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IN THE SUPREME COURT OF THE STATE OF HAWAIʻI

---o0o---

U.S. BANK TRUST, N.A.,

AS TRUSTEE FOR LSF9 MASTER PARTICIPATION TRUST,

Petitioner/Plaintiff-Appellee,

vs.

PATRICK LOWELL VERHAGEN; PATRICK LOWELL VERHAGEN, TRUSTEE OF THE 

PATRICK LOWELL VERHAGEN REVOCABLE TRUST DATED OCTOBER 29, 1999

Respondent/Defendant-Appellant,

and

WELLS FARGO BANK, N.A.,

Respondent/Defendant-Appellee.

SCWC-17-0000746

CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS

(CAAP-17-0000746; CIVIL NO. 16-1-0147(1))

JUNE 21, 2021

RECKTENWALD, C.J., NAKAYAMA, McKENNA, WILSON, AND EDDINS, JJ.

OPINION OF THE COURT BY EDDINS, J.

This case concerns the admissibility and evidentiary weight 

of documents and declarations at issue in a foreclosure 

Electronically Filed

Supreme Court

SCWC-17-0000746

21-JUN-2021

09:00 AM

Dkt. 25 OP
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proceeding. We consider: whether promissory notes are hearsay, 

admissible only if they fall within an exception to the hearsay 

rule; whether a copy of a promissory note is self-authenticating 

under Hawai‘i Rules of Evidence (“HRE”) Rule 902(9); the scope 

and limits of the business records exception to the hearsay 

rule; and the evidentiary burden mortgagees must meet to 

establish standing in the foreclosure context.

We conclude that promissory notes are not hearsay, that 

copies of promissory notes are not self-authenticating under HRE 

Rule 902(9), and that, under the incorporated records doctrine,

business records may, in certain circumstances, be admissible 

even absent testimony concerning the business practices or 

records of their creator. We also clarify the evidentiary 

burden on mortgagees seeking to show their possession of a 

promissory note at the time a foreclosure complaint was filed.

I. BACKGROUND

Patrick Verhagen (“Verhagen”) owned real estate in Lahaina

(the “Property”). In September 2007, Verhagen executed a

$1,730,000.00 note (the “Note”) in favor of Washington Mutual 

Bank, FA (“Washington Mutual”). Verhagen secured the Note with 

a mortgage on the Property.

The mortgage was later assigned to U.S. Bank. Caliber Home 

Loans, Inc. (“Caliber”) is U.S. Bank’s current loan servicer. 

JPMorgan Chase Bank, National Association (“JPMorgan Chase”)
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previously serviced the loan.

Verhagen defaulted on the Note in February 2012. He was 

sent notice of the default in August 2014. The notice provided 

Verhagen thirty-five days to cure the default. Verhagen did not 

timely cure the default.

On March 23, 2016, U.S. Bank filed a verified foreclosure 

complaint in the Circuit Court of the Second Circuit (the 

“circuit court”).

The complaint was accompanied by a Verification to 

Foreclosure Complaint by Julia Jackson, a Caliber employee. 

Jackson said she was familiar with Caliber’s records and the 

manner in which Caliber maintains those records. She “verified” 

and “confirmed” U.S. Bank’s possession of the original Note.

On January 31, 2017, U.S. Bank filed a Motion for Summary 

Judgment and Interlocutory Decree of Foreclosure (“MSJ”) against 

Verhagen.

In its MSJ, U.S. Bank argued it was entitled to summary 

judgment against Verhagen because: (1) A loan had been made to 

Verhagen; (2) Verhagen made, executed, and delivered the Note to 

the lender; (3) Verhagen secured the Note with a mortgage on the 

Property; (4) Verhagen is in default of the amounts due under 

the Note; and (5) U.S. Bank. holds the Note and has standing to 

foreclose against Verhagen.

U.S. Bank supported its MSJ with a declaration (the 
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“Salyers Declaration”) from Alyssa Salyers. Salyers is a 

foreclosure document specialist at Caliber.

Salyers declared she was familiar with both Caliber’s 

business records concerning the Note and the manner in which 

Caliber maintains those records. Salyers also declared she had 

inspected a copy of the Note maintained by Caliber. She 

attached a “true and correct” copy of the Note to her 

declaration. She further declared that Caliber’s records 

concerning the Note include records incorporated from the prior 

loan servicer, JPMorgan Chase. The records obtained from 

JPMorgan Chase, Salyers declared, are “kept and maintained by 

Caliber in the ordinary course of its business for the purpose 

of maintaining an accounting of payments received, expenses 

incurred, and amounts advanced with regard to the Subject Loan, 

and such records are relied upon by Caliber in the regular 

course of its business.”

Verhagen’s opposition to U.S. Bank’s MSJ focused on U.S. 

Bank’s failure to demonstrate its ownership and possession of

the Note at the time it filed suit. Verhagen argued that this 

evidentiary deficiency was fatal for U.S. Bank: without a 

showing that it possessed the Note at the time it filed its 

complaint, U.S. Bank could not establish standing under Bank of 

America, N.A. v. Reyes-Toledo, 139 Hawaiʻi 361, 390 P.3d 1248

(2017).
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We issued Reyes-Toledo on February 28, 2017: one month 

before Verhagen’s March 31, 2017 opposition and one month after

U.S. Bank’s January 31, 2017 MSJ. Reyes-Toledo held that in 

order to establish standing, a foreclosing plaintiff must prove 

“its entitlement to enforce the note at the commencement of the 

proceedings.” Id. at 369, 390 P.3d at 1256.

The circuit court granted U.S. Bank’s motion. Verhagen 

appealed. The ICA remanded the case to the circuit court to 

allow U.S. Bank to supplement the record in light of ReyesToledo and another case, U.S. Bank N.A. v. Mattos, 140 Hawai‘i

26, 398 P.3d 615 (2017).1 Mattos was issued after U.S. Bank 

submitted its proposed forms for the foreclosure judgment (May 

17, 2017) but before the court entered judgment (September 25, 

2017). In Mattos, we held that the employee of a plaintiff 

 

1 U.S. Bank’s motion for remand came after it had, following a procedure

described in Life of the Land v. Ariyoshi, 57 Haw. 249, 553 P.2d 464 (1976), 

asked the circuit court to indicate how it was inclined to rule on a motion 

to ratify the foreclosure judgment. Verhagen neither opposed the substance 

of the motion U.S. Bank presented to the circuit court nor appeared at the 

related hearing. Verhagen did, however, file jurisdictional objections to 

U.S. Bank’s proposed order granting the motion to ratify.

Notwithstanding Verhagen’s jurisdictional objections, on July 27, 2018, 

the circuit court indicated its inclination to grant U.S. Bank’s motion to 

ratify. Confusingly, though it lacked jurisdiction to adjudicate the motion, 

the circuit court styled itself as “granting” the motion to ratify. As the 

ICA noted in its order granting U.S. Bank’s motion for temporary remand, the 

circuit court should have indicated its inclination to grant the motion 

rather than purporting to actually grant it. See Life of the Land, 57 Haw.

at 251, 553 P.2d at 466 (“Accordingly, we consider that the procedure for 

motions under Rule 60(b), H.R.C.P., may and should be consistent with that 

for motions under Rule 33, H.R.Cr.P., where an appeal is pending in this 

court. Jurisdiction is in this court while the appeal is pending, in both 

instances. Nevertheless, the motion may be made and considered in the 

circuit court. If that court indicates that it will grant the motion, the 

appellant may then move in this court for a remand of the case.”)
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bank’s loan servicer was not a “qualified witness” in relation 

to the bank’s records where the employee did not testify to

familiarity with the bank’s record-keeping system or to the loan 

servicer’s incorporation of the bank’s records. Id. at 33, 398 

P.3d at 622.

On remand, U.S. Bank moved for ratification of the circuit 

court’s prior judgment. Verhagen filed jurisdictional 

objections to the circuit court’s consideration of the motion 

but did not substantively oppose the motion to ratify. U.S. 

Bank’s motion was accompanied by a supplemental declaration from

Melinda Patterson (the “Patterson Declaration”). Patterson 

stated she was a Caliber employee and was familiar with both 

Caliber’s books and records concerning the Note and the manner 

in which Caliber maintains its books and records. Patterson’s 

declaration provided additional testimony concerning Caliber’s 

incorporation of prior loan servicers’ records. Patterson

declared:

Caliber’s records include and incorporate records for the 

Loan obtained from [JPMorgan Chase] (“Prior Servicer”), the 

prior loan servicer for the Loan. The records obtained by 

Caliber from the Prior Servicer are kept and maintained by 

Caliber in the ordinary course of its business for the 

purpose of maintaining an accounting of payments received, 

expenses incurred, and amounts advanced with regard to the 

Loan, and such records are relied upon by Caliber in the 

regular course of its business. The information regarding 

the Loan transferred to Caliber from the Prior Servicer has 

been validated in many ways, including but not limited to, 

going through a due diligence phase, review of hard copy 

documents, and review of the payment history and accounting 

of other fees, costs, and expenses charged to the Loan by 

Prior Servicer. It is Caliber’s regular practice, after 

these phases are complete, to receive records from prior 
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servicers and integrate these records into Caliber’s 

business records at the time of acquisition. Once 

integrated, Caliber maintains and relies on these business 

records in the ordinary course of its mortgage loan 

servicing business.

Patterson also declared that, based on her review of 

Caliber’s business records, U.S. Bank possessed the Note on 

March 23, 2016, when it filed its complaint against Verhagen:

Plaintiff, or its agent on Plaintiff’s behalf, was in 

possession of the original wet-ink, indorsed in blank Note 

when the above-captioned foreclosure action was commenced 

on March 23, 2016 and since [that time]. . . .

My personal knowledge of these statements is derived from 

my having inspected Caliber’s business records. 

Specifically, I researched Caliber’s business records, 

which includes “Certification” [sic] executed by Caliber 

employee, Jennifer Martin. The “Certification” contained 

in Caliber’s business records evidence [sic] that the 

original wet ink, indorsed in blank Note was in Caliber’s 

possession on Plaintiff’s behalf on February 9, 2016. 

Further, the “Certification” contained in Caliber’s 

business records indicates that the original wet-ink Note 

was indorsed in blank no later than February 9, 2016, as 

the original wet-ink Note was electronically scanned and 

uploaded to Caliber’s business records on or before 

February 9, 2016 and the scanned copy of the original wetink Note that was uploaded to Caliber’s business records on 

or before February 9, 2016 contains a blank indorsement on 

page 6 of the Note.

Patterson attached a copy of Jennifer Martin’s Certification to 

her declaration.

Patterson also declared that there was an attorney’s bailee 

letter agreement in Caliber’s business records. The letter was 

dated December 9, 2016. Patterson declared that Caliber sent 

the letter2 to U.S. Bank’s legal counsel on or around that date 

 

2 The bailee letter attached to Patterson’s declaration documented 

transmission of the original Note from Caliber to U.S. Bank’s foreclosure 

counsel. At the bottom of the letter there was a signed December 16, 2016 

acknowledgement from a representative of U.S. Bank’s legal counsel 

recognizing receipt of the original Note.
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along with the wet-ink indorsed-in-blank Note. Verhagen did not 

object to the admission of Patterson’s testimony.

On October 8, 2018, the circuit court filed amended 

findings of fact (“FOFs”) and conclusions of law (“COLs”). 

These amended FOFs and COLs addressed U.S. Bank’s compliance 

with Reyes-Toledo. The circuit court found U.S. Bank possessed 

the indorsed-in-blank Note at the time it sued Verhagen:

[Amended FOF 8] At the time the Complaint was filed, 

PLAINTIFF, or its agent on PLAINTIFF’s behalf, was in 

possession of the original indorsed in blank Note. As 

evidence of this, the Verification filed with the 

Complaint, which was executed by Julia Jackson (an employee 

of Caliber Home Loans, Inc.) (“Servicer”), PLAINTIFF’S loan 

servicer, stated that Jackson had “verified and hereby 

confirm[ed] possession of the original Note by Plaintiff . 

. . [and that] [t]he Note is indorsed in blank . . ..” 

Verification to Complaint, at ¶¶ 7-8; see Nationstar 

Mortgage, LLC v. Ruth C. Alejandro, et al., CAAP 15-0000107 

(March 23, 2017) (Summary Disposition Order) (discussing 

how similar verification established possession of note 

when case was commenced as required by Reyes-Toledo). 

Further, together with the Motion to Ratify, filed on June 

18, 2018, PLAINTIFF submitted a further Declaration of 

Melinda Patterson (who was also an employee of Servicer), 

which provided additional evidence that: (i) Servicer had 

authority to act on behalf of PLAINTIFF and had been 

servicing the subject loan since prior to the filing of the 

Complaint (see Patterson Decl. at ¶¶ 3 and 6); and (ii) 

Servicer had been in possession of the original indorsed in 

blank Note since at least February 9, 2016, and through 

approximately December 9, 2016, when the original indorsed 

in blank Note was transmitted to PLAINTIFF’S counsel of 

record in this case to hold on PLAINTIFF’S behalf while the 

foreclosure action was being prosecuted (see Patterson 

Decl. at ¶ 8; Prather Declaration submitted with 

PLAINTIFF’S Reply Memorandum in Support of its Motion for 

Summary Judgment, filed April 3, 2016).

The circuit court further found that U.S. Bank had 

possessed the Note since the filing of the complaint:

[Amended FOF 11] As a result, PLAINTIFF, its agent on 

PLAINTIFF’s behalf, or PLAINTIFF’S counsel on PLAINTIFF’S 

behalf, has been and remains in possession of the original 

indorsed in blank Note since before this foreclosure action 
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was commenced on March 23, 2016, and through the present. 

No evidence to the contrary was presented to the Court.

The circuit court’s amended FOFs also considered the 

admissibility of the loan documents U.S. Bank submitted in 

support of its MSJ:

[Amended FOF 10] Further, the evidence establishing 

PLAINTIFF’S standing is admissible because the various 

declarants established their personal knowledge of the 

statements made and/or that the statements made were 

derived from the business records of the declarant’s 

employer, and not some other entity. See U.S. Bank, N.A. 

v. Mattos, 140 Haw. 26, 32-33, 398 P.3d 615, 621-622 (S. 

Ct. 2017) (foreclosing plaintiff must establish standing 

through admissible evidence; servicer could not testify to 

records of plaintiff without establishing familiarity with 

plaintiff’s record keeping system) . . . .

The circuit court also addressed U.S. Bank’s standing:

[Amended COL 2] PLAINTIFF had standing to bring this 

action and has standing at present because PLAINTIFF, its 

agent on PLAINTIFF’S behalf, or PLAINTIFF’S counsel on 

PLAINTIFF’S behalf, has been and remains in possession of 

the original indorsed in blank Note since before this 

foreclosure action was commenced on March 23, 2016, and 

through the present.

Following the entry of the circuit court’s amended 

judgment, order, and FOFs and COLs, U.S. Bank filed an amended 

answering brief in the ICA. In its brief, U.S. Bank argued 

that: (1) loan documents maintained by Caliber but created by 

prior loan servicers were admissible as “incorporated records” 

under the business records exception to the hearsay rule; and 

(2) declarations U.S. Bank submitted in support of its MSJ 

showed it possessed the Note at the time it filed the complaint 

and, in doing so, established U.S. Bank’s standing to sue 

Verhagen.
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On October 2, 2020, the ICA issued an Amended SDO3 vacating 

the circuit court’s October 8, 2018, Amended Judgment and the 

Amended Findings of Fact and Conclusions of Law; Amended Order 

Granting Plaintiff's Motion for Summary Judgment and for 

Interlocutory Decree of Foreclosure. U.S. Bank v. Verhagen, 

CAAP-17-0000746 (App. Oct. 2, 2020) (SDO).

The ICA ruled that U.S. Bank lacked standing because it had 

not established it possessed the Note at the time it filed the 

foreclosure action. See Reyes-Toledo, 139 Hawaiʻi at 368, 390 

P.3d at 1255 (holding that to establish standing a foreclosing 

plaintiff must establish entitlement to enforce the subject note 

at the time the action was commenced).

The ICA reached this conclusion after determining that the 

copies of the Note U.S. Bank submitted in support of its MSJ 

 

3 The ICA initially issued a summary disposition order (the “SDO”)

vacating the circuit court’s September 25, 2017 Judgment and Findings of Fact 

and Conclusions of Law; Order Granting Plaintiff’s Motion for Summary 

Judgment and for Interlocutory Decree of Foreclosure Filed January 31, 2017. 

U.S. Bank moved the ICA to reconsider its SDO. In addition to making several 

legal arguments about why the ICA should reconsider the SDO, U.S. Bank’s 

motion for reconsideration highlighted the fact that the ICA’s SDO did not 

address or acknowledge the circuit court’s October 8, 2020 Amended Judgment 

and Amended Findings of Fact and Conclusions of Law; Order Granting 

Plaintiff’s Motion for Summary Judgment and for Interlocutory Decree of 

Foreclosure Filed January 31, 2017. On October 2, 2020, the ICA issued a 

two-paragraph order granting in part U.S. Bank’s motion for reconsideration. 

The order granted the motion only to the extent it concerned the ICA’s 

failure to address the October 8, 2018 Amended Judgment and the Amended 

Findings of Fact and Conclusions of Law; Amended Order Granting Plaintiff's 

Motion for Summary Judgment and for Interlocutory Decree of Foreclosure. The 

ICA rejected all of U.S. Bank’s substantive legal arguments concerning the 

need for reconsideration. It issued its Amended SDO that same day, October 

2, 2020.
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were inadmissible hearsay. None of the declarations U.S. Bank 

submitted were from a declarant familiar with the record-keeping 

practices of Washington Mutual, the entity that purportedly 

created the Note. As such, the ICA ruled, there was not an 

adequate foundation for the admission of the Note under the

“business records” exception to the hearsay rule.

In reaching this conclusion, the ICA cited Mattos’s 

quotation of State v. Fitzwater, 122 Hawaiʻi 354, 227 P.3d 520 

(2010), for the proposition that an employee of a business that 

received records from another business may be qualified to 

establish a foundation for their admission under HRE Rule 

803(b)(6):

A person can be a “qualified witness” who can authenticate 

a document as a record of regularly conducted activity 

under HRE Rule 803(b)(6) or its federal counterpart even if 

he or she is not an employee of the business that created 

the document, or has no direct, personal knowledge of how 

the document was created. As one leading commentator has 

noted:

The phrase “other qualified witness” is given a 

very broad interpretation. The witness need 

only have enough familiarity with the recordkeeping system of the business in question to 

explain how the record came into existence in 

the ordinary course of business. The witness 

need not have personal knowledge of the actual 

creation of the documents or have personally 

assembled the records. In fact, the witness 

need not even be an employee of the recordkeeping entity as long as the witness 

understands the entity's record-keeping system.

There is no requirement that the records have 

been prepared by the entity that has custody of 

them, as long as they were created in the 

regular course of some entity's business.

The sufficiency of the foundation evidence 

depends in part on the nature of the documents 
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at issue. Documents that are “standard records 

of the type regularly maintained by firms in a 

particular industry may require less by way of 

foundation testimony than less conventional 

documents proffered for admission as business 

records.”

Verhagen, SDO at 7-8 (quoting Mattos, 140 Hawaiʻi at 32, 398 P.3d 

at 621) (cleaned up).

The ICA also cited Behrendt’s discussion of the testimony 

necessary to support the admission of incorporated records:

The court in Mattos held that a witness may be qualified to 

provide the testimony required by HRE Rule 803(b)(6) even 

if the witness is not employed by the business that created 

the document or lacks direct, personal knowledge of how the 

document was created. Id. “There is no requirement that 

the records have been prepared by the entity that has 

custody of them, as long as they were created in the 

regular course of some entity's business.” Id. (quoting 

State v. Fitzwater, 122 Hawaiʻi 354, 366, 227 P.3d 520, 532 

(2010)). The witness, however, must have enough 

familiarity with the record-keeping system of the business 

that created the record to explain how the record was 

generated in the ordinary course of business. Id.

Records received from another business and incorporated 

into the receiving business’ records may in some 

circumstances be regarded as “created” by the receiving 

business. Id. Incorporated records are admissible under 

HRE Rule 803(b)(6) when a custodian or qualified witness 

testifies that the documents were incorporated and kept in 

the normal course of business, that the incorporating 

business typically relies upon the accuracy of the contents 

of the documents, and the circumstances otherwise indicate 

the trustworthiness of the document. See id.; Fitzwater, 

122 Hawaiʻi at 367-68, 227 P.3d at 533-34.

Verhagen, SDO at 8 (quoting 142 Hawai‘i at 45-46, 414 P.3d at 97-

98).

The ICA then turned to explaining why the Jackson 

verification, Salyers declaration, and supplemental Patterson 

declaration each failed to establish the declarant’s 

qualifications to authenticate the Note as a business record 
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under HRE Rule 803(b)(6).

Jackson’s verification — which described her familiarity 

with Caliber’s records and record-keeping system4 — did not 

qualify her as an “other qualified witness” for purposes of 

admitting the Note under HRE Rule 803(b)(6) because it did not 

demonstrate that she had “enough familiarity with the recordkeeping system of the business that created [the Note] to 

explain how [it] was generated in the ordinary course of 

business.” Verhagen, SDO at 9 (alterations added) (quoting 

Behrendt, 142 Hawai‘i at 45, 414 P.3d at 97).

Salyers’ declaration5 was similarly deficient. Because 

 

4 Specifically, Jackson stated:

I have access to and am familiar with Caliber’s books and 

records regarding the Loan, including Caliber’s servicing 

records and copies of the applicable loan documents. I am 

familiar with the manner in which Caliber maintains its 

books and records, including computer records relating to 

the servicing of the Loan. Caliber’s records are made at 

or near the time of the occurrence of the matters set forth 

in such records, by an employee or representative with 

knowledge of the acts or events recorded. Such records are 

obtained, kept and maintained by Caliber in the regular 

course of Caliber’s business. Caliber relies on such 

records in the ordinary course of its business.

5 Salyers declared, in relevant part:

I have access to and am familiar with Caliber’s books and 

records regarding the Loan, including Caliber’s servicing 

records and copies of the applicable loan documents. I am 

familiar with the manner in which Caliber maintains its 

books and records, including computer records relating to 

the servicing of the Loan. Caliber’s records are made at 

or near the time of the occurrence of the matters set forth 

in such records, by an employee or representative with 

knowledge of the acts or events recorded. Such records are 

obtained, kept and maintained by Caliber in the regular 

course of Caliber's business. Caliber relies on such 

records in the ordinary course of its business. Caliber’s 
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Salyers did not attest to being familiar with “the recordkeeping system of Washington Mutual or JPMorgan [Chase]” Salyers 

was not a “qualified witness” for the admission of the Note 

under HRE Rule 803(b)(6).

According to the ICA, even the supplemental Patterson 

declaration failed “to establish under Mattos and Behrendt that 

[Patterson] is a custodian of records or a qualified witness for 

purposes of admitting the Note as evidence pursuant to HRE Rule 

803(b)(6).” Verhagen, SDO at 10.

In its December 28, 2020 certiorari application, U.S. Bank

presented the following questions: 

(1) “To obtain summary judgment, is a foreclosing creditor 

in possession of the original note required to authenticate the 

note through HRE 803(b)(6), or is the note admissible under HRE 

902?”;

(2) “Is the issue of standing based on possession of the 

promissory note distinct from the issue of admissibility of loan 

records, such that a lender can satisfy the possession 

requirement with a declaration that affirms pre-filing 

 

records include and incorporate records for the Subject 

Loan obtained from JPMorgan Chase Bank, N.A. (“Prior 

Servicer”), the prior loan servicer for the Subject Loan. 

The records obtained by Caliber from the Prior Servicer are 

kept and maintained by Caliber in the ordinary course of 

its business for the purpose of maintaining an accounting 

of payments received, expenses incurred, and amounts 

advanced with regard to the Subject Loan, and such records 

are relied upon by Caliber in the regular course of its 

business.
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possession of the note based upon personal knowledge and 

corroborating records of the custodian, irrespective of the 

declarant’s foundation to admit the note as a business record 

under HRE 803(b)(6)?”; and 

(3) “Did the debtor waive his right to dispute the Amended 

Judgment by failing to oppose Petitioner’s Motion to Ratify and 

the resulting Amended Order?”

II. DISCUSSION

A. The Note is not hearsay

The Note is not hearsay.

Out of court statements with independent legal 

significance, like verbal acts, are not hearsay since “[i]f the 

significance of an offered statement lies solely in the fact 

that it was made, no issue is raised as to the truth of anything 

asserted.” Fed. R. Evid. 802(c) cmt. See State v. Villena, 140 

Hawaiʻi 370, 378, 400 P.3d 571, 579 (2017) (“It is well-settled 

that statements of independent legal significance are not 

hearsay.”).

Contractual documents have independent legal significance. 

See State v. Salavea, 147 Hawaiʻi 564, 577 n.13, 465 P.3d 1011, 

1024 n.13 (2020) (citing Island Directory Co. v. Iva’s Kinimaka 

Enters., Inc., 10 Haw. App. 15, 21-22, 859 P.2d 935, 939 (1993),

and describing it as “holding that statements that constitute 

the offer, acceptance, or terms of a contract are not hearsay 
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because the making of such statements are in themselves 

relevant[.]”).

Promissory notes are a subspecies of written contracts 

because they record the terms of an agreement between lender and 

borrower. See Remington Investments, Inc. v. Hamedani, 64 Cal. 

Rptr. 2d 376, 382 (Cal. Ct. App. 1997) (explaining “[t]he 

Promissory Note document itself is not a business record as that 

term is used in the law of hearsay, but rather is an operative 

contractual document admissible merely upon adequate evidence of 

authenticity”). Since the Note has independent legal 

significance as evidence of the written contract between 

Verhagen and the Note’s holder, it is not hearsay. Because the 

Note is not hearsay, it does not need to meet the business 

records exception to be admissible.

B. Copies of the Note submitted by U.S. Bank are not selfauthenticating under HRE Rule 902(9)

Though the original Note is self-authenticating under HRE 

Rule 902(9), the copies of the Note U.S. Bank submitted in 

support of its MSJ are not.

Even non-hearsay evidence must be authenticated. “The 

requirement of authentication or identification as a condition 

precedent to admissibility is satisfied by evidence sufficient 

to support a finding that the matter in question is what its 

proponent claims.” HRE Rule 901. Under HRE Rule 902, however, 
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“[e]xtrinsic evidence of authenticity as a condition precedent 

to admissibility” is not needed with respect to “[c]ommercial

paper, signatures thereon, and documents relating thereto to the 

extent provided by general commercial law.” HRE Rule 902(9).

Hawai‘i’s generally applicable commercial law is the Hawaiʻi 

Uniform Commercial Code (the “U.C.C.”). Under Article 3 of the 

U.C.C.: 

In an action with respect to an instrument, the 

authenticity of, and authority to make, each signature on 

the instrument is admitted unless specifically denied in 

the pleadings. If the validity of a signature is denied in 

the pleadings, the burden of establishing validity is on 

the person claiming validity, but the signature is 

presumed[6] to be authentic and authorized unless the action 

is to enforce the liability of the purported signer and the 

signer is dead or incompetent at the time of trial of the 

issue of validity of the signature.

Hawai‘i Revised Statutes (“HRS”) § 490:3-308(a) (2008). 

Promissory notes like the one Verhagen signed are negotiable 

instruments under the U.C.C. See HRS § 490:3-104; see also Bank 

of New York Mellon v. Spielman, 146 Hawaiʻi 205, 457 P.3d 844 

(App. 2020) (characterizing a promissory note as a “negotiable 

instrument” under Article 3 of Hawaiʻi’s U.C.C.). As such, the 

original Note is self-authenticating commercial paper under HRE 

Rule 902(9).

HRE 902(9) does not specify whether it applies to 

 

6 Article 3 of the U.C.C. provides that, “[w]henever this chapter creates 

a ‘presumption’ with respect to a fact, or provides that a fact is 

‘presumed’, the trier of fact shall find the existence of the fact unless 

evidence is introduced that supports a finding of its nonexistence.” HRS § 

490:1-206.
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photocopies of commercial paper or only to original commercial 

paper. At least one court has found that photocopies of 

commercial paper are not self-authenticating. See United States 

v. Brandell, 35 M.J. 369, 371 (C.M.A. 1992) (holding that 

photocopies of checks are not “self-authenticating ‘commercial 

paper’ within the meaning of Mil.R.Evid. Rule 902(9),” which is 

identical to HRE Rule 902(9)). We, however, have not addressed 

whether photocopies of commercial paper are self-authenticating 

under HRE Rule 902(9).

HRE Rule 1003 is central to our analysis on this issue. It 

provides: “[a] duplicate is admissible to the same extent as an 

original unless (1) a genuine question is raised as to the 

authenticity of the original, or (2) in the circumstances it 

would be unfair to admit the duplicate in lieu of the original.” 

HRE Rule 1003.

Here, and indeed in all foreclosure cases where a mortgagee 

introduces a copy of a promissory note to establish standing, we

conclude that it would be unfair to treat duplicates of 

promissory notes as self-authenticating under HRE Rule 902(9). 

The policy considerations that justify HRE Rule 902(9)’s 

special treatment of commercial paper do not apply in the 

context of duplicate promissory notes. An original note is 

particularly trustworthy because it allows for the direct 

inspection of all its inscriptions. But it is impossible to 
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definitively match a copy of a given note’s frontside with a 

copy of the same note’s backside.7 Moreover, limiting HRE Rule 

902(9) to original commercial papers makes sense given the

mismatch between the significance of original commercial paper 

and copies thereof in everyday life: “[b]anks do not treat 

copies of checks and notes like originals,” and under the 

U.C.C., the “enforcement of a negotiable instrument by a person 

who does not possess the original instrument [is permitted] only 

under very limited circumstances.” 31 Charles Alan Wright, 

Arthur R. Miller & Victor J. Gold, Federal Practice and

Procedure § 7143(9) (1st ed. 2000 & Supp. 2021).

Accordingly, we hold that while original promissory notes 

are self-authenticating under HRE Rule 902(9), duplicates like 

those submitted by U.S. Bank in support of its MSJ are not selfauthenticating and are only admissible if they are authenticated

by extrinsic evidence. See HRE Rule 901.

 

7 As one treatise explained:

[A] copy may not reveal all the information bearing on 

authenticity that is contained on an original. For example, 

a check that has been deposited and processed through the 

banking system has information that is contained on both its 

front and back. While both the front and back can be copied, 

often there is nothing about a copy of a given front and a 

given back that shows they match. Further, the bank imprints 

on the back of a check may not be clear on a copy.

31 Charles Alan Wright, Arthur R. Miller & Victor J. Gold, Federal Practice

and Procedure § 7143(9) (1st ed. 2000 & Supp. 2021).
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C. U.S. Bank properly authenticated the copies of the Note it 

submitted in support of its MSJ

The copies of the Note U.S. Bank submitted in support of 

its MSJ are not self-authenticating commercial paper. They are 

still admissible, however, if there is “evidence sufficient to 

support a finding” that they are what U.S. Bank claims they are. 

See HRE Rule 901(a). Testimony of a witness with personal 

knowledge of a document may establish the foundation necessary 

for its admission. HRE Rule 901(b)(1).

Salyers and Patterson’s testimony establishes an adequate 

foundation for the copies’ admission. Both Salyers and 

Patterson declared under penalty of perjury that they had

inspected a copy of the Note maintained by Caliber. They both

declared that “true and correct” copies of the Note they 

inspected were attached to their declarations. U.S. Bank has 

thus adequately authenticated these copies of the Note.

D. The ICA erred in its application of the incorporated 

records doctrine

In its Amended SDO, the ICA held that the Note was 

inadmissible because it was not authenticated by testimony from 

a witness with personal knowledge of the record-keeping systems 

of Washington Mutual or JPMorgan Chase. Leaving aside the fact 

that the Note is not hearsay, the ICA’s holding relies on a 

conspicuous misreading of our incorporated records doctrine.

Though hearsay is generally inadmissible, HRE Rule 
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803(b)(6) establishes a hearsay exception for “records of 

regularly conducted activity.” It provides:

A memorandum, report, record, or data compilation, in any 

form, of acts, events, conditions, opinions, or diagnoses, 

made in the course of a regularly conducted activity, at or 

near the time of the acts, events, conditions, opinions, or 

diagnoses, as shown by the testimony of the custodian or 

other qualified witness, or by certification that complies 

with rule 902(11) or a statute permitting certification, 

unless the sources of information or other circumstances 

indicate lack of trustworthiness.

HRE Rule 803(b)(6).

Our incorporated records doctrine clarifies the application 

of this exception to documents that were created by one entity 

but which are maintained in the records of another. We 

introduced this rule in Fitzwater, 122 Hawaiʻi 354, 227 P.3d 520. 

In Fitzwater, we explained: “when an entity incorporates records 

prepared by another entity into its own records, they are 

admissible as business records of the incorporating entity

provided that it relies on the records, there are other indicia 

of reliability, and the requirements of HRE Rule 803(b)(6) are 

otherwise satisfied.” Id. at 367–68, 227 P.3d at 533–34

(emphasis added).

We affirmed this holding in Behrendt, explaining that

“[r]ecords received from another business and incorporated into 

the receiving business’ records may in some circumstances be 

regarded as ‘created’ by the receiving business.” 142 Hawaiʻi at 

45, 414 P.3d at 97. The clear implication of this language is 
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that when a record is treated as “created” by the receiving 

business, a person is qualified to authenticate it if the person

has “enough familiarity with the record-keeping system of the 

business that ‘created’ the record,” i.e., the receiving or 

incorporating business. Accordingly, a person may be qualified

to authenticate an incorporated record even if the person lacks

familiarity with the records or record-keeping practices of the 

entity that actually created the record.

In Behrendt, we identified the circumstances in which it is 

appropriate to treat an incorporated record as “created” by the 

receiving business:

Incorporated records are admissible under HRE Rule 

803(b)(6) when a custodian or qualified witness testifies 

that [1] the documents were incorporated and kept in the 

normal course of business, [2] that the incorporating 

business typically relies upon the accuracy of the contents 

of the documents, and [3] the circumstances otherwise 

indicate the trustworthiness of the document.

142 Hawaiʻi at 45, 414 P.3d at 97. If each of these three 

conditions is satisfied, an incorporated record is admissible 

even in the absence of testimony concerning its actual creation. 

This is because evidence that a business has incorporated and 

relied on a record created by another organization speaks 

directly to that record’s reliability. When accompanied by 

testimony about other circumstances that also indicate the 

record’s trustworthiness, such evidence is an acceptable 

substitute for testimony concerning a record’s actual creation.
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Immediately before our discussion of the incorporated 

records doctrine in Behrendt, we addressed a slightly different 

situation: the case where a business has custody of another 

entity’s records but has not actually incorporated those records 

into its own. In that situation, we explained, a witness need 

not be employed by the entity that created the documents to 

provide the testimony required by HRE Rule 803(b)(6). But the 

witness does need to have “enough familiarity with the recordkeeping system of the business that created the record to 

explain how the record was generated in the ordinary course of 

business.” Id. at 45, 414 P.3d at 97.

In its SDO, the ICA incorrectly applied this standard to 

Caliber’s incorporated records. It ignored the fact that the 

records created by JPMorgan Chase were incorporated into 

Caliber’s own records and were not merely in Caliber’s custody. 

In determining whether the records incorporated from JPMorgan 

Chase were admissible under HRE Rule 803(b)(6), the ICA should 

have considered whether there was testimony from a Caliber 

custodian or witness qualified to testify about Caliber’s 

records that: (1) Caliber incorporated and kept the documents in 

the normal course of business; (2) Caliber typically relies upon 

the accuracy of the contents of the documents; and (3) the 

circumstances otherwise indicate the trustworthiness of the 

documents. See id. at 45, 414 P.3d at 97.
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Patterson and Salyers8 both testified that JPMorgan Chase’s

records were incorporated into Caliber’s own and kept and 

maintained by Caliber in the ordinary course of its business. 

They both further testified that Caliber used and relied on the 

incorporated records in the regular course of its loan servicing 

business. The first two requirements for the admission of 

incorporated records are thus satisfied. 

Salyers’ testimony does not describe any circumstances that 

otherwise indicate the trustworthiness of the documents Caliber 

incorporated from JPMorgan Chase. But Patterson’s does. 

Patterson declared that:

The information regarding the Loan transferred to Caliber 

from the Prior Servicer has been validated in many ways, 

including, but not limited to, going through a due 

diligence phase, review of hard copy documents, and review 

of the payment history and accounting of other fees, costs, 

and expenses charged to the Loan by Prior Servicer.

Though scant, this testimony establishes circumstances 

indicating the trustworthiness of Caliber’s incorporated 

records. It is evidence that before incorporating JPMorgan 

Chase’s documents, Caliber reviewed hard copies of the 

 

8 Both Patterson and Salyers are knowledgeable about Caliber’s record 

keeping system and can describe Caliber’s incorporation of JPMorgan Chase’s 

documents. They are thus “other qualified witnesses” who can authenticate 

Caliber’s records of regularly conducted activity under HRE Rule 803(b)(6). 

See Fitzwater, 122 Hawai‘i at 366, 227 P.3d at 532 (2010) (“The phrase ‘other 

qualified witness’ is given a very broad interpretation. The witness need 

only have enough familiarity with the record-keeping system of the business 

in question to explain how the record came into existence in the ordinary 

course of business.” (cleaned up))
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documents, engaged in a “due diligence” process, and reviewed 

the payment history and accounting associated with the loan. 

JPMorgan Chase’s documents were not, in other words, 

uncritically incorporated into Caliber’s own. They were vetted 

by Caliber. This pre-incorporation vetting, however nebulously

described by Patterson’s testimony, is a circumstance that 

indicates the trustworthiness of the documents.

Patterson’s testimony thus satisfies each of the three 

criteria in Behrendt. The ICA should have held that Caliber’s 

incorporated records, as authenticated by Salyers9 and

Patterson’s testimony, were admissible under HRE Rule 803(b)(6).

E. The evidence, taken together, shows U.S. Bank had standing 

at the time it filed suit

Having addressed the admissibility of copies of the Note

and Caliber’s incorporated records, we are left with an 

evidentiary issue: has U.S. Bank established its standing to sue 

Verhagen?

In Reyes-Toledo, we held that a foreclosing plaintiff must 

establish its standing to bring a lawsuit at the commencement of 

the proceeding, not merely at the summary judgment stage. 139 

 

9 Salyers’ testimony contributes to the authentication of records Caliber 

incorporated from JPMorgan Chase by describing: (1) Caliber’s incorporation 

of those records in the normal course of its business; and (2) Caliber’s 

reliance on those records. Salyers’ testimony standing alone, however, would 

be insufficient to establish that Caliber’s incorporated records are 

admissible under HRE Rule 803(b)(6). This is because Salyers’ testimony does 

not describe any other circumstances, beyond mere incorporation and reliance, 

that indicate the incorporated records’ trustworthiness.
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Hawaiʻi 361, 369, 390 P.3d 1248, 1256. In the mortgage 

foreclosure context, we noted, the requirement of standing 

overlaps with a plaintiff’s burden of proving its entitlement to 

enforce the subject promissory note. Id. at 367, 390 P.3d at

1254.

Whether a party is entitled to enforce a promissory note is 

determined by application of HRS § 490:3-301, which provides:

“Person entitled to enforce” an instrument means (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 490:3-309 or 

490:3-418(d). A person may be a person entitled to enforce 

the instrument even though the person is not the owner of 

the instrument or is in wrongful possession of the 

instrument.

U.S. Bank maintains that, at the time it initiated suit, it 

was entitled to enforce the Note because it held the indorsedin-blank Note. U.S. Bank supports this claim with the following 

evidence: (1) Jennifer Martin’s February 9, 2016, certification 

certifying, under penalty of perjury, that at 12:51 p.m. on 

February 9, 2016, she personally verified Caliber’s possession 

of the original Note and attaching an indorsed-in-blank copy of 

the Note; (2) a bailee letter dated December 9, 2016, 

establishing that Caliber sent the Note to U.S. Bank’s counsel 

at that time; and (3) Patterson’s sworn testimony that, based on 

her review of Caliber’s records, and her knowledge of how those 

records are made and maintained in the ordinary course of 

business, “Plaintiff, or its agent on Plaintiff’s behalf, was in 
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possession of the original wet-ink, indorsed in blank Note when 

the [Verhagen] foreclosure action was commenced on March 23, 

2016, and since.”

The ICA held that this evidence was insufficient to 

establish U.S. Bank’s standing on the day it filed suit since 

“the Certification does not certify possession of the original 

Note by U.S. Bank at the time the Verified Complaint was filed, 

and the Attorney Bailee Letter was executed approximately nine 

months after U.S. Bank commenced the foreclosure action.” As 

U.S. Bank observes, the implication of this holding is that only 

evidence gathered on the day the complaint was filed would be 

sufficient to establish a foreclosing plaintiff possessed the 

subject promissory note at the time of filing. This is not, and 

should not be, the standard.

U.S. Bank’s briefing raises a compelling question: if the 

Note wasn’t in Caliber’s possession between February 9, 2016, 

and December 9th of the same year, where did it go? Here,

Patterson testified that based on her knowledge of Caliber’s 

records and record-keeping practices, U.S. Bank had actual or 

constructive possession of the Note at the time it filed the 

complaint. Such testimony, standing alone and uncorroborated by 

documentary evidence, would be insufficient to establish U.S. 

Bank possessed the Note when it filed the complaint. Here,

however, there is admissible documentary evidence showing that 
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U.S. Bank possessed the Note both a mere six weeks before the 

filing of the complaint and at the time of summary judgment. 

Collectively, the evidence presented by U.S. Bank thus

establishes the bank’s possession of the Note on the day the 

complaint was filed.10

Of course, a defendant may counter this inference of 

possession at the time of filing with evidence setting forth 

“specific facts showing that there is a genuine issue” as to 

whether the plaintiff actually possessed the subject note at the 

time it filed suit. See Hawaiʻi R. Civ. Pro. Rule 56(e). But 

that has not happened here. Verhagen has not offered any 

evidence undermining Patterson’s testimony that Caliber 

possessed the Note on March 23, 2016. And he has not offered 

any evidence that the Note left U.S. Bank’s custody in the ten 

months between Martin’s certification and the bailee letter. 

Nor has he offered any evidence contradicting or calling into 

question Martin’s certification. Accordingly, U.S. Bank’s 

evidence establishes that the bank possessed the Note, indorsed 

in blank,11 at the time it initiated suit. The bank thus has 

 

10 We reach this conclusion in part because Martin’s certification predates the filing of the complaint by less than two months. An older 

certification, and a correspondingly larger gap between the certification’s 

date and that of the complaint, would leave more room for a “genuine issue” 

as to whether U.S. Bank actually possessed the Note when it sued Verhagen.

11 Importantly, where, as here, standing is based on possession of a Note 

indorsed in blank, the admissible evidence must also show that the blank

indorsement occurred before the initiation of the suit. See HSBC Bank USA, 

Nat’l Ass’n v. Moore, CAAP-17-0000478, 2018 WL 1887197 (Haw. App. Apr. 20, 
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standing to foreclose against Verhagen under Reyes-Toledo. 

The evidence that the Note existed, that Verhagen was in 

default under its terms, and that Verhagen received the 

necessary notice of his default is undisputed. There is no 

genuine issue as to the Note’s existence, Verhagen’s default 

under its terms, or Verhagen’s receipt of the necessary notice. 

U.S. Bank is entitled to summary judgment and the ICA erred in 

reversing the circuit court’s grant of summary judgment to U.S. 

Bank.

F. Verhagen waived his objections to U.S. Bank’s motion to 

ratify 

“Issues not properly raised on appeal will be deemed to be 

waived.” Pele Defense Fund v. Paty, 73 Haw. 578, 613, 837 P.2d 

1247, 1268 (1992). Verhagen had an opportunity to oppose U.S. 

Bank’s motion to ratify but he did not do so. As such, he has 

waived his objections to that motion. Regardless, the ICA did 

not err in considering whether the Patterson declaration was 

admissible or sufficient to establish U.S. Bank’s entitlement to 

summary judgment.12 

 

2018). Here, this requirement is satisfied because the copy of the Note 

attached to Martin’s certification and authenticated by Patterson’s testimony 

is indorsed in blank.

12 Even when a motion for summary judgment is wholly unopposed, the motion 

should only be granted when the moving party submits facts establishing there 

are no genuine issues of material fact and that it is entitled to summary 

judgment as a matter of law. See Arakaki v. SCD-Olanani Corp., 110 Hawai‘i 1, 

7-8, 129 P.3d 504, 510-11 (2006). As the ICA explained in its Amended SDO, 

its evaluation of whether or not U.S. Bank has met its burden on summary 

judgment is not constrained by Verhagen’s failure to object to certain 
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III. CONCLUSION

We vacate the ICA’s October 28, 2020, judgment on appeal

and October 2, 2020, amended summary disposition order and 

affirm the circuit court’s October 8, 2018, amended judgment and 

amended order granting plaintiff’s motion for summary judgment 

and for interlocutory decree of foreclosure.

Paul Alston,

(David B. Rosen, David E. 

McAllister, Justin S. Moyer,

and Madisson L. Heinze,

on the briefs)

for petitioner

Keith M. Kiuchi,

for respondent

Patricia J. McHenry,

for Amicus Curiae 

Federal Housing Finance Agency

/s/ Mark E. Recktenwald

/s/ Paula A. Nakayama

/s/ Sabrina S. McKenna

/s/ Michael D. Wilson

/s/ Todd W. Eddins

 

evidence at the circuit court level.