GMC Mortgage, LLC v. Tom ( 2022 )

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Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
25-FEB-2022
08:02 AM
Dkt. 204 SO
NO. CAAP-XX-XXXXXXX
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI#I
GMAC MORTGAGE, LLC, Plaintiff-Appellee, v. WAYNE
NOELANI TOM; COLEEN ETSUKO TOM, Defendants-
Appellees, and JOYCELYN WANDA UNCIANO, Defendant-
Appellant, and CITIFINANCIAL, INC. 221, LLC, fka
ASSOCIATES FINANCIAL SERVICES COMPANY OF HAWAII, A
DELAWARE LIMITED LIABILITY COMPANY; STATE OF
HAWAI#I, DEPARTMENT OF HUMAN SERVICES; FIRST
HAWAIIAN BANK, fka FIRST INTERSTATE BANK OF
HAWAII; CURT DUKE PRATT AND JUDITH HILOKO PRATT;
UNITED STATES OF AMERICA; DIRECTOR, DEPARTMENT OF
TAXATION, STATE OF HAWAI#I, Defendants-Appellees,
and JOHN DOES 1-10; JANE DOES 1-10; DOE
PARTNERSHIPS 1-10; DOE CORPORATIONS 1-10; DOE
ENTITIES 1-10 AND DOE GOVERNMENTAL UNITS 1-10,
Defendants
APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CIVIL NO. 1CC03-1-001029)
SUMMARY DISPOSITION ORDER
(By: Hiraoka, Presiding Judge, Nakasone and McCullen, JJ.)
The Defendant-Appellant Joycelyn Wanda Unciano appeals,
pro se, from the Circuit Court of the First Circuit's
(1) November 1, 2017 Second Amended Final Judgment;
(2) January 6, 2017 Order Denying Unciano's Amended Motion to
Correct Court Record;1 and (3) January 27, 2017 Order Denying
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Unciano fails to make any argument for her appeal from the Order
Denying her Amended Motion to Correct Court Record and, thus, we deem it
waived. Hawai#i Rules of Appellate Procedure Rule 28(b)(7).
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Unciano's Hawai#i Rules of Civil Procedure (HRCP) Rule 59 Motion
for New Trials, Amendment of Judgments, Etc.2 On appeal, Unciano
raises the following points of error:
(1) "Lower Court erred in October 18, 2016 Order
Granting Plaintiff GMAC Mortgage, LLC's
Motion to Reinstate Vacated Orders and
Judgment;"
(2) "Lower Court erred in granting the GMAC
Motion to Reinstate where GMAC lacked
standing without being the valid holder of
the Note, and there are no dates for the
endorsements or allonges;"
(3) "Lower Court erred in Granting Plaintiff's
Motion to Reinstate in finding there are no
genuine issues of material fact as to the
Homecomings corporate entities, and is not
based on admissible evidence;"
(4) "Law of the Case Doctrine, the Lower Court
Abused Discretion lack of Cogent Reasons to
ignore June 13, 2016 oral ruling of the
Hawaii Land Court;" and
(5) "Lower Court abused its discretion,
December 14, 2016 Amended Order and Amended
Final Judgment."
(Some formatting altered.)
After reviewing the record on appeal and the relevant
legal authorities and giving due consideration to the issues
2
The Honorable Bert I. Ayabe presided.
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raised and the arguments advanced by the parties, we resolve the
appeal as follows.
I. Background
In 1995, Wayne and Coleen Tom (Toms) executed and
delivered a promissory note (Note) for $160,000.00 to Western
Pacific Mortgage, Inc. to purchase property in Kapolei
(Property). The Note was secured by a mortgage (Mortgage) in
favor of Western Pacific Mortgage, Inc. The Property was
subsequently conveyed to Unciano by warranty deed. Since 1995,
the Note and Mortgage were purportedly transferred and assigned
several times. Pertinent to this appeal, in 2003, Washington
Mutual Bank, FA (Washington Mutual) filed a foreclosure complaint
(2003 Complaint), attaching a copy of the Note. In 2010,
Homecomings Financial assigned the Mortgage "together with the
note or notes therein described" to the Plaintiff-Appellee GMAC
Mortgage, LLC (GMAC), who then successfully foreclosed on the
Property.
On appeal to this Court, we explained that "Unciano's
primary argument underlying all her consolidated appeals is that
[GMAC] did not establish that, and there were genuine issues of
material fact concerning whether, GMAC was the valid holder of
the note and mortgage on which the foreclosure action regarding
the subject property is based." GMAC Mortg., LLC v. Unciano, 133
Hawai#i 449, 329 P.3d 354, CAAP-XX-XXXXXXX, CAAP-XX-XXXXXXX,
CAAP-XX-XXXXXXX, 2014 WL 2949441, at *1 (App. Jun. 30, 2014)
(SDO). "We conclude[d] that there were genuine issues of
material fact regarding whether GMAC was the valid holder of the
note and mortgage on the subject property." Id. We also
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concluded that "GMAC lack[ed] standing to pursue the Foreclosure
Action unless GMAC can show that it [was] the owner of the
Mortgage." Id. at *4. We then "vacate[d] the Foreclosure
Judgment, Confirmation of Sale Judgment, Judgment for Possession,
and Order Denying Land Court Petition, and remand[ed] for further
proceedings." Id. at *1.
On remand to the Circuit Court, GMAC moved to reinstate
the vacated orders and judgment on February 24, 2016 (2016 Motion
to Reinstate), and submitted the declaration of Chris Eggert of
21st Mortgage Corporation—the current servicer of the Note and
Mortgage. GMAC also submitted public records from Delaware and
Minnesota that purported to clarify the issues addressed in this
Court's 2014 decision. The Circuit Court held a hearing on the
Motion to Reinstate where GMAC presented the original Note with
endorsements and allonges for inspection. The Circuit Court
ultimately granted the 2016 Motion to Reinstate.
In response, Unciano filed multiple motions including
(1) an Ex Parte Motion to Correct Court Record Regarding Hearing
Held on July 26, 2016, Re: Plaintiff's Motion to Reinstate
Vacated Orders and Judgments filed 2/24/16; (2) an amended motion
of the same; and (3) a motion for a new trial. In her motion for
new trial, Unciano argued that "GMAC lack[ed] standing to proceed
without reinstatement of Land Court Order 186175." The Circuit
Court denied these motions.
On February 24, 2017, Unciano filed her notice of
appeal with this Court. Four days later, the Hawai#i Supreme
Court published its opinion in Bank of America, N.A. v. Reyes-
Toledo, 139 Hawai#i 361, 390 P.3d 1248 (2017). In her opening
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brief to this Court, Unciano again contends that GMAC lacks
standing, but relies on the Hawai#i Supreme Court's holding in
Reyes-Toledo to support her contention. In its answering brief,
GMAC argues, among other things, that Unciano lacks standing to
challenge the Note, this court's only instruction on remand was
"concerning the assignment of the Mortgage, not the Note," and
its standing to enforce the Note "withstands scrutiny under"
Reyes-Toledo.
II. Discussion
A. Unciano Has Standing
Contrary to GMAC's contention that Unciano lacks
standing to object to the foreclosure action because Unciano is
not a party to the Note and cannot avail herself of the rights
under the contract, Unciano has standing. The Hawai#i Supreme
Court observed that standing in the foreclosure context did not
implicate the same standing requirements as contract law. See
Wells Fargo Bank, N.A. v. Behrendt, 142 Hawai#i 37, 41–42, 414
P.3d 89, 93–94 (2018) ("This court's reasoning in Reyes-Toledo,
however, was based on standing and the statutory foreclosure
requirements and was not tied to the contractual relationship
between the parties.") In Behrendt, the foreclosing bank argued
that the defendant "was not a party to the Mortgage and because
there is no reasonable interpretation of the Mortgage that
confers contractual rights, obligations, and standing on [the
defendant] or upon any subsequent purchaser who does not assume
the Mortgage, [the defendant] could not 'seek protection' under
the Mortgage." Id. at 41, 414 P.3d at 93 (emphasis added). The
Court, however, observed that the purpose of ensuring the
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foreclosing plaintiff has standing is to protect the maker of the
note from multiple enforcement of the same note and to protect
the homeowner from an improper foreclosure. See id. at 42, 414
P.3d at 94. Therefore, a subsequent purchaser may challenge the
validity of a foreclosure action. See id.
The Property was conveyed to Unciano by warranty deed
from the Toms for $125.00 in gold. The warranty deed transferred
all rights, title, interests, and claims the Toms had in the
Property. Thus, Unciano was a subsequent purchaser who had
standing to challenge the foreclosure action. See id. at 42, 414
P.3d at 94.
B. A Genuine Issue Of Material Fact Exists
As she did in the first appeal and on remand, Unciano
challenges GMAC's standing. Relying on Reyes-Toledo, Unciano
contends that the Circuit Court committed reversible error in
granting summary judgment in favor of GMAC because GMAC lacked
standing to foreclose on the Property.
In Reyes-Toledo, the bank filed a complaint to
foreclose on the homeowner's property. Reyes-Toledo, 139 Hawai#i
at 364, 390 P.3d at 1251. The homeowner asserted many defenses
including that the bank was not the holder of the mortgage and
note. Id. The bank later moved for summary judgment, which was
granted, and the circuit court entered an Interlocutory Decree of
Foreclosure as a final judgment pursuant to HRCP Rule 54(b). Id.
at 365-66, 390 P.3d at 1252-53.
On certiorari review, the Hawai#i Supreme Court
explained that "[i]n order to prove entitlement to foreclose, the
foreclosing party must demonstrate that all conditions precedent
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to foreclosure under the note and mortgage are satisfied and that
all steps required by statute have been strictly complied
with[,]" including proving "its entitlement to enforce the note
and mortgage." Id. at 367, 390 P.3d at 1254. "A foreclosing
plaintiff's burden to prove entitlement to enforce the note
overlaps with the requirements of standing in foreclosure actions
as standing is concerned with whether the parties have the right
to bring suit." Id. (citation omitted and cleaned up).
Because the bank moved for summary judgment, it was the
bank's burden to show that there were no genuine issues of
material fact regarding the essential elements of a foreclosure
action. Id. at 370, 390 P.3d at 1257. More specifically,
"standing must be present at the commencement of the case. . . .
[A] foreclosing plaintiff must establish entitlement to enforce
the note at the time the action was commenced[.]" Id. at 368,
390 P.3d at 1255 (emphasis added). The Hawai#i Supreme Court
held that the bank failed to meet its burden because there was no
evidence in the record showing that "the blank indorsement on the
Note occurred prior to the initiation of the suit." Id. at 371,
390 P.3d at 1258.
Like the homeowner in Reyes-Toledo, Unciano challenged
whether GMAC was the holder of the note and mortgage and, thus,
challenged GMAC's standing. Standing "arises solely out of
justiciability concerns based on prudential concerns of judicial
self-governance, and is based on concern about the proper--and
properly limited--role of courts in a democratic society[,]" and
asks whether the litigant is asserting a legally recognized
interest that is personal and peculiar to him. See Tax Found. of
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Hawai#i v. State, 144 Hawai#i 175, 191-92, 439 P.3d 127, 143-44
(2019) (internal quotation marks omitted). Accordingly, standing
may be raised at any time, and "Hawai#i State Courts may consider
standing even when not raised by the parties." Id.; see Mortgage
Elec. Registration Sys., Inc. v. Wise, 130 Hawai#i 11, 17, 304
P.3d 1192, 1198 (2013), as amended (July 10, 2013).3 Here,
Unciano consistently challenged GMAC's standing, albeit for
different reasons.
In addition, as the Hawai#i Supreme Court explained in
Reyes-Toledo, the "requirement that a foreclosing plaintiff prove
its entitlement to enforce the note at the commencement of the
proceedings provides strong and necessary incentives to help
ensure that the note holder will not proceed with a foreclosure
action before confirming that it has a right to do so." Reyes-
Toledo, 139 Hawai#i at 369, 390 P.3d at 1256 (emphasis added and
internal quotation marks omitted).
Because standing may be considered at any time, Unciano
consistently challenged GMAC's standing, and Reyes-Toledo is
binding on this Court, we address whether there were genuine
issues of material fact as to Washington Mutual's standing to
foreclose at the time this action was originally filed and, by
extension, GMAC's standing as a substituted party. And for
summary judgment purposes, we must view the evidence, and
3
In Wise, the defendants appealed from the judgment confirming the
foreclosure sale, challenging the plaintiff's standing to foreclose. The
Hawai#i Supreme Court noted that although lack of standing can be raised at
any time, the defendants' challenge to standing was barred by res judicata
because the defendants did not raise standing in opposition to the foreclosure
or appeal the foreclosure judgment. Wise, 130 Hawai #i at 17, 304 P.3d at
1198. In this case, Unciano appealed from, among other things, the
foreclosure judgment and, thus, res judicata does not bar her challenge to
Washington Mutual's standing when the 2003 Complaint was filed.
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reasonable inferences drawn therefrom, in the light most
favorable to Unciano, the non-moving party. See Hawaii Cmty.
Fed. Credit Union v. Keka, 94 Hawai#i 213, 221, 11 P.3d 1, 9
(2000).
The 2003 Complaint alleged that Washington Mutual was
the owner and holder of the Note by mesne assignment. A copy of
the Note, without indorsements, allonges, or bleed-through
markings, was attached to the 2003 Complaint.
In stark contrast, at the 2016 Motion to Reinstate
hearing, GMAC produced the original Note that showed bleed
through and included several allonges with undated special
indorsement to various entities purportedly made before a blank
endorsement by Residential Funding Company, LLC.
GMAC asserts that the Note was assigned from Western
Pacific to Mellon Mortgage Company in 1995, and then to Fleet
Real Estate in 1996, which ultimately became known as Washington
Mutual. GMAC points to the indorsements on the Note produced at
the 2016 hearing as evidence those assignments were made prior to
the 2003 Complaint.
However, the three undated indorsements (two of which
bled through to the reverse page) and the undated allonges
presented at the 2016 hearing were not visible on, and not
included with, the Note attached to the 2003 Complaint.4 That
the indorsements were readily visible on the Note produced at the
2016 hearing but not visible on the Note attached to the 2003
4
Similarly, the bleed through was not visible, and the undated
allonges were not included with, the Note attached to GMAC's Plaintiff's
Motion [1] To Substitute Party and Amend Caption, and [2] For Summary Judgment
and Interlocutory Decree of Foreclosure, filed in 2011.
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Complaint raises a genuine issue of material fact as to whether
Washington Mutual had possession of the Note at the time it filed
the 2003 Complaint. The allonges included with the Note produced
at the 2016 hearing but not included with the Note attached to
the 2003 Complaint raise a similar issue of material fact.
Furthermore, because the indorsements and allonges
provided at the 2016 hearing were undated, it is unclear that
Washington Mutual was entitled to foreclose at the time it filed
the 2003 Complaint. Although GMAC points to several recorded
assignments of the Mortgage, that evidence was not dispositive
because the debt does not automatically follow the security. See
Reyes-Toledo, 139 Hawai#i at 371 n.17, 390 P.3d at 1258 n.17
("Although the security follows the debt, the debt does not
automatically follow the security.").
Viewing this evidence in the light most favorable to
Unciano, there are genuine issues as to whether Washington Mutual
was entitled to enforce the Note at the time it filed the 2003
Complaint, and whether GMAC as the substitute plaintiff was
entitled to foreclose on the Property. See Reyes-Toledo, 139
Hawai#i at 370, 390 P.3d at 1257; Wells Fargo Bank, N.A. v.
Pierce, 144 Hawai#i 436, 443 P.3d 128, CAAP-XX-XXXXXXX, 2019 WL
2723641 at *2 (App. Jun. 28, 2019) (SDO) ("The blank indorsement
on the Note is undated and there is no evidence when the blank
indorsement was made. Thus, it is unclear at what point the Note
could have been negotiated by transfer of possession alone.").
"The requirement that a foreclosing plaintiff prove its
entitlement to enforce the note at the commencement of the
proceedings provides strong and necessary incentives to help
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ensure that a note holder will not proceed with a foreclosure
action before confirming that it has a right to do so." Reyes-
Toledo, 139 Hawai#i at 369, 390 P.3d at 1256 (citation and
internal quotation marks omitted). On remand, "the foreclosing
party must demonstrate that all conditions precedent to
foreclosure under the note and mortgage are satisfied and that
all steps required by statute have been strictly complied
with[,]" including proving "its entitlement to enforce the note
and mortgage[,]" and the original plaintiff's standing to
foreclose when the complaint was filed. Id. at 367-68, 390 P.3d
at 1254-55. In light of our resolution, we need not reach
Unciano's remaining contentions.
For the foregoing reasons, we vacate the Circuit
Court's November 1, 2017 Second Amended Final Judgment and
January 27, 2017 Order Denying Unciano's HRCP Rule 59 Motion for
New Trials, Amendment of Judgments, Etc., and remand this case
for further proceedings consistent with this summary disposition
order.
DATED: Honolulu, Hawai#i, February 25, 2022.
/s/ Keith K. Hiraoka
Presiding Judge
/s/ Karen T. Nakasone
Associate Judge
/s/ Sonja M.P. McCullen
Associate Judge
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