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SCWC-18-0000699

IN THE SUPREME COURT OF THE STATE OF HAWAI‘I

U.S. BANK NATIONAL ASSOCIATION

AS TRUSTEE FOR CSMC MORTGAGE LOAN TRUST 2006-7,

Petitioner/Plaintiff-Appellee,

vs.

WATOSHINA LYNN COMPTON,

Respondent/Defendant-Appellant,

and

GABI A. BENGIS; RON SERLE;

DEPARTMENT OF TAXATION – STATE OF HAWAI‘I,

Respondents/Defendants-Appellees.

CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS

(CAAP-18-0000699; CIVIL NO. 17-1-0025(3))

MEMORANDUM OPINION

(By: Recktenwald, C.J., Nakayama, McKenna, Wilson, and Eddins, JJ.)

This appeal arises from U.S. Bank National Association as 

Trustee for CSMC Mortgage Loan Trust 2006-7’s (“U.S. Bank”) 

motion for summary judgment and interlocutory decree of 

Electronically Filed

Supreme Court

SCWC-18-0000699

21-JUN-2021

09:25 AM

Dkt. 58 MO
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foreclosure (“MSJ”) against Watoshina Lynn Compton (“Compton”).

U.S. Bank initiated foreclosure proceedings against Compton 

in January 2017. In February 2018, U.S. Bank moved for summary 

judgment. U.S. Bank supported its MSJ with loan documents, 

including a promissory note (the “Note”) executed by Compton in 

favor of Countrywide Home Loans, Inc. (“Countrywide”). Two 

declarations also supported U.S. Bank’s MSJ. Carol Davis, an 

employee of Nationstar Mortgage LLC, U.S. Bank’s loan servicer,

prepared one; Gina Santellan, a custodian of records for U.S. 

Bank’s counsel, wrote the other.

The circuit court granted U.S. Bank’s motion. It entered 

judgment for U.S. Bank. Compton appealed. On appeal, Compton 

argued that because U.S. Bank had not established its possession 

of the Note at the time it filed its complaint, the circuit 

court had erred in concluding U.S. Bank had standing to sue. 

The ICA agreed. It ruled that because neither Davis nor 

Santellan could speak to the record-keeping practices of the 

Note’s creator, Countrywide, the Note could not be admitted 

under the business records exception to the hearsay rule. Given 

the inadmissibility of the Note, the ICA concluded, U.S. Bank 

was not entitled to summary judgment: there was a “genuine issue 

of material fact as to whether U.S. Bank had standing to 

initiate this foreclosure action when it was commenced.”

On certiorari, U.S. Bank presents two questions: (1) “To 
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introduce a promissory note into evidence, must a creditor 

satisfy the business records exception to the hearsay rule?” and 

(2) “If a party incorporates a third party’s records into its 

own, must it present testimony about the third party’s recordkeeping in order to satisfy the business records exception?”

We answered these questions in U.S. Bank v. Verhagen, SCWC17-0000746 (Haw. June 21, 2021). 

As we explained in Verhagen, promissory notes are not 

hearsay because they have independent legal significance. Here, 

U.S. Bank presented the Note to establish Compton’s legal 

obligation to the Note’s holder. The Note was therefore not 

hearsay and need not fall within an exception to the hearsay 

rule to be admissible.

Our opinion in Verhagen also explained that under the 

incorporated records doctrine, the foundation for the admission 

of business records incorporated into the records of a receiving 

business can, in certain cases, be established by testimony from 

a custodian or other witness qualified to testify about the 

record-keeping practices of the incorporating business. The ICA 

thus erred in ruling that the Note was inadmissible absent 

testimony about its creator’s record-keeping systems.

Here, U.S. Bank has submitted admissible evidence that 

collectively shows it possessed the original Note, indorsed in 

blank, at the time it sued Compton. Compton has not set forth
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any “specific facts showing that there is a genuine issue” as to 

whether U.S. Bank actually possessed the Note at the time it 

filed suit. See Hawaiʻi Rules of Civil Procedure Rule 56(e). By 

showing it possessed and was entitled to enforce the Note when 

it filed its complaint, U.S. Bank has established its standing 

to foreclose against Compton. See Bank of Am., N.A. v. ReyesToledo, 139 Hawai‘i 361, 390 P.3d 1248 (2017) (holding that to 

establish standing a foreclosing plaintiff must show it was 

entitled to enforce the subject note when the lawsuit began). 

The circuit court correctly determined that U.S. Bank provided 

Compton the necessary notice of default. The Note is valid and

Compton is in default under its terms. U.S. Bank is thus 

entitled to summary judgment. 

Accordingly, we hold the ICA erred in reversing the circuit 

court’s grant of summary judgment to U.S. Bank. We vacate the 

ICA’s memorandum opinion and judgment on appeal and affirm the 

circuit court’s findings of fact, conclusions of law and order 
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granting plaintiff’s motion for summary judgment against all 

defendants and for interlocutory decree of foreclosure.

DATED: Honolulu, Hawaii, June 21, 2021.

Jade Lynne Ching,

(David A. Nakashima, Ryan B. 

Kasten, Alan M. Hurst, and 

Justin D. Balser on the briefs)

for petitioner

Matthew K. Yoshida,

(Keith M. Kiuchi on the briefs)

for respondent

Patricia J. McHenry,

for Amicus Curiae

Federal Housing Finance Agency

Crystal K. Rose and

Adrian L. Lavarias

for Amicus Curiae

Mortgage Bankers Association and 

Mortgage Bankers Association of 

Hawaii

/s/ Mark E. Recktenwald

/s/ Paula A. Nakayama

/s/ Sabrina S. McKenna

/s/ Michael D. Wilson

/s/ Todd W. Eddins