the Lyons did not contest the genuineness, authenticity and 
execution of the Note and Mortgage. An affidavit presented by WFB shows the 
installment payments due on August 1, 2008, and subsequent installments have not 
been received from the Lyons. 12 O.S. Supp. 2009, §2008 (C)(14) provides:
AFFIRMATIVE DEFENSES. In pleading to a preceding pleading, a party shall set 
forth affirmatively: 
14. Payment.
See also, Cummins v. Morris, 1938 OK 107, ¶4-6, 76 P.2d 897, 898. 
¶9 The party alleging proof of payment has the burden of so proving. 
Liberty National Bank of Weatherford v. Simpson, 1940 OK 258, ¶4, 102 P.2d 844, 846. In the present matter the Lyons 
did not present any evidence sufficient to challenge the allegations of default 
or establish a controverted issue as to payment. In Weeks v. Wedgewood 
Village, Inc., 1976 OK 72, ¶11, 554 P.2d 780, 784. The Court held:
The mere assertion in pleading, when attacked by a motion for summary 
judgment supported by proof of specific facts in the form of an affidavit or 
deposition, places on the author of the statement the obligation to present 
something which will show that when the date of trial arrives, he will have some 
proof to support the allegations in the pleadings. He cannot withhold this 
showing until the time of trial. 
In the present matter, the Lyons have failed to show any affirmative evidence 
of payment or any evidence that they were not in default. The Lyons have failed 
to produce a single fact contravening the sworn testimony within HSBC's 
affidavit, and the note and mortgage. The Lyons have failed to present any 
evidence that they are not in default.
¶10 Appellee must show it became a "person entitled to enforce" prior 
to the filing of the foreclosure proceeding. In the present case, the trial 
court's actions have cured any deficiencies. Dismissal of the original action in 
the Motion for Summary Judgment, and requiring the refiling of the note showing 
the proper indorsement, cured any error in the initial filing. Therefore, we 
affirm the granting of summary judgment by the trial court.
SUMMARY JUDGMENT AFFIRMED
¶11 CONCUR: TAYLOR, C.J., KAUGER, WATT, EDMONDSON, REIF, COMBS, 
JJ.
¶12 CONCUR IN RESULT: WINCHESTER, GURICH, JJ.
¶13 RECUSED: COLBERT, V.C.J. 
FOOTNOTES
1 This opinion was 
promulgated prior to the enactment of the UCC. It is, however, possible for the 
owner of the note not to be the person entitled to enforce the note if the owner 
is not in possession of the note. (See the REPORT OF THE PERMANENT EDITORIAL 
BOARD FOR THE UNIFORM COMMERCIAL CODE, APPLICATION OF THE UNIFORM COMMERCIAL 
CODE TO SELECTED ISSUES RELATING TO MORTGAGE NOTES (NOVEMBER 14, 2011)). 

2 12A O.S. 2001, §§ 1-201(b)(21), 3-204 and 3-205. 

3 According to Black's Law Dictionary (9th ed. 2009) an allonge is "[a] slip of paper sometimes 
attached to a negotiable instrument for the purpose of receiving further 
indorsements when the original paper is filled with indorsements." See, 
12A O.S. 2001, § 
3-204(a).