UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

_________________________________ 

In re: ALEXANDER N. KIM; LAURA J. 

FOSTER, 

 Debtors. 

------------------------------ 

ALEXANDER N. KIM; LAURA J. 

FOSTER, 

 Appellants, 

v. 

JP MORGAN CHASE BANK N.A.; 

DOUGLAS E. LARSON, Chapter 7 

Trustee, 

 Appellees. 

No. 18-1186 

(D.C. No. 1:16-CV-02928-PAB) 

(D. Colo.) 

_________________________________ 

ORDER AND JUDGMENT*

_________________________________ 

Before HOLMES, MURPHY, and PHILLIPS, Circuit Judges. 

_________________________________ 

Seeking a substantial windfall, Alexander Kim and Laura Foster, a married couple, 

argue that JP Morgan Chase Bank cannot enforce a promissory note that Kim signed in 

return for a $2,000,000 loan. Their lone reason: the original promissory note is nowhere 

* This order and judgment is not binding precedent, except under the doctrines 

of law of the case, res judicata, and collateral estoppel. It may be cited, however, for 

its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1. 

FILED 

United States Court of Appeals 

Tenth Circuit 

April 28, 2020

Christopher M. Wolpert 

Clerk of Court
2 

to be found. During Kim and Foster’s bankruptcy proceedings, the bankruptcy judge 

sided with Chase, concluding that Chase could enforce the promissory note, even though 

the original is lost, because Chase had satisfied the elements of Colorado’s lostinstrument statute. Agreeing that Chase can enforce the promissory note under the lostinstrument statute, we hold that Chase presented admissible evidence in the bankruptcy 

proceedings to show that it constructively possessed the original promissory note when it 

was lost, that it had the right to enforce the promissory note at that time, and that Chase 

did not transfer the promissory note to its attorney. Accordingly, we affirm the 

bankruptcy court’s dismissal of Kim and Foster’s objection to Chase’s proof of claim. 

BACKGROUND 

I. Events Leading to Kim and Foster’s Bankruptcy and the Initial 

Bankruptcy Proceedings

On February 22, 2008, Kim obtained a $2,000,000 construction loan from 

Washington Mutual Bank so that he and Foster could construct a 10,000 square-foot 

building with an on-site commercial kitchen for their catering business in 

Carbondale, Colorado. Kim signed a promissory note (Note), pledging to pay 

$2,000,000 plus interest to Washington Mutual, and he and Foster executed a deed of 

trust covering the business’s property (except the water rights) to secure the Note. 

Washington Mutual indorsed the Note in blank, meaning Washington Mutual’s 
3 

indorsement did not identify a specific person “to whom it ma[de] the instrument 

payable.” Colo. Rev. Stat. Ann. § 4-3-205(a)–(b) (West 2020).1 

In 2008, in the midst of the housing-market crash that spurred the Great 

Recession, Washington Mutual failed, leading the Office of Thrift Supervision to 

shutter it. The Office of Thrift Supervision appointed the Federal Deposit Insurance 

Corporation (FDIC) as the receiver of Washington Mutual and its assets. 

On September 25, 2008, Chase and the FDIC agreed to a Purchase and 

Assumption Agreement through which Chase would purchase “certain assets” that 

Washington Mutual held. App. vol. 3 at 745. Section 3.3 of the Purchase and 

Assumption Agreement requires that conveyances under the agreement “be made, as 

necessary, by receiver’s deed or receiver’s bill of sale.” App. vol. 8 at 1968 

(capitalization removed). Through the Purchase and Assumption Agreement, Chase 

alleges that it “purchased all of [Washington Mutual’s] mortgage loans,” including 

Kim’s Note. Appellee Chase’s Answer Br. 4 (citing App. vol. 10 at 2472–515; id. 

vol. 7 at 1813:4–15). Kim and Foster dispute whether Chase purchased the Note, 

asserting that no evidence shows that the FDIC ever executed a receiver’s deed or a 

receiver’s bill of sale. 

1

 Though the first page of the Note shows that Kim (the borrower) promised to 

pay $2,000,000 to the order of “Lender” (Washington Mutual), the last page of the 

Note shows a stamp that says, “pay to the order of [blank] without recourse.” App. 

vol. 10 at 2466 (some capitalization removed). Tobin Tange, Washington Mutual’s 

Vice President, signed and indorsed the promissory Note. Thus, Washington Mutual, 

as the holder of the Note, indorsed the Note in blank, because it did not make the 

Note payable to an identified person. See Colo. Rev. Stat. Ann. § 4-3-205(a)–(b). 
4 

Whatever the case, Chase eventually sent Kim and Foster notice that it “was 

[now] the servicer” for the Note. App. vol. 3 at 745. Kim and Foster then began 

sending Chase checks that were made payable to Washington Mutual. 

Like Washington Mutual, Kim and Foster began experiencing financial 

difficulties of their own, and on September 21, 2010, they filed for bankruptcy under 

Chapter 11 of the Bankruptcy Code. See 11 U.S.C. §§ 1101–1195 (2018). Around 

this time, they defaulted on the Note. On November 12, 2010, Chase filed in the 

bankruptcy case a proof of claim,2

 which Chase amended on February 27, 2013. The 

bankruptcy court then converted the bankruptcy into a Chapter 7 Bankruptcy, see 11 

U.S.C. §§ 701–784 (2018), a conversion that Kim and Foster attribute to “numerous 

errors by [the] initial bankruptcy attorneys.” Appellants’ Opening Br. 8.3

 

2

 The Bankruptcy Code does not define the term “proof of claim,” but Federal 

Rule of Bankruptcy Procedure 3001(a) states that it is “a written statement setting 

forth a creditor’s claim.” 

3

 In a Chapter 7 bankruptcy, a bankruptcy trustee liquidates the property 

existing in the bankruptcy estate at the time of the bankruptcy to pay the debtor’s 

creditors, and, in return, the bankruptcy court grants the debtor a discharge, which 

(among other things) “operates as an injunction against the commencement or 

continuation of an action, the employment of process, or an act, to collect, recover or 

offset any such debt as a personal liability of the debtor.” 11 U.S.C. § 524(a)(2) 

(2018); see also id. §§ 726–727. Chapter 11, on the other hand, grants the debtor’s 

business a chance at reorganization, and a bankruptcy “trustee may operate the 

debtor’s business” during a Chapter 11 bankruptcy. Id. § 1108; see also id.

§ 1115(a)–(b) (including post-petition property in the bankruptcy estate and generally 

permitting debtors to “remain in possession of all property of the estate”). 

Presumably, the “errors” that Kim and Foster allude to is that by allowing the 

bankruptcy to be converted from a Chapter 11 bankruptcy into a Chapter 7 

bankruptcy, Kim and Foster’s earlier attorneys deprived them of the opportunity to 

maintain and manage their business while seeking to emerge from bankruptcy. 
5 

With new counsel in place, on March 5 and 12, 2014, Kim and Foster sent 

letters to Chase requesting to see the original Note. Chase did not immediately 

respond. Instead, on March 28, 2014, Chase filed a motion with the District Court of 

Eagle County, Colorado, seeking to foreclose under the deed of trust and sell Kim 

and Foster’s property. 

During the state-foreclosure proceedings, Kim and Foster served discovery 

requests on Chase, demanding that Chase produce the original Note. Chase opposed 

those discovery requests and filed a motion to strike discovery. At a second status 

conference, Chase admitted that as of June 10, 2014, it “was not currently in 

possession of the original [Washington Mutual] Note.” App. vol. 3 at 746. Chase 

never produced the original Note at further state proceedings and eventually filed a 

motion to withdraw its earlier motion seeking foreclosure. 

The case then returned to the bankruptcy court, where Kim and Foster filed a 

motion for examination under Federal Rule of Bankruptcy Procedure 2004. This 

motion allows an examination into “the acts, conduct, or property or to the liabilities 

and financial condition of the debtor, or to any matter which may affect the 

administration of the debtor’s estate, or to the debtor’s right to a discharge.” Fed. R. 

Bankr. P. 2004(b). Kim and Foster claimed a right to discharge Chase’s claim, so 

they served subpoenas on Chase and sought production of the original Note.

On July 6, 2015, Chase produced thousands of document pages but did not 

provide the original Note. On July 30, 2015, the bankruptcy court entered an order 

setting the matter for a hearing and ordered Chase to bring the original Note. At the 
6 

hearing, Chase failed to produce the Note and admitted that it was not in possession 

of the original. 

At the bankruptcy judge’s invitation, Kim and Foster filed a motion for 

sanctions, and they also filed an objection to Chase’s proof of claim. Chase opposed 

the objection, arguing that even though the Note was lost, Chase was still a holder 

entitled to enforce the Note. Before ruling on these matters, the bankruptcy court held 

a two-day evidentiary hearing. 

II. Evidentiary Hearing 

On June 21 and 22, 2016, the bankruptcy court heard the parties’ evidence. 

The key witness was a “mortgage banking research officer,” Marilyn Lea. App. vol. 7 

at 1785:24–25. 

A. Marilyn Lea 

Lea testified that, as a mortgage-banking research officer, she “review[ed] 

loans that are in litigation.” Id. at 1786:1–2. She explained that she had reviewed 

Chase’s business records and that she had oftentimes testified in Chase’s legal 

proceedings. Though she did not actively manage customer-service accounts, she was 

“very familiar with their processes and [had] been trained in [them].” Id. at 1786:8–

15. At the time of the hearing, Lea had been working for Chase for over seven years.

Lea testified that even though she was primarily involved with Chase’s 

litigation matters, she had personally “create[d] a few” business records for them. Id.

at 1787:25–1788:2. She stated that she would “pull summaries and reports out of the 

business records” and “make notations” in a computer system about “appearances 
7 

that are coming up.” Id. at 1788:3–6. She also stated that she “review[ed] Chase’s 

business records on an ongoing basis every day.” Id. at 1793:10–14. 

Lea admitted that Chase no longer possessed the original Note. She testified 

that Chase had sent the Note to its foreclosure counsel to commence foreclosure 

proceedings against Kim and Foster. Even though Chase usually would have required 

its counsel to sign and return a bailee’s letter establishing that he was holding the 

original Note, Lea conceded that Chase had no such letter in its business records. She 

explained that Chase had not implemented its practice of requiring bailee’s letters 

“until after this original note was sent out.” Id. at 1789:2–3. 

Kim and Foster’s counsel then asked Lea about the Purchase and Assumption 

Agreement, specifically, whether Chase held in its business records the “receiver’s 

deed or bill of sale” that the Purchase and Assumption Agreement required when the 

FDIC conveyed certain assets to Chase. Id. at 1790:4–19. She testified that such a 

deed or bill was not in Chase’s system, although Chase did have the assignment of a 

deed of trust. 

Lea knew little about the original Note: she had never handled it or spoken 

with Chase’s foreclosure counsel about it. Nonetheless, through Lea, the bankruptcy 

judge admitted under Federal Rule of Evidence 803(6) numerous exhibits concerning 

the Note, with the following limiting instruction: “[They are] admitted as a business 

record contained in the records of Chase Bank and establish[] that and nothing 

further.” Id. at 1832:25–1833:1. 
8 

B. Key Exhibits 

After the two-day evidentiary hearing, the bankruptcy court issued a written 

order, which apparently rested on only Lea’s testimony and two exhibits that the 

parties had introduced.4

 First, the court relied on Exhibit L and Lea’s testimony about 

Exhibit L to determine that Chase had possessed the original Note in September 

2009. Second, the court may have relied on Exhibit M and Lea’s testimony about 

Exhibit M to find that Chase had lost the Note “sometime after the May 12, 2010 

transmission of the original documents to Chase’s prior attorney.” App. vol. 5 

at 1127 n.23. 

1. Exhibit L: Print-Out of a Screenshot of the Scanned 

Promissory Note 

Exhibit L is a print-out of a screenshot of the Note’s scanned first page. It 

contains computer data showing that it had been scanned into Chase’s system on 

September 17, 2009. The computer data on the print-out shows that the owner was 

“WAMU” (Washington Mutual). The Note itself shows that the borrower (Kim) 

promised to pay the lender (Washington Mutual) $2,000,000, plus interest. Lea 

testified that the print-out proved “that the original note was deposited to Chase’s 

vault or was scanned into Chase’s vault” in September 2009. App. vol. 7 at 1827:1–

1828:7.

4

 Though Kim and Foster challenge several other exhibits, they seem to 

concede that those other exhibits do not matter. See Appellants’ Reply Br. 14 (noting 

that “the Court relied on a narrow and specified set of evidence” and citing Exhibit L, 

Exhibit M, and Lea’s testimony). Because we conclude that the other exhibits are 

immaterial for our purposes, we need not consider their admissibility. 
9 

2. Exhibit M: “Doc-Line-Report” 

Exhibit M is a summary report about the Note that identifies Washington 

Mutual as the “Heritage Indicator” and Kim as the borrower. App. vol. 10 at 2619.

This report states that the “[p]roperty [s]tate” is Colorado, identifies the relevant 

County number for the property, and identifies Chase’s foreclosure counsel under a 

track-location-description heading. Id. at 2619–20. It shows that the “doc[ument] 

release date” was May 12, 2010. Id. at 2622 (capitalization removed). It also states 

that “[t]he file is located at a Litigation or Bankruptcy attorney[’]s office.” Id.

at 2623. 

C. Robert Byrnes 

Also at the hearing, Kim and Foster introduced testimony from their expert, 

Robert Byrnes, stating that he could not verify whether Exhibit L was a true and 

accurate copy without reviewing the original scan of Exhibit L, not just a copy of the 

scan. Byrnes testified that the electronic copies he had examined had been created or 

modified in 2015. During Byrnes’s brief cross-examination, when asked if he had 

“any opinion as to whether the PDFs accurately reflect Chase’s computer-stored 

records,” he said, “No, I do not.” App. vol. 7 at 1782:17–20. 

D. The Bankruptcy Court’s Order 

In its order on Kim and Foster’s claim objection, the bankruptcy court 

addressed two issues: (1) whether Chase was entitled to enforce the Note, and 

(2) whether and what sanctions were appropriate against Chase. The bankruptcy 

judge ultimately awarded Kim and Foster $22,841.03 in sanctions, and Chase does 
10 

not challenge that award on appeal. What is at issue, though, is the bankruptcy 

court’s ruling that Chase was entitled to enforce the Note. 

1. Standing 

Before reaching its conclusion on the merits, the bankruptcy court first 

considered standing. It noted that Chapter 7 debtors “generally do[] not have such 

standing to bring objections to claims and other issues of administration of the 

bankruptcy estate, unless they can show after payment of creditors a surplus will 

remain to be paid to the debtor.” App. vol. 5 at 1124 (citing Cult Awareness Network, 

Inc. v. Martino (In re Cult Awareness Network, Inc.), 151 F.3d 605, 608 (7th Cir. 

1998)). 

The bankruptcy court noted that the parties had presented no evidence about 

the solvency of the bankruptcy estate. On its own review, the bankruptcy court 

surmised that it was unlikely that the estate was solvent. Nonetheless, the bankruptcy 

court considered the case an unusual one: “the Debtors’ contention they would like to 

negotiate with the proper party with respect to the Note and [deed of trust] creates a 

pecuniary interest in that if they are able to negotiate a payment plan, they will be 

able to retain their residence and operate their business from the property.” Id. Thus, 

the bankruptcy court ruled that “in the present dispute only, the Court finds the 

Debtors have standing to proceed.” Id. 

2. Merits 

After confirming that Kim and Foster had standing to object to Chase’s proof 

of claim, the bankruptcy judge next considered whether Chase could enforce the 
11 

Note. The bankruptcy court isolated the issue to whether Chase has a right to 

payment—that is, a claim. That issue turns on state law, Miller v. Deutsche Bank 

Nat’l Tr. Co. (In re Miller), 666 F.3d 1255, 1262–63 (10th Cir. 2012) (quoting In re 

Mims, 438 B.R. 52, 56 (Bankr. S.D.N.Y. 2010)), so the bankruptcy court looked to 

Colorado’s version of the Uniform Commercial Code (UCC). Agreeing that 

Washington Mutual indorsed the Note in blank by not indorsing it as payable to the 

order of an identified party, the court turned to whether Chase could enforce the Note 

even though it was lost. Relying on Colorado’s lost-instrument statute, the 

bankruptcy court determined that Chase had to meet three elements to succeed: 

“1) Chase was in possession of the instrument and entitled to enforce it when loss of 

possession occurred; 2) the loss of possession was not the result of a transfer by 

Chase or a lawful seizure; and 3) Chase cannot reasonably obtain possession of the 

Note.” App. vol. 5 at 1125–26 (quoting Colo. Rev. Stat. Ann. § 4-3-309(a)–(b)). 

First, the bankruptcy court found that Chase had once possessed the Note 

because “Chase produced convincing evidence the Note was scanned into its business 

records.” Id. at 1126. Relying on the scan date from Exhibit L (and Lea’s testimony), 

the court found that Chase had scanned the original Note into its system on 

September 17, 2009. 

The bankruptcy court also found Expert Byrnes’s testimony unpersuasive. The 

court noted that Byrnes had claimed that he would have to examine the original 

scanned promissory Note to determine whether Exhibit L (the screenshot) was an 

identical match. But Byrnes had not shown or claimed that the scan of the original 
12 

Note had ever been altered, and the bankruptcy court credited Lea’s testimony that 

she had no ability to change a scan that was in Chase’s system. Finding Lea 

“credible,” the Court stated that “Chase ha[d] provided an accurate copy of the 

original Note.” Id. at 1127. 

Second, the bankruptcy court noted that “neither party suggests . . . that Chase 

transferred the original Note to another entity, or that the Note was lawfully seized by 

another entity.” Id. Also, the bankruptcy court concluded that the Purchase and 

Assumption Agreement—which requires that certain assignments between the FDIC 

and Chase be documented by a receiver’s deed or bill of sale—was irrelevant to 

whether Chase had acquired the Note. 

Third, the bankruptcy court found that “there is no question that [the] original 

paper Note was lost, possibly in transmission to or from Chase’s prior counsel. 

Therefore, Chase cannot reasonably be expected to find and produce the original 

Note.” Id. at 1128. 

Having decided that Chase met all three elements of the lost-instrument 

statute, the court ruled that Chase had met its burden of showing that it was entitled 

to enforce the Note. Thus, it denied Kim and Foster’s objection to Chase’s proof of 

claim. 

E. The District Court Affirms the Bankruptcy Court. 

Kim and Foster appealed the bankruptcy court’s ruling to the district court. 

The district court concluded that the bankruptcy court had relied on admissible 

evidence in concluding that Chase possessed the Note in 2009 and agreed that the 
13 

Purchase and Assumption Agreement was irrelevant to whether the FDIC had 

transferred the Note to Chase. In addition, the district court ruled that the evidence 

supported the bankruptcy court’s conclusion that Chase had lost the Note, as opposed 

to having transferred the Note or having had it seized. After rejecting Kim and 

Foster’s additional arguments, the district court affirmed the bankruptcy court on all 

grounds. Kim and Foster timely appeal, and we have appellate jurisdiction under 

28 U.S.C. § 158(d)(1).

DISCUSSION 

I. Opinion Under Review and Standard of Review 

We independently review the bankruptcy court’s order and afford no deference 

to the district court’s intermediate ruling. Aviva Life & Annuity Co. v. White (In re 

Millennium Multiple Emp’r Welfare Benefit Plan), 772 F.3d 634, 638–39 (10th Cir. 

2014) (citing Miller v. Bill & Carolyn L.P. (In re Baldwin), 593 F.3d 1155, 1159 

(10th Cir. 2010); In re Miller, 666 F.3d at 1260)). We review de novo the bankruptcy 

court’s legal conclusions but examine its factual findings for clear error. Nelson v. 

Long (In re Long), 843 F.3d 871, 873 (10th Cir. 2016). When reviewing the 

bankruptcy court’s factual findings, we “must defer to facts found by the bankruptcy 

court unless ‘[they are] without factual support in the record’ or, after examining all 

the evidence, we are left with a ‘definite and firm conviction that a mistake has been 

made.’” DSC Nat’l Props., LLC v. Johnson (In re Johnson), 477 B.R. 156, 168 

(B.A.P. 10th Cir. 2012) (citations omitted). Yet if the bankruptcy court’s factual 

findings “are premised on improper legal standards or on proper ones improperly 
14 

applied, they are not entitled to the protection of the clearly erroneous standard, but 

are subject to de novo review.” Sender v. Johnson (In re Hedged-Invs. Assocs., Inc.), 

84 F.3d 1267, 1268 (10th Cir. 1996) (internal quotation marks and citation omitted). 

A bankruptcy court’s evidentiary rulings to admit evidence—as opposed to its 

factual findings—are generally reviewed for abuse of discretion. See United States v. 

Collins, 575 F.3d 1069, 1073 (10th Cir. 2009) (citing United States v. Chavez, 229 

F.3d 946, 950 (10th Cir. 2000)). But because Kim and Foster challenge hearsay 

rulings, they have a particularly heavy burden. See United States v. Hamilton, 413 

F.3d 1138, 1142 (10th Cir. 2005) (“[H]earsay determinations are particularly fact and 

case specific, [so] our review of those decisions is ‘especially deferential.’” (quoting 

Chavez, 229 F.3d at 950; and citing United States v. Pulido-Jacobo, 377 F.3d 1124, 

1132 (10th Cir. 2004))). Moreover, Kim and Foster’s hearsay challenges rely on the 

Federal Rules of Evidence; thus, the harmless-error standard applies, and we will 

reverse only if we have a “grave doubt as to whether” any errors had “a substantial 

influence on the outcome.” See Collins, 575 F.3d at 1073 (internal quotation marks 

omitted) (quoting United States v. Jones, 44 F.3d 860, 873 (10th Cir. 1995)). 

II. The Lost-Instrument Statute 

A creditor has a “claim” to property in the bankruptcy estate if it has a “right 

to payment.” 11 U.S.C. § 101(5)(A) (2018). State law determines the extent to which 

a creditor has property rights to assets within the bankruptcy estate. In re Miller, 666 

F.3d at 1262 (citation omitted). So, like in In re Miller, “[w]e must . . . turn to 

Colorado law, in particular [Colorado’s] version of the [UCC].” Id. at 1262–63. 
15 

Under Colorado law, a promissory note is “payable to bearer if it . . . [d]oes 

not state a payee.” Colo. Rev. Stat. Ann. § 4-3-109(a)(2) (West 2020). As discussed, 

Washington Mutual did not make the Note payable to any payee, so the Note is 

payable to bearer. 

Generally, the only people entitled to enforce a blank-indorsed note are those 

in physical possession of it. That is because Colorado law states that “[w]hen 

indorsed in blank, an instrument becomes payable to bearer and may be negotiated by 

transfer of possession alone until specially indorsed.” Id. § 4-3-205(b); see also In re 

Miller, 666 F.3d at 1263–64 (“In the case of bearer paper . . . physical possession is 

essential because it constitutes proof of ownership and a consequent right to 

payment.”). 

Colorado’s lost-instrument statute is an exception to this general rule. In 

pertinent part, the lost-instrument statute states: 

A person not in possession of an instrument is entitled to enforce the 

instrument if (i) the person was in possession of the instrument and entitled 

to enforce it when loss of possession occurred, (ii) the loss of possession 

was not the result of a transfer by the person or a lawful seizure, and 

(iii) the person cannot reasonably obtain possession of the instrument 

because the instrument was destroyed, its whereabouts cannot be 

determined, or it is in the wrongful possession of an unknown person or a 

person that cannot be found or is not amenable to service of process. 

Colo. Rev. Stat. Ann. § 4-3-309(a) (West 2020). So even if a holder of a note lost it, 

he or she may enforce the note by satisfying these three elements. The question now 

is whether the bankruptcy court was correct in ruling that Chase had satisfied all 

three of the lost-instrument statute’s elements. Arguing that it was not, Kim and 
16 

Foster first claim that the court relied on inadmissible evidence, meaning that no 

factual basis existed for concluding that Chase had met these elements. Second, Kim 

and Foster assert that Chase did not meet these elements as a matter of law. 

III. Kim and Foster’s Factual Arguments 

A. Lea’s Direct-Examination Testimony 

Kim and Foster argue that the bankruptcy court erred by relying on Lea’s 

testimony because “she had no personal knowledge concerning Chase obtaining 

possession of the original Note in 2009, Chase sending the Note to [its foreclosure 

counsel] in 2010, or not receiving the Note back.” Appellants’ Opening Br. 43. And 

Kim and Foster contend that without personal knowledge, she could not provide 

relevant evidence concerning Chase’s possession and loss of possession of the Note. 

In addition, Kim and Foster argue Lea’s testimony about Exhibits L and M (and their 

contents) is inadmissible, because she was merely “‘parroting’ the content of the 

Exhibits.” Appellants’ Reply Br. 21 (quoting United States v. Garcia, 793 F.3d 1194, 

1213 (10th Cir. 2015)). 

 But Kim and Foster’s counsel called Lea to testify on direct examination as an 

adverse witness. And “[g]enerally, a party introducing evidence cannot complain on 

appeal that the evidence was erroneously admitted.” Ohler v. United States, 529 U.S. 

753, 755 (2000) (citation omitted). Discussing Ohler, we have stated that “the party 

introducing the evidence waives—rather than forfeits—any objection to its 

admission, meaning ‘we do not consider the claim at all, even under the forgiving 

plain-error standard.’” Vehicle Mkt. Research, Inc. v. Mitchell Int’l, Inc., 839 F.3d 
17 

1251, 1258 (10th Cir. 2016) (quoting Hancock v. Trammell, 798 F.3d 1002, 1011 n.3 

(10th Cir. 2015)).5

 This waiver rule applies in civil cases, id. at 1258 n.5 (citations 

omitted), and it applies when a party elicits testimony on direct examination, see id.

at 1258 (applying Ohler when a party elicited testimony on direct examination). 

 This waiver is significant because Lea’s direct-examination testimony 

establishes all three elements of the lost-instrument statute. When asked if she had 

spoken with anyone at Chase who knew which (if any) Chase employees “physically 

took possession of the note,” Lea testified that she knew “that the vault personnel [at 

Chase’s vault in Monroe, Louisiana,] physically took possession of the note.” App. 

vol. 7 at 1800:15–20. Further, when asked if “Chase [wa]s not in possession of the 

original Alexander Kim note,” Lea responded, “[c]orrect.” Id. at 1788:10–12. Lea 

then stated that Chase had sent the original Note to its foreclosure counsel and that 

Chase still, as of June 2016, had the right to enforce the Note. 

Starting with element one—“the person was in possession of the instrument 

and entitled to enforce it when loss of possession occurred”—we find that Lea’s 

testimony directly states that Chase physically possessed the Note. And because Kim 

and Foster agree that “physical possession” of a blank-indorsed note “constitutes 

proof of ownership and a consequent right to payment,” Appellants’ Opening Brief 

5

 As it affects Lea’s direct-examination testimony, Kim and Foster’s fallback 

argument—“that if each objection was not clearly preserved, there is no waiver of the 

issue if there is plain-error resulting in manifest injustice”—is therefore precluded by 

Vehicle Market Research. Appellants’ Reply Br. 13 (alteration, internal quotation 

marks, and citation omitted). 
18 

at 32 (citing Miller, 666 F.3d at 1262–63), her testimony also establishes that Chase 

had the right to enforce the Note. 

All that leaves for element one is timing: Chase must show it possessed and 

could enforce the Note “when loss of possession occurred.” But the bankruptcy court 

found that “[t]he original Note was removed from the vault and transferred to 

Chase’s prior attorney, and was thereafter lost and has not been returned,” a finding 

that establishes Chase both possessed the Note and could enforce it when it was lost. 

App. vol. 5 at 1126. And Lea’s testimony on direct examination supports that finding. 

She stated that Chase sent the Note to its foreclosure counsel and that the Note was 

lost thereafter. From this testimony, even if Lea did not provide a precise date, we 

conclude that the bankruptcy judge drew a reasonable inference that Chase 

maintained possession (and, therefore, the right to enforce the Note) when the Note 

was lost. See United States v. Porter, 928 F.3d 947, 962 (10th Cir. 2019) (“Under 

clear error review, we ‘view the evidence and inferences drawn therefrom in the light 

most favorable to the [bankruptcy] court’s determination.’” (quoting United States v. 

Brown, 314 F.3d 1216, 1222 (10th Cir. 2003))).6

Next, for element two, Chase must prove that it did not lose possession 

through a transfer or a lawful seizure. Colo. Rev. Stat. Ann. § 4-3-309(a). Finding for 

Chase again, the bankruptcy court stated that “[n]o evidence indicates, and, indeed, 

neither party suggests, that Chase transferred the original Note to another entity, or 

6

 Our conclusion that Chase maintained constructive possession also supports 

this finding. See discussion infra Section IV.A. 
19 

that the Note was lawfully seized by another entity.” App. vol. 5 at 1127. In a 

footnote, the bankruptcy court reasoned that Chase entrusted the Note with its 

attorney so that he could hold it as Chase’s agent. 

Lea’s testimony on direct examination also supports that finding. Again, she 

testified that Chase sent the Note to its foreclosure counsel and that, at the time of the 

hearing (June 2016), Chase still had the right to enforce the Note. But if Chase 

maintained the right to enforce the Note in 2016, then the bankruptcy court could 

have easily inferred that Chase never transferred the Note to its attorney or gave up 

its right of possession. Rather, Chase still possessed the Note then, and the attorney 

merely took custody over it through an agency relationship.7

 

Likewise, Lea’s testimony supports the bankruptcy court’s finding on element 

three: “there is no question that [the] original paper Note was lost, possibly in 

transmission to or from Chase’s prior counsel. Therefore, Chase cannot reasonably be 

expected to find and produce the original Note.” App. vol. 5 at 1128. As mentioned, 

Lea testified on direct examination that Chase possessed the Note, sent the Note to its 

foreclosure counsel, and that the Note was then lost. From this testimony, we 

conclude that the bankruptcy court could have reasonably inferred that Chase could 

not obtain the Note, because its whereabouts could not be determined.8

 

7

 Again, our later conclusion that Chase maintained constructive possession of 

the Note through an agency relationship precludes any contrary argument. 

See discussion infra Section IV.A. 

8

 In addition to Lea’s testimony, the bankruptcy court could have drawn this 

inference from evidence that was not before the court. If Chase knew about the 
20 

Kim and Foster introduced this testimony themselves; therefore, under Ohler, 

they cannot now challenge the admissibility of this evidence on appeal. And because 

“we may affirm on any ground supported by the record,” Johnson v. Spencer, 950 

F.3d 680, 720 (10th Cir. 2020) (citation omitted), we could stop our analysis here and 

conclude that through Lea’s testimony, Kim and Foster satisfied Chase’s burden for 

Chase.9

B. Lea’s Cross-Examination Testimony About Exhibit L 

Even assuming Lea’s direct-examination testimony was not enough, her 

cross-examination testimony about Exhibit L definitively resolves the primary 

dispute—whether Chase possessed the Note. On cross-examination, Lea testified 

about the contents of Exhibit L (a print-out of a screenshot of the Note’s scanned first 

blank-indorsed Note’s whereabouts, it seems a fair inference that Chase would have 

produced the Note, rectifying the problems—one being the possibility of sanctions—

that it had created by having lost the Note. And if Chase never actually possessed the 

Note and some other unidentified entity did (as Kim and Foster seem to suggest), 

then the bankruptcy judge could have reasonably questioned why that entity never 

filed a proof of claim in the bankruptcy proceedings, seeking to recover what it could 

on the $2,000,000 debt instrument. 

9

 Kim and Foster argue that the bankruptcy judge violated the law of the case 

by exceeding the limiting instructions that it attached to Chase’s business records. 

But Kim and Foster forfeited their law-of-the-case argument by not raising it in the 

original appeal to the district court. See Foster v. Hill (In re Foster), 188 F.3d 1259, 

1264 n.5 (10th Cir. 1999) (holding that a party had “forfeited the issue in [that] 

appeal” by not raising it on appeal to the “district court as an alternative basis to 

affirm”). And even if Kim and Foster had not forfeited it, we would refuse to 

consider it, because we can affirm the bankruptcy court’s decision that Chase 

satisfied the elements of the lost-instrument statute based on this direct-examination 

testimony alone. See Johnson, 950 F.3d at 720. 
21 

page) and the procedures Chase followed when scanning notes. Among other things, 

she explained that 

 Chase contemporaneously scanned notes into its system when it received 

the original notes, and Chase had no ability to change scan dates.

 On September 17, 2009, Chase scanned the original Note into its computer 

system. 

 Therefore, on September 17, 2009, Chase had possession of the original 

Note. 

We conclude that this testimony, if admissible, provided a factual basis for the 

bankruptcy court to find that Chase had obtained possession of (and, thus, the right to 

enforce) the Note. As they did in the bankruptcy court, Kim and Foster argue that this 

evidence should never have been introduced because it is inadmissible.10

Hearsay evidence is “an oral or written assertion by a declarant offered to 

prove the truth of the matter asserted.” United States v. Channon, 881 F.3d 806, 811 

(10th Cir. 2018) (citing Fed. R. Evid. 801). Such evidence is generally inadmissible. 

10 Chase claims that “[a]t the Evidentiary Hearing, Debtors’ counsel never 

objected to the admissibility of Ms. Lea’s testimony on the basis of a lack of 

first-hand knowledge or any other grounds,” meaning we should now apply our 

demanding plain-error standard of review to the business-record-exception issue. See 

Appellee Chase’s Answer Br. 25. But the record shows that when Chase moved to 

admit Exhibit L, lack of personal knowledge was one of many objections Kim and 

Foster raised: 

MS. LOWERY-GRABER: Your Honor, I’d ask for admission of 

Exhibit L. 

MR. BUECHLER: Objection, Your Honor, foundation, best evidence, 

double hearsay after triple hearsay, Your Honor and lack of personal 

knowledge. 

App. vol. 7 at 1832:18–22 (emphasis added). Because Kim and Foster objected 

to this evidence in the bankruptcy court, we do not apply plain-error review. 
22 

Fed. R. Evid. 802. As an exception to the rule against hearsay, business records are 

admissible to prove the truth of the matters asserted within those records if the party 

offering the business record can satisfy these elements: 

[B]usiness records are admissible despite their hearsay nature if the 

records’ custodian, or another qualified witness, testifies the records 

(1) were prepared in the normal course of business; (2) were made at or 

near the time of the events recorded; (3) were based on the personal 

knowledge of the entrant or of a person who had a business duty to transmit 

the information to the entrant; and (4) are not otherwise untrustworthy. 

United States v. Irvin, 682 F.3d 1254, 1261 (10th Cir. 2012) (citing United States v. Ary, 

518 F.3d 775, 786 (10th Cir. 2008)); see also Fed. R. Evid. 803(6). For the following 

reasons, we hold that Chase has satisfied each of these elements. 

1. Lea was a qualified witness.

Kim and Foster argue that Lea was incompetent to testify about whether Chase 

obtained possession of the Note. Among other things, they argue that she lacked 

first-hand knowledge about any of the details surrounding the Note and that she did 

not learn of those details from people who would have scanned the Note into Chase’s 

system. 

Federal Rule of Evidence 803(6)(D) requires testimony from the custodian of 

the business record or “another qualified witness.” The rule does not define the term 

“another qualified witness,” but most courts have “broadly interpreted [it] to require 

only that the witness understand the record-keeping system.” United States v. Ray, 

930 F.2d 1368, 1370 (9th Cir. 1990) (citations omitted); see also Brawner v. Allstate 

Indem. Co., 591 F.3d 984, 987 (8th Cir. 2010) (“[W]e have established that the 
23 

‘custodian or other qualified witness need not have personal knowledge regarding the 

creation of the document offered, or personally participate in its creation, or even 

know who actually recorded the information.”’ (citations omitted)); Wallace Motor 

Sales, Inc. v. Am. Motors Sales Corp., 780 F.2d 1049, 1061 (1st Cir. 1985) (“A 

qualified witness is simply one who can explain and be cross-examined concerning 

the manner in which the records are made and kept.” (citation omitted)). 

Here, Lea’s testimony demonstrated that she thoroughly understood Chase’s 

recordkeeping process. She testified that she reviewed Chase’s business records 

daily. She testified that she herself had created business records for Chase. She knew 

about where Chase maintained its document vault—Monroe, Louisiana—and she 

testified that she had inspected the vault herself. She testified that “the vault records 

are kept very meticulously.” App. vol. 7 at 1800:23. She testified that she “personally 

witnessed how [Chase employees] scan in the documents and separate the files.” Id.

at 1801:15–22. She explained how Chase’s I-Vault system—where Chase 

electronically stored its records after they were scanned—functioned. She described 

which Chase personnel were authorized to enter information into the I-Vault system. 

She explained that, temporally, Chase employees scanned documents as they were 

received and immediately uploaded into the I-Vault system. Finally, she explained 

that she had acquired this knowledge after having served as a Chase mortgagebanking research officer for over seven years. 
24 

Thus, we conclude that Lea was a qualified witness. As a result, contrary to Kim 

and Foster’s argument, Lea did not need to have personal knowledge about Exhibit L’s 

contents to testify about Exhibit L. 

2. Exhibit L was prepared in the normal course of business.

When asked if Exhibit L was “kept and maintained in the ordinary course of its 

business,” Lea testified, “[y]es.” Id. at 1831:16–18. Even so, Kim and Foster argue 

that Exhibit L was not maintained in the ordinary course of business, because it is a 

print-out of data that was stored in Chase’s recordkeeping system and Chase created 

the document in preparation for this litigation. Specifically, Kim and Foster assert 

that “[p]reparing a document for litigation is not the regular course of business, 

preventing trustworthiness.” Appellants’ Reply. Br. 16 (citations omitted). 

But our circuit rejected that argument thirty years ago: “so long as the original 

computer data compilation was prepared pursuant to a business duty in accordance 

with regular business practice, the fact that the hard copy offered as evidence was 

printed for purposes of litigation does not affect its admissibility.” United States v. 

Hernandez, 913 F.2d 1506, 1512–13 (10th Cir. 1990); see also Channon, 881 F.3d at 

811 (“As we have previously held, business records in one form may be presented in 

another for trial.” (citing Hernandez, 913 F.2d at 1512–13)). The original electronic 

scan is what matters here, and just because Chase presented that business record in a 

different form does not make it inadmissible if the other elements of the businessrecord exception are satisfied. 
25 

3. The original scan was made near the time of the events at 

issue.

Lea testified that Exhibit L’s scan date was entered in both a timely and trustworthy 

fashion. She testified that the original Note was scanned on September 17, 2009. She also 

testified that the records were kept “very meticulously” and that the “scan date cannot be 

changed.” App. vol. 7 at 1800:23, 1803:21–22. 

Kim and Foster’s only argument to the contrary is based on Expert Byrnes’s 

testimony that because he had not reviewed the original scanned file, he could not 

confirm that Chase scanned the document into its system in 2009 or created the original 

scan at that time. Byrnes testified that the electronic copies he had received had been 

created or modified in 2015. Thus, Byrnes testified that he did not have “any opinion as 

to whether the PDF[] accurately reflect[ed] Chase’s computer-stored records.” Id.

at 1782:17–20. 

Relying on Lea’s testimony, the bankruptcy judge chose to credit her account over 

Byrnes’s hesitancies about Exhibit L. He noted that Byrnes had not claimed that “the 

scan of the original Note had been fraudulently altered.” App. vol. 5 at 1127. And he 

noted that Lea had testified that “when she creates an image of a scanned document from 

Chase’s electronic files, she has no ability to change any of the scan information.” Id.

Kim and Foster’s argument that Exhibit L is unreliable because it was created “in 

2015, not contemporaneously with events allegedly occurring in 2009-2011,” Appellants’ 

Reply Br. 17, asks us to make a credibility determination—crediting Byrnes’s concerns 

about his inability to verify that the original scan was created in 2009 over Lea’s 
26 

testimony that the original scan must have been made in 2009 because the scan date 

could not be changed and was contemporaneously generated as it was inputted into 

Chase’s system. But on a clearly erroneous standard of review, we leave that credibility 

determination for the bankruptcy judge. See Mason v. Young (In re Young), 237 F.3d 

1168, 1176 (10th Cir. 2001) (“However, that is a credibility determination that is properly 

the province of the trier of fact—in this case the bankruptcy court—, and we may not 

disturb that trier of fact’s credibility determinations on appeal.” (citing Anderson v. City 

of Bessemer City, 470 U.S. 564, 575 (1985))). In Anderson, the Court instructed that “the 

court of appeals may not reverse [a district court] even though convinced that had it been 

sitting as the trier of fact, it would have weighed the evidence differently. Where there 

are two permissible views of the evidence, the factfinder’s choice between them cannot 

be clearly erroneous.” 470 U.S. at 574 (citing United States v. Yellow Cab Co., 338 U.S. 

338, 342 (1949)). Lea’s account was permissible—indeed, it was more persuasive—

hence we conclude that the bankruptcy court did not clearly err by concluding that the 

original scan was created at or near the time of the 2009 events at issue. And because 

Exhibit L is just a print-out of a screenshot of the scanned Note, it is admissible. See 

2 Kenneth S. Broun et al., McCormick On Evidence § 294 (Robert P. Mosteller ed., 

8th Fed. Jan. 2020 update) (“The question as to the timeliness of the creation of the 

record is answered by observing that the time requirement refers to when the entry into 

the data bank was originally made, not the time the printout was produced.” (collecting 

cases)). 
27 

4. Exhibit L was based on the personal knowledge of the entrant 

or of a person who had a business duty to transmit the 

information to the entrant. 

Kim and Foster do not address whether the vault personnel who entered into 

Chase’s system the information contained in Exhibit L had personal knowledge of the 

information or a business duty to transmit the information. But Lea did: she testified 

that “I-Vault personnel” at Chase’s Monroe, Louisiana vault contemporaneously 

entered information as they were scanning the document into Chase’s system. App. 

vol. 7 at 1829:6–25. She also testified that once the scan date was entered, “that scan 

date cannot be changed.” Id. at 1803:21–22. Accordingly, we conclude that Exhibit L 

was based on the personal knowledge of a Chase employee who was working in the 

Monroe, Louisiana vault and who contemporaneously entered the information as it 

was scanned. 

5. Exhibit L was created through and from trustworthy 

methods, sources, and circumstances.

Because Exhibit L meets the four elements just discussed, it is admissible 

under the business-record exception unless Kim and Foster “show that the source of 

information or the method or circumstances of preparation indicate a lack of 

trustworthiness.” Fed. R. Evid. 803(6)(E). Kim and Foster’s burden is heavy, because 

“bank records are particularly suitable for admission under Rule 803(6) in light of the 

fastidious nature of record keeping in financial institutions, which is often required 

by governmental regulation.” United States v. Johnson, 971 F.2d 562, 571 (10th Cir. 

1992). 
28 

Attempting to satisfy that heavy burden, Kim and Foster retrace arguments that 

we have already rejected. They reassert that Exhibit L is inadmissible because it 

contains “multiple hearsay,”11 that the print-out was “prepared in 2015” rather than in 

2009 when the Note was originally scanned, that “Ms. Lea admitted [it was] prepared 

to defend this legal dispute,” and that Lea did not count as a “qualified witness.” 

Appellants’ Opening Br. 39. We need not reconsider these arguments. 

C. Summary 

Lea’s direct-examination testimony establishes that Chase has satisfied all 

three elements of the lost-instrument statute. Because Kim and Foster elicited this 

testimony themselves, they have waived any appellate challenge to the admissibility 

of Lea’s direct-examination testimony. 

And even if this evidence were not enough, Lea’s cross-examination testimony 

about Exhibit L, an admissible business record, resolves the central dispute: whether 

11 Kim and Foster assert that Exhibit L contains “multiple hearsay” because 

“unidentified Chase employees” imputed the “underlying information” into 

Exhibit L. Appellants’ Opening Br. 39. But “[d]ouble hearsay in the context of a 

business record exists when the record is prepared by an employee with information 

supplied by another person.” Wilson v. Zapata Off-Shore Co., 939 F.2d 260, 271 

(5th Cir. 1991). We have noted that “[i]f the source of the information is an outsider 

. . . Rule 803(6) does not, by itself, permit the admission of the business record. The 

outsider’s statement must fall within another hearsay exception to be admissible 

because it does not have the presumption of accuracy that statements made during the 

regular course of business have.” TK-7 Corp. v. Estate of Barbouti, 993 F.2d 722, 

729 n.5 (10th Cir. 1993) (omission in original) (internal quotation marks omitted) 

(quoting Wilson, 939 F.2d at 271). Here, we have already concluded that Exhibit L 

was created in the regular course of business, and no evidence shows that an outsider 

conveyed Exhibit L’s information—when Chase’s vault personnel scanned the 

Note—to Chase’s vault personnel. 
29 

Chase ever possessed the original Note. Her testimony on that issue shows that Chase 

scanned the Note into its electronic system in September 2009. This testimony thus 

proves that Chase had possession of the Note and the right to enforce it. 

Accordingly, we conclude that the bankruptcy court relied on admissible 

evidence and that its factual findings were not clearly erroneous. We have no “grave 

doubt as to whether” the bankruptcy judge made an incorrect evidentiary ruling that 

had “a substantial influence on the outcome.” Collins, 575 F.3d at 1073 (internal 

quotation marks and citation omitted). Next, we turn to Kim and Foster’s arguments 

addressing whether, as a matter of law, Chase satisfied the elements of the lostinstrument statute.12

IV. Kim and Foster’s Legal Arguments 

Aside from their factual arguments, Kim and Foster raise two legal challenges 

to the bankruptcy judge’s ruling. First, they argue in the alternative that even if Chase 

12 Kim and Foster also mount evidentiary challenges to Exhibit M. While we 

do have concerns about Exhibit M—namely, whether it was created in the ordinary 

course of business and near the time of the events at issue—we need not reengage in 

this analysis separately for Exhibit M. A review of the bankruptcy judge’s order 

shows that if the bankruptcy judge even relied on Exhibit M, it was for one fact only: 

“Presumably th[e] loss [of the Note] occurred sometime after the May 12, 2010 

transmission of the original documents to Chase’s prior attorney, but no precise date 

was identified.” App. vol. 5 at 1127 n.23. But the bankruptcy judge only presumed 

that Chase sent the Note to its foreclosure attorney on that day, explaining that the 

parties had not conclusively established a precise date when Chase would have done 

so. Nothing about that is in error, because the lost-instrument statute does not require 

precise dates. Lea’s testimony establishes that Chase sent the Note to its foreclosure 

counsel some time after first receiving the Note from Washington Mutual in 2009. 

On a clearly erroneous standard of review, we conclude that this was all that was 

needed for the bankruptcy judge to make this finding. 
30 

possessed the Note, it transferred the Note to its foreclosure counsel when it sent the 

Note to him. Second, they argue that the FDIC’s failure to follow the terms of the 

Purchase and Assumption Agreement meant that Chase never legally acquired the 

Note. We review de novo these two questions of law. See In re Long, 843 F.3d 

at 873. 

A. Chase Did Not Transfer the Note to Its Foreclosure Counsel.

Relying on La Junta State Bank v. Travis, 727 P.2d 48 (Colo. 1986), Kim and 

Foster argue that when Chase gave the blank-indorsed Note to its attorney, it 

transferred the Note to him. That is significant, Kim and Foster argue, because under 

the lost-instrument statute, a person who lost an instrument can enforce it only if 

“the loss of possession was not the result of a transfer.” Colo. Rev. Stat. Ann. 

§ 4-3-309(a) (emphasis added). Before addressing La Junta State Bank, we will first 

explain what constitutes a transfer. 

1. Transfer

Under Colorado law, “[a]n instrument is transferred when it is delivered by a 

person other than its issuer for the purpose of giving to the person receiving delivery 

the right to enforce the instrument.” Colo. Rev. Stat. Ann. § 4-3-203(a) (West 2020). 

The plain language of this statute provides that a transfer occurs if two elements are 

satisfied: (1) a person who did not issue the instrument delivers it to another person, 

and (2) the person who delivers the instrument does so to give the person receiving 

delivery the right to enforce the instrument. Addressing this second element, the 

official commentary to this statute obligates courts to consider why the instrument 
31 

changed possession: “Subsection (a) defines transfer by limiting it to cases in which 

possession of the instrument is delivered for the purpose of giving to the person 

receiving delivery the right to enforce the instrument.” Id. § 4-3-203 cmt. 1. Both 

delivery and intent matter, hence a transfer does not occur in “cases in which a 

delivery of possession is for some purpose other than transfer of the right to enforce.” 

Id. 

Here, no evidence shows that Chase gave the Note to its foreclosure counsel 

with the intent of giving him the right to enforce it on his own behalf. But that does 

not matter, Kim and Foster argue, because they claim that this transfer rule and 

Chase’s intent are irrelevant, given that bearer paper has unique footing under 

Colorado law. They point out that a blank-indorsed instrument “may be negotiated by 

transfer of possession alone.” Appellants’ Reply Br. 3 (internal quotation marks 

omitted) (quoting Colo. Rev. Stat. Ann. § 4-3-205(b)). And because “[n]egotiation is 

merely a special form of transfer,” Pierce v. DeZeeuw, 824 P.2d 97, 99 (Colo. App. 

1991),13 the next issue is how these principles operate in the context of a blankindorsed note. 

13 “Negotiation” allows a person to become a “holder,” a status that in turn 

allows a person to become a “holder in due course,” an extra-special status that 

permits the party to “take the instrument free from all claims to it and most defenses 

of any party to the instrument.” La Junta State Bank, 727 P.2d at 51 (citations 

omitted); see also Colo. Rev. Stat. Ann. §§ 4-1-201(20) (holder), 4-3-201(a) 

(negotiation), 4-3-302(a) (holder-in-due-course) (West 2020). 
32 

2. La Junta State Bank is distinguishable. 

In La Junta State Bank, a woman named Katherine Warnock bought a 

$53,541.93 cashier’s check from Pueblo Bank and Trust Company. 727 P.2d at 50. 

She indorsed “Katherine Warnock” on the back of the check and then gave it to her 

attorney, Jerry Quick. Id. Attorney Quick wrote “deposit only” under her indorsement 

and deposited the check in a separate trust account that he maintained at the La Junta 

State Bank. See id. The La Junta State Bank “collected the amount of the check from 

the Pueblo Bank and Trust Company.” Id. 

When Warnock died, one of the administrators of her estate could find no 

receipt for the cashier’s check and discovered that the funds had not been remitted to 

the estate. See id. The administrator made a demand for payment on the La Junta 

State Bank, but it refused the demand because Attorney Quick’s trust fund was 

depleted. Id. The administrators of the estate sued the La Junta State Bank on various 

state-law grounds, arguing that Attorney Quick had placed the words “deposit only” 

for Warnock’s benefit; thus, they contended that the La Junta State Bank had a duty 

to set the funds aside in a separate account for her benefit rather than placing them in 

Attorney Quick’s account. Id.

The Colorado Supreme Court reasoned that when Warnock bought the original 

cashier’s check, “it was negotiable order paper in her hands.” Id. at 52. This means 

that the cashier’s check was payable “to any person that [she] designate[d].” Paper, 

Black’s Law Dictionary (11th ed. 2019). By writing her name on the back of the 

check and not identifying a specific payee, the court concluded that she had indorsed 
33 

the check in blank. La Junta State Bank, 727 P.2d at 52; see also Colo. Rev. Stat. 

Ann. § 4-3-205 cmt. 2 (“A blank indorsement is usually the signature of the indorser 

on the back of the instrument without other words.”). 

The court then ruled that when Warnock delivered that blank-indorsed check 

to Attorney Quick, he “became a holder of the instrument in bearer form with the 

right to transfer or negotiate it by delivery alone.” La Junta State Bank, 727 P.2d 

at 52. And because Attorney Quick received the cashier’s check with a blank 

indorsement, “he was free to direct its deposit in any manner he elected.” Id. at 55. 

Thus, when he wrote, “deposit only,” that restrictive indorsement was “added by 

Quick on his own behalf.” Id. As a result, the La Junta State Bank owed Attorney 

Quick a duty “to honor his restrictive indorsement,” and it owed Warnock no duty at 

all. Id. 

Significantly, the Colorado Supreme Court rejected the administrators’ 

argument that Attorney Quick wrote for “deposit only” on Warnock’s behalf as her 

agent. Id. at 53. Though agents can indorse a negotiable instrument for a principal, 

the court refused to infer that Attorney Quick was Warnock’s agent; it stated that “the 

respondents presented no evidence that Quick wrote ‘deposit only’ on behalf of 

Warnock.” Id. The court also remarked that no evidence had been presented showing 

“why Warnock purchased the check or how Quick acquired it.” Id.

We view the Colorado Supreme Court’s inquiry into that matter—how and 

why the attorney acquired the Note—as having significant implications. Consider a 

hypothetical in which Attorney Quick had been assisting Warnock with purchasing 
34 

real estate, and evidence showed that Warnock had given to him the cashier’s check 

to present to the sellers at closing. Even if the check were bearer paper, would the 

Colorado Supreme Court have concluded that Warnock transferred the Note to 

Attorney Quick? In light of the doctrine of constructive possession, we think not. 

Unlike actual possession, constructive possession exists if a person “has the 

power and intent to exercise control over the object,” lack of physical control 

notwithstanding. Henderson v. United States, 135 S. Ct. 1780, 1784 (2015) (citing 

Black’s Law Dictionary 1047 (5th ed. 1979); 2A K. O’Malley, J. Grenig & W. Lee, 

Federal Jury Practice and Instructions, Criminal § 39.12, p. 55 (6th ed. 2009)). Since 

deciding La Junta State Bank, the Colorado Supreme Court has recognized that 

constructive possession applies in the negotiable-instruments context. See Georg v. 

Metro Fixtures Contractors, Inc., 178 P.3d 1209, 1214 (Colo. 2008) (“[T]here are 

circumstances wherein requiring actual physical possession of the instrument would 

be problematic and constructive possession applies.” (citing 6 William D. Hawkland 

& Lary Lawrence, Uniform Commercial Code Series, § 3-301:3 (1999))). And 

though a blank-indorsed instrument was not at issue in Georg, the court there 

provided a rule for analyzing whether a party maintained possession of an instrument 

through constructive possession: “a determination of constructive possession should 

occur only when delivery is clearly for an identifiable person under circumstances 

excluding any other party as a holder in due course.” Id. (citing Hawkland & 

Lawrence, supra, § 3-301:3). Because La Junta State Bank considered why Warnock 

gave Attorney Quick the blank-indorsed cashier’s check and Georg applied 
35 

constructive possession in the negotiable-instruments context, this guidance from the 

Colorado Supreme Court shows that constructive possession is relevant in the 

negotiable-instruments setting—even in the case of bearer paper.14

Thus, we apply Georg here, meaning “a determination of constructive 

possession should occur only when delivery is clearly for an identifiable person 

under circumstances excluding any other party as a holder in due course.” 178 P.3d 

at 1214 (citation omitted). Delivery occurs if a party (1) transfers possession of an 

instrument to another party (2) with intent to transfer possession. Id. at 1215. We 

have already concluded that at one time Chase had actual possession of the Note. 

And the FDIC’s execution with Chase of the Purchase and Assumption Agreement, 

through which the FDIC transferred Washington Mutual’s assets to Chase, satisfies 

14 And even if this guidance did not settle the issue, we would reach this result 

if we had to make an Erie–guess. See Pino v. United States, 507 F.3d 1233, 1236 

(10th Cir. 2007) (“Under our own federal jurisprudence, we will not trouble our sister 

state courts every time an arguably unsettled question of state law comes across our 

desks. When we see a reasonably clear and principled course, we will seek to follow 

it ourselves.” (citations omitted)). This is the reasonably clear and principled course 

under Colorado law and, although the case law on the issue is sparse, appears to 

follow the general trend. See, e.g., Deutsche Bank Nat’l Tr. v. Moynihan, 270 F. 

Supp. 3d 497, 508, 512 (D. Mass. 2017) (concluding that Massachusetts’s lostinstrument statute does “not displace principles of agency,” even in the context of a 

blank-indorsed note, and allowing a bank to enforce the note through constructive 

possession after its attorney-agent lost the note); Lakiesha v. Bank of N.Y. Mellon, 

No. 3:15-CV-0901-B, 2015 WL 5934439, at *10 (N.D. Tex. Oct. 9, 2015) (“[A] 

blank-indorsed promissory note is enforceable by the party to whose possession—

constructive or actual—it is delivered.” (citation omitted)); Caraccia v. U.S. Bank, 

Nat. Ass’n, 185 So. 3d 1277, 1279 (Fla. Dist. Ct. App. 2016) (“We emphasize that we 

do not hold that possession is not necessary when bearer paper is at issue; instead we 

hold only that, when an agency relationship such as that exists here is at issue, the 

element of possession can be met through either actual or constructive possession.”). 
36 

the intent element. Thus, the FDIC’s delivery of the Note was “clearly for an 

identifiable person”—Chase. 

That brings us to the key issue: under these circumstances, did Chase transfer 

possession of the Note to its foreclosure counsel so that he became a holder-in-duecourse? A holder of an instrument is “[t]he person in possession of a negotiable 

instrument that is payable either to bearer or to an identified person that is the person 

in possession.” Colo. Rev. Stat. Ann. § 4-1-201(20)(A) (West 2020). And to be a 

holder-in-due-course, Chase’s foreclosure counsel must “(1) be a holder; (2) of a 

negotiable instrument who took it; (3) for value; (4) in good faith; (5) without notice 

of certain problems with the instrument.” Georg, 178 P.3d at 1212–13 (footnotes and 

citation omitted). 

“Negotiation,” a special form of transfer, determines whether a person can 

meet the first element and become a holder. See Colo. Rev. Stat. Ann. § 4-3-201(a) 

(West 2020). Section 201(a) defines “negotiation” as “a transfer of possession, 

whether voluntary or involuntary, of an instrument by a person other than the issuer 

to a person who thereby becomes its holder.” (emphasis added). A party becomes a 

holder of an instrument through negotiation if that party also possesses the Note and 

it is blank-indorsed. Id. § 4-1-201(20)(A); see also id. § 4-3-205(b) (“When indorsed 

in blank, an instrument becomes payable to bearer and may be negotiated by transfer 
37 

of possession alone until specially indorsed.”). Accordingly, Chase’s foreclosure 

counsel’s status hinges on whether Chase transferred possession of the Note to him.15

But Chase never transferred possession. As discussed, Lea testified that Chase 

gave custody of the Note to its foreclosure counsel, an action meant to facilitate 

foreclosure proceedings against Kim and Foster. That means that Chase gave its 

foreclosure counsel custody of the Note through an agency relationship—i.e., an 

attorney-client relationship. See Steffes v. Stepan Co., 144 F.3d 1070, 1075 (7th Cir. 

1998) (explaining that the “traditional understanding of the attorney-client 

relationship” is that the attorney is the client’s agent (citing Restatement (Second) of 

Agency § 1(3) cmt. e (Am. Law. Inst. 1957))). But as the Colorado Supreme Court 

recognized in Georg, “[u]nder traditional analysis, the agent’s possession would be 

the owner’s possession and thus the owner would have ‘possession.’” 178 P.3d 

at 1213–14 (emphasis and citation omitted); see also 73 C.J.S. Property § 54 (Mar. 

2020 update) (“Property in the hands of an agent or servant is in the possession and 

control of the principal or employer, the agent or servant having only custody, since 

the possession of the agent or servant is the possession of the principal or employer.” 

(emphasis added) (footnote omitted) (collecting cases)); cf. Holland v. Sutherland, 

15 Kim and Foster also argue that the bankruptcy judge improperly shifted the 

burden from Chase (of proving that the Note was not transferred to its foreclosure 

counsel) to Kim and Foster (of proving that the Note was transferred). But the court 

did no such thing; it concluded that “[n]o evidence indicates, and, indeed, neither 

party suggests, that Chase transferred the original Note to another entity, or that the 

Note was lawfully seized by another entity.” App. vol. 5 at 1127. This quote shows 

that the court relied on the “evidence” that the parties—both parties—provided to it. 
38 

635 P.2d 926, 928 (Colo. App. 1981) (concluding that an absent squatter can 

establish adverse-possession rights to real property through an agent’s possession of 

the property, because the agent’s possession is the principal’s possession). So 

through this agency relationship, Chase’s foreclosure counsel’s physical custody of 

the Note was Chase’s constructive possession. Therefore, because Chase maintained 

possession, it never transferred its possession of the Note to its foreclosure counsel, 

meaning it did not negotiate or transfer the Note.16 

Claiming that physical custody is pivotal, Kim and Foster point out that even a 

thief who steals a blank-indorsed note becomes the holder of the note. See 

Colo. Rev. Stat. Ann. § 4-3-203 cmt. 1. That same comment recognizes that “[t]he 

right to enforce an instrument and ownership of the instrument are two different 

concepts,” so a thief who steals a blank-indorsed note might be able to enforce it 

without owning it. Id. And that makes sense—in that scenario, the thief deprived the 

owner of both actual and constructive possession of the blank-indorsed note, thereby 

depriving the owner of the right to enforce the note. But, though some cynics may 

beg to differ, lawyers are not thieves, and when a lawyer holds a financial instrument 

on behalf of a client through an agency relationship, the lawyer has not deprived the 

client of his or her right of possession. Rather, unlike in the case of a thief, “the 

16 Moreover, constructive possession applies because Chase’s foreclosure 

counsel was not a holder-in-due-course. See Georg, 178 P.3d at 1214. To be a holderin-due-course, Chase’s foreclosure counsel must have (among other things) obtained 

the Note for value. Id. at 1213. Unlike in La Junta State Bank, see 727 P.2d at 53, the 

record here does not create a factual question about whether Chase gave its counsel a 

$2,000,000 promissory note in return for value. 
39 

[lawyer’s] possession would be the owner’s possession and thus the owner would 

have ‘possession.’” Georg, 178 P.3d at 1213–14 (emphasis and citation omitted). 

We hold that Chase maintained constructive possession of the Note when it 

gave custody of the Note to its foreclosure counsel. Accordingly, we agree with and 

affirm the bankruptcy court’s ruling that Chase did not transfer or negotiate to its 

foreclosure counsel a $2,000,000 promissory note. 

B. The Purchase and Assumption Agreement 

Section 3.3 of the Purchase and Assumption Agreement requires conveyances 

between the FDIC and Chase to be documented, “as necessary,” by either a receiver’s 

deed or bill of sale. App. vol. 8 at 1968 (capitalization removed). Kim and Foster 

argue next that because the FDIC did not provide this documentation, “the legal basis 

upon which Chase could have obtained title” is absent. Appellants’ Opening Br. 47. 

Kim and Foster’s only supporting case is Kim v. JPMorgan Chase Bank, 825 

N.W.2d 329 (Mich. 2012).17 There, the plaintiffs’ mortgage had been acquired by 

Chase from Washington Mutual. Id. at 330. When the FDIC became Washington 

Mutual’s receiver, it executed a Purchase and Assumption Agreement with Chase. Id.

at 330–31. Chase then later attempted to foreclose on the mortgage. Id. at 331. Even 

though Chase had purchased the mortgage through the Purchase and Assumption 

Agreement, the trial court ruled that Chase had acquired the mortgage “by operation 

of law,” a conclusion that meant that Chase did not need to comply with a Michigan 

17 The Kim here is different than the Kim in this Michigan case. 
40 

statute requiring “that a mortgage assignment be recorded before initiation of a 

foreclosure by advertisement.” Id. If Chase had acquired the mortgage by operation 

of law, it had not acquired it through a mortgage assignment. See id.

On review, the Michigan Supreme Court concluded that the FDIC had 

acquired Washington Mutual’s assets by operation of law, because it became a 

receiver under 12 U.S.C. § 1821(d)(2)(A)(i)–(ii). Id. at 333. On the other hand, the 

court ruled that Chase had not acquired Washington Mutual’s assets by operation of 

law, but that Chase had instead acquired them through a “voluntary transaction”—the 

Purchase and Assumption Agreement with the FDIC. Id. at 334. Thus, the Michigan 

Supreme Court ruled that Chase needed to comply with Michigan statutory law and 

publicly record its assignment of mortgage before foreclosing. Id. at 336. 

Not once in the Kim opinion did the Michigan Supreme Court mention section 

3.3 of the Purchase and Assumption Agreement, a receiver’s deed, or a receiver’s bill 

of sale. True, Kim might stand for the limited proposition that Chase acquired 

Washington Mutual’s assets through the Purchase and Assumption Agreement rather 

than through operation of law. But it does not support the argument that the FDIC’s 

failure to comply with section 3.3 voided the transaction. Moreover, as the district 

court recognized, section 3.3 does not even apply to every transfer under the 

agreement, because it is limited to “conveyances where a receiver’s deed or 

receiver’s bill of sale is ‘necessary.’” App. vol. 5 at 1258. That limitation establishes 

that, in some cases, assignments between the FDIC and Chase could be made without 

a receiver’s deed or bill of sale. 
41 

Here, Kim and Foster fail to explain how this was the type of transaction in 

which a receiver’s deed or bill of sale was necessary. And even if it were such a 

transaction, we fail to see how the FDIC’s breach of that provision would invalidate 

the transaction with Chase. Only a material breach of a contract gives the 

nonbreaching party a right to set aside the contract. See Coors v. Sec. Life of Denver 

Ins., 112 P.3d 59, 64 (Colo. 2005) (citing Sci. Packages, Inc. v. Gwinn, 301 P.2d 719, 

722 (1956)). Kim and Foster do not claim that this breach equated to a material 

breach. What is more, even if it had been a material breach, nothing prevents the 

nonbreaching party—here, that would be Chase—from preserving the contract and 

performing in spite of the breach. Sci. Packages, 301 P.2d at 722. Because Chase 

elected to purchase Washington Mutual’s assets through the Purchase and 

Assumption Agreement, Chase upheld the contract. Thus, we conclude that the 

FDIC’s failure to provide Chase with a receiver’s deed or bill of sale, if one was even 

necessary, is irrelevant to whether Chase acquired Kim’s Note.18

CONCLUSION 

 Admissible evidence establishes that Chase possessed the original Note in 

September 2009 and scanned it into its electronic-recordkeeping system at that time. 

Because Chase possessed the Note and it was indorsed in blank, this means that 

18 Kim and Foster also claim that the bankruptcy court violated public policy, 

because the order allowed Chase’s claim to persist even though it never had 

“possession of the original blank-endorsed Note” and did not present “evidence 

required to satisfy C.R.S. §4-3-309.” Appellants’ Opening Br. 51. Our conclusion 

that the bankruptcy court did not clearly err by relying on Lea’s testimony precludes 

this argument. 
42 

Chase had the right to enforce the Note. And Chase never surrendered that right by 

sending the Note to its foreclosure counsel because, through an agency relationship, 

Chase maintained constructive possession of the Note. For these and other reasons 

mentioned, we affirm the bankruptcy court’s denial of Kim and Foster’s objection to 

Chase’s proof of claim. 

Entered for the Court 

Gregory A. Phillips 

Circuit Judge