Nationstar Mortgage LLC v. Amina ( 2023 )

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
12-DEC-2023
08:12 AM
Dkt. 58 SO
NO. CAAP-XX-XXXXXXX
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI#I
NATIONSTAR MORTGAGE LLC, Plaintiff-Appellee,
v.
DONNA M. AMINA, AS THE PERSONAL REPRESENTATIVE OF THE ESTATE OF
MARY ANN NEULA LIM, also known as MARY A.N. LIM and MARY LIM,
DECEASED, Defendant-Appellant, SECRETARY OF HOUSING AND URBAN
DEVELOPMENT, Defendant-Appellee, and JOHN DOES 1-20; JANE DOES
1-20; DOE CORPORATIONS 1-20; DOE ENTITIES 1-20; AND DOE
GOVERNMENTAL UNITS 1-20, Defendants
APPEAL FROM THE CIRCUIT COURT OF THE THIRD CIRCUIT
(CIVIL NO. 3CC181000120)
SUMMARY DISPOSITION ORDER
(By: Leonard, Presiding Judge, Hiraoka and McCullen, JJ.)
Self-represented Defendant-Appellant Donna M. Amina,
personal representative of the estate of Mary Ann Neula Lim,
deceased, appeals from the Judgment of foreclosure in favor of
Plaintiff-Appellee Nationstar Mortgage LLC entered by the Circuit
Court of the Third Circuit on January 29, 2020.1 We vacate the
Judgment and remand for further proceedings.
Lim died in 2017. On May 22, 2018, Nationstar sued
Amina, Lim's personal representative, to foreclose on a reverse
mortgage of real property owned by Lim. Nationstar moved for
summary judgment and an interlocutory decree of foreclosure.
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The Honorable Melvin H. Fujino presided.
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Amina didn't oppose the motion. The circuit court granted the
motion and entered the judgment of foreclosure. Amina filed a
timely notice of appeal.
Even if a motion for summary judgment is unopposed, it
should be granted only if the movant shows there is no genuine
issue of material fact and it is entitled to judgment as a matter
of law. U.S. Bank Tr., N.A. v. Verhagen, 149 Hawai#i 315, 328
n.12, 489 P.3d 419, 432 n.12 (2021); Arakaki v. SCD-Olanani
Corp., 110 Hawai#i 1, 6, 129 P.3d 504, 509 (2006) ("[A] party
need not affirmatively oppose a motion for summary judgment that
fails to show prima facie (1) that the undisputed facts foreclose
genuine issues as to any material facts and (2) that the moving
party is entitled to judgment as a matter of law." (cleaned up)).
A foreclosing plaintiff must show it had standing to
sue when it filed the lawsuit. Verhagen, 149 Hawai#i at 327, 489
P.3d at 431. The plaintiff in Verhagen showed it had standing
with a declaration showing that the indorsed-in-blank note was
sent to plaintiff's counsel "a mere six weeks before the filing
of the complaint[.]" Id. at 327-28, 489 P.3d at 431-32. Here,
Nationstar's Assistant Secretary (Randazzo) submitted a
declaration stating that he reviewed the indorsed-in-blank note
and authenticating a bailee letter showing that the note was sent
to Nationstar's counsel on March 5, 2018, 11 weeks before
Nationstar filed its complaint. Cf. Deutsche Bank Nat'l Tr. Co.
v. Yata, 152 Hawai#i 322, 336, 526 P.3d 299, 313 (2023) (holding
that foreclosure plaintiff didn't show standing where it
certified it was holder of the note nine months before filing of
the complaint, and no bailee letter showed note was sent to
plaintiff's counsel). This case is closer to Verhagen than to
Yata. Nationstar showed it had standing to foreclose when its
complaint was filed.
But Nationstar was not the original lender; Golden
Empire Mortgage, Inc. dba Senior Independence Hawaii was.
Randazzo's declaration attempted to state that Golden Empire's
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records for Lim's reverse mortgage had (eventually) been
incorporated into those of Nationstar.
Incorporated records are admissible under [Hawaii Rules of
Evidence] Rule 803(b)(6) when a custodian or qualified
witness testifies that [1] the documents were incorporated
and kept in the normal course of business, [2] that the
incorporating business typically relies upon the accuracy of
the contents of the documents, and [3] the circumstances
otherwise indicate the trustworthiness of the document.
Wells Fargo Bank, N.A. v. Behrendt, 142 Hawai#i 37, 45-46, 414
P.3d 89, 97-98 (2018) (emphasis added) (citations omitted).
Randazzo's declaration did not show circumstances
indicating the trustworthiness of Nationstar's documents. The
note that Lim signed had an undated special indorsement2 from
Golden Empire to "Bank of America, A National Banking Assoc."
It had an undated blank indorsement by Bank of America.
Randazzo's declaration stated:
11. The owner of the Note and Mortgage for a
particular a [sic] mortgage loan is commonly referred to in
the loan servicing industry as the Investor. The Investor
for this mortgage loan is the Plaintiff [Nationstar Mortgage
LLC].
(Emphasis added.)
But Randazzo's declaration also stated:
12. The owner of the Note and Mortgage for a
particular mortgage loan is commonly referred to in the loan
servicing industry as the Investor. The Investor for this
mortgage loan is Federal National Mortgage Association
("Fannie Mae").
13. 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 Fannie Mae when it purchased
the subject mortgage loan.
14. Under the terms of Nationstar's servicing
arrangement, Fannie Mae 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.
2
"When specially indorsed, an instrument becomes payable to the
identified person and may be negotiated only by the indorsement of that
person." Hawaii Revised Statutes § 490:3-205 (2008).
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15. Fannie Mae, as the Investor, has a passive role
with the primary emphasis on tracking its return on
investment. In terms of routine business records on the
Loan, Nationstar acts as the sole custodian of Plaintiff's
[sic] records, except when they are delivered to Plaintiff's
attorney as agents for the Plaintiff [sic].
16. Nationstar became Plaintiff's [sic] loan
servicer for the Loan being foreclosed in this action on
09/30/2012.
. . . .
24. The prior loan servicer [sic] for this mortgage
loan was Bank of America, N.A. ("Prior Servicer"). Bank of
America, N.A. acted as servicer for the original lender
Golen [sic] Empire Mortgage, Inc. dba Senior Independence
Hawaii.
25. Upon becoming Fannie Mae's loan servicer,
Nationstar took possession of the loan documents and
business records of the Prior Servicer and incorporated all
such records into the business records of Nationstar.
. . . .
28. The Prior Servicer's records 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 Fannie Mae, in the preparation, filing and payment
of income taxes dependent upon such information, and in
evaluating Nationstar's own job performance.
(Emphasis added.) Randazzo's declaration is ambiguous about the
identity of the "Investor" for Lim's reverse mortgage. It also
calls into question how Nationstar came into possession of, and
incorporated into its business records, the records purportedly
authenticated by Randazzo.
The plaintiff in Verhagen offered these circumstances
to indicate the trustworthiness of its incorporated records:
The information regarding the Loan transferred to Caliber
from the Prior Servicer has been validated in many ways,
including, but not limited to, going through a due diligence
phase, review of hard copy documents, and review of the
payment history and accounting of other fees, costs, and
expenses charged to the Loan by Prior Servicer.
Verhagen, 149 Hawai#i at 326, 489 P.3d at 430. The supreme court
held:
Though scant, this testimony establishes circumstances
indicating the trustworthiness of Caliber's incorporated
records. It is evidence that before incorporating JPMorgan
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Chase's documents, Caliber reviewed hard copies of the
documents, engaged in a "due diligence" process, and
reviewed the payment history and accounting associated with
the loan. JPMorgan Chase's documents were not, in other
words, uncritically incorporated into Caliber's own. They
were vetted by Caliber. This pre-incorporation vetting,
however nebulously described by Patterson's testimony, is a
circumstance that indicates the trustworthiness of the
documents.
Id.
The plaintiff in Yata offered these circumstances to
indicate the trustworthiness of its incorporated records:
It is the regular business practice of SLS to integrate
prior servicers' records into SLS's business records, and to
rely upon the accuracy of those boarded records in providing
its loan servicing functions. These prior servicer records
are integrated and relied upon by SLS as part of SLS's
business records.
Yata, 152 Hawai#i at 334, 526 P.3d at 311. The supreme court
held that
the Mountes and McCloskey Declarations do not provide
sufficient "circumstances that indicate the trustworthiness
of the documents." With regard to circumstances indicating
trustworthiness, the Mountes and McCloskey Declarations
state that "SLS maintains quality control and verification
procedures as part of the boarding process to ensure the
accuracy of the boarded records." The declarations in
Verhagen provided specific methods of validation of
documents from the prior loan servicer, "including, but not
limited to, going through a due diligence phase, review of
hard copy documents, and review of the payment history and
account of other fees, costs, and expenses charged to the
Loan by Prior Servicer." The Mountes and McCloskey
Declarations merely assert that SLS has "quality control and
verification procedures" to ensure the accuracy of
incorporated records without stating what those procedures
are. This court noted that the testimony indicating
circumstances of trustworthiness in Verhagen was "scant" and
"nebulously described" circumstances of trustworthiness.
Here, there is even less testimony describing circumstances
of trustworthiness. Thus, it appears that the third
Behrendt requirement was not satisfied, and the documents
attached to the Mountes and McCloskey Declarations were not
admissible.
Id. at 335, 526 P.3d at 312 (cleaned up).
Randazzo's declaration states:
26. Before the Prior Servicer's records were
incorporated into Nationstar's own business records, it
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conducted an independent check into the Prior Servicer's
records and found them in keeping with industry wide loan
servicing standards and only integrated them into
Nationstar's own business records after finding the Prior
Servicer's records were made as part of a regularly
conducted activity, met industry standards and determined to
be trustworthy.
Like the declarations in Yata, Randazzo's declaration doesn't
sufficiently specify what procedures Nationstar followed for its
"independent check" to determine whether the incorporated records
were trustworthy, or from where they came.
For these reasons, we hold that Nationstar did not
sustain its burden as the summary judgment movant in a
foreclosure action. We need not address Amina's other arguments.
We vacate the Judgment entered by the circuit court on
January 29, 2020, and remand for further proceedings consistent
with this summary disposition order.
DATED: Honolulu, Hawai#i, December 12, 2023.
Donna M. Amina, /s/ Katherine G. Leonard
Self-represented Defendant- Presiding Judge
Appellant.
/s/ Keith K. Hiraoka
Charles R. Prather, Associate Judge
Jason L. Cotton,
Peter T. Stone, /s/ Sonja M.P. McCullen
for Plaintiff-Appellee Associate Judge
Nationstar Mortgage LLC.
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