U.S. Bank N.A. v. Mattos. , 140 Haw. 26 ( 2017 )

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Electronically Filed
Supreme Court
SCWC-14-0001134
IN THE SUPREME COURT OF THE STATE OF HAWAII
06-JUN-2017
08:35 AM
---oOo---
________________________________________________________________
U.S. BANK N.A. IN ITS CAPACITY AS TRUSTEE FOR THE REGISTERED
HOLDERS OF MASTR ASSET BACKED SECURITIES TRUST 2005-NC1,
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-NC1,
Respondent/Plaintiff-Appellee,
vs.
JOSEPH KEAOULA MATTOS, CHANELLE LEOLA MENESES,
Petitioners/Defendants-Appellants,
and
CITIFINANCIAL, INC., ASSOCIATION OF APARTMENT OWNERS OF
TERRAZA/CORTEBELLA/LAS BRISAS/TIBURON,
EWA BY GENTRY COMMUNITY ASSOCIATION,
Respondents/Defendants-Appellees.
________________________________________________________________
SCWC-14-0001134
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-14-0001134; CIVIL NO. 11-1-1539)
JUNE 6, 2017
RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.
OPINION OF THE COURT BY McKENNA, J.
I. Introduction
This appeal arises from a judicial decree of foreclosure
granted in favor of plaintiff “U.S. Bank N.A. in its Capacity as
Trustee for the registered holders of MASTR Asset Backed
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Securities Trust 2005-NC1, Mortgage Pass-Through Certificates,
Series 2005-NC1” (“U.S. Bank”) against defendants Joseph Keaoula
Mattos (“Mattos”) and Chanelle Leola Meneses (“Meneses”)
(collectively, “Defendants”). At issue is whether the Circuit
Court of the First Circuit1 (“circuit court”) properly granted
U.S. Bank’s “Motion for Summary Judgment and Decree of
Foreclosure Against All Defendants on Complaint Filed July 21,
2011” (“motion” or “motion for summary judgment”). In its
published opinion, the Intermediate Court of Appeals (“ICA”)
affirmed the circuit court. U.S. Bank N.A. v. Mattos, 137
Hawaii 209, 367 P.3d 703 (App. 2016).2
Defendants assert the ICA erred in concluding that the
circuit court properly granted summary judgment due to the
existence of genuine issues of material fact. Specifically,
Defendants allege U.S. Bank lacked standing to foreclose
because:
1. the two mortgage assignments to the securitized trust
in the chain of U.S. Bank’s alleged ownership of
[Defendants’] loan were “robo-signed” by persons with
insufficient authority or personal knowledge as to
what they swore to, and whose signatures differed
among similar mortgage assignments that they had
supposedly signed and/or notarized;
2. the two mortgage assignments to the securitized trust
in the chain of U.S. Bank’s alleged ownership of
1
The Honorable Judge Bert I. Ayabe presided.
2
The ICA initially issued its decision in the form of a summary
disposition order (“SDO”). U.S. Bank filed a motion for publication, which
the ICA granted, entering its Published Opinion on February 12, 2016.
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[Defendants’] loan violated the securitized trust’s
governing instrument, known as its Pooling and
Servicing Agreement [(“PSA”)]. . . .
3. the two mortgage assignments to the securitized trust
in the chain of U.S. Bank’s alleged ownership of
[Defendants’] loan were unproven as supported only by
hearsay declarations inadmissible pursuant to [Hawai‘i
Rules of Civil Procedure (“HRCP”)] Rule 56(e) and
Hawaii Evidence Rule 803(b)(3)[sic]3 as U.S. Bank’s
Declarants had no personal knowledge of how earlier
business records had been compiled in addition to the
two mortgage assignments having been invalid, supra.
We address the third issue on certiorari first. We hold
that the ICA erred by concluding the declaration of Richard Work
(“Work”), the Contract Management Coordinator of Ocwen Loan
Servicing, LLC (“Ocwen”), rendered him a “qualified witness”
under State v. Fitzwater, 122 Hawaii 354, 227 P.3d 520 (2010)
for U.S. Bank’s records under the Hawai‘i Rules of Evidence
(“HRE”) Rule 803(b)(6) hearsay exception for records of
regularly conducted activity. In addition, U.S. Bank failed to
establish that it was a holder entitled to enforce the note at
the time the foreclosure complaint was filed. See Bank of
America, N.A. v. Reyes-Toledo, 139 Hawaii 361, 370-71, 390 P.3d
1248, 1257-58 (2017).
With respect to the first issue on certiorari, because it
is unclear what Defendants mean by “robo-signing” and because a
ruling on the legal effect of “robo-signing” is not necessary to
3
It appears this is a typographical error, as the ICA Opinion is based
on Rule 803(b)(6), the hearsay exception for “[r]ecords of regularly
conducted activity.” Rule 803(b)(3) is the hearsay exception for “[t]hen
existing mental, emotional, or physical condition,” and is clearly
inapplicable.
3
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the determination of this case, we set aside the ICA’s holding
that conclusory assertions that fail to offer factual
allegations or a legal theory indicating how alleged “robo-
signing” caused harm to a mortgagee are insufficient to
establish a defense in a foreclosure action. Addressing the
factual allegations underlying the “robo-signing” claim,
however, we conclude there is a genuine issue of material fact
as to whether Ocwen had the authority to sign the second
assignment of mortgage to U.S. Bank.
With respect to the second issue on certiorari, we affirm
the ICA in part. We adopt the majority rule followed by the ICA
in U.S. Bank Nat. Ass’n v. Salvacion, 134 Hawaii 170, 338 P.3d
1185 (App. 2014) and hold that a third party unrelated to a
mortgage securitization pooling and servicing agreement lacks
standing to enforce an alleged violation of its terms unless the
violation renders the mortgage assignment void, rather than
voidable, but we limit the holding to the judicial foreclosure
context.
Accordingly, we vacate the ICA’s March 9, 2016 Judgment on
Appeal, as well as the circuit court’s August 26, 2014 Findings
of Fact, Conclusions of Law and Order Granting Plaintiff’s
Motion for Summary Judgment and Decree of Foreclosure Against
All Defendants on Complaint Filed July 21, 2011, and remand this
case to the circuit court.
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II. Background
On October 15, 2004, Mattos signed a mortgage and a note
for $296,000 in favor of New Century Mortgage Corporation (“New
Century”). The mortgage was recorded in the Land Court on
October 25, 2004.
On July 21, 2011, U.S. Bank filed a foreclosure complaint.
U.S. Bank alleged it was the owner of the mortgage by virtue of
an Assignment of Mortgage dated January 3, 2007 (“first
assignment”) and an Assignment of Mortgage dated September 10,
2010 (“second assignment”), both of which were recorded in the
Land Court (the mortgage, first assignment, and second
assignment are sometimes collectively referred to as “the
mortgage documents”). Attached to the complaint were copies of
the note with an allonge4 and the mortgage documents. The
allonge was apparently executed by Ocwen as New Century’s
attorney-in-fact pursuant to a Limited Power of Attorney. The
allonge was dated June 22, 2010, although it stated it was
effective January 31, 2005.
On January 23, 2014, U.S. Bank filed a motion for summary
judgment. The motion was supported by a declaration from Work,
4
“An ‘allonge’ is defined as a slip of paper sometimes attached to a
negotiable instrument for the purpose of receiving further indorsements when
the original paper is filled with indorsements.” Mortg. Elec. Registration
Sys., Inc. v. Wise, 130 Hawai‘i 11, 14 n.6, 304 P.3d 1192, 1195 n.6 (2013).
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which purported to authenticate various attached exhibits,
including the underlying note, allonge, and mortgage documents.
On April 15, 2014, Defendants filed their opposition to
U.S. Bank’s motion. In summary, Defendants alleged that U.S.
Bank lacked standing to foreclose because (1) it failed to show
it was the holder of the note at the time of foreclosure, (2)
the mortgage assignments contained various alleged defects, and
(3) the motion’s supporting documents were inadmissible hearsay.
Defendants’ opposition was also based on an affidavit from Marla
Giddings (“Giddings”), a purported forensic and securitization
analysis expert retained to opine as to whether U.S. Bank owned
the note and mortgage. Giddings asserted the assignments
“suffer[ed] from several fatal flaws,” namely that the signers
and notaries were known “robo-signers” who were employed by
Ocwen and appeared to have differing signatures on several
documents. Giddings also claimed the assignments violated the
securitized trust’s PSA. On July 18, 2014, after a hearing, the
circuit court granted U.S. Bank’s motion for summary judgment.
Defendants appealed to the ICA. In its opinion, the ICA
rejected Defendants’ arguments and affirmed the grant of summary
judgment in U.S. Bank’s favor. Mattos, 137 Hawaii at 214, 367
P.3d at 708. The ICA rejected Defendants’ first argument
regarding “robo-signing” because their opposition to U.S. Bank’s
motion “failed to assert facts or law explaining how the alleged
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‘robo-signing’ caused them harm or damages.” 137 Hawai‘i at 210,
367 P.3d at 704. The ICA rejected Defendants’ second argument
that the assignments were void, holding, “This court, however,
has held that the non-compliance with a PSA does not render the
assignment void. Given our holding in Salvacion, Appellants
have no standing to challenge U.S. Bank’s alleged noncompliance
with the PSA.” 137 Hawaii at 211, 367 P.3d at 705. Finally,
the ICA rejected Defendants’ third argument, determining that
Work was a “qualified witness” pursuant to Fitzwater who was
able to authenticate the records attached to his declaration for
admission under HRE Rule 803(b)(6). 137 Hawaii at 211-213, 367
P.3d at 705-07.
We now address the questions presented on certiorari.
III. Standard of Review
An award of summary judgment is reviewed de novo and “is
appropriate where there is no genuine issue as to the material
fact and the moving party is entitled to judgment as a matter of
law.” French v. Hawaii Pizza Hut, Inc., 105 Hawai‘i 462, 466, 99
P.3d 1046, 1050 (2004) (citing Ross v. Stouffer Hotel Co., 76
Hawai‘i 454, 457, 879 P.2d 1037, 1040 (1994)).
Furthermore,
The burden is on the party moving for summary
judgment (moving party) to show the absence of any genuine
issue as to all material facts, which, under applicable
principles of substantive law, entitles the moving party to
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judgment as a matter of law. This burden has two
components.
First, the moving party has the burden of producing
support for its claim that: (1) no genuine issue of
material fact exists with respect to the essential elements
of the claim or defense which the motion seeks to establish
or which the motion questions; and (2) based on the
undisputed facts, it is entitled to summary judgment as a
matter of law. Only when the moving party satisfies its
initial burden of production does the burden shift to the
non-moving party to respond to the motion for summary
judgment and demonstrate specific facts, as opposed to
general allegations, that present a genuine issue worthy of
trial.
Second, the moving party bears the ultimate burden of
persuasion. This burden always remains with the moving
party and requires the moving party to convince the court
that no genuine issue of material fact exists and that the
moving part is entitled to summary judgment as a matter of
law.
105 Hawaii at 470, 99 P.3d at 1054 (emphasis and citation
omitted).
IV. Discussion
A. Work’s declaration was insufficient to establish that he is
a “qualified witness” under Fitzwater as to U.S. Bank’s
records.
Pursuant to HRCP Rule 56(e) (2000)5 and Rules of the Circuit
Courts of the State of Hawaii (“RCCH”) Rule 7(g) (1997)6, a
5
HRCP Rule 56 governs summary judgment. HRCP Rule 56(e) provides in
pertinent part:
Form of affidavits; further testimony; defense required.
Supporting and opposing affidavits shall be made on
personal knowledge, shall set forth such facts as would be
admissible in evidence, and shall show affirmatively that
the affiant is competent to testify to the matters stated
therein. Sworn or certified copies of all papers or parts
thereof referred to in an affidavit shall be attached
thereto or served therewith.
6
RCCH Rule 7(g) provides in pertinent part:
(continued. . .)
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declaration 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 is competent
to testify as to the matters contained within the declaration.
The ICA ruled that the loan documents, including the note and
allonge, were admissible through Work’s declaration, which
established he was a “qualified witness” able to authenticate
the records of U.S. Bank and Ocwen pursuant to the hearsay
exception for records of regularly conducted activity. See
Mattos, 137 Hawai‘i at 213, 367 P.3d at 707.
With respect to the note and mortgage documents, Work’s
declaration states:
1) I am the Contract Management Coordinator of OCWEN Loan
Servicing, LLC (“Ocwen”), the servicer for U.S. Bank N.A.
in its capacity as Trustee for the registered holders of
MASTR Asset Backed Securities Trust 2005-NC1, Mortgage
Pass-Through Certificates, Series 2005-NC1 [(“U.S. Bank”)]
of the mortgage loan at issue in this case (the “Loan”).
As such, I am authorized to make this Declaration.
2) I am over the age of 18 years, and I have personal
knowledge of the facts and matters stated herein based on
my review of the business records described below. The
statements set forth in this Declaration are true and
correct, to the best of my knowledge and belief.
3) In the regular performance of my job functions, I have
access to and am familiar with [U.S. Bank’s] records and
documents relating to this case (the “Records”), including
Ocwen’s business records relating to the servicing of the
(continued. . .)
Declaration in lieu of affidavit. In lieu of an affidavit,
an unsworn declaration may be made by a person, in writing,
subscribed as true under penalty of law, and dated[.]
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Loan (the “Ocwen Records”). In making this Declaration, I
relied upon the Records.
4) The Ocwen Records document transactions relating to the
Loan and were made and are maintained in the regular course
of Ocwen’s business consistent with Ocwen’s regular
practices, which require that records documenting
transactions relating to the serviced mortgage loan be made
at or near the time of the transactions documented by a
person with knowledge of the transactions or from
information transmitted by such a person.
5) According to the Ocwen Records, [U.S. Bank] is in
possession of an original promissory note dated October 15,
2004 . . . in favor of NEW CENTURY MORTGAGE CORPORATION
(the “Note”). A true and correct copy of the Note is
attached hereto as Exhibit 1.
6) The Note has been endorsed to [U.S. Bank] by Ocwen
acting as the attorney-in-fact for New Century Mortgage
Corporation. A true and correct copy of the Limited Power
of Attorney designating Ocwen as New Century’s attorney-in-
fact is attached hereto as Exhibit 2.[7]
7) According to the Ocwen Records, the Note is secured by a
Mortgage dated October 15, 2004, and recorded on October
25, 2004 in the Bureau of Conveyances of the State of
Hawaii,[8] as Document Number 3183517, and noted on the
Transfer Certificate of Title No.: 671,440 (the
“Mortgage”). A true and correct copy of the Mortgage is
attached hereto as Exhibit 3.
8) According to the Ocwen Records, the Mortgage was
assigned to [U.S. Bank] by that assignment dated January 3,
2007, and recorded on January 30, 2007, in the Office of
the Assistant Registrar of the Land Court of the State of
Hawaii as Document Number 3550341, and that assignment
dated September 29, 2010, and recorded October 11, 2010 in
the Office of the Assistant Registrar of the Land Court of
the State of Hawaii as Document Number 4007870 (the
“Assignments”). True and correct copies of the referenced
assignments are attached hereto as Exhibit 4 and
Exhibit 5. A true and correct copy of the Limited Power of
Attorney is attached hereto as Exhibit 6.[9]
As to the alleged default, amounts owed, and notices provided,
Work’s declaration is based on the “Ocwen Records.”
7
This Limited Power of Attorney is dated March 2, 2005.
8
This appears to be a Land Court filing in the Office of Assistant
Registrar.
9
This Limited Power of Attorney is dated April 13, 2012.
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We focus on the ICA’s ruling that the note and mortgage
documents were admissible through Work’s declaration as records
of regularly conducted activity pursuant to HRE Rule 803(b)(6)
and this court’s Fitzwater opinion. HRE Rule 803(b)(6)
provides:
The following are not excluded by the hearsay rule, even
though the declarant is available as a witness:
. . . .
(b) Other exceptions.
. . . .
(6) Records of regularly conducted activity. 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 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.)
Fitzwater addressed the admissibility of business documents
authenticated by an employee of another business, stating:
A person can be a ‘qualified witness’ who can
authenticate a document as a record of regularly conducted
activity under HRE Rule 803(b)(6) or its federal
counterpart even if he or she is not an employee of the
business that created the document, or has no direct,
personal knowledge of how the document was created. As one
leading commentator has noted:
... [sic] The phrase ‘other qualified witness’ is given a
very broad interpretation. The witness need only have
enough familiarity with the record-keeping system of the
business in question to explain how the record came into
existence in the ordinary course of business. The witness
need not have personal knowledge of the actual creation of
the documents or have personally assembled the records. In
fact, the witness need not even be an employee of the
record-keeping entity as long as the witness understands
the entity’s record-keeping system.
There is no requirement that the records have been prepared
by the entity that has custody of them, as long as they
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were created in the regular course of some entity’s
business.
The sufficiency of the foundation evidence depends in part
on the nature of the documents at issue. Documents that
are ‘standard records of the type regularly maintained by
firms in a particular industry may require less by way of
foundation testimony than less conventional documents
proffered for admission as business records.’
Thus, an employee of a business that receives records from
another business can be a qualified witness who can
establish a sufficient foundation for their admission as
records of the receiving business under HRE Rule 803(b)(6).
Fitzwater, 122 Hawai‘i at 365-66, 227 P.3d at 531-32 (internal
citations and footnote omitted).
Work’s declaration does not assert that he is a custodian
of records for either U.S. Bank or Ocwen. Therefore, the
documents attached to his declaration are admissible under the
HRE 803(b)(6) hearsay exception only if he is a “qualified
witness” with respect to those documents. The ICA Opinion
relied on Fitzwater in concluding that Work met the requirements
of a “qualified witness” able to authenticate all the documents
to which he referred, and analyzed the issue as follows:
As previously noted, Work’s declaration stated that he is
the Contract Management Coordinator for Ocwen. Work’s
declaration further stated that Ocwen is the servicer for U.S.
Bank related to the Appellants’ loan, and that he had access to
and was familiar with Appellants’ loan records through his
regular performance of his job. Furthermore, Work’s declaration
indicated the documents to which he referred to in preparing his
declaration were “maintained in the regular course of Ocwen’s
business consistent with Ocwen’s regular practices, which require
that records documenting transactions relating to the serviced
mortgage loan be made at or near the time of the transactions
documented by a person with knowledge of the transactions or from
information transmitted by such a person.” Thus, Work’s
declaration establishes that Ocwen relies on the documents
related to Appellants’ loan, there are further indicia of
reliability given Ocwen’s business practices, and the documents
constituted “records of regularly conducted activity” that were
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admissible as a hearsay exception, pursuant to HRE Rule
803(b)(6). The circuit court, therefore, did not err in relying
upon the documents when it granted summary judgment in U.S.
Bank’s favor.
Mattos, 137 Hawai‘i at 213, 367 P.3d at 707.
To the extent the ICA ruled that Work’s declaration
established him as a “qualified witness” with respect to Ocwen’s
records, we agree. To the extent the ICA opinion concluded that
Work met the requirements to be a “qualified witness” with
respect to U.S. Bank’s records, however, we disagree. Fitzwater
addresses situations in which one business receives documents
created by another business and includes them in its own
records. Work’s declaration does not indicate that U.S. Bank’s
Records were received by Ocwen and incorporated into the Ocwen
Records. Work’s declaration also does not establish that Work
is familiar with the record-keeping system of U.S. Bank.
Rather, Work merely states that he has access to and is familiar
with U.S. Bank’s records. Thus Work’s declaration does not
satisfy foundational requirements to make him a “qualified
witness” for U.S. Bank’s records pursuant to Fitzwater.
Even if records attached to Work’s declaration were
otherwise admissible as Ocwen records, there are separate legal
issues with respect to the note and allonge. Defendants have
continuously argued a lack of admissible evidence that U.S. Bank
is the holder of the note. On this issue, the ICA ruled that
Work’s declaration established U.S. Bank as the holder of the
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note entitled to foreclose pursuant to HRS § 490:3-301 (2008).
Mattos, 137 Hawai‘i at 212, 367 P.3d at 706.
In Reyes-Toledo, we held that a person seeking to
judicially foreclose on a mortgage following a promissory note
default must establish that it was the “person entitled to
enforce [the note]” as defined by HRS § 490:3-301 at the time of
the filing of the foreclosure complaint. Reyes-Toledo, 139
Hawaii at 370-71, 390 P.3d at 1257-58. HRS § 490:3-301
provides:
‘Person entitled to enforce’ an instrument means (i) the
holder of the instrument, (ii) a nonholder in possession of
the instrument who has the rights of a holder, or (iii) a
person not in possession of the instrument who is entitled
to enforce the instrument pursuant to section 490:3-309 or
490:3-418(d). A person may be a person entitled to enforce
the instrument even though the person is not the owner of
the instrument or is in wrongful possession of the
instrument.
There was no evidence or argument presented in this case
regarding HRS § 490:3-301 subsections (ii) and (iii), and the
ICA ruled on the basis that U.S. Bank was the “holder” pursuant
to subsection (i). The relevant definition of “holder” is in
HRS § 490:1-201(1) (2008). This subsection defines a “holder”
as “[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[.]” Since the allonge was apparently
used to specifically indorse the note to U.S. Bank, admissible
evidence was needed to demonstrate that U.S. Bank was in
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possession of the note and allonge at the time of the filing of
this foreclosure complaint for U.S. Bank to be entitled to
summary judgment.
Even if the Ocwen records were admissible through the Work
declaration, the only representation in Work’s declaration
regarding possession of the note is in paragraph 5, which
states, “According to the Ocwen records, [U.S. Bank] is in
possession of an original promissory note dated October 15, 2004
. . . in favor of NEW CENTURY MORTGAGE CORPORATION[.]” This
paragraph goes on to say that “[a] true and correct copy of the
Note is attached hereto as Exhibit 1.” (Emphasis added.)
Work’s declaration does not even represent that U.S. Bank’s
records contain the original note; Work merely states that
Ocwen’s records so indicate. Even if Work’s declaration had
stated that the U.S. Bank records contain the original note,
this statement would not be admissible because, as noted, Work’s
declaration is insufficient to render him a “qualified witness”
as to U.S. Bank’s records.
In addition, paragraph 5 of Work’s declaration refers only
to the original note and makes no reference to the allonge.
Although Exhibit 1 also contains the allonge, which indorses the
note to U.S. Bank, the allonge was never authenticated.
Therefore, U.S. Bank was not entitled to summary judgment even
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if the original note had been properly authenticated, which it
was not.
Even if the aforementioned issues concerning the note and
allonge did not exist, Work’s declaration also does not satisfy
the Reyes-Toledo requirement of an affirmative showing that U.S.
Bank possessed the original note and allonge at the time of
filing of this foreclosure complaint on July 21, 2011.
For all of these reasons, Work’s declaration failed to meet
U.S. Bank’s burden of establishing facts necessary for a grant
of summary judgment.
In order to provide guidance on remand, we address the
other issues on certiorari.
B. Defendants’ “robo-signing” allegation is unclear, so it is
unnecessary to address the legal effect of “robo-signing.”
However, the first issue on certiorari has merit because
there is a genuine issue of material fact as to whether
Ocwen had authority to assign the mortgage from U.S. Bank’s
predecessor in interest to U.S. Bank.
The ICA held that conclusory assertions of “robo-signing”
are insufficient to establish a defense in a foreclosure action
if the assertions lack factual allegations or a legal theory
demonstrating how “robo-signing” caused harm to a mortgagee.
Mattos, 137 Hawaii at 210, 367 P.3d at 704. Defendants do not
define what they mean by “robo-signing”; therefore, it is not
necessary to address the legal effect of “robo-signing” at this
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time. Accordingly, we set aside the ICA’s holding on this issue
as it is not necessary to the determination of this case.
Underlying Defendants’ “robo-signing” allegations, however,
are assertions that the two mortgage assignments to the
securitized trust culminating in the assignment to U.S. Bank
were signed “by persons with insufficient authority or personal
knowledge as to what they swore to, and whose signatures
differed among similar mortgage assignments that they had
supposedly signed and/or notarized.” Thus, Defendants assert
that the assignments of mortgage were signed by persons (1) with
insufficient authority; (2) with insufficient personal knowledge
as to what they swore to; and (3) whose signatures differed
among similar mortgage assignments that they had supposedly
signed and/or notarized. We address each of these allegations
in turn.
We first address the allegation that the assignments of
mortgage were signed by persons with insufficient authority.
Exhibit 2 to Work’s declaration, the March 2, 2005 Limited Power
of Attorney designating Ocwen as New Century’s attorney-in-fact,
is admissible as an Ocwen record pursuant to Paragraph 6 of
Work’s declaration. This Limited Power of Attorney establishes
Ocwen’s authority regarding the first mortgage assignment dated
January 3, 2007 from Ocwen to U.S. Bank’s predecessor in
interest, “U.S. Bank, N.A., as Trustee for the registered
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holders of MASTR Asset Back Securities Trust 2005-NC1, Mortgage
Pass-Through Certificates, Series 2005-NC1” (“U.S. Bank for
Registered Holders”).10 Thus the first assignment of mortgage
was signed by a person with sufficient authority.
Exhibit 6 to Work’s declaration is an April 13, 2012
Limited Power of Attorney, which is also admissible as an Ocwen
record. This Limited Power of Attorney purports to establish
Ocwen’s authority to execute the second assignment of mortgage
dated September 29, 2010 from U.S. Bank for Registered Holders
to U.S. Bank. Although the difference between U.S. Bank for
Registered Holders to U.S. Bank is unclear, this foreclosure
action was brought in the name of the assignee U.S. Bank, and
this Limited Power of Authority was not effective until more
than a year after the second assignment of mortgage. Therefore,
there is a genuine issue of material fact as to whether Ocwen
had authority to sign the second assignment of mortgage to U.S.
Bank.
We next address Defendants’ allegation that the assignments
of mortgage were signed by persons “with insufficient authority
or personal knowledge as to what they swore[.]” Defendants
themselves lack personal knowledge as to the signers’ knowledge.
This allegation is therefore without merit.
10
It appears the only difference between the entities “U.S. Bank for
Registered Holders” and “U.S. Bank” is that the latter’s name includes the
additional language “in its Capacity.”
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We then turn to Defendants’ allegation that the assignments
of mortgage contained signatures that differed among similar
mortgage assignments supposedly signed and/or notarized by the
same person.11 Even if the other assignments were admissible,
there is no admissible evidence they were signed by different
persons. This allegation is therefore also without merit.
C. In a judicial foreclosure, a third party to a pooling and
servicing agreement lacks standing to challenge assignments
in alleged violation of its terms unless the violation
would render the assignment void.
Finally, in their second question on certiorari, Defendants
challenge the foreclosure on the basis that the first and second
assignments of the mortgage violated the requirements of the
pooling and servicing agreement. Paragraph 12 of the Giddings
affidavit refers to the PSA as an exhibit filed with the
Securities and Exchange Commission, and provides a website link.
No explanation is provided as to how a document contained in a
website link can be considered admissible evidence in this
motion for summary judgment. Thus, the terms of the PSA are not
actually before us, and there is no actual evidence that the
first and second assignments of mortgage violated terms within
the PSA.
11
Defendants’ allegations regarding mortgage assignments were based on
the Giddings affidavit. U.S. Bank challenged Giddings’ interpretations of
law, but never challenged whether she was qualified to testify as an expert,
the scope of her alleged expertise, whether documents attached to declaration
could properly be considered in the motion for summary judgment, or the
admissibility of documents attached to her affidavit.
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Even if the terms of the PSA were properly before this
court and showed that the first and second assignments of
mortgage violated its terms, Defendants might not have standing
to challenge the validity of mortgage assignments on this basis.
In Salvacion, a case arising out of a judicial foreclosure, the
ICA noted that, “[t]ypically, borrowers do not have standing to
challenge the validity of an assignment of its loans because
they are not parties to the agreement and because noncompliance
with a trust’s governing document is irrelevant to the
assignee’s standing to foreclose.” Salvacion, 134 Hawai‘i at
175, 338 P.3d at 1190. As pointed out in Salvacion, this is the
overwhelming majority rule. Id.12 According to Salvacion,
Hawaii law would recognize an exception to the general rule when
a challenge to a mortgage assignment would deem the assignment
void, not voidable. Id. We adopt the ICA’s analysis in
Salvacion, but limit the holding to the judicial foreclosure
context for the reasons that follow.
On certiorari, Defendants urge this court to follow the
minority rule allowing third-party challenges to an assignment,
12
The Giddings affidavit also asserts that the PSA is governed by New
York law, which, according to Giddings, provides that every sale conveyance
or other act of a trustee in contravention of a trust is void. Even if it
was proper to consider the PSA under New York law, it is not clear whether a
mortgage assignment in contravention of a pooling and servicing agreement
would be deemed void or voidable. See Glaski v. Bank of Am., N.A., 218 Cal.
App. 4th 1079, 1096–97, 160 Cal. Rptr. 3d 449, 463 (Cal. Ct. App. 2013)
(construing New York law).
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arguing that in Yvanova v. New Century Mortg. Corp., 62 Cal. 4th
919, 365 P.3d 845 (2016), the Supreme Court of California
allowed challenges to mortgage assignments based on non-
compliance with terms of securitized trust agreements. The
Supreme Court of California was clear, however, that its ruling
was limited to the nonjudicial foreclosure context; it held
“only that a borrower who has suffered a nonjudicial foreclosure
does not lack standing to sue for wrongful foreclosure based on
an allegedly void assignment merely because he or she was in
default on the loan and was not a party to the challenged
assignment.” 62 Cal. 4th at 924, 365 P.3d at 848. We also note
that the Glaski case, one of two cases cited in Salvacion as
going against the majority rule, 134 Hawaii at 176-77, 338 P.3d
at 1190-91, also arose out of a non-judicial foreclosure.
Glaski, 218 Cal. App. 4th at 1082, 160 Cal. Rptr. 3d at 452. As
the issue of whether such challenges should be allowed in non-
judicial foreclosures is not before us, we limit our holding at
this time to the judicial foreclosure context.
Accordingly, in the context of judicial foreclosures, we
adopt the majority rule followed in Salvacion and hold that a
third party unrelated to a pooling and servicing agreement lacks
standing to challenge assignments based on alleged violation of
the PSA’s terms unless the violation would render the assignment
void. As the PSA is not in evidence, we do not decide whether
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any of its terms were violated and, if so, whether any such
violation renders an assignment void or voidable.
V. Conclusion
For the foregoing reasons, we vacate the ICA’s March 9,
2016 Judgment on Appeal, as well as the circuit court’s August
26, 2014 Findings of Fact, Conclusions of Law and Order Granting
Plaintiff’s Motion for Summary Judgment and Decree of
Foreclosure Against All Defendants on Complaint Filed July 21,
2011. We remand this case to the circuit court for further
proceedings consistent with this opinion.
Gary Victor Dubin /s/ Mark E. Recktenwald
for petitioners
/s/ Paula A. Nakayama
J. Blaine Rogers
for respondent /s/ Sabrina S. McKenna
U.S. Bank N.A.
/s/ Richard W. Pollack
/s/ Michael D. Wilson
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