good morning your honor and may please the court my name is mark solomon i'm here today on behalf of the palin in the debtor's in the bankruptcy below alexander kim and laura foster miss foster is with us here in court this morning appellate must be required to follow the rules to prove they have a legal right to foreclose a promise during but that isn't what happened here this case provides a stark illustration of the reckless misuse of financial documents disregard for rules in the legal process that infected the home lending industry and the played an instrumental role in bringing about the great economic crisis banks like the appellee use their power and their bottomless resources to manipulate the system grind down homeowners like mr kim and miss foster over years of expensive litigation and eventually find ways to take away people's homes without proving that they have the right to do it public policy demands that a proper application of negotiable paper law as one way to protect homeowners like the appellant's here this court have the power to do that by reversing the two thousand and sixteen bankruptcy court order and granting debtors claim objection a critical fact in this case is that after mr kim signed a two million dollars promissary note payable to washington mutual bank in february of two thousand and eight why movements washington mutual proceeded to blank indorse that note blank indorse note make the note bearer paper is negotiated which is a transfer simply by delivering physical possession of the note to another person without any regard to the intention of the parties in the delivery by turning the note into  continued its normal business of bundling and then transferring better notes to investors as underlying assets in mortgage backed securities law keeping the right to service loans for itself but in in september of two thousand chase st started communicating with the debtors in october of two thousand and eight advising them that one who had been in the service or that they were now the service or not the holder can i can i just fast forward a little bit here to focus on one of the issues in particular are those the laws that in particular you are addressing as being the basis for any improper ignition in use by the district i mean the bankruptcy court your honor that is certainly a  prong of our appeal exhibits l and m are sort of the crux exhibits that the bankruptcy court relied on or that chase's witness miss lady relied on in her testimony a debtors witness to wasn't she wasn't really it's important to understand that when the bankruptcy court held its hearing in june of two thousand and sixteen it was dealing with two separate motions it was dealing with the debtors motion for sanctions which judge brooks said earlier invited them to file based on the lack of disclosure by chase and the court was also dealing with the claim objection so in the  motion the motion for sanctions the debtors or the burden of proving thanks inable conduct well in terms of the order prove the debtor had the right to order their proof any way they wanted they did and so  in reading this lease testimony or large part of this lease testimony is the debtor listening from right to some extent it is that testimony was focused on really what documents had been provided how they chase delivered the note to their agent those issues are relevant to the last known you'd also came up in her testimony today not well mislay is certainly responded to questions about what had been produced by offering her positions that that the documents that she had produced demonstrated that chase had the original note in two thousand and nine and transferred it to their lawyer in two thousand and ten well you didn't seem to you didn't stop her from making that testimony did you and she wasn't stopped but again i believe your honor the the basis of that is that the debtors were having to carry a burden on the sanction side and so we're questioning her about that and then subsequently the court sort of combined all of the testimony into one as opposed to segregating it out well that wasn't the court's responsibility to order the proof on where the objections were raised by debtors did object at the hearing to mislay his testimony on the basis that she didn't have any personal knowledge that she admitted she didn't have any personal knowledge and the lack of personal knowledge being important for what for the business record rule well it's important in this case for two reasons why and it's important for it's important for her admission of the exhibits but it's also important because as chase points out that they say even without those exhibits her testimony still carry the day but of course her testimony is based only and you know the elements as well as i do what is the problem with exhibit coming in under that rule well it was objected to on a number of bases objected that it's hearsay say that she didn't have any idea who actually created the documents that it wasn't created if there was evidence from mr burns that the document wasn't created contemporaneously but was created as a prepared in connection with litigation was that an allegation raised as a released exhibit exhibit al was just this document that was scanned and at the time he had the original note which they would have done in the ordinary course of business with a not well but there was evidence in the was already in the database is being imported from asia well the only information that had been made available to the debtor suggested that these documents were created i mean what do you mean why don't you just  scanned in the original note at the time that they received that's a that's an absolute fundamental thing that we dispute because your honor we don't believe the chase ever had this original note nobody ever saw the original note the only the only piece of information that suggests there was a original note is mislay is testimony looking at this document that at least our experts our forensic document experts that was created in two thousand and fifteen emirates exhibit  transferred it off in a bundled package the original your original is the reify the right to be paid its peak the photocopy there can be many photocopies in fact in two thousand and sixteen when chase filed another foreclosure they attached a photocopy that didn't have the blank indorsement dot so i don't dispute that they have many photocopies of the note and that exhibit a may well be a copy of a photocopy of a note that has a stamp date on of it please so you're saying that even if exhibit l and m come in and you should still win because there wasn't adequate proof that they know what was scanned was the original no all right well that's absolutely part of our argument specifically said in admitting that while it called it a business record it also said it's not coming in for any purpose other than show that it's a document that came out of chase's file and again remember chase at the burden of proving to well they didn't have the burden of proving it had a defense that it had produced documents that was a defense to the sanctions claim we could certainly came in on that basis but not for the truth of the matter and why does that matter i mean we can affirm on any grounds supported by the record fact is a business record because the court's limitation struck me as odd because in fact the court didn't seem to follow its own limitation when it issued its order which you have alleged is a basis for some concern and so if the court the if you if you find that what the court did is all correct then i'm not sure i can answer what you're going to base the point except there are legal reasons why the case why the the bankruptcy court order should still be reversed as a matter of law and  can have just a minute to give you that because i'm almost out of time now but if i give you a minute to jump to that chase acknowledges this is the basis of chase's defense here or chase case tells you is that if you have a blank indorse a note and you even give it to your lawyer in that case it was a blank indorsed cashier's check but it's a sick but it's a negotiable piece of paper if you even give it to your lawyer the intention of why you give it to the makes no difference that is a transfer and a transfer makes the person who receives it the holder with the full rights to enforce it and under colorado's last note statute one of the things that chase has to prove is that the speak of the notion of a person is not automatically divest of his or her status as a holder when his or her agent possesses the antrim and the two and this lawyer would be the agent would be not the difference and the key distinction is that this note is a blank indorsed note and a blank indorse no it is a blank check and what the law hunted case says is that if you give that blank check to your lawyer case i believe in that case i believe in that case that the court said the intent is immaterial it said there was no real evidence offered on the intent but the intent is immaterial the simple transfer of a blank indorsed note even to your lawyer makes the lawyer the holder and that right there would be fatal to the rule of three hundred and nine position and i've got ten seconds left i'd like to keep it for  court made four key factual findings that bring chase within the last known statute let me ask you about one of them which is the bankruptcy court says here specifically the scan date for chase's electronic record shows the original note was scanned into its record keeping system on september th two thousand and nine what is the evidence behind that word original i understand that you have established through exhibit hall swimming it's properly admitted and so i think that brings me to the issue which ron array's about this lease testimony which is a lot of the testimony came in on examination from the debtors a lot of the rest of it all the rest of it came in an examination from chase but there was no personal knowledge objection ever made during her testimony during the as a relates to her testimony prior to what segregate out the the admission of allen and prior to the admission of allen and would it be your position that her testimony if we supported the st two elements the last notes that if not the entire statute itself i think it supported at least the st three maybe all four that is our possession of the no this is why i think this may be proved by her by her testimony that we have possession of it as debtors counsel's pointed out usually the right to force a note false physical possession of it and so lee testifies chase had physical possession the original note before a senate mr hoppe that supports the banks for its finding that we had the right to possess the note i'm sorry the right to force the note when we lost possession of it got it but isn't that the one that you about why the client who by the way was dead at the time this was all happening and gave the note of the lawyer you can tell from the supreme court's opinion that the position taken by the lawyer was that was payment to me from a legal services the position taken by the clients the dead children was no it wasn't my mom gave that to you for safekeeping so that was a question of the purpose the client had in transferring t court found the evidence didn't bear out the children's position and i think that shows position is clear was that my mom gave you that note for safekeeping in this case no one not the client not the lawyer says that chase gave papa two million dollar note to pay everybody agreed the purpose of giving him the no so he could go file a foreclosure action in the name of each case and the statute is is quite clear the statute to define transfer that instrument is only truly hansford if it's delivered by one person to another quote for the purpose of giving to the person receiving delivery the right to enforce the instrument close quote that's not what chase but i think his or what's your legal basis for saying that because it has to be lost when it's in possession of the whole right no no it doesn't have to be the last moments of his action to hold or the father has to have the right to enforce possession of an instrument is entitle to enforce one the person was in possession of the answer one entitled to enforce when loss of possession occur well so i think the answer in this case would be  chase was in possession of the note i don't think that transferring it to an agent means chase lost possession i think when chase lost possessions when the agent lost track of it ok and that's what i'm trying to nail down is if that's so that's one thing if it's not so then it's something else which is to say if we disagree with you after we studied this burglar that in fact possession chase continued to possess us then were  you do you lose no i think i still lost the note when i sent it to the lawyer if that's a lot that's a loss of possession i think the evidence is we didn't know where it was after that you think loss of possession includes transferring it to your lawyer i think i think if you're applying the last known statute i think the question that's being answered is should this person have a right to enforce the no i think the issue is if you give it your lawyer for purposes of the lawyers in case on your i don't think you should be worse off than you would be safe to know it were stolen if somebody stole the note from chase we would have a right to enforce it i think if we send it to our lawyer for the purpose of filing a foreclosure action and the lawyer loses track of it i think we have to be entitled to recover under the last note statute because in that time at that time is it true then that you would have both had possession as a legal matter not obviously physical possession you would have possession constructive possession and also a right to enforce is that the position because that lawyer is your agent and therefore yes you is acting to enforce on your behalf but he was not the same thing from you right that's exactly right ok i don't think we you know we haven't challenging the foundation of that as a business record as they did preserve that objection i think that all they preserved an objection to is whether miss levy was within the words of eighty thousand three hundred and sixty dollars and other qualified witness and the found that she was and i think that that finding is is unassailable and she testified that she personally observed chase's recordkeeping process personally observed how chase scans and documents knows if they're kept to maintain the ordinary course of business that the records are making temper a knisley and that chase relies on entries in the file and conducting its business i think her call in from that is you infer that they follow the same procedure in this particular case i think that's why the business record exception to the hearsay rule works yes i think that's right i think if you had if you had to have a corporate person with personal knowledge corporations couldn't litigation federal or you'd have to find the person who signed the contract twenty years ago in this case the person who actually scanned it in one of about two million during a given year it's unworkable what the rule lousiness for businesses say here's how our business operates here someone knows how we operate and you're someone who knows we rely on these records we create and if that is a foundation as late as a bankruptcy judge and it was here then the records come in and that's what happened what there was never a challenge to was her under rule six of two there's never a just doesn't apply this is so corporations can litigate in federal court while testifying based on business records but the implication of that would be that the records are and and the records were acceptable i understood your position to be and correct me if i'm wrong that quite apart from the admission of exhibit a and m you had testimony from her that was an objected to so whether that was wrong or right nobody objected to it in so that testimony can form the basis for your l you're exactly right i mean the way that the way we've all tried cases you object as is happening you don't go over the transcript later and say i don't know if the witness knew this rush objected to that on this evidence came in a lot of it from then it's evidence the banks are going to rely on he did rely on it it's perfectly computer printout it's almost like an x l spreadsheet there is no she never looked at the documents that supported it she didn't compare those documents to exhibit him to confirm that that's accurate so it's not an original r row ok well it's not an original you did it's not a summary exhibit based upon the admission of voluminous records under one thousand and six is not that right it's not that but it is a business right how can it be a business record if you don't have she exhibit and it's not mentioned in his opinion on the exhibit ellis mention nd if she testifies as i believe she did she knows how documents like exhibit m are created by chase's system and it's generally reliable there's not a requirement that the that the business record witness go back and examine the underlying document no i don't recall her testimony the testimony that you the the business record factors that you clicked off it's in me can work i'm growing with exhibit l i didn't see them as being congruity with exhibit and in fact she didn't even know what some of the entries on exhibit him were for right she didn't know what some of the meant that welfare she didn't know anything about the document but she was asked at the beginning of her testimony about her familiarity i wouldn't say that that's a fair  testimony about her general familiarity with how chase keeps business records i think that is is what's needed and also this is a review of course for an abuse of discretion in a bench trial we don't have a jury trial here where there is some risk a jury may be misled you have an experienced judge admitting this is a business record and giving it the weight that he thought was appropriate which judging from his opinion he wasn't any doesn't mention it so i don't think even if there was some error in the foundation of that mission that exhibit i think it's got to be harmless on appeal especially given all the testimony that mislead game about what actually happened in the snow and the fact that you heard today it's undisputed this no went to hot it's undisputed and there's admit i'm sorry thank you thank you very much chase's attorney just noted that there is nothing in the record that says the court relied on exhibit m and i just want to be sure that we address that to support its finding of how the no was lost the court uses the date may th two thousand in footnote four that case the court sort of notes that the why that why the cashier's check with the blank indorsement ended up in the warriors and doesn't factor into our analysis quote once the lawyer obtained possession of the check he was the holder of bearer of paperwork and whether or not the owner thereof he had the right to transfer or negotiate the difference in what chase is talking about is that this is a blank  blank indorse merely giving it it's not the same as a thief it requires delivery deliveries a voluntary transfer but the intent an important negotiation is the voluntary delivery of a blank indors