No. SCWC-18-0000699 and No. SCWC-17-0000746, Thursday, April 8, 2021, 2 p.m.

No. SCWC-18-0000699
U.S. BANK NATIONAL ASSOCIATION AS TRUSTEE FOR CSMC MORTGAGE LOAN TRUST 2006-7, Petitioner/Plaintiff-Appellee, vs. WATOSHINA LYNN COMPTON, Respondent/Defendant-Appellant, and GABI A. BENGIS; RON SERLE; DEPARTMENT OF TAXATION – STATE OF HAWAI‘I, Respondents/Defendants-Appellees.

No. SCWC-17-0000746
U.S. BANK TRUST, N.A., AS TRUSTEE FOR LSF9 MASTER PARTICIPATION TRUST, Petitioner/Plaintiff-Appellee, vs. PATRICK LOWELL VERHAGEN; PATRICK LOWELL VERHAGEN, TRUSTEE OF THE PATRICK LOWELL VERHAGEN REVOCABLE TRUST DATED OCTOBER 29, 1999, Respondent/Defendant-Appellant, and WELLS FARGO BANK, N.A., Respondent/Defendant-Appellee.

The above-captioned cases have been set for argument on the merits at:

The oral argument was live streamed for public viewing via the Judiciary’s YouTube channel at YouTube.com/hawaiicourts.

Attorneys for petitioner U.S. Bank National Association:

Jade Lynne Ching, David A. Nakashima, and Ryan B. Kasten of Nakashima Ching LLC; Alan M. Hurst and Justin D. Balser of Akerman LLP, admitted pro hac vice

Attorneys for petitioner U.S. Bank Trust:

David B. Rosen, David E. McAllister, Justin S. Moyer of Aldridge Pit, LLP; Paul Alston and Madisson L. Heinze of Dentons US LLP

Attorney for respondent Patrick Verhagen:

Keith M. Kiuchi

Attorneys for respondent Watoshina Compton:

Keith M. Kiuchi and Matthew K. Yoshida

NOTE: Order accepting Application for Writ of Certiorari, filed 02/18/21 in SCWC-18-0000699 and SCWC-17-0000746.

COURT: Recktenwald, C.J., Nakayama, McKenna, Wilson, and Eddins, JJ.

[  Listen to the entire audio recording in mp3 format  ]

Brief Description:

SCWC-18-0000699, U.S. Bank National Association as Trustee for Mortgage Loan Trust 2006-7 v. Compton

This case arises from foreclosure proceedings initiated by Petitioner/Plaintiff U.S. Bank National Association as Trustee for Mortgage Loan Trust 2006-7 (“US Bank”) against Respondent/Defendant Watoshina Lynn Compton (“Compton”). U.S. Bank moved for summary judgment against Compton. It supported its motion for summary judgment with loan documents, including a promissory note signed by Compton (“the Note”), as well as two declarations. The circuit court granted summary judgment in favor of U.S. Bank. Compton appealed.

The Intermediate Court of Appeals (“ICA”) reversed the circuit court on the grounds that since U.S. Bank had not established it possessed the Note at the time it filed its complaint against Compton, it had not established its standing to sue. The ICA concluded that the copies of the Note U.S. Bank submitted with its motion for summary judgment were hearsay and were not admissible under the business records exception to the hearsay rule because U.S. Bank had not submitted testimony from a witness qualified to testify about the business records of the Note’s creator.

This case requires the court to consider whether a creditor must satisfy the business records exception to the hearsay rule to introduce a promissory note into evidence. It also requires the court to consider whether a party that has incorporated a third party’s records into its own must present testimony about the third party’s record keeping in order for those records to be admissible under the business records exception.

SCWC-17-0000746, U.S. Bank v. Verhagen, et al.

This case arises from foreclosure proceedings initiated by U.S. Bank Trust, N.A., as Trustee for LSF9 Master Participation Trust (“U.S. Bank”) against Patrick Lowell Verhagen and Patrick Lowell Verhagen, Trustee of the Patrick Lowell Verhagen Revocable Trust Dated October 29, 1999 (collectively “Verhagen”). U.S. Bank moved for summary judgment against Verhagen. It supported its motion for summary judgment with copies of a promissory note (the “Note”), other loan documents, and testimony. The circuit court granted summary judgment for U.S. Bank. Verhagen appealed. Subsequently, the ICA remanded the case. The trial court updated its findings of facts and conclusions of law and again, granted summary judgment to U.S. Bank. The trial court issued an amended judgment against Verhagen.

On appeal, the Intermediate Court of Appeals (“ICA”) reversed the trial court and vacated the amended judgment. The ICA held that the promissory note copies submitted by U.S. Bank in support of its motion for summary judgment were hearsay and inadmissible under the business records exception to the hearsay rule absent testimony from a qualified witness familiar with the record-keeping of the entity that created the promissory note. It further held that U.S. Bank did not have standing because it had not established that it possessed the Note when it filed its complaint against Verhagen.

This case requires the court to consider whether promissory notes are hearsay and therefore only admissible if they fall within an exception to the hearsay rule. It also requires the court to consider whether the issue of standing based on possession of a promissory note is distinct from the issue of admissibility of loan records. Finally, this case requires the court to consider whether Verhagen waived his right to dispute the trial court’s amended judgment.