1 IN TH E COURT OF APPEALS O F THE ST ATE OF NEW MEXICO

2 O pin ionN um

be r: 3 Fi lin g D at e: N OV EM BE R 4, 201 5 4 N O. 32, 824 5 BAC HOME LOANS SE RVICI NG LP, 6 f/k /a COUNTRYWI DE HOME LOANS 7 SERVI CING L P, 8 Plaintiff-Appellee, 9 v
. 10 STEP HEN R. SM ITH, 11 D ef

en da nt- Appe llant, 12 an d 13 SARAH H. SMI TH, COME RICA-B ANK 14 TEXAS a nd OCCUPANTS W HOS E TRUE 15 NAMES ARE UNKNOW N, 16 D ef

en da nts . 17 AP PE AL FR OM T HE D ISTRICT C OUR T OF LINC OLN CO UN TY 18 Ka re n L. P ar son s, D ist ri ctJu dg e 19 W einstein & Riley , P .S
. 20 Jason C. Bouslim an 21 Alb uq ue rq ue , NM 22 for Appellee1 W ill ia m

N
. G ri ff in 2 Ru id os o, NM 3 fo r Appe llant 4 St ep he n R
. S m ith 5 Aus ti n, TX 6 Pr o S e Appe llant1 OPIN ION

2 Z AM ORA , Jud ge. 3 { 1} St ep he n Sm ith (H om eo w ne r) , ap pe al s fr om an aw ar d of sum m ar y j udgm en t i n 4 fav orof B AC Hom e Loa ns Serv ic in g, LP (B AC), whi ch ord ers a fo recl os ur e sa le . On 5 ap pe al , H om eo w ne r ar gue s tha t the dis tr ic t co urt er re d in gr an tin g sum

m ar y j udgm en t 6 w he re BA C f

ai le d to es ta

bli sh i ts s tandi ng t o f

or ec los e an d w he re BA C f ai le d to 7 pr ovi de a de qua te n ot ic e of a nd o ppor

tun ity to cure the de fa

ult

. H om eo w ne r al so 8 ar gue s th at

the dis tr ic t c ourt e rr ed in gr an tin g su m

m ar y j udgm en t onhis 9 counterclaim s. Be cause BA C fa iled to establis h that it had standin g to foreclose w hen 10 it filed its com

plaint for foreclosure, we rever se. 11 BACKGRO UND 12 { 2} O n F eb ru ar

y 24, 2003 , H om eo w ne r sig ne d apr om iss or y not e w ithF ir st 13 Magnus Financial Corporation (First Magnus). As secur ity for the loan, Hom eowner 14 signed a m ortgage contract w ith Mortgage Elec tronic Registration Sy stem s (ME RS), 15 as the nom ine e fo r Fi rs t Ma gnus , ple dgi ng the hom e as co llate ra l fo r the loan. O n Ju ly 16 17, 2009, BAC filed a com plaint for forec losure against Hom eowner . B AC attached 17 to i ts co m

pla int an uni ndor se d co py of the not e, al ong w itha n un re co rd ed a ssi gnm en t 18 of H om eo w ne r’s m ortga ge , sho w ing that M E RS a ssi gne d th e m ortga ge to BA C o n 19 Jul y 6, 200 9.2

1 { 3} H om eo w ne r fi le d an answ er to the c om

pla int , a sse rt ed

a ff irm at ive de fe nse s, 2 an d fil ed co un te rcl ai m s. Ho m eo wne r al le ge d, int er ali a , that B A C f

ai le d to e sta

bli sh 3 its ow ne rs hip of

the not e an d m ortga ge . B AC m ove d f or sum m ar y j udgm en t and 4 produced the affidav i t of Colleen N ew som e, an office r of Bank of Am erica , which 5 sta te d th at , a cc or din g to Bank o f A m er ic a busi ne ss r ec or ds, BA C w as the hol de r of 6 H om eo w ne r’ s no te . T he a ff idavit w as da te d June 26, 201 2. 7 { 4} O n D ec em

be r 17, 201 2, H om eo w ne r fi le d an e xhi bit li st w itha tta ch ed

e xhi bit s, 8 inc lud ing tw o c opi es of the not e an d tw o a ssi gnm en ts o f m ortga ge . O ne c opy of the 9 not e w as ind or se d a s f

oll ow s: f ro m F ir st M ag nus to G MA C B an k, f ro m G MA C B an k 10 to GMA C Mortgage Corporation, f rom GM AC Mortgage Corporation to W itm er 11 Fundi ng L L C, a nd i ndor se d inblank f ro m W it m er Fundi ng L L C. N one of the 12 ind o rs emen t s we re dated. One of the assignm ents of m ortgage appears to be a 13 re co rd ed

c opy of the a ssi gnm en t pr ovide d w iththe Bank’ s f or ec los ur e co m

pla int , 14 as sig nin g th e m ortga ge fr om ME RS to BA C. T he fi rs t ass ign m en t wa s r ec or de d w ith 15 the L inc olnCo unty

c le rk on July 22, 2009
. T he se co nd a ssi gnm en t sh ow ed that the 16 m ortgage wa s assigned from First Magn us to Bank of Am erica on April 3, 2012 . T hat 17 as sig nm en t w as r ec or de d onApr il 11, 201 2. 18 { 5} O n Janu ary 15, 201 3, the dis tr ic t c ourt he ld a he ar ing on B A C’ s m oti on f or 19 sum m ar y j udgm en t. BA C’ s coun se l advi se d the co urt tha t she w as in poss es sio n of3

1 t h e o r i g i n a l n o t e , i n d o r s e d i n b l a n k , w h i c h c o u l d b e s ub m i t t e d t o the c our t a nd 2 inspected byHom eowner . The original no te w as subm itted to th e court on January 3 23, 201 3. T he dis tr ic t c ourt f ound that BAC had st an din g to e nf or ce the not e an d 4 m ortga ge a nd s um

m ar y j udgm en t w as gr an te d. T his appe al f oll ow ed

. 5 DISC US SION 6 { 6} On appeal, Hom eowner argues that the district c ourt e rred in granting summ ary 7 j udgm en t be ca

use BA C f

ai le d to pr ove it s st an din g to f or ec los e. H om eo w ne r al so 8 ar gues tha t su m

m ar y j udgm en t w as im

pr ope r w he re BA C f

ai le d to sho wthat i t 9 provided notice and an oppo rtunity to c ure the default, and that the district c ourt erre d 10 in gra nt in g s umm ary jud gm en t o n h is co un te rcl ai m s. Be cau s e w e ho ld th atBAC 11 la ck ed

standi ng t o f

or ec los e and rev ers e on tha t ba sis , w e ne ed not a ddr es s 12 H om eo w ne r’ s r em ai nin g arg um en ts. 13 Stand ard of R eview 14 { 7} “ W e rev ie w th e d is tri ct co ur t’s de ci si on to gra nt su m m ary jud gm en t d e n ov o.” 15 Hyd ro Res. Co rp. v . G ray , 200 7- N MS C- 061, ¶ 14, 143 N
. M. 142 , 173 P
. 3d 7 49. 16 Su m m ar y j udgm en t is appr opr ia te w he re the fa ct s ar e undi sput ed “ an d the m ovant i s 17 en t itled to judgm ent as a m atter of law. ” Id

. ( i n t e rn a l qu o t a t i o nm a rk s a n dc i t a tio n 18 om itt ed ). N ew Me xic o co urts dis favor sum m ar y j udgm en t an d pr ef

er a tri al on the 19 m eri ts . Rom ero v. Philip Morris Inc. , 2010 -N MS C- 035, ¶ 8, 148 N
. M. 713 , 242 P
. 3d4

1 280. Whe n w e re vie w the gr an tin g of sum m ar y jud gm ent, w e m ak e al l r ea sona ble 2 in fere nc es fro m th e reco rd in fav or of th e n on m ov in g p art y . T. H

. M cE lv ain O il & G as 3 Ltd. P’s hi

p v . Bens on -Mo nt in -Gre er Dri lli ng C

orp. , 2 0 1 5
- N M C A

- 0 0 4 , ¶

19, 340 P
. 3d 4 12 77 , cert. gran ted , 20 14 -NMCER T-01 2, 3 44 P.3d 98 8. Whet he r a p art y ha s st an din g 5 to bri ng a cl ai m

is a le g a l q ue st io n, wh ic h we a ls o re vi ew de no vo . Dis ab le d Am. 6 Ve terans v. Lakeside V eterans Club, Inc. , 2011 -N MC A -0 99, ¶ 9, 150 N
. M. 569 , 263 7 P. 3d 9 11. 8 St an di ng t o F or ec los e 9 { 8} In for ecl os ur e act io ns , st an di ng i s a j ur isd ic ti on al pre req ui si te . Se e B an k o f N

. Y. 10 v. R om er o , 2014-NMS C-007, ¶¶ 15, 17, 320 P. 3d 1 (“ [L ] ack of standing is a potential 11 j ur isd ic tio na l de fe ct

. . . standi ng [i s] a j ur isd ic tio na l pr er equis ite f or astatut or y c au se 12 of a ct ion ” (a lte ratio n, int er

na l qu ota tio n m ar

ks, an d ci ta tio n om itt ed ))

. A party f ili ng 13 f or f or e c l os ur e i s “ r e qu i r e d t o de m onstrate under NewMexico’ s Uniform Com m ercia l 14 Co de (UCC) t ha t i t h adst an di ng to bri ng a fo recl os ur e act io n at th e ti m e it fil edsu it .” 15 Id

. ¶ 17. I n or de r to es tabli sh i ts s tandi ng t o f or ec los e, apla int if

f m ust de m onstrate 16 tha t i t ha d th e ri ght

to en fo rc e the not e an d the ri ght to f or ec los e the m ortga ge a t the 17 ti m e th e co m

pl ai nt forfor ecl os ur e was fil ed

. Id

. Be cau se the r igh t t o e nf or ce the 18 m ortga ge a ri se s f

ro m the ri ght to en fo rc e the not e, the que sti on of standi ng tur ns o n 19 whe th er t he pl ai nt iff

ha s es tabl is he d t im el y

own ers hi p o f th e n ot e. Id

. ¶¶ 1 7, 3 5.5

1 { 9} U nde r

t h e U C C , ap r o m i s s o ry

n o t e i s an e g o t i ab l e i n s t r u m e n t , N M S A 1 9 78, 2 § 55-3-104 (a), (b), (e) (1992), which can be enforced by a third party who is a holder 3 of the ins tr

um en t. N MS A 197 8, § 55 -3 -3 01 ( 1992 ); R om er o , 201 4- N MS C- 007, ¶ 20 4 (s am e)

. A thi rd

party in poss es sio n of

the not e can e nf

or ce ane got ia

bl e ins tr um en t 5 as ahol de r if

the not e is e ith er

ind or se d spe ci fi ca lly to the thi rd party , or ind or se d in 6 bl an k, no t sp eci fy in g a pe rs on or en ti ty to whi ch th e no te i s i n d o rs ed

. See NMS A 7 1978 , § 55-1 -2 01( b) (2 1) (A ) (2 005) (s ta tin g that a hold er is a per son in poss es sio n of 8 a ne got ia

ble ins tr um en t pay ab le : ( 1) to be ar er , or (2 ) to anide nti fi ed pe rs on, a nd w ho 9 is tha t pe rs on) ; se e als o § 55 -1 -2 01( b) (5 ) (i de nti fy ing be ar er pa pe r as ane got ia

ble 10 instrum ent that has an indo rsem ent in blank ). 11 { 10} Inthi s c as e, BA C a lle ge d th at it w as the hol de r of

the not e, a tta ch ing to its 12 co m pla int a n un ind or se d co py of the not e an d an as sig nm en t of m ortga ge a ssi gni ng 13 H om eo w ne r’ s m ortga ge f ro m ME RS to BA C. N ei the r doc um en t i s su ff ic ie nt t o 14 es ta bli sh B A C a s th e hol de r of the not e. “ Po sse ssi on o f anuni ndor se d no te m ad e 15 pa y ab le to a thi rd

party doe s no t e sta

bli sh the r igh t of en fo rc em en t, j ust as fi ndi ng a 16 lo st ch eckm ad e p ay ab le to a pa rti cu la r pa rty do es no t a l l o w t he fin de r to cas h i t.” 17 R om er o , 201 4- N MS C- 007, ¶ 23. T he re is no l eg al auth or ity a llo w ing the a ssi gnm en t 18 of am ortga ge to carr

y w ithit the tr an sf

er of anot e. A pla intiff who ha s no t6

1 es ta bli she d th e ri ght

to en fo rc e the not e cannot f or ec los e the m ortga ge , e ve n if the 2 ev id en ce s ho ws t ha t t he m or tg ag e was ass ig ne d t o t he pl ai nt iff

. Id

. ¶¶ 3 4- 35
. 3 { 11} The reco rddo es co nt ai n a co py o f th e no te th at ha s a b la nkin do rs em en t. As we 4 not ed pr ev iou sly , und er

the U CC , pos se ssi on o f a note ind or se d inblank o rd inari ly 5 es ta bli she s th e ri ght

of athi rd party a s th e hol de r of tha t not e. N MS A 197 8, § 55 -3

- 6 205(b) (1992 ) (“ When indorsed in bl ank, an instrum ent becom es pay able to bearer 7 and m ay

be negoti at ed b y transfer of possessi on alone un til specially indorsed.”); 8 Se ct io n 55- 3- 104( a) (1 ), ( b) , ( e) ( de fi nin g “ ne got ia ble ins tr um en t” a s in cl udi ng a 9 “ n o t e” m ade “pay able to bearer or to order” ( internal quotatio n m arks om itted)); 10 Se ct ion 55- 3- 301 (d ef ini ng “ [p ] er son en tit le d to en fo rc e” a ne got iabl e instru m en t 11 (i nte rn al quo ta tio n m ar ks o m itt ed )) ; R om er o , 201 4- N MS C- 007, ¶ 26 ( “ [T he ] blank 12 ind or se m en t . . . e sta bl is hed th e [b ] an k a s ahol de r be ca use the [ b] an k [ w as ] in 13 poss es sio n of beare r pa pe r[
. ] ”)

. H ow ev er , the r ec or d do es not sho wthat B A C at any 14 tim e poss es se d th is i ndor se d no te . A c opy of the ind or se d note w as pr oduc ed by 1 5 H o me o w n e r

w i t h h i s e x h i b i tl i s t , a n d i ti s n o tc l e a r h o wo r w h e n H o me o w n e r

c a me 16 to p oss es s it

. A nd w hil e BA C’ s tr ia l c ouns el a dvi se d th e co urt th at sh e w as in 17 poss es sio n of

the or igi na l note , ind or se d in blank, a t the sum m ar y j udgm en t he ar ing , 18 the or igi na l not e subm itt ed to the dis tr ic t co urt on January 23, 2013 , doe s not inc lud e7

1 an indorsem ent page or provide any evidence of when BA C or its counsel obt ained 2 poss ession o f the original note. 3 { 12} As noted earlier , BAC produced the a ffidavit of Colleen N ew som e in suppo rt 4 of its m otion for su m

m ary j udgm ent. The af

fidavit, exec uted nearly

three y ears a fter 5 BA C f ile d it s c om

pla int , st at es that BA C i s th e hol de r of the not e. H ow ev er , the 6 affidavit does not state that New som e had personal k n o wledge that the note wa s 7 tra ns ferr edto BAC p rio r to th e fi li ng of t he for ecl os ur e co m pl ai nt . See Ru le 11- 602 8 NMR A ( “ A w itness [or affiant] m ay testify to a m atter only if evidence is introdu ced 9 sufficient to supp ort a finding that the witness has personal knowledge of the m atter. 10 Evidence to prove personal knowledge m ay consist o f th e w i tne ss ’ s ow n t e stim ony .” ). 11 Ne wsom e’ s purported basis of knowledge regarding the ownership of the note is her 12 reviewof the note as part of B ank of Am erica ’ s b u s i n es s re co rds and her personal 13 know le dge of

Bank of A m er ic a’ s pr oc ed ur es f or c re at ing bus ine ss r ec or ds. Whil e the 14 af fi da vit state s th at

ac opy of the r ev ie w ed

“ busi ne ss r ec or d” is a tta ch ed , no 15 attachm ent appears in the rec ord. T he rec ord also does n ot i n d i ca t e th at any such 16 busi ne ss re co rd w as of fe re d or adm itt ed as ahe ar say e xc ep tio n f

or bus ine ss r ec or ds. 17 See Ru le 11- 803( 6) N MR A ( na m ing thi s c at eg or

y of he ar say ex ce pti ons as “ [r ] ec or ds 18 of ar eg ularl y

c ondu ct ed

a ct ivi ty ”) ; se e als o R om er o , 201 4- N MS C-00 7, ¶¶ 31- 32 19 (h old ing that a

w itn es s’ s te st im ony

a nd a w itn es s’ s a ff

idavit w er e ins uf

fi ci en t t o8

1 es ta bli sh the tr an sf

er of the not e be ca

use the w itn es se s la ck ed

pe rs ona l kn ow le dge of 2 the not e’ s tr an sf

er , a nd tha t a

w itn es s’ s r el ianc e on a re vie w of the bus ine ss r ec or ds 3 wa s also insu fficient to establish the not e’ s transfer without a specific business record 4 having been offer ed and adm itted und er the bu siness records exception to the hearsay 5 ru le ). A n addi tio na l conc er n wi th the N ew som e af

fi da vit is tha t i t di d no t i nc lud e the 6 not e ind or se d inblank a s part of the bus ine ss r ec or d. T hus, the a ff idavi t is a lso 7 ins uf fi ci en t to esta

bli sh BA C’ s tim el y ow ne rs hip of the not e at the tim e its c om pla int 8 wa s filed in July2009
. W e conclude that BAC did not present the evidence necessar y 9 to d em onstrate it

ha d st an din g to e nf

or ce the not e at

the ti m e of

it s c om pla int

. 10 BAC ’s A rgum ents in Sup port of Af firm ance 11 { 13} I n s up p o rt o f a f f i rm a n c e , B A C a r g u e s t h a t o u r d e c i s i o n s in Deutsc he B ank 12 Nationa l Trust Co. v. Be neficial New M exico Inc. , 201 4- N MC A -0 90, 335 P
. 3d 2 17, 13 ce rt. gra nte d su b no m . D eu tsc he B ank v . J ohns ton , 201 4- NMCERT- 008, 334 P
. 3d 14 425, a nd Bank of New York Mellon v. Lopes , 2014 -N MC A -0 97, 336 P. 3d 443, se t ou t 15 ne w “ im

pe rm iss ibl e” pr oc ed

ur al r equ i r e m e n ts f

or the f ili ng o f fo re cl osur e co m

pla int s 16 tha t sh oul d no t be appl ie d r etro ac tiv el y to thi s c as e. T his a rg um en t i s un av ai lin g. 17 { 14} A cc or din g to BA C, our hol din gs i n D eu tsc he B ank a nd Lopes ha ve c re at ed

a 18 new r ule: that a th ird party filing for foreclosure m ust produce a cop y of the indorsed9

1 not e w ithit s c om

pla int , an d cannot la te r co rr ec t de fi ci en ci es or of fe r subs tanti at ing 2 doc um en ta tio n. BA C h as m isc onstru ed the hol din gs o f tho se c as es . 3 { 15} In R om er o , our

S upr em e Co urt he ld tha t st an din g inf or ec los ur e ac tio ns i s a 4 j u r i s d i c t i o n a l p r e r e qu i s i t e t h a t m u s t b e e s t ab l i s h e d a t t h e t i m e t h e s u i t is f ile d, by 5 de m onstratin g ti m el y

ow ne rs hip of the not e an d m ortga ge . 201 4- N MS C- 007, ¶ ¶ 15- 6 17. I n D euts ch e Bank, thi s C ourt a ppl ie d R om er o ’ s hold ing where the plaintiff 7 attem pted to establis h tim ely

ownership of the n ote by producin g a copy of the note, 8 wit h an un da te d, bl an k in do rs em en t, afterth e fi li ng of t he co m pl ai nt . D eu tsc he B ank , 9 2014 -N MC A -0 90, ¶

13. W e co nc lud ed

that “ the blank i ndor se m en t o n the not e the 10 [b ] ank in troduce d a t tri al w as not da te d, m ak ing it

im poss ibl e to t el l w he n th e 11 ind or se m en t w as e xe cu te d. T he re fo re , w hil e the ind or se d no te w as suf fi ci en t t o sh ow 12 tha t the [ b] an k wa s the hold er of the not e at the tim e of tr ia l, it fa ile d to show tha t the 13 [b] ank was the hold er at the tim e it filed its com plaint for foreclosure. ” Id

. S i mi l a r l y, 14 in Lopes , w e held that “ [n] either the [b] ank’ s at t ac h m ent of a copy of [the] note, 15 ind or se d inblank, to its S ep te m be r 22, 201 1[ , ] ple ad ing nor it s pr oduc tio n of

that no te 1 6 at t h e s u m

m ar y ju d g m en th ea ri n g o n J u l y 1 7 , 2 0 1 2 [, ] es t ab l i s h ed t h e [ b ]an k ’s 17 st an di ng to bri ng th e su itforfor ecl os ur e ag ai ns t [th e h]om eo wne r on Ju ly 6, 20 11 [,] 18
. . . [ as ] in D eu tsc he B ank , the [ b] an k’ s f ai lur e to e stabl is h th at

it ha d th e ri ght

to 19 en fo rc e [the ] not e as of the da te the co m pla int f or f or ec los ur e w as f

ile d c onst itu te s a10

1 fai lu re t o e st ab li sh th e [b ]ank ’s st an di ng to bri ng th e su it an d a juri sd ic ti on al de fect .” 2 Lopes , 201 4- N MC A -0 97, ¶ 12. 3 { 16} BA C arg ue s th at D eu tsc he B ank a nd Lopes s h o u l d n o t a p p l y r e t r o a c t i v e l y. 4 Notably , it does not include R om er o in tha t ar gum en t. W e re j ec t B A C’ s arg um en t f

or 5 tw o r ea sons . F ir st, in or de r to o ve rc om e the pr es um pti on o f re tr oa ct ive appl ic at ion , 6 a de ci sio n “ m

ust e sta bli sh a ne wpr inc ipl e of

law , e ith er

by ove rr uli ng cle ar

pa st 7 pr ec ed en t on whi ch li tig an ts m ay ha ve r el ie d, or

by de ci din g an is sue of

f ir st 8 im pression w hose r esolutio n was not clear ly foreshadowed. ” Jo rdan v . A lls tat e In s. 9 Co

. , 201 0- N MS C- 051, ¶ 27, 149 N
. M. 162, 245 P. 3d 1 214 (i nte rn al quo ta tio n m ar ks 10 and citation om itted). N either D eu tsc he B ank nor Lopes es ta

bli she d a ne wpr inc ipl e 11 of law, o r reac hed r es olutio ns t hat wer e n ot for es ha do wed

. Se e R om er o , 2014 -N MSC12 007, ¶ 17 ( sta tin g th at

“ [a ] pla int if

f ha s no f ound at ionin lawor

f ac t t o f or ec los e upon 13 a m ortga ge in w hic h th e pla int if f ha s no le ga l or

e qui ta ble int er es t. O ne reas on f or 14 suc h ar equir em en t i s si m ple : [ o] ne w ho is not a party to a co ntr ac t c an not

m ai nta in 15 a suit upo n it. If the entity wa s a successor in interest to a party on the contract, it w as 16 inc um be nt u pon it to p ro ve thi s to the co urt. ” (a lte ratio ns, int er na l qu ota tio n m ar

ks, 17 an d c it at io n o m it te d) ). Seco nd , bec au se th e co pi es of t he no te pro du ced by BAC 18 w er e not

ind or se d, our

de ci sio ns i n D eu tsc he B ank a nd Lopes are not appl icable here.11

1 To the extent that BA C claim s that it satisfied the stand ing requir ements under 2 R om er o , w e ha ve c onc lud ed that i t di d no t. 3 CON CLU SION 4 { 17} Fo r the f

or eg oin g r ea sons , w e re ve rs e an d r em an d f or pr oc ee din gs c onsi ste nt 5 w iththi s O pin ion

. 6 { 18} IT IS S O ORDERE D.
7 8 M . M ON IC A Z A M OR A , Ju dg e 9 WE CO NCUR:
10 11 JAM ES J. WEC HSLER , Jud ge
12 13 TI M OT HYL. GA R C IA , Ju dg e