NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS OR THE PACIFIC REPORTER

NO. CAAP-17-0000926

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI#I

U.S. BANK NATIONAL ASSOCIATION, A NATIONAL BANKING

ASSOCIATION AS TRUSTEE FOR SARM 05-19XS, 

Plaintiff-Appellee, 

v.

DYLAN THEDE, Defendant-Appellant,

and

ASSOCIATION OF APARTMENT OWNERS OF VILLAS ON THE PRINCE;

PRINCEVILLE II COMMUNITY ASSOCIATION, Defendants-Appellees,

and

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. 12-1-0114)

SUMMARY DISPOSITION ORDER

(By: Fujise, Presiding Judge, and Chan and Wadsworth, JJ.)

This appeal arises out of a foreclosure decree entered

by the Circuit Court of the Fifth Circuit (Circuit Court) against

Defendant-Appellant Dylan Thede (Thede). On November 30, 2017,

the Circuit Court entered its Findings of Fact, Conclusions of

Law and Order Granting Plaintiff's Motion for Summary Judgment

Against All Parties and for Interlocutory Decree of Foreclosure

(Foreclosure Decree), and the related Judgment (Foreclosure

Judgment), both in favor of Plaintiff-Appellee U.S. Bank National

Association, a National Bank Association as Trustee for SARM 05-

19XS (U.S. Bank), and against Thede, Defendant-Appellee

Association of Apartment Owners of Villas on the Prince, and

Electronically Filed

Intermediate Court of Appeals

CAAP-17-0000926

06-APR-2020

03:07 PM
NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS OR THE PACIFIC REPORTER

Defendant-Appellee Princeville II Community Association.1/

Thede appeals from the Foreclosure Decree and the

Foreclosure Judgment.2/ He contends that the Circuit Court erred

in granting U.S. Bank's motion for summary judgment and

interlocutory decree of foreclosure (MSJ) by relying on "the

hearsay testimony of U.S. Bank's declaring witnesses" to

establish U.S. Bank's standing to foreclose on Thede's mortgaged

property. He also summarily argues that the Circuit court erred

in disregarding an expert report disputing the authenticity of

the original note at issue in the foreclosure. 

After reviewing the record on appeal and the relevant

legal authorities, and giving due consideration to the issues

raised and the arguments advanced by the parties, we resolve

Thede's contentions as follows and vacate and remand.

I. RELEVANT BACKGROUND

On April 13, 2012, U.S. Bank filed a Complaint for

Foreclosure (Complaint) in the Circuit Court. U.S. Bank alleged,

among other things, that: (1) on June 1, 2005, Thede obtained a

$612,000 loan (Loan) from Countrywide Home Loans, Inc.

(Countrywide), by executing a promissory note (Note), secured by

a mortgage (Mortgage) recorded with respect to real property

located at 4141 Queen Emmas Dr., #1538, Princeville, Hawai#i

96722 (Property); (2) the Mortgage was assigned to U.S. Bank by

an Assignment of Mortgage recorded on October 13, 2009; (3) Thede

defaulted under the payment terms of the Note and Mortgage; (4)

following written notice to Thede and his failure to cure the

default, U.S. Bank exercised its option to accelerate the loan

and to declare the entire principal due under the Note and

secured by the Mortgage, plus interest, advances, and other

charges, immediately due and payable; and (5) U.S. Bank was

entitled to foreclose the Mortgage and to sell the Property. 

1/ The Honorable Randal G.B. Valenciano presided.

2/ The Association of Apartment Owners of Villas on the Prince and

Princeville II Community Association did not appeal from the Foreclosure

Judgment and, as presumably nominal appellees, did not file answering briefs. 

See Hawai#i Rules of Appellate Procedure Rule 28(c). 

2
NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS OR THE PACIFIC REPORTER

On December 11, 2015, U.S. Bank filed its MSJ, which

included an attached "Verified Declaration of Indebtedness." 

Ryan Cable (Cable) signed the declaration (Cable Declaration) and

asserted that he had knowledge of, and was competent to testify

to, "the matters stated [t]herein by virtue of [his] employment

for Nationstar Mortgage LLC, the loan servicing agent for

Plaintiff [U.S. Bank]." Cable declared, among other things, that

"[o]n or about June 1, 2005, [Thede] . . . duly made, executed

and delivered to Countrywide . . ., an Adjustable Rate Note

('Note') in the amount of $612,000.00[,]" which was attached as

Exhibit "A" to the Cable Declaration. Cable also stated that

"[U.S. Bank] is in possession of the Note." 

Thede filed a memorandum in opposition on October 27,

2016, and a supplemental memorandum in opposition on April 12,

2017. In his supplemental memorandum, Thede argued that U.S.

Bank had failed to establish its standing to foreclose under the

supreme court's then-recently issued decision in Bank of America,

N.A. v. Reyes-Toledo, 139 Hawai#i 361, 390 P.3d 1248 (2017). In

particular, Thede argued that U.S. Bank had not demonstrated it

was the holder of the Note at the time the Complaint was filed. 

On June 19, 2017, U.S. Bank filed the "Affidavit of

Bank of America, N.A. Re: Possession of Note as Prior Servicer." 

Nichole Renee Williams (Williams) signed the affidavit (Williams

Affidavit) which stated, in relevant part:

1. I am authorized to sign this Declaration on

behalf of Bank of America, N.A. ("BANA"), which was the

prior servicer for the subject loan (the "Loan") for

Plaintiff U.S. BANK NATIONAL ASSOCIATION, A NATIONAL BANKING

ASSOCIATION AS TRUSTEE FOR SARM 05-19XS.

2. As prior servicer, BANA maintained records for

the Loan. As part of my job responsibilities for BANA, I am

familiar with the type of records that were maintained by

BANA in connection with the Loan. As such, I am authorized

to make this Declaration.

3. The information in this Declaration is taken

from BANA's business records. I have personal knowledge of

BANA's procedures for creating these records. They are: (a)

made at or near the time of the occurrence of the matters

recorded by persons with personal knowledge of the

information in the business record, or from information

transmitted by persons with personal knowledge; (b) kept in

the course of BANA's regularly conducted business

activities; and (c) created by BANA as a regular practice.

3
NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS OR THE PACIFIC REPORTER

4. My knowledge is based on my review of BANA's

business records and files related to the mortgage loan

which is the subject of this foreclosure. 

5. On April 13, 2012, the Complaint for Foreclosure

was filed herein. A true and correct copy of the Complaint

is attached as Exhibit "1".

6. At the time the Complaint was filed, BANA was

the servicer for the Loan.

7. On April 13, 2012, BANA was in possession of the

original Adjustable Rate Note dated June 1, 2005 in the

principal amount of $612,000.00 executed by DYLAN THEDE in

favor of Countrywide Home Loans, Inc. endorsed in blank

("Note"). A true and correct copy of the Note is attached

as Exhibit "2".

8. On or about March 31, 2014, servicing of the

Loan transferred to Nationstar Mortgage LLC.

On August 1, 2017, U.S. Bank filed a supplemental

declaration in support of its MSJ. Rebecca C. Wallace (Wallace)

signed the declaration (Wallace Declaration), which stated, in

relevant part:

1. I am authorized to sign this Declaration on

behalf of Plaintiff U.S. BANK NATIONAL ASSOCIATION, A

NATIONAL BANKING ASSOCIATION AS TRUSTEE FOR SARM 05-19XS

("Plaintiff") as an authorized signer of Nationstar Mortgage

LLC ("Nationstar"),which is Plaintiff's servicing agent for

the subject loan ("the loan").

2. Nationstar maintains records for the loan in its

capacity as Plaintiff's servicer. As part of my job

responsibilities for Nationstar, I am familiar with the type

of records maintained by Nationstar in connection with the

Loan. As such, I am authorized to make this Declaration.

3. Nationstar is the current loan servicer for

Plaintiff and acts as the exclusive representative and agent

of Plaintiff in the servicing and administering of mortgage

loans referred to Nationstar, including the Loan being

foreclosed in this action.

4. The information in this Declaration is taken

from Nationstar's business records. I have personal

knowledge of Nationstar's procedures for creating these

records. They are: (a) made at or near the time of the

occurrence of the matters recorded by persons with personal

knowledge of the information in the business record, or from

information transmitted by persons with personal knowledge;

(b) kept in the course of Nationstar's regularly conducted

business activities; and (c) created by Nationstar as a

regular practice.

5. On April 13, 2012, Plaintiff filed its Complaint

for Foreclosure ("Complaint").

6. At the time the Complaint for Foreclosure was

filed, Bank of America, N.A. ("BANA") was the servicer for

the Loan.

7. Based on the affidavit executed by Nichole Renee

Williams on May 31, 2017 as an authorized representative of

4
NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS OR THE PACIFIC REPORTER

BANA ("Affidavit"), BANA was in possession of the original

Adjustable Rate Note dated June 1, 2009 in the principal

amount of $612,000.00 executed by Defendant DYLAN THEDE in

favor of Countrywide Home Loans, Inc., endorsed in blank

("Original Note"), when the Complaint was filed. . . . 

8. On 4/01/2014 , servicing of the Loan was

transferred from BANA to Nationstar.

9. When the servicing rights of the Loan were

transferred to Nationstar, BANA transferred its servicing

records pertaining to the Loan to Nationstar. Among the

records and documents was the Original Note.

10. The records of prior servicers are regularly

used and relied upon by Nationstar in all dealings with all

the borrowers, in reporting all profit and loss on the

mortgage loans to the Plaintiff, in the preparation, filing

and payment of income taxes dependent upon such information,

and in evaluating Nationstar's own job performance.

11. Before the records of prior servicers were

incorporated into Nationstar's own business records, it

conducted an independent check into the records of prior

servicers and found them in keeping with industrywide loan

servicing standards and only integrated them into

Nationstar's own business records after finding these

records were made as part of a regularly conducted activity,

met industry standards, and determined to be trustworthy.

12. Nationstar maintains all the day to day loan

documents, records and accounting of payments on the Loan

being foreclosed in this action including all documents and

business records acquired by Plaintiff when it purchased the

subject mortgage loan.

13. Under the terms of Nationstar's servicing

arrangement, Plaintiff does not participate in, keep and

maintain any of the day to day loan documents, inputting of

accounting data, saving of business records and all

communications with borrowers.

14. All declarations, affidavits, and exhibits filed

in support of Plaintiff's Motion for Summary Judgment

Against All Parties and for Interlocutory Decree of

Foreclosure filed on December 11, 2015 are incorporated by

reference.

On August 7, 2017, Thede filed a further supplemental

memorandum in response to the Wallace Declaration. Thede argued,

among other things, that Wallace and Williams: (1) were not

qualified to authenticate U.S. Bank's business records; (2)

failed to demonstrate personal knowledge that U.S. Bank was in

possession of the Note when the Complaint was filed; and (3)

offered inadmissible hearsay. 

On August 17, 2017, U.S. Bank filed an amended

supplemental declaration signed by Wallace in support of its MSJ

(Amended Wallace Declaration). The Amended Wallace Declaration

appears to have corrected Paragraphs 8 and 9 of the Wallace

5
NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS OR THE PACIFIC REPORTER

Declaration, as follows:

8. On April 1, 2014, servicing of the Loan was

transferred from Specialized Loan Servicing LLC ("SLS") to

Nationstar[.]

9. When the servicing rights of the Loan were

transferred to Nationstar, SLS transferred its servicing

records pertaining to the Loan to Nationstar. Among the

records and documents transferred to Nationstar by SLS was

the Original Note. Loan servicing records from BANA were

also included in the records and documents transferred from

SLS to Nationstar.

On September 14, 2017, U.S. Bank filed a further

supplemental reply memorandum in support of its MSJ. 

Following a September 19, 2017 hearing on U.S. Bank's

MSJ, the Circuit Court granted the MSJ and entered the

Foreclosure Decree and the Foreclosure Judgment on November 30,

2017. Thede filed a timely notice of appeal. 

II. DISCUSSION

In Reyes-Toledo, the Hawai#i Supreme Court held that to

establish the right to foreclose, the foreclosing plaintiff must

establish standing, or entitlement to enforce the subject

promissory note, at the time the action was commenced. 139

Hawai#i at 367-70, 390 P.3d at 1254-57. The "foreclosing

plaintiff's burden to prove entitlement to enforce the note

overlaps with the requirements of standing in foreclosure actions

as '[s]tanding is concerned with whether the parties have the

right to bring suit.'" Id. at 367, 390 P.3d at 1254 (quoting

Mottl v. Miyahira, 95 Hawai#i 381, 388, 23 P.3d 716, 723 (2001)). 

The supreme court further noted that "a foreclosing plaintiff

does not have standing to foreclose on mortgaged property unless

the plaintiff was entitled to enforce the note that has been

defaulted on." Id. at 368, 390 P.3d at 1255 (citing Hanalei, BRC

Inc. v. Porter, 7 Haw. App. 304, 310, 760 P.2d 676, 680 (1988)).

Here, it appears that the Circuit Court granted U.S.

Bank's MSJ based in part on the copy of the "Adjustable Rate

Note" that was attached to the Williams Affidavit (Attached

Note). At the September 19, 2017 hearing, the court stated:

I'm looking at the affidavit of Bank of America,

the one filed on June 19th, 2017, where they're

alleging that they had the documents –- the note at

the time the complaint for foreclosure was filed, so I

6
NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS OR THE PACIFIC REPORTER

believe that would bring this matter in compliance

with the Reyes-Toledo situation.

And when I look at the declaration, it talks

about Ms. Williams having personal knowledge and

working with these documents.

So I'm –- I'm not willing to expand that every

time there's a statement in a declaration referring to

a document, you have to attach the document. I'm not

willing to expand it – that requirement.

And so based on the Court's review of the

documents submitted, the pleadings, the Court will be

granting the motion for summary judgment. 

Thede contends that the Circuit Court erred in granting

U.S. Bank's MSJ by relying on "the hearsay testimony of U.S.

Bank's declaring witnesses" to establish U.S. Bank's standing to

foreclose. Thede also argues that U.S. Bank offered "no

admissible evidence" that it possessed the Note when the

Complaint was filed. 

"Under Hawai#i Rules of Civil Procedure Rule 56(e)

(2000) and Rules of the Circuit Courts of the State of Hawai#i

Rule 7(g) (1997), 'a declaration [or affidavit] in support of a

summary judgment motion must be based on personal knowledge,

contain facts that would be admissible in evidence, and show that

the declarant [or affiant] is competent to testify as to the

matters contained within the declaration.'" Wells Fargo Bank,

N.A. v. Behrendt, 142 Hawai#i 37, 44, 414 P.3d 89, 96 (2018)

(quoting U.S. Bank N.A. v. Mattos, 140 Hawai#i 26, 30, 398 P.3d

615, 619 (2017)). "Inadmissible evidence 'cannot serve as a

basis for awarding or denying summary judgment.'" Id. (quoting

Haw. Cmty. Fed. Credit Union v. Keka, 94 Hawai#i 213, 221, 11

P.3d 1, 9 (2000)).

U.S. Bank contends that the Attached Note was

admissible under the hearsay exception for records of regularly

conducted activity pursuant to Hawai#i Rules of Evidence (HRE)

Rule 803(b)(6).3/ U.S. Bank further argues that Williams and

3/ HRE Rule 803(b)(6) (Supp. 2011) provides that the following are

not excluded by the rule against hearsay:

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

7
NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS OR THE PACIFIC REPORTER

Wallace were each a "qualified witness" with respect to the

Attached Note, and each satisfied the standards set out in Mattos

for admitting that document into evidence and establishing U.S.

Bank's standing to foreclose. 

In Mattos and Behrendt, the supreme court reviewed the

sufficiency of declarations similar in certain key respects to

those at issue here, each of which attested to a promissory note

and other documents relating to a foreclosure under the HRE Rule

803(b)(6) business records exception. See Mattos, 140 Hawai#i at

31, 398 P.3d at 620; Behrendt, 142 Hawai#i at 44-45, 414 P.3d at

96-97. The court's decisions in Mattos and Behrendt are

therefore dispositive as to whether HRE Rule 803(b)(6) may serve

as a basis to admit the Attached Note into evidence. 

With respect to the Williams Affidavit, Williams did

not aver that she was the custodian of records for BANA,

Countrywide,4/ or any other holder of the Note (e.g., U.S.

Bank5/). Thus, the Attached Note is admissible under HRE Rule

803(b)(6) only if the Williams Affidavit demonstrates that

Williams is a "qualified witness" with respect to that document. 

See Mattos, 140 Hawai#i at 32, 398 P.3d at 621; Behrendt, 142

Hawai#i at 45, 414 P.3d at 97. 

The supreme court has held that a witness may be

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

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.

(Emphasis added.)

4/ The Cable Declaration stated that "[o]n or about June 1, 2005,

[Thede] . . . duly made, executed and delivered to Countrywide" the Note.

(Emphasis added.) In addition, the Note identifies Countrywide as the

"Lender" and, in turn, defines the "Note Holder" as the "Lender or anyone who

takes this Note by transfer and who is entitled to receive payments under this

Note." It therefore appears that Countrywide was the original holder of the

Note.

5/ The Cable Declaration states: "By Assignment of Mortgage recorded

on October 13, 2009 . . . the mortgagee's interest in the Mortgage was

assigned to [U.S. Bank]." Because the debt does not automatically follow the

security (Reyes-Toledo, 139 Hawai#i at 371 n.17, 390 P.3d at 1258 n.17), it is

not clear when U.S. Bank became the holder of the Note. The Williams

Affidavit states that BANA was in possession of the Note on April 13, 2012,

but does not indicate when BANA's possession commenced.

8
NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS OR THE PACIFIC REPORTER

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. See Mattos, 140 Hawai#i at 32, 398 P.3d at

621; Behrendt, 142 Hawai#i at 45, 414 P.3d at 97. While there is

"no requirement that the records have been prepared by the entity

that has custody of them," the testifying witness "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." Behrendt, 142 Hawai#i at

45, 414 P.3d at 97 (quoting and citing Mattos, 140 Hawai#i at 32,

398 P.3d at 621).

The court in Behrendt further explained:

Records received from another business and incorporated into

the receiving business' records may in some circumstances be

regarded as 'created' by the receiving business. 

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.

Id. at 45, 414 P.3d at 97 (citation omitted) (citing Mattos, 140

Hawai#i at 32, 398 P.3d at 621.

Here, as in Mattos and Behrendt, the Williams Affidavit

does not establish that the Attached Note was received by BANA

and then incorporated into BANA's records. In addition, like the

declaration in Behrendt, the Williams Affidavit does not

establish that Williams was familiar with the record-keeping

system of Countrywide or any other prior holder of the Note. See

142 Hawai#i at 46, 414 P.3d at 98 (declaration of loan servicer

employee "ma[de] no assertions as to [the declarant's]

familiarity with the record-keeping systems of Funding Group or

Option One, which first created the Note and allonges"). Thus,

the Williams Declaration does not satisfy the foundational

requirements to make Williams a qualified witness with respect to

the Attached Note, and she could not authenticate it as a record

of a regularly conducted activity under HRE Rule 803(b)(6). 

The Wallace Declaration, even as amended, was similarly

deficient in providing the foundation necessary to admit the

Attached Note under HRE Rule 803(b)(6). Wallace did not state

9
NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS OR THE PACIFIC REPORTER

that she was the custodian of records for Nationstar or any prior

holder of the Note, so she had to demonstrate that she was a

"qualified witness" with respect to the Attached Note. Yet she

did not claim to be familiar with the record-keeping system of

Countrywide or any other holder of the Note before BANA. Indeed,

the Wallace Declaration does not specifically assert that Wallace

was even familiar with BANA's record-keeping system. The Wallace

Declaration also relies on the Williams Affidavit, which, for the

reasons previously stated, is insufficient to admit the Attached

Note under the business records exception. 

Absent the declaration of a "qualified witness" with

respect to the Attached Note, U.S. Bank failed to establish its

standing to foreclose. Because the Attached Note was not

admissible as asserted, U.S. Bank did not meet its burden of

establishing facts necessary for a grant of summary judgment. 

See Behrendt, 142 Hawai#i at 46, 414 P.3d at 98. Given our

conclusion, we do not reach Thede's second issue on appeal.

We therefore vacate the (1) Findings of Fact,

Conclusions of Law and Order Granting Plaintiff's Motion for

Summary Judgment Against All Parties and for Interlocutory Decree

of Foreclosure, and (2) Judgment, both entered on November 30,

2017, by the Circuit Court of the Fifth Circuit. The case is

remanded to the Circuit Court for further proceedings consistent

with this Summary Disposition Order.

DATED: Honolulu, Hawai#i, April 6, 2020.

On the briefs:

Gary Victor Dubin and

Frederick J. Arensmeyer

for Defendant-Appellant.

Andrew J. Lautenbach and

Sianha M. Gualano

(Starn O'Toole Marcus & Fisher)

for Plaintiff-Appellee.

 

/s/ Alexa D.M. Fujise

Presiding Judge

/s/ Derrick H.M. Chan

Associate Judge

/s/ Clyde J. Wadsworth

Associate Judge

10