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NO. CAAP-18-0000736

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI#I

THE BANK OF NEW YORK MELLON FKA THE BANK OF NEW YORK,

AS TRUSTEE FOR THE CERTIFICATEHOLDERS OF THE CWALT,

INC., ALTERNATIVE LOAN TRUST 2006-5T2 MORTGAGE PASSTHROUGH

CERTIFICATES 2006-5T2, Plaintiff-Appellee, v.

NATHAN EARL AIWOHI; LEAH LEIKO AIWOHI, Defendants-Appellants,

and GATHER FEDERAL CREDIT UNION; AOAO OF ARRUDA ESTATES I;

JOHN DOES 1-50; JANE DOES 1-50; DOE PARTNERSHIPS 1-50;

DOE CORPORATIONS 1-50; DOE ENTITIES 1-50; AND

DOE GOVERNMENTAL UNITS 1-50, Defendants

APPEAL FROM THE CIRCUIT COURT OF THE FIFTH CIRCUIT

(CIVIL NO. 13-1-0082)

SUMMARY DISPOSITION ORDER

(By: Leonard, Presiding Judge, Nakasone and McCullen, JJ.)

Defendants-Appellants Nathan Earl Aiwohi and Leah Leiko

Aiwohi (the Aiwohis) appeal from the Judgment entered on

September 20, 2018 (Foreclosure Judgment), by the Circuit Court

of the Fifth Circuit (Circuit Court),1 in favor of PlaintiffAppellee The Bank of New York Mellon fka the Bank of New York, as

Trustee for the Certificateholders of the CWALT, Inc.,

Alternative Loan Trust 2006-5T2 Mortgage Pass-Through

1 The Honorable Kathleen N.A. Watanabe presided. 

Electronically Filed

Intermediate Court of Appeals

CAAP-18-0000736

24-MAR-2022

07:47 AM

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Certificates, Series 2006-5T2 (Bank of New York). The Aiwohis

also challenge the Circuit Court's September 20, 2018 Findings of

Fact, Conclusions of Law and Order Granting Plaintiff's Motion

for Summary Judgment Against All Defendants and for Interlocutory

Decree of Foreclosure (Foreclosure Decree).

The Aiwohis raise a single point of error on appeal,

contending that the Circuit Court erred in granting Plaintiff's

Motion for Summary Judgment Against All Defendants and for

Interlocutory Decree of Foreclosure filed on June 25, 2018

(Motion for Summary Judgment), because the court erroneously

relied upon the hearsay testimony of Bank of New York's declaring

witnesses, which it admitted under the business records exception

to the hearsay rule, even though Bank of New York produced no

business records to corroborate its witnesses' self-serving

hearsay testimony that Bank of New York was in possession of the

original note evidencing the Aiwohis' debt (the Note) at the time

the Complaint was filed, and even though no evidence was produced

demonstrating that the Note had been indorsed prior to that date.

Upon careful review of the record and the briefs

submitted by the parties, and having given due consideration to

the arguments advanced and the issues raised by the parties, we

resolve the Aiwohis' point of error as follows:

The Aiwohis argue that Keli Smith's (Smith's)

declaration testimony, based upon her alleged review of business

records, did not establish the requisite element of personal

knowledge with respect to the business records at issue. Smith's

declaration provided, inter alia, that she was a document

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coordinator employed by Bank of New York's loan servicer, Bayview

Loan Servicing, LLC (Bayview). 

Bank of New York attached a copy, not an original, of

the Note to its Motion for Summary Judgment. Therefore, the

duplicate Note must be authenticated with extrinsic evidence. 

See Hawaii Rules of Evidence (HRE) Rule 901(b)(1); U.S. Bank

Trust, N.A. v. Verhagen, 149 Hawai#i 315, 323-25, 489 P.3d 419,

427-29 (2021). To authenticate a copy of a promissory note,

"[t]estimony of a witness with personal knowledge of a document

may establish the foundation necessary for its admission." 

Verhagen, 149 Hawai#i at 325, 489 P.3d at 429. Smith declared

under penalty of perjury, inter alia, that she reviewed the

"records and files in Bayview's possession regarding this

matter," and that a "true and correct copy of the Note . . .

known to [her] to be a true and accurate copy of said promissory

note" was attached to her Declaration. Smith's Declaration was

sufficient to satisfy HRE Rule 901(b)(1).

We note that Smith did not need to have personal

knowledge of the record-keeping systems of the loan servicers

prior to Bayview. Verhagen, 149 Hawai#i at 325, 489 P.3d at 429. 

The Hawai#i Supreme Court in Verhagen, restating the holding in

Wells Fargo Bank, N.A. v. Behrendt, 142 Hawai#i 37, 414 P.3d 89

(2018), provided that "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." Verhagen, 149 Hawai#i at 325, 489

P.3d at 429. The supreme court further stated:

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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. 

Id. at 325-26, 489 P.3d at 429-30. Therefore, "[i]f each of

these three conditions is satisfied, an incorporated record is

admissible even in the absence of testimony concerning its actual

creation." Id. at 326, 489 P.3d at 430. 

Smith's declaration provided that she had personal

knowledge of Bayview's procedures for creating business records. 

Smith further testified that "Bayview took custody and control of

loan documents and business records of the Prior Servicers and

incorporated all such records into the business records of

Bayview." Smith also testified that Bayview kept the records and

files "in the ordinary course of business." Smith declared that

"Bayview relies upon the accuracy of the Prior Servicers' records

and those records are now a part of and used for all purposes in

the conduct of Bayview's regularly conducted activity of keeping

and maintaining its own business records." Thus, the first two

Verhagen conditions establishing admissibility of incorporated

records, including the Note, are met. 

The last condition, providing testimony that

establishes that the circumstances otherwise indicate

trustworthiness of the document, is also met. Here, similar to

the declaration testimony in Verhagen, Smith's declaration

provided that before Bayview incorporated the prior loan

servicers' records, Bayview "conducted a review of the Prior

Servicers' records and found them in keeping with industry wide

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loan servicing standards and found the Prior Servicers' records

were made as a part of a regularly conducted activity, met

industry standards and determined to be trustworthy." Smith's

declaration also provided that "Bayview did review and determine

the Prior Servicers' business records were trustworthy otherwise

it would not have incorporated it into its own records." The

record sufficiently establishes that the prior servicers' loans

were vetted by Bayview prior to incorporating the records and

files. See Verhagen, 149 Hawai#i at 326, 489 P.3d at 430. 

Therefore, we conclude that Bayview's incorporated records,

including the Note, as authenticated by Smith's declaration, were

admissible under HRE Rule 803(b)(6). 

It is now well-established 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." Verhagen, 149 Hawai#i at 327, 489 P.3d at 431

(citing Bank of Am., N.A. v. Reyes-Toledo, 139 Hawai#i 361, 369,

390 P.3d 1248, 1256 (2017)). The Aiwohis argue that Bank of New

York "offered no admissible evidence, either in its motion, or

ever, that it possessed the note at the time it filed its

complaint."

Bank of New York's attachments to its Motion for

Summary Judgment included a blank-indorsed Note. That Note does

not reflect the date of the blank indorsement. Smith's

declaration does not indicate when the indorsement occurred. 

Smith's declaration provides that "Prior Servicers' records

indicate that [Bank of New York] had possession of the original

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Note on 03/12/2013, the date of the filing of the complaint in

this foreclosure." Here, Smiths' Declaration further provides,

in part:

11. Bayview became [Bank of New York]'s loan

servicer for the Loan being foreclosed in this action

on 09/01/2017. 

. . . .

26. Prior Servicers' records indicate that

Plaintiff had possession of the original Note on

03/12/2013, the date of the filing of the complaint in

this foreclosure. 

However, Smith's declaration does not provide

sufficient evidence that Bank of New York possessed the Note on

or before March 12, 2013, and Bank of New York fails to provide

any additional evidence establishing that it, or its agent, had

possession of the original Note at the time of filing the

Complaint. In Verhagen, the supreme court explained that a

witness's sworn testimony, based on knowledge of a loan

servicer's records and record-keeping practices, provided as

evidence that the foreclosing bank had possession of the Note at

the time it filed the complaint "standing alone and

uncorroborated by documentary evidence, would be insufficient to

establish [that the foreclosing bank] possessed the Note when it

filed the complaint." 149 Hawai#i at 327, 489 P.3d at 431. In

Verhagen, there was additional evidence that a witness

"personally verified" possession of the subject note prior to the

date the complaint was filed and a letter from a bailee

established that the loan servicer sent the note to the

foreclosing bank prior to the date the complaint was filed. Id. 

Here, standing alone, Smith's declaration that the records

"indicate" that Bank of New York had possession of the original

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Note as of the date Bank of New York filed its Complaint is

insufficient to establish standing. In addition, there is no

evidence regarding the date when the blank indorsement occurred

or whether it was present on the Note on the date the Complaint

was filed herein. We conclude that Bank of New York did not

provide sufficient evidence that it had possession of the

original blank-indorsed Note at the time it filed its Complaint.

For these reasons, the Circuit Court's September 20,

2018 Judgment is vacated, and this case is remanded to the

Circuit Court for further proceedings.

DATED: Honolulu, Hawai#i, March 24, 2022.

On the briefs:

/s/ Katherine G. Leonard

Frederick J. Arensmeyer, Presiding Judge

for Defendants-Appellants.

/s/ Karen T. Nakasone

Charles R. Prather, Associate Judge

Robin Miller,

Sun Young Park, /s/ Sonja M.P. McCullen

Peter T. Stone, Associate Judge

(TMLF Hawaii LLC),

for Plaintiff-Appellee.

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