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HSBC Bank USA, N.A.

Intermediate Court of Appeals of Hawaii

May 10, 2018

HSBC BANK USA, NATIONAL ASSOCIATION AS TRUSTEE FOR DEUTSCHE ALT-A SECURITIES, INC. MORTGAGE LOAN TRUST, SERIES 2005-2, Plaintiff-Appellee,
v.
FELICITAS B. MOORE, Defendant-Appellant, and PNC BANK, NATIONAL ASSOCIATION, Defendant-Appellee, 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 SECOND CIRCUIT (CIVIL NO. 13-1-0648 (2))

          Gary Victor Dubin, Frederick J. Arensmeyer, for Defendant-Appellant.

          Jade Lynn Ching, Ryan B. Kasten, (Nakashima Ching LLC), for Plaintiff-Appellee.

          GINOZA, CHIEF JUDGE, LEONARD AND CHAN, JJ.

          OPINION

          LEONARD, J.

         Defendant-Appellant Felicitas B. Moore (Moore) appeals from the Judgment entered on May 22, 2017, in the Circuit Court of the Second Circuit (Circuit Court), [1] in favor of Plaintiff-Appellee HSBC Bank USA, N.A., as Trustee for Deutsche, Alt-A Securities, Inc. Mortgage Loans Trust, Series 2005-2 (HSBC Bank), and against all defendants. Moore also challenges the Circuit Court's Findings of Fact and Conclusions of Law; Order Granting Plaintiff's Motion for Summary Judgment and for Interlocutory Decree of Foreclosure, also entered on May 22, 2017 (Foreclosure Decree).

         I. BACKGROUND

         On June 3, 2013, HSBC Bank filed a Verified Complaint for Foreclosure (Complaint). In the Complaint, HSBC Bank alleged that on December 17, 2004, Moore executed a promissory note in favor of National City Mortgage Co. dba Accubanc Mortgage in the amount of $420, 000.00 (Note), secured by a mortgage on real property recorded on December 23, 2004 in the Bureau of Conveyances (Mortgage). HSBC Bank alleged that National City Mortgage Co. merged with National City Bank effective October 1, 2008, and National City Bank then merged with PNC Bank, N.A., (PNC Bank) effective November 6, 2009. HSBC Bank alleged that it was the owner of the Mortgage by virtue of an Assignment of Mortgage recorded in the Bureau of Conveyances on November 7, 2012 (Assignment of Mortgage), that it was "entitled to enforce the Note" and Mortgage, and that Moore was in default. The Complaint does not specifically allege that HSBC Bank possessed the Note or reference any indorsements.

         However, the Complaint was supported by an attached "Verification of Complaint for Foreclosure" executed on May 22, 2013, by Rodney Carpenter (Carpenter), an employee and "Authorized Signer" of PNC Bank, the loan servicing agent for HSBC Bank (Carpenter's Declaration), in which Carpenter attested, in relevant part, that "[HSBC Bank] is in possession of the Note. As evidenced by the recorded Mortgage and applicable assignment, [HSBC Bank] is also the mortgagee of record. As such, [HSBC Bank] is the proper plaintiff in this matter."[2] Carpenter also attested, inter alia, that "[a] true and correct copy of the Indorsed Note" was attached as Exhibit A. Notably, there are no indorsement stamps directly on the Note that was attached as Exhibit A. Instead, attached to this copy of the Note is an undated allonge, apparently executed by a representative of PNC Bank, specifically indorsing the Note to HSBC Bank.[3]

         Carpenter's Declaration also purported to authenticate other loan documents which were also attached thereto, including a recorded copy of the Mortgage, a recorded copy of the Assignment of Mortgage, payment records for Moore's loan account, and an October 4, 2011 notice of default and of intent to accelerate the loan.

         On December 16, 2013, Moore filed an answer denying all allegations in the Complaint. Moore also separately filed her affirmative defenses, asserting among other things that HSBC Bank lacked standing because HSBC Bank had not shown that it owned the Note and was authorized to bring the foreclosure action.

         On March 18, 2015, HSBC Bank filed a Motion for Summary Judgment Against all Parties and for Interlocutory Decree of Foreclosure (Motion for Summary Judgment). The Motion for Summary Judgment was supported by: (1) a declaration by Jeffrey Moler (Moler), an employee and "Authorized Signer" of PNC Bank, (First Moler Declaration) which indicated, inter alia, that he was the custodian of the exhibits attached to the Carpenter Declaration and Complaint which "remain true and accurate;" and (2) a declaration executed by Andrew R. Tellio (Tellio), former counsel for HSBC Bank in this case, which purported to authenticate various documents related to the Mortgage and the mergers of National City Mortgage Co., National City Bank, and PNC Bank. Neither the Note nor any allonges were attached to the Motion for Summary Judgment or these declarations. Also on March 18, 2015, HSBC Bank filed an Affirmation of Attorney pursuant to HRS § 667-17 wherein Tellio affirmed that, inter alia, none of HSBC Bank's filings "contain any false statements of fact or law" and that "[HSBC Bank] has legal standing to bring this foreclosure action" (Attorney Affirmation).[4]

         On May 26, 2015, Moore filed a memorandum in opposition to the Motion for Summary Judgment asserting that there were genuine issues of material fact as to whether "Carpenter is competent to authenticate Plaintiff's business records, and with respect to whether Plaintiff is the holder of the subject promissory note[.]"

         On July 21, 2016, HSBC Bank filed a supplemental memorandum in support of its Motion for Summary Judgment. In support of its argument that HSBC Bank possessed the Note, HSBC Bank attached a declaration of HSBC Bank's counsel, David B. Rosen dated July 20, 2016 (Rosen Declaration), and a supplemental declaration by Moler dated June 20, 2016 (Second Moler Declaration). The Rosen Declaration provides in relevant part:

3. I have personally reviewed the original "wet-ink" note dated December 17, 2004 ("Note"), executed by Defendant FELICITAS B. MOORE ("MOORE"). A true and correct copy of the original Note, which I personally reviewed is attached hereto as Exhibit H.
4. The original wet-ink Note is indorsed in blank. I am in possession of the original wet-ink Note on behalf of Plaintiff, which Plaintiff forwarded to me in response to MOORE's demand to inspect the Note. The original wet-ink Note is currently stored at my office located at ... .

         The Second Moler Declaration provided in pertinent part:

1. I have personal knowledge of and am competent to testify to the matters stated herein by virtue of my employment for PNC Bank, National Association, the mortgage servicer for the Plaintiff HSBC BANK .... My personal knowledge is based on my review of the records and files related to the mortgage loan ("Loan") which is the subject of this foreclosure and my knowledge of the regular business practices of PNC Bank ....
2. .... The Note contains an indorsement in blank on page 3. A true and correct copy of the Note is attached as Exhibit A.
3. An outdated copy of the Note, which included a specially indorsed Allonge in favor of Plaintiff, was attached to the Verified Complaint .... As mentioned above, the original Note contains a blank indorsement on page 3. As a result, the Allonge to the Note has been removed from the Note.

         Unlike the Note that was attached to Carpenter's Declaration, the copy of the Note attached as an exhibit to these declarations contains a blank indorsement stamp on the third and final page as follows:

Pay to the order of without recourse in any event
NATIONAL CITY MORTGAGE CO.
DBA ACCUBANC MORTGAGE
BY [signature Elaine C. Gilmer]
Elaine C. Gilmer, Allocations Coordinator

         The Motion for Summary Judgment was heard on February 8, 2017. After brief oral arguments, the Circuit Court stated:

[P]laintiff has shown it is the holder of the note, it's been endorsed in blank. As Mr. Rosen has represented, which I accept, he's produced the original note for review and inspection by ...

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