This memorandum opinion was not selected for pub lication in the New Mexico Appellate Reports. Please see Rule 12-405 NMRA for restricti ons on the citation of unpublished memorandum opinions. Please also note that this electronic memorandum opinion may contain computer-generated errors or other deviations from the official paper version filed by the Court of Appeals and does not include the filing date. IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO 1 PNC MORTGAGE, a division of PNC 2 BANK, NATIONAL ASSOCIATION, 3 Plaintiff-Appellee, 4

v. NO. 35,255 5 HARBHAJAN KHALSA, a/k/a, 6 HARBHAJAN S. KHALSA, 7 Defendant-Appellant. 8 APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY 9 Francis J. Mathew, District Judge 10 Brownstein Hyatt Farber Schreck, LLP 11 Eric R. Burris 12 Thomas J. Bunting 13 Albuquerque, NM 14 for Appellee 15 Gleason Law Firm, LLC 16 Deirdre Gleason 17 Heath, MA 18 for Appellant 19 MEMORANDUM OPINION 202 WECHSLER, Judge. 1 {1} Defendant-Appellant Harbha jan Khalsa appeals from a foreclosure judgment 2 in favor of Plaintiff-Appellee PNC Mort gage, a division of PNC Bank, National 3 Association. Khalsa argues that PNC Mortgage failed to establis h standing to enforce 4 the underlying promissory note and to forecl ose the mortgage that secured the note. 5 For the reasons that follow, we agree. We therefore reverse. 6 BACKGROUND 7 {2} In March 2006, Khalsa executed a promi ssory note (the Note) evidencing a debt 8 in the principal sum of $304,500 to National City Mortgage (NCM), a division of 9 National City Bank of Indiana (NCBI). The Note was secured by a mortgage on 10 Khalsa’s home (the Mortgage). Khalsa made the Mortgage payments until August 11 2010, but thereafter he went into default. 12 {3} In December 2010, PNC Mortgage, “adivision of PNC Bank, National 13 Association successor by merger with National City Real Estate Services LLC, 14 successor by merger to National City Mortgage, Inc. f/k/a National City Mortgage 15 Co., a subsidiary of National City Bank,” filed a mortgage foreclosure complaint 16 against Khalsa. PNC Mortgage attached both an unindorsed copy of the Note and a 17 copy of the Mortgage. The complaint allege d that the Mortgage had been assigned to 18 PNC Mortgage and that PNC Mortgage wa s “the owner of the Mortgage and the 193 holder in due course of the Note.” The complaint further alleged that PNC Mortgage 1 was “the holder of the Mortgage . . . pursu ant to a name change/merger with current 2 holder of record.” In February 2011, Khal sa filed an answer to the complaint, 3 asserting the affirmative defense of lack of standing to sue. 4 {4} In March 2013, PNC Mortgage filed a motion for summary judgment, 5 contending that it was “the current holder of the [N]ote” and also “successor by 6 merger to the original entity to whom Mr. Khalsa gave the [N]ote,” and as such, it was 7 entitled to enforce the Note and the Mortgage. PNC Mortga ge attached a copy of the 8 Note that, unlike the version attached to the complaint, contained two undated 9 indorsements: one by NCM, a division of NCBI, to Nati onal City Mortgage Co., a 10 subsidiary of NCBI; and the other by Nati onal City Mortgage Co., a subsidiary of 11 NCBI, in blank. In support of its mo tion, PNC Mortgage attached numerous 12 documents, including the affidavit of Brian J. Arthur. As “an Assistant Vice President 13 of Mortgage Services—Default for PNC Mortgage,” Arthur stated that the Mortgage 14 had been assigned to National City Mortgage Co. in 2006. A copy of that assignment 15 was attached. Arthur further stated that National City Mortgage Co. had merged with 16 and into National City Bank effective October 1, 2008, and that National City Bank 17 had merged with and into PNC Mortgageeffective November 6, 2009. A number of 18 documents reflecting the Nati onal City Mortgage Co. merg er into National City Bank 194 were attached. Arthur also st ated that “National City Mo rtgage Co. [had] indorsed the 1 Note in blank[,]” without specifying when th at occurred. Finally, he stated that PNC 2 Mortgage’s counsel was in possession of the original Note. 3 {5} In response to the motion for summary judgment, Khalsa asserted that material 4 issues of fact existed, including whether PNC Mortgage was the holder of the Note. 5 In an attached affidavit, Kh alsa described his attempts to obtain a loan modification 6 in 2010; in the course of those conversati ons, PNC Mortgage had advised Khalsa that 7 the Bank of New York was the holder of th e Note. In its reply, PNC Mortgage took 8 the position that Khalsa’s sworn statement concerning the conflicting information that 9 he had received from PNC Mortgage should be regarded as “post-hoc efforts” to 10 nullify prior discovery responses that failed to mention the exchange described in 11 Khalsa’s affidavit. 12 {6} Khalsa subsequently filed his own mo tion for summary judgment and a motion 13 to dismiss, contending that PNC Mortgage lacked support for its claim of standing and 14 entitlement to collect amounts due on the No te and foreclose the Mortgage. Khalsa 15 reiterated that PNC Mortgagetold him that the Bank of New York was the holder of 16 the Note and admitted in discovery that it did not own his loan, as it was part of a 17 bundle given as security to another bank prior to the mergers. PNC Mortgage, Khalsa 185 argued, was unable to establish its status eith er as a holder in due course or as a holder 1 by virtue of possession, corporate merger, or otherwise. 2 {7} The district court denied Khalsa’s motion for summary judgment as untimely 3 and did not rule on the remaining motions, instead proceeding to trial. The evidence 4 presented at trial largely correlated withthe materials submitted in connection with 5 the pretrial motions. PNC Mortgage presen ted the original Note, bearing the two 6 undated indorsements referenced in its mo tion for summary judgment. Arthur, PNC 7 Mortgage’s only witness, te stified about the series of mergers by which PNC became 8 the successor to NCM. In the course of th at testimony, the district court admitted 9 certifications reflecting the mergers of NCBI and NCM into PNC Bank, National 10 Association, effective November 2009. Arthur also testified that it was the usual 11 business practice of NCM to indorse originalnotes directly after closing and digital 12 imaging. However, Arthur did not have any personal knowledge of the actual timing 13 of the indorsements on the Note. Nor did he testify as to whether NCM, NCBI, and/or 14 PNC Mortgage had possession of the Note atthe time of the filing of the complaint 15 or continuously retained possession of the Note between the time of origination and 16 the time of trial. 17 STANDARD OF REVIEW 186 {8} We review the district court’s determination that PNC Mortgage had standing 1 to pursue the foreclosure complaint agai nst Khalsa under the substantial evidence 2 standard of review. Deutsche Bank Nat’l Tr. Co. v. Johnston , 2016-NMSC-013, ¶ 28, 3 369 P.3d 1046. Accordingly, we must determine whether PNC Mortgage presented 4 evidence that a reasonable mind could accept as adequate to establish the requisites 5 of standing, resolving all disputed fact s and indulging all reasonable inferences in 6 favor of the district court’s findings. Id. “However, when the re solution of the issue 7 depends upon the interpretation of documentary evidence, [the appellate court] is in 8 as good a position as the trial court to interpret the evidence.” Id. (alteration, internal 9 quotation marks, and citation omitted). 10 STANDING 11 {9} The New Mexico Supreme Court has held that a party seeking to foreclose is 12 “required to demonstrate under [the UCC] th at it had standing to bring a foreclosure 13 action at the time it filed suit.” Bank of N.Y. v. Romero, 2014-NMSC-007, ¶ 17, 320 14 P.3d 1; see Johnston , 2016-NMSC-013, ¶¶ 20-23. To demonstrate standing, the 15 foreclosing party “must demonstrate that it had the right to enforce the note and the 16 right to foreclose the mortgage at the time the foreclosure suit was filed .” PNC Mortg. 17 v. Romero , 2016-NMCA-064, ¶ 19, 377 P.3d 461 (emphasis added) (alteration, 18 internal quotation marks, and citation omitted). 197 {10} A promissory note is a negotiable instru ment that may be enforced by the 1 holder. See NMSA 1978, § 55-3-301 (1992) (defining “ ‘[p]erson entitled to enforce’ 2 [a negotiable] instrument” to include“the holder of the instrument,” inter alia ); PNC 3 Mortg. , 2016-NMCA-064, ¶ 20. The holder is “the person inpossession of a 4 negotiable instrument that is payable either to bearer or to an identified person that is 5 the person in possession[.]” NMSA 1978, § 55-1-201(b)(21)(A) (2005). 6 {11} PNC Mortgage contends that there wa s sufficient evidence to establish its 7 standing as the holder of the Note for two reasons. First, it argues that its possession 8 of the Note, indorsed in blank, rendered it the holder. Alternatively, it relies on its 9 status as successor by merger to the orig inal lender. We address each argument in 10 turn. 11 The Indorsed Note 12 {12} PNC Mortgage argues that the indorsed Note establishes its standing because 13 PNC Mortgage was in possession of a bearerinstrument, and thus it had the right to 14 enforce the Note. 15 {13} The difficulty with PNC’s argument is th at the indorsed Note only came to light 16 after PNC Mortgage filed its complaint. PNC Mortgage faile d to establish either the 17 date of the indorsements on the Note or PNC Mortgage’s possession of the original 18 Note at the time it filed its complaint. U nder the circumstances, the Note, as produced 198 at trial, is insufficient to show that PNC Mortgage was the holder of the Note at the 1 time it filed its foreclosure complaint. See Johnston , 2016-NMSC-013, ¶ 23 (holding 2 that “a mortgage holder must produce proof that it was entitled to enforce the 3 underlying promissory note prior to the co mmencement of the foreclosure action by, 4 for example, attaching a note containing an undated indorsement to the initial 5 complaint or producing a note dated beforethe filing of the complaint at some 6 appropriate time in the litigation”); PNC Mortg. , 2016-NMCA-064, ¶ 25 (same). 7 {14} PNC Mortgage argues that Arthur’s te stimony concerning the usual business 8 practice of indorsing original notes promptly after closing supports a reasonable 9 inference that the Note received similar treatment. Nevertheless, even assuming that 10 this inference is permissible, the evid ence remains insufficient. As previously 11 described, Arthur did not testify to the crucial question of PN C Mortgage’s possession 12 of the Note at the time of the filing of th e complaint. This is a fatal deficiency. See 13 Johnston , 2016-NMSC-013, ¶ 28 (“Substantial evidence means relevant evidence that 14 a reasonable mind could accept as adequate to support a conclusion.” (internal 15 quotation marks and citation omitted)). 16 The Corporate Mergers 17 {15} Alternatively, PNC Mortgage argues thatit established its standing to enforce 18 the Note by demonstrating its status as successor to NCM. PNC Mortgage bases its 199 argument on the testimony and documentation de scribing the series of mergers, as 1 well as a section in the National Bank Act, 12 U.S.C. § 215a(e) (2012), which 2 provides: 3 All rights, franchises, and interests of the i ndividual merging banks or 4 banking associations in and to every type of property (real, personal, and 5 mixed) and choses in action shall betransferred to and vested in the 6 receiving association by virtue of suchmerger without any deed or other 7 transfer. The receiving association, upon the merger and without any 8 order or other action on the part of any court or otherwise, shall hold and 9 enjoy all rights of property, franchises, and interests[.] 10 PNC Mortgage therefore argues that it established its entitlement to enforce the Note 11 because it had all of the rights of its predecessor in interest. 12 {16} In PNC Mortgage , we addressed a nearly iden tical argument. We concluded 13 “that a successor in interest seeking to establish its right to foreclose [must] provide 14 some evidence of a proper indorsement or tran sfer via negotiation as part of its prima 15 facie case.” 2016-NMCA-064, ¶ 28. Moreover, a successor in interest must establish 16 that right as of the time of the filing of the complaint. Id. ¶ 34. In light of the decision 17 rendered in PNC Mortgage , it is clear that proof of the mergers, without more, cannot 18 establish PNC Mortgage’s status as holder at the time of the f iling of the complaint. 19 {17} Whether the Note was unindorsed, specially indorsed, or indorsed in blank at 20 the time of the filing of the complaint, possession remained critical. See § 55-1- 21 201(b)(21)(A) (defining the holder as “ the person in possession of a negotiable 2210 instrument that is payable eith er to bearer or to an identified person that is the person 1 in possession[.]” (emphasis a dded)). Accordingly, “PNC Mortgage may have been 2 able to establish a right to enforce the unindorsed note had it shown documentation 3 confirming what entity had possession of it th rough negotiation or transfer at the time 4 of filing the complaint .” PNC Mortg. , 2016-NMCA-064, ¶ 35 (emphasis added). It did 5 not do so. 6 {18} We understand PNC Mortgage to argue that Arthur’s testimony and the 7 documentary evidence concerning the mergers should be sufficient to establish its 8 possession of the Note “[f]rom November 2009 forward[.]” However, neither Arthur’s 9 testimony nor the documents concerning the mergers actually addressed this subject. 10 No specific information was supplied about the manner in which PNC Mortgage 11 obtained possession. If PNC Mortgage and/orthe various entities that merged into 12 PNC Mortgage had continuous possession of the Note, as it suggests, PNC Mortgage 13 should have presented evidence, such as busine ss records, to that effect. In the absence 14 of such evidence, the invited inference of continuous possession is unduly speculative. 15 See, e.g. , PNC Mortg. , 2016-NMCA-064, ¶ 34 (observing that the “noticeable lack” 16 of documentary evidence to c onfirm the inclusion of a promissory note in a series of 17 mergers, combined with uncertainties surrounding possession in view of 18 securitization, created genuine issues of material fact regarding possession). 1911 {19} Finally, PNC Mortgage argues that the decision inPNC Mortgage should not 1 be regarded as controlling because that case involved an award of summary judgment 2 as opposed to a decision on the merits fo llowing a bench trial. We acknowledge the 3 distinction. In either situation, howev er, the burden on the complainant remains 4 fundamentally the same. See generally Johnston , 2016-NMSC-013, ¶ 27 (observing, 5 on appeal from a decision rendere d after a bench trial, that proof of the elements of 6 standing is “an indispensable part of the plaintiff’s case” (internal quotation marks and 7 citation omitted)). As described above, th e evidence upon which PNC Mortgage relied 8 in this case exhibited the same defi ciencies as the evidence relied upon in PNC 9 Mortgage ; the critical informational gaps cannot be filled with unsupported inference. 10 See, e.g. , Johnston , 2016-NMSC-013, ¶¶ 28-32 (concluding that indirect evidence was 11 insufficient to establish standing to forecl ose under the applicable substantial evidence 12 standard of review); c f. Romero , 2014-NMSC-007, ¶¶ 30-33 (holding that in the 13 absence of admissible testimony or business records, alleged transfer of a promissory 14 note to the complainant was not supported by the requisite substantial evidence). 15 CONCLUSION 16 {20} For the foregoing reasons, we conclude that PNC failed to prove its standing. 17 We therefore reverse and remand with instructions to vacate the judgment of 18 foreclosure. See PNC Mortg. , 2016-NMCA-064, ¶ 35. 1912 {21} IT IS SO ORDERED. 1

__________ ______________________ 2 JAMES J. WECHSLER, Judge 3

WE CONCUR: 4

________________________________ 5 JULIE J. VARGAS, Judge 6

________________________________ 7 STEPHEN G. FRENCH, Judge 8