***** NOT FOR PUBLICATION IN WEST’S HAWAI** ‘ **I REPORTS AND PACIFIC REPORTER *****

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and interlocutory decree of Electronically Filed Supreme Court SCWC-18-0000699 21-JUN-2021 09:25 AM Dkt. 58 MO***** NOT FOR PUBLICATION IN WEST’S HAWAI** ‘ **I REPORTS AND PACIFIC REPORTER *****

2 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, a n employee of Nationsta r 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, Compt on 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 b ecause 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 On certiorari, U.S. Bank presents two questions: ( 1) “To***** NOT FOR PUBLICATION IN WEST’S HAWAI** ‘ **I REPORTS AND PACIFIC REPORTER *****

3 introduce a promissory note into evid ence, 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 record

keeping in order to satisfy the business reco rds exception?” We answered these questions in U.S. Bank v. Verhagen , SCWC

17

- 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 u nder 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 t he 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 show s i t possessed the original Note, indorsed in blank, at the time it sued Compton. Compton has not set for th***** NOT FOR PUBLICATION IN WEST’S HAWAI** ‘ **I REPORTS AND PACIFIC REPORTER *****

4 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 Hawai ʻ i R ules of Civ il Pro cedure Rule 56(e). By showing it possessed and was entitled to enforce the Note when it filed its complaint , U.S. Ba nk has established its standing
to foreclose against Compton . See Bank of Am., N.A. v. Reyes

Toledo , 139 Haw ai ‘ i 361, 390 P.3d 1248 (2017) (holding that to establish standing a foreclosing plaintiff must show it was entitle d to enforce the subject note when the lawsuit began ). The circuit court correctly determined that U.S. Bank provided Compton the necessary noti ce 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 t he ICA erred in reversing the circuit court’s grant of summary judgment to U.S. Bank. W e vacate the ICA’s memorandum opinion and judgment on appeal and affirm the circuit court’s f indings of f act, conclusions of law and order***** NOT FOR PUBLICATION IN WEST’S HAWAI** ‘ **I REPORTS AND PACIFIC REPORTER *****

5 granting plaintiff’s motion for summary judgment against all defendants and for interlocutory decree of foreclosur e.
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 , f or 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/ Mich ael D. Wilson /s/ Todd W. Eddins