text:
    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
    NO. CAAP-17-0000478
    Intermediate Court of Appeals of Hawai'i.
    May 10, 2018
    On the briefs:
    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 OF THE COURT BY 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 ), 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." 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.

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 ).

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 accent, he's produced the original note for review and inspection by both the defendant and her counsel.
And so at that point, the burden was upon the defendant to come in with admissible facts demonstrating that the falsity, or at least the alleged falsity of the statements set forth in the declaration, that has not been done. And plaintiff is the assignee of the mortgage. All the successor documents have been put into the record and have been

acknowledged and verified in an admissible format.

....
The appropriate affidavit under HRS 667 has been filed. The record shows there are no material questions of fact in dispute. Defendant has failed to submit anything other than argument.
To question the declarations, as well as the production of the original note, plaintiff has shown it has standing to bring the mortgage foreclosure action and is entitled to judgment as a matter law.

(Emphasis added).

On May 22, 2017, the Circuit Court entered its Judgment and Foreclosure Decree. In its Foreclosure Decree, the Circuit Court found, inter alia, that HSBC Bank was the holder of the Note.

On June 20, 2017, Moore timely filed a notice of appeal.

II. POINT OF ERROR ON APPEAL

Moore raises a single point of error, arguing that the Circuit Court erred by granting HSBC Bank's March 18, 2015 Motion for Summary Judgment because HSBC Bank's declaring witness was not qualified to authenticate its business records and failed to meet its burden of demonstrating that it was the holder of the subject note at the time the complaint was filed, as required by the Hawai'i Supreme Court in Bank of America, N.A. v. Reyes-Toledo, 139 Hawai'i 361, 390 P.3d 1248 (2017).

III. APPLICABLE STANDARD OF REVIEW

"Appellate courts review an award of summary judgment de novo under the same standard applied by the circuit court." Salera v. Caldwell, 137 Hawai'i 409, 415, 375 P.3d 188, 194 (2016) (citation omitted). The Hawai'i Supreme Court has articulated that standard as follows:

Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.
This court must review the evidence and inferences in the light most favorable to the non-moving party.

Id. (citation omitted; format altered).

IV. DISCUSSION

Moore's primary contention on appeal is that HSBC Bank did not produce any admissible evidence that it was in possession of the blank-indorsed Note at the time it filed the Complaint.

The Hawai'i Supreme Court's decisions in Bank of America. N.A. v. Reyes-Toledo, 139 Hawai'i 361, 390 P.3d 1248 (2017), U.S. Bank, N.A. v. Mattos, 140 Hawai'i 26, 398 P.3d 615 (2017), and Wells Fargo Bank, N.A. v. Behrendt, 142 Hawai'i 37, 414 P.3d 89 (2018) (designated for publication), are dispositive in this case. We also note that this case is similar to this court's decision in HSBC Bank USA, N.A. v. Yamashita, CAAP-17-0000026, 141 Hawai'i 379, 2017 WL 6048908 (Haw. App. Dec. 7, 2017) (SDO).

In Reyes-Toledo, the supreme court held that the foreclosing plaintiff must establish standing or entitlement to enforce the subject note at the time the action was commenced. 139 Hawai'i at 367-71, 390 P.3d at 1254-58. The supreme court stated, inter alia, that a foreclosing plaintiff must typically "prove the existence of an agreement, the terms of the agreement, a default by the mortgagor under the terms of the agreement, and giving of the cancellation notice." Id. at 367, 390 P.3d at 1254 (citing Bank of Honolulu, N. A. v. Anderson, 3 Haw. App. 545, 551, 654 P.2d 1370, 1375 (1982) ). Furthermore, "[a] foreclosing plaintiff must also prove its entitlement to enforce the note and mortgage." Id. (citations omitted). The supreme court explained, "[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 and internal brackets omitted). The supreme court further stated that "[a]s standing relates to the invocation of the court's jurisdiction, it is not surprising that standing must be present at the commencement of the case." Id. at 368, 390 P.3d at 1255 (citation omitted). In concluding that the foreclosing bank failed to satisfy its burden as the movant for summary judgment, the court reasoned, "[a]lthough Bank of America produced evidence that it possessed the blank-indorsed Note at the time it sought summary judgment, a material question of fact exists as to whether Bank of America possessed the Note, or was otherwise the holder, at the time it brought the foreclosure action." Id. at 370, 390 P.3d at 1257.

In Mattos, summary judgment was granted in favor of the foreclosing bank, U.S. Bank. 140 Hawai'i at 29, 398 P.3d at 618. On appeal, one of the issues was whether relevant loan documents had been properly admitted through the declaration of an individual named Richard Work (Work ), as records of regularly conducted activity under Hawai'i Rules of Evidence (HRE ) Rule 803(b)(6). Id. at 28, 30-33, 398 P.3d at 617, 619-22. In his declaration, Work attested, inter alia , that he was a "Contract Management Coordinator" of OCWEN Loan Servicing, LLC (Ocwen ), the "servicer" for U.S. Bank on the subject loan. Id. at 30-31, 398 P.3d at 619-20, Because Work did not attest that he was the custodian of records for either U.S. Bank or Ocwen, the supreme court noted that "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." Id. at 32, 398 P.3d at 621. The supreme court applied its analysis in State v. Fitzwater, 122 Hawai'i 354, 365-66, 227 P.3d 520, 531-32 (2010), and ruled as follows:

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.

Mattos, 140 Hawai'i at 32-33, 398 P.3d at 621-22.

In light of its prior ruling in Reyes-Toledo, the supreme court in Mattos further held that:

[s]ince [an] 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 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.

Id. at 33, 398 P.3d at 622. Among other infirmities, the supreme court noted that Work did not attest that U.S. Bank possessed both the note and the allonge when the foreclosure complaint was filed. Id. The supreme court thus ruled that "Work's declaration failed to meet U.S. Bank's burden of establishing facts necessary for a grant of summary judgment." Id.

In Behrendt, the supreme court addressed a substantially similar issue and declaration as in Mattos, this time determining the sufficiency of a declaration of Vanessa Lewis (Lewis ), who was also a "contract management coordinator" for Ocwen, the foreclosing bank's (Wells Fargo's) loan-service provider. Behrendt, 142 Hawai'i at 39-40, 414 P.3d at 91-92. Because Lewis did not attest that she was the custodian of records for either Wells Fargo or Ocwen, the supreme court again stated that the documents attached to her declaration were admissible under HRE Rule 803(b)(6) only if her declaration demonstrated that she was a "qualified witness." Id. at 45, 414 P.3d at 97 (citing Mattos, 140 Hawai'i at 32, 398 P.3d at 621 ). In holding that Lewis was not a "qualified witness" under its decision in Mattos, the Behrendt court stated:

Here, as in Mattos, the Lewis Declaration does not establish that the loan documents were received by Ocwen and then incorporated into Ocwen's records. In addition, although Lewis averred that Ocwen's records relating to the loan were made and maintained in the regular course of Ocwen's business, Lewis asserted only that she had "access to and [was] familiar" with Wells Fargo's records and documents relating to this case. The Lewis Declaration does not establish that Lewis was familiar with Wells Fargo's record-keeping system. It also makes no assertions as to Lewis's familiarity with the record-keeping systems of Funding Group or Option One, which first created the Note and allonges. Thus, the Lewis Declaration satisfies the foundational requirements to make Lewis a qualified witness only with respect to Ocwen's original records about the loan and not any records of Wells Fargo or the loan documents themselves.
The Lewis Declaration also refers only to the Note and not the allonges that Wells Fargo asserts were used to endorse the Note in blank. As noted, the Lewis Declaration does not establish that Lewis was a qualified witness, and thus she could not have satisfied the requirements of HRE Rule 803(b)(6) with respect to the allonges. But, as with the declaration in Mattos, the Lewis Declaration did not attempt to admit the allonges under the business records exception. Thus, even if the Note fell within the bounds of HRE Rule 803(b)(6), the allonges endorsing it in blank did not because the declaration did not provide the requisite foundation. This is to say that the documents purporting to allow Wells Fargo to enforce the Note were not admissible under the business record exception. Since the documents were not admissible as asserted, Wells Fargo did not meet its burden of establishing facts necessary for a grant of summary judgment.

Id. at 46, 414 P.3d at 98 (citing Mattos, 140 Hawai'i at 32-33, 398 P.3d at 621-22 ).

In Yamashita, this court reviewed the sufficiency of a declaration attached to the foreclosing-bank's ( HSBC Bank's) motion for summary judgment. 2017 WL 6048908 at *3-4. The declaration was made by Luann Jones (Jones ), an employee of HSBC Bank's "loan-servicing agent, " PNC Bank, and is substantially similar to the Carpenter Declaration. In the declaration, Jones attested that PNC Bank possessed the subject note, which was attached to the complaint with an allonge specifically indorsing the note to HSBC Bank. Id. at *3. This court rejected HSBC Bank's argument that Jones's affirmation that "PNC is in possession of the Note" established that HSBC Bank possessed the Note and the allonge under Mattos. Id. This court rejected HSBC Bank's argument that Jones's statement that she was trained to use and understood "the record keeping system utilized for this loan," was sufficient to render her a "qualified witness" as to HSBC Bank's records stating, "[t]his does not appear to satisfy the requirements discussed in Mattos." Id. at *4, n.5. We held that there was no admissible evidence to demonstrate that HSBC Bank was in possession of the subject note and allonge at the time the action was commenced and therefore HSBC Bank failed to meet its burden to show entitlement to summary judgment under Reyes-Toledo, 139 Hawai'i at 370-71, 390 P.3d at 1257-58. Id. at *4.

Here, HSBC Bank maintains that "it was in possession of the Note, and that the Note had been indorsed in blank. HSBC was therefore a holder entitled to enforce the Note at the time it filed its foreclosure Complaint." HSBC Bank relies on the following, filed contemporaneously with the Complaint: (1) the Carpenter Declaration; (2) the Note attached to the Complaint; (3) the Mortgage; and (4) the Assignment of Mortgage. HSBC Bank also relies on the following, filed in relation to its Motion for Summary Judgment: (5) the First Moler Declaration; (6) the Second Moler Declaration; (7) the Rosen Declaration; and (8) the Note indorsed in blank attached to the Rosen and Second Moler Declarations.

However, there is no evidence in the record, including either version of the Note or the declarations and documents relied upon by HSBC Bank on appeal, showing that the blank indorsement on the Note occurred prior to the initiation of the suit. See Reyes-Toledo, 139 Hawai'i at 371, 390 P.3d at 1258. Like the foreclosing bank in Reyes-Toledo, HSBC Bank was granted summary judgment and the Foreclosure Decree was entered based in part on the declaration of HSBC Bank's counsel, David B. Rosen, which attests in part, "I am in possession of the wet-ink Note on behalf of Plaintiff[.]" Even if the Note indorsed in blank were admissible through the Rosen and Second Moler Declarations, neither the Note indorsed in blank nor these declarations show that HSBC Bank possessed the Note indorsed in blank at the initiation of this foreclosure action. See id., at 370-71, 390 P.3d at 1257-58.

Nor does Carpenter's statement that "[HSBC Bank] is in possession of the Note" show that HSBC Bank possessed the Note indorsed in blank at the time of the filing of the Complaint. Although Carpenter's Declaration was executed just prior to the filing of the Complaint and a copy of the Note was attached, the copy of the Note that Carpenter attempted to authenticate is not-indorsed in blank. Carpenter's statement that "[HSBC Bank] is in possession of the Note" also does not establish that HSBC Bank had possession of the allonge specifically indorsing the Note to HSBC Bank at the time the Complaint was filed. See Mattos, 140 Hawai'i at 33, 398 P.3d at 622 ("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 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.").

Moreover, according to the Second Moler Declaration, the copy of the Note attached to the Complaint was "outdated" and "the original Note contains a blank indorsement on page 3. As a result, the Allonge to the Note has been removed from the Note." This declaration does not provide any dates for these events. Therefore, it is unclear whether the Note and the allonge attached to the Complaint were "outdated" when the Complaint was filed.

Lastly, regarding the admissibility of the documents attached to Carpenter's Declaration, like in Mattos and Behrendt, Carpenter did not attest that he was the custodian of record for PNC Bank or HSBC Bank, and as explained below, he is not a "qualified witness" for the purposes of admitting HSBC Bank's records into evidence under HRE Rule 803(b)(6), pursuant to the analysis in Mattos and Behrendt. Like the Work declaration in Mattos, the Lewis declaration in Behrendt, and the Jones declaration in Yamashita, Carpenter's Declaration does not indicate that HSBC Bank's records were received by PNC Bank or incorporated into PNC Bank's records. Also similar to the declarations in those cases, Carpenter's Declaration does not establish that he is familiar with the record-keeping system of HSBC Bank, only that "[t]hese records are routinely made in the ordinary course of business in a filing and computer system that I have access to, have been trained to use and understand, and with which I am familiar," and that "I have been trained to use and understand the record keeping system utilized for this loan." In Yamashita, we concluded that identical language was insufficient to establish that the declarant, Jones, was familiar with the record-keeping system of HSBC Bank. See Yamashita, 2017 WL 6048908 at *4, n. 5, 409 P.3d 783 {"Jones attests that 'I have been trained to use and understand the record keeping system utilized for this loan.' This does not appear to satisfy the requirements discussed in Mattos.") We reject HSBC Bank's argument that Mattos is factually distinguishable because Carpenter "explicitly states that he is familiar with the record-keeping system used by HSBC," because he did not in fact state that he was familiar with the record-keeping system used by HSBC Bank.

For these reasons, Carpenter is not a "qualified witness" with respect to the admission of HSBC Bank's records. See Mattos, 140 Hawai'i at 32-33, 398 P.3d at 621-22.

We further conclude that the Second Moler Declaration does not provide adequate foundation to admit the Note indorsed in blank under HRE Rule 803(b)(6) for the same reasons as the Carpenter Declaration. Moler, an employee of PNC Bank, did not attest that he is the custodian of record for PNC Bank or HSBC Bank, that PNC Bank incorporated HSBC Bank's records into its own, or that he had any personal knowledge of HSBC Bank's record-keeping system. Rather, the Second Moler Declaration states that Moler's personal knowledge is based on his "review of the records and files related to the mortgage loan" and based on "my knowledge of the regular business practices of PNC Bank [.]" Moreover, like the Rosen Declaration, the Second Moler Declaration does not indicate that HSBC Bank possessed the Note indorsed in blank at the time HSBC Bank filed its Complaint. Therefore, even if the Note indorsed in blank were admissible through the Second Moler Declaration, this evidence is not sufficient to establish standing. See Reyes-Toledo, 139 Hawai'i at 370-71, 390 P.3d at 1257-58.

We also reject HSBC Bank's remaining argument that the Mortgage and Assignment of Mortgage, executed prior to the filing of the Complaint, are evidence that HSBC Bank possessed the Note indorsed in blank prior to the filing of the Complaint. Similar arguments have been rejected by the supreme court. See id. at 371, n.17, 390 P.3d at 1258, n.17 ("An assignment of the Mortgage to Bank of America prior to the commencement of the action would not be sufficient to establish standing as an injury to the plaintiff in the foreclosure proceeding, which is premised on the default under the note. Although the security follows the debt, the debt does not automatically follow the security.").

We conclude, viewing the facts and inferences in the light most favorable to Moore, as we must for purposes of a summary judgment ruling, that there is a genuine issue of material fact as to whether HSBC Bank was entitled to enforce the subject note at the time this foreclosure action was commenced. Therefore, the Circuit Court erred in granting HSBC Bank's Motion for Summary Judgment.

V. CONCLUSION

For the foregoing reasons, we vacate the Circuit Court's Foreclosure Decree and Judgment, both entered May 22, 2017, and remand this case to the Circuit Court for further proceedings.

      The Honorable Peter T. Cahill presided.

      The Carpenter Declaration more fully provides:
      1. I have knowledge of and I am competent to testify to the matters stated herein by virtue of my employment for PNC Mortgage, a division of PNC Bank, N.A., the loan servicing agent for Plaintiff HSBC BANK USA, NATIONAL ASSOCIATION AS TRUSTEE FOR DEUTSCHE ALT-A SECURITIES, INC. MORTGAGE LOAN TRUST, SERIES 2005-2 ("Plaintiff"). I have been trained to use and understand the record keeping system utilized for this loan, I know that pursuant to normal business practices, the entries in the business records are made at or near the time of the occurrence by the person with actual knowledge of the occurrence being recorded in the business record. I have also been trained to use and understand the entries in the record and am familiar with the same. My knowledge is based on my review of the business records and files related to the mortgage loan which is the subject of this foreclosure.
      2. ... A true and correct copy of the Indorsed Note is attached as Exhibit "A".
      ....
      5. Plaintiff is in possession of the Note. As evidenced by the recorded Mortgage and applicable assignment, Plaintiff is also the mortgagee of record. As such, [HSBC Bank] is the proper plaintiff in this matter.
      ....
      9. All documents, memoranda, reports and records of data compilation (collectively, "Records of Acts") that are attached as Exhibits "A"-"E" to my [Declaration], as well as all other factual information contained herein, represent records of regularly conducted business activity relating to the subject loan.
      10. The Records of Acts were and are made in the course of Plaintiff's and Plaintiff's servicing agent's regularly conducted business activity of mortgage lending and mortgage servicing.
      11. All herein referenced Records of Acts were and are made at or near the time of the acts reported. Entries into these records are made by persons having personal knowledge of such event, and are reviewed by me from time to time to ensure accuracy and completeness, and are relied upon by Plaintiff and its servicing agent in the conduct of its business.
      12. I am familiar with the referenced Records of Acts, which is used to record and track events and documents by Plaintiff and its servicing agent that are relevant to this loan. These records are routinely made in the ordinary course of business in a filing and computer system that I have access to, have been trained to use and understand, and with which I am familiar.
      13. I reviewed the Verified Complaint for Foreclosure prepared by RCO Hawaii, LLLC, including the attached exhibits and I have confirmed the factual accuracy of the allegations set forth therein.
      14. I reviewed the notarizations contained in the supporting documents filed with the Verified Complaint for Foreclosure and confirmed the accuracy of the notarizations by examining the notarizations for signs of forgery or tampering and verifying the factual accuracy of the notarized documents using business records.

      This allonge reads in pertinent part,
      PAY TO THE ORDER OF:
      HSBC Bank USA, National Association as Trustee fore [sic] Deutsche Alt-A Securities, Inc., Mortgage Loan Trust, Series 2005-2
      WITHOUT RECOURSE:
      PNC Bank, National Association, successor in interest to National City Real Estate Services, LLC, successor by merger to National City Mortgage, Inc., formerly known as National City Mortgage Co.
      BY: [signature Sharon Lynch]
      Name: Sharon Lynch
      Title: Authorized Signer

      The Attorney Affirmation, which HSBC Bank does not reference on appeal, provides in pertinent part:
      1. I am an attorney duly licensed to practice in the State of Hawaii and am employed by RCO Hawaii, LLLC, the attorneys of record for Plaintiff....
      2. I received communication from representatives of Plaintiff regarding this action declaring that the representative (a) personally reviewed Plaintiff's documents and records relating to this case for factual accuracy; and (b) confirmed the factual accuracy of the allegations set forth in the Complaint and any supporting affidavits or affirmations filed with the Court ....
      The Statement of Review was prepared by and provided as follows:
      Date Name Title May 5, 2013 Rodney Carpenter Authorized Signer
      3. Based upon my communication with representatives of Plaintiffs, and upon my own inspection and other reasonable inquiry under the circumstances, I affirm that to the best of my knowledge, information, and belief, the Summons, Complaint, and other papers filed with the Court in this matter contain no false statements of fact or law and that Plaintiff has legal standing to bring this foreclosure action.

      The Behrendt court observed that the Lewis and Work declarations were "nearly identical." Behrendt, 142 Hawai'i at 45, 414 P.3d at 97.

      In fact, in light of the fact that the Note attached to Carpenter's Declaration did not have the indorsement on the Note, and the Note attached to the Second Moler Declaration did, HSBC's own evidence seems to suggest that the indorsement post-dated the Complaint or, at minimum, creates a genuine issue of material fact.

      Because the Carpenter Declaration does not purport to authenticate the Note indorsed in blank, the First Moler Declaration, which purports to verify the documents attached to the Complaint, likewise does not support the proposition that HSBC Bank possessed the Note indorsed in blank when the Complaint was filed.

      Carpenter's description of the "Note" in his declaration does not appear to include the allonge which indorses the Note to HSBC Bank. Specifically, Carpenter describes the "Note" as the promissory note executed by Moore and delivered "to National City Mortgage Co dba Accuabanc Mortgage" on December 17, 2004 and makes no mention of an allonge. Although Carpenter states that a "true and correct copy of the Indorsed Note is attached as Exhibit 'A,' " the referenced Note is not itself indorsed and, as discussed infra, was later described by Moler as "outdated." See also Mattos, 140 Hawai'i at 33, 398 P.3d at 622 ("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.")


source: Caselaw Access Project

license: Public Domain

text:
    In the Matter of HAWAII STATE TEACHERS ASSOCIATION, Complainant- Appellant-Appellant, v. BOARD OF EDUCATION, DEPARTMENT OF EDUCATION, State of Hawaii and Beth Schimmelfennig, Department of Education, State of Hawaii, Respondents-Appellees-Appellees, and Hawaii Labor Relations Board; James B. Nicholson; Sesnita A.D. Moepono; and Rock B. Ley (2008-024), Agency-Appellees-Appellees
    NO. CAAP-15-0000656
    Intermediate Court of Appeals of Hawai'i.
    January 30, 2019
    On the briefs:
    Herbert R. Takahashi, Rebecca L. Covert, (Takahashi and Covert), for Complainant-Appellant-Appellant.
    James Halvorson, Richard H. Thomason, Deputy Attorneys General for Respondents-Appellees-Appellees.
    (By: Fujise, Presiding Judge, Leonard and Reifurth, JJ.)
   SUMMARY DISPOSITION ORDER

In this secondary appeal, Complainant/Appellant-Appellant Hawai'i State Teachers Association (HSTA ) appeals from the Circuit Court of the First Circuit's (Circuit Court's ) Final Judgment (Judgment ), which was entered on August 25, 2015. HSTA also challenges the Circuit Court's Order Reversing in Part and Affirming in Part Hawai'i Labor Relations Board [ (HLRB ) ] Order No. 3015 [ (HLRB's Decision ) ], also entered on August 25, 2015 (Circuit Court's Order ).

HSTA raises four points of error on appeal, contending that the Circuit Court erred in: (1) affirming HLRB's Decision in that it granted summary judgment in favor of Respondents/Appellees-Appellees the Board of Education, Department of Education, State of Hawai'i (the Board ), and Susan Kitsu (Kitsu ), then-Director of the Office of Civil Rights Compliance (OCRC ) (collectively, Respondents ), on HSTA's allegations of a violation of the statutory duty to provide information under the duty to bargain, in violation of Hawaii Revised Statutes (HRS ) § 89-13(a)(5) (2012), and willfully violated terms and conditions of the unit 5 agreement, in violation of HRS § 89-13 (a)(8) ; (2) applying the deferral doctrine to the Board's determination of what information was so confidential as to be excluded from its duty to bargain, as a matter of law; (3) affirming HLRB's Decision in that it denied HSTA summary judgment on the allegations of violations of HRS § 89-13(a)(5) and (8) ; and (4) affirming HLRB's Decision in that it granted the Respondents summary judgment on the allegations of interference with employees' rights, and refusal or failure to comply with other Chapter 89 and contractual provisions, where material facts were in dispute.

Upon careful review of the record and the briefs submitted by the parties, and having given due consideration to the arguments advanced and the issues raised by the parties, we resolve HSTA's points of error as follows:

In Points of Error 1, 2, and 3, HSTA argues that HLRB erred in granting summary judgment in favor of Respondents with respect to HSTA's allegations that Respondents violated HRS § 89-13 (a)(5) and (8). HSTA argues that the Board breached its duty to bargain in good faith with HSTA, in violation of HRS § 89-13(a)(5), which provides in relevant part:

§ 89-13 Prohibited practices; evidence of bad faith, (a) It shall be a prohibited practice for a public employer or its designated representative wilfully to:
....
(5) Refuse to bargain collectively in good faith with the exclusive representative as required in section 89-9 [ ]...

It appears, consistent with well-established federal labor law principles, that HLRB recognized that an employer's duty to bargain in good faith with a union under HRS § 89-13(a)(1) 4 & (5) implicitly includes an obligation to furnish the union, upon request, with relevant information the union needs to fulfill its statutory obligations as the bargaining unit employees' exclusive bargaining representative. See Detroit Edison Co. v. NLRB, 440 U.S. 301, 303 (1979) (duty to collectively bargain under National Labor Relations Act (NLRA ), § 8(a)(5) as amended 29 U.S.C.A. § 158(a)(5), "includes a duty to provide relevant information needed by a labor union for the proper performance of its duties as the employees' bargaining representative"). See also Thomas Fusco, Annotation, Employer's duty to furnish particular information, other than financial or wage information, to employees' representative under [NLRA], 29 U.S.C.A. § 151 et seq. , 113 A.L.R. Fed. 425 (2017). The parties generally agree to this statement of the law.

A union has the initial burden to establish relevancy before an employer must comply with the information request. Sara Lee Bakery Grp., Inc. v. NLRB, 514 F.3d 422, 430 (5th Cir. 2008). Thus, "[a] union's bare assertion that it needs information to process a grievance does not automatically oblige the employer to supply all the information in the manner requested. The duty to supply information under § 8(a)(5) turns upon 'the circumstances of the particular case,' and much the same may be said for the type of disclosure that will satisfy that duty." Detroit Edison Co., 440 U.S. at 314-15 (quoting NLRB v. Truitt Mfg. Co., 351 U.S. 149, 153 (1956) ).

In deciding whether requested information is of the type an employer must disclose (i.e. , relevant), the United States Supreme Court has adopted the National Labor Relations Board's (NLRB's ) use of a "discovery-type" standard; there must only be a "probability that the desired information is relevant." NLRB v. New Jersey Bell Tel. Co., 936 F.2d 144, 150 (3d Cir. 1991) (internal quotation marks omitted) (quoting NLRB v. Acme Indus. Co., 385 U.S. 432, 437 (1967) ).

Certain information is "presumptively relevant" under federal law. Namely, wage-related information pertaining to employees in the bargaining unit is "presumptively relevant" because the nature of its relevance is obvious; therefore, the union need not explain its specific requests unless the employer provides effective rebuttal. Emeryville Research Ctr., Shell Dev. Co. v. NLRB, 441 F.2d 880, 887-88 (9th Cir. 1971) ; Curtiss-Wright Corp., Wright Aeronautical Div. v. NLRB, 347 F.2d 61, 69 (3d Cir. 1965). The NLRB has also applied this rule to the names and contact information of the union's own members. See Prudential Ins. Co. of Am. v. NLRB, 412 F.2d 77, 84 (2d Cir. 1969). In these cases, the duty to provide information is not limited to that which is pertinent to a particular dispute or pending grievance; the union is entitled to information "which would enable it to properly and understandingly perform its duties as such in the general course of bargaining." NLRB v. Whitin Mach. Works, 217 F.2d 593, 594 (4th Cir. 1954). For example, in Whitin, the employer produced lists of data related to union-employees and a list of the hourly wage rates paid at the plant; from this information, however, the union could not determine what each individual union-employee was earning. Id. Because the NLRA entitled the union to "all wage information essential to the intelligent representation of the employees," the employer was required to turn over reasonably-available records showing the individual wage-rates of union-employees; it was no defense that there was no pending dispute over wages. Id.

Consistent with this rule is a limitation on the obligation to produce information; a requirement that the request pertain to a mandatory subject of collective bargaining. The NLRB has held, "[w]hen the request pertains to a subject that is nonmandatory ... then neither employers nor labor organizations are obliged under the [NLRA] to furnish information requested for bargaining on [that] subject." Serv. Emps. Local 535, 287 N.L.R.B. 1223, 1225 (1988) (quoting Am. Stores Packing Co., 277 N.L.R.B. 1656, 1658 (1986) (internal quotation marks omitted)). The NLRB has explained that the "duty to furnish ... information stems from the underlying statutory duty imposed on employers and unions to bargain in good faith with respect to mandatory subjects of bargaining." Id. (quoting Cowles Commc'ns, Inc., 172 N.L.R.B. 1909, 1909 (1968) ). In Hawai'i, like under the NLRA, mandatory subjects of collective bargaining include "wages, hours, ... and other terms and conditions of employment." HRS § 89-9(a) ; see also 29 U.S.C.A. § 158(d).

HSTA argues that HLRB erred as a matter of law in concluding that Respondents had provided HSTA with sufficient basic information to enable HSTA to perform its duties. HSTA does not cite any authority supporting the proposition that its requests to the OCRC pertained to wages, hours, or "other terms and conditions of employment." Rather, HSTA relies on a broad assertion that it has a duty to "represent" and "assist" the teachers, without explaining how that assistance relates to its statutory duties under HRS Chapter 89. HSTA also asserts that the Teacher 1 and Teacher 2's "employment and terms and conditions of employment were in question[.]" However, HSTA does not explain which terms or conditions of employment those were or otherwise support its assertion.

We reject HSTA's reliance on cases related to a union's "role" during an investigatory interview for the proposition that such representation entitles it to information under the duty to bargain in good faith. It is well-established under federal law that Teacher 1 and Teacher 2 had a right to have an HSTA representative at the meeting with the OCRC. Specifically, the right to organize includes the right to have a union representative present at an employer-meeting or interview that the employee reasonably believes could result in disciplinary action. NLRB v. J. Weingarten, Inc., 420 U.S. 251, 260-62 (1975). This right is not founded on the duty to bargain in good faith, but in the employee's right to act in concert with others for "mutual aid and protection." Id. (interpreting NLRA §§ 7, 8(a)(1) as amended 29 U.S.C.A. §§ 157 & 158 (a)(1)). See HRS § 89-3 (2012). This includes instances where the investigator does not impose discipline but seeks a statement from an employee to generate a report that will be forwarded to a supervisor in charge of discipline. Exxon Co., 223 N.L.R.B. 203, 207 (1976).

However, the employer is still entitled to investigate an employee's alleged misconduct without interference from union officials and, further, is free to insist on hearing the employee's own account of the matter under investigation. Howard Indus., Inc., 362 N.L.R.B. No. 35 (Mar. 23, 2015) (citing Weingarten, 420 U.S. at 260 ). This is because, as the NLRB ha's recognized, the employer "has no duty to bargain with any union representative who may be permitted to attend the investigatory interview." Weingarten, 420 U.S. at 259 (quoting the NLRB's interpretation with approval). The role of the union representative includes providing assistance and counsel to employees who may lack the ability to express themselves or may be "too fearful or inarticulate ... to raise extenuating factors." Howard, 362 N.L.R.B. at 2 (internal quotation marks omitted) (quoting id. at 260-63, 263 n.7). Accordingly, the union representative is entitled to give the employee "active assistance" during the interview. Id.

On one hand, HSTA argues that Weingarten is irrelevant because it does not "dictat[e] the limits of a union's role during an investigation process or discuss[ ] the union's role in the context of a duty of fair representation." On the other hand, HSTA cites cases analyzing these issues for the proposition that HSTA's "role" was to provide representation and does not provide us with any other authority that HSTA had a statutory "duty to assist in gather [sic] relevant information[.]" HSTA cites no authority supporting that an employee's right to act in concert for "mutual aid and protection" implicates an employer's duty to bargain in good faith such that a union is entitled to specific information during a disciplinary investigation. We find no error in HLRB's conclusion that HSTA had basic information to enable it to fulfill its duties (i.e. , the duty to provide "active" representation at a meeting with the OCRC).

We also reject HSTA's contention that its requests were "presumptively relevant." Here, HSTA did not request information about its own membership related to wages, contact information, or any other topic that could be so central to the relationship between the parties that it is obviously relevant.

We also reject HSTA's assertion that HLRB erred by relying on the nature and timing of the OCRC's investigation. HSTA cites Whitin, where the union was entitled to wage-related information of its own members, regardless of the existence of a related dispute, because the information was "presumptively reasonable." Whitin Mach. Works, 217 F.2d at 594. HSTA invites us to compare Whitin with a completely unrelated case, Arnold v. Air Midwest, Inc., 100 F.3d 857, 863 (10th Cir. 1996). There, the relevant issue was whether an attorney-client relationship existed between a union-attorney and a former union employee where the employee brought claims for breach of fair representation against a union under the Railway Labor Act and for breach of fiduciary duty and legal malpractice against the attorney. Id. at 858-61. Next, HSTA cites to Acme, 385 U.S. at 435-36, for the general proposition that the duty to bargain in good faith includes an obligation to provide information relevant to the collective-bargaining process. Again, HSTA fails to explain how its requests were related to the "collective-bargaining process."

HSTA quotes Lee v. UPW, 125 Hawai'i 317, 329, 260 P.3d 1135, 1147 (App. 2011), as follows: "[I]t is the public policy of the State to promote harmonious and cooperative relations between government and its employees and to protect the public by assuring effective and orderly operations of government." HSTA does not explain how this statement relates to its argument. In sum, we cannot conclude, based on the authorities cited by HSTA, that HLRB erred in considering the nature and timing of OCRC's investigation.

HSTA also argues that the "refusal to produce the documents and information' was a wilful violation of Article IV section A" and that HSTA is entitled to summary judgment on its claim regarding HRS § 89-13 (a)(8) . Article IV, Section A of the collective bargaining agreement covering the period from July 1, 2007, through June 30, 2009 (CBA ), provides:

ARTICLE IV - ASSOCIATION RIGHTS
A. EMPLOYER INFORMATION
In addition to any obligation under Chapter 89, HRS, to furnish information in its possession, the Employer will furnish such other information in its possession, in response to reasonable requests by the Association which will assist the Association in effectively representing the teacher in the collective bargaining process and in the processing of grievances [ ].... The Employer need not perform compilation of facts or information for the purpose of responding to such Association requests.

(Emphasis added).

HSTA failed to establish how its requests were related to assisting it in representing a teacher "in the collective bargaining process" or in the "processing of grievances." Grievances are expressly defined in the CBA as claims by HSTA or employees that the Board is not abiding by terms in the CBA. HSTA fails to demonstrate that its requests related to either of these processes.

Finally, HSTA argues that HLRB erred in granting summary judgment "in favor of respondents on the merits related to the remaining allegations in CE-05-669, i.e. , interference of employees' rights, refusal or failure to comply with other Chapter 89 and contractual provisions, where material facts were in dispute." HSTA asserts that "[t]he facts related to claims in the complaint such as the prior rights and incorporation provision of the unit 5 agreement (Article XXI) were not ripe for determination given the uncertainty with respect to the scope of the school code, the transition to the standard practices under Article XXI" and therefore, should not have been decided by summary judgment.

HSTA fails to identify what "material facts" were still in dispute regarding these topics, or explain how those facts relate to its argument pursuant to HRS § 89-13(a). HSTA submitted hundreds of pages of argument, declarations, policies, letters, administrative rules, and other evidence to support and defend its position. HLRB received this evidence and argument in advance of the July 29, 2008 hearing, and then HLRB heard both parties' arguments regarding all of the claims. HSTA does not indicate what evidence it did not have the opportunity to produce, or how its "substantial rights" may have been prejudiced. See HRS § 91-14(g) (provided that the "court may ... reverse or modify the decision and order if the substantial rights of the petitioners may have been prejudiced" by legal or factual errors by the administrative agency).

Also, it appears that HSTA argues that provisions in HAR Chapter 41 constitute "Standard Practices" within the meaning of Article XXI, Section A, of the CBA which provides that the teachers "shall retain all rights, benefits and privileges pertaining to their conditions of employment contained in the Standard Practices at the time of the execution of this Agreement." Yet, Section B of that article also provides that "nothing contained herein shall be interpreted as interfering with the Employer's right to make, amend, revise, or delete any portion of the Standard Practices; provided, however, that the Association shall be consulted on any changes to be made." Thus, as HLRB concluded, even if HAR Chapter 41 was "incorporated" into the agreement, HLRB has a contractual right to change those practices after consulting with HSTA. HSTA did not allege that Respondents violated this part of the CBA by failing to consult with HSTA regarding "Standard Practices."

For these reasons, the Circuit Court's August 25, 2015 Judgment is affirmed.

      The Honorable Rhonda A. Nishimura presided.

      Pursuant to Hawai'i Rules of Appellate Procedure Rule 43(c)(1), the current Director of the Office of Civil Rights Compliance Branch should be substituted for Susan Kitsu, the Director at the time this case was decided by the Circuit Court. According to the Department of Education's website, Beth Schimmelfennig is the current Director, by temporary assignment (last visited January 29, 2019).

      HRS § 89-9 (2012) provides, in relevant part:
      § 89-9 Scope of negotiations; consultation. (a) The employer and the exclusive representative shall meet at reasonable times ... and shall negotiate in good faith with respect to wages, hours, the amounts of contributions by the State and respective counties to the Hawaii employer-union health benefits trust fund to the extent allowed in subsection (e), and other terms and conditions of employment which are subject to collective bargaining and which are to be embodied in a written agreement as specified in section 89-10, but such obligation does not compel either party to agree to a proposal or make a concession[.]

      This case arises out of unrelated student allegations of sexual harrassment/misconduct against two different teachers, who will be referred to as Teacher 1 and Teacher 2.

      HRS § 89-3 provides:
      § 89-3 Rights of employees. Employees shall have the right of self-organization and the right to form, join, or assist any employee organization for the purpose of bargaining collectively through representatives of their own choosing on questions of wages, hours, and other terms and conditions of employment, and to engage in lawful, concerted activities for the purpose of collective bargaining or other mutual aid or protection, free from interference, restraint, or coercion.

      HRS § 89-13(a)(8) prohibits an employer from willfully violating "the terms of the collective bargaining agreement."

      Within the CBA, Article V governs the "Grievance Procedure" and provides in relevant part:
      ARTICLE V - GRIEVANCE PROCEDURE
      A. DEFINITION. Any claim by the Association or a teacher that there has been a violation, misinterpretation or misapplication of a specific term or terms of this Agreement shall be a grievance.
      GRIEVING PARTY. Only teachers or their certified bargaining representative, shall have the right to institute and process grievances under this Article.
      ...
      L. The Employer has the right to suspend, demote, discharge or take other disciplinary action against a teacher for proper cause.
      M. Disciplinary action taken against any teacher shall be for proper cause and shall be subject to the Grievance Procedure. An expedited grievance procedure shall be used for suspensions or terminations of teachers. The informal discussion and/or Step 1 of the grievance procedure shall be waived.
      If the grievance goes to arbitration, the arbitration process may be either conventional or expedited. If expedited arbitration is used, either party shall have the right to file closing briefs.


text:
    STATE of Hawai'i, Plaintiff-Appellee, v. Robert L. TETU, Defendant-Appellant
    NO. CAAP-14-0001065
    Intermediate Court of Appeals of Hawai'i.
    January 31, 2019
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    Intermediate Court of Appeals of Hawai'i.
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    STATE of Hawai'i, Plaintiff-Appellee, v. Sok Ye CAMPBELL, Defendant-Appellant
    NO. CAAP-16-0000866
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    STATE of Hawai'i, Plaintiff-Appellee, v. Cody PRESTI, Defendant-Appellant
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    Intermediate Court of Appeals of Hawai'i.
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    STATE of Hawai'i, Plaintiff-Appellee, v. Cari SALAVEA also known as Cari Carveiro, Defendant-Appellant
    NO. CAAP-16-0000386
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    Patrick BRADLEY, Plaintiff-Appellant, v. Kristin SHARP, Defendant-Appellee
    NO. CAAP-16-0000790
    Intermediate Court of Appeals of Hawai'i.
    January 31, 2019. As Corrected March 1, 2019
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text:
    The ESTATE OF Edward VON BARAVALLE, Also Known as Edward V. Baravalle, Deceased
    NO. CAAP-16-0000073
    Intermediate Court of Appeals of Hawai'i.
    February 12, 2019
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    Bernartita MOSES, Petitioner-Appellant, v. STATE of Hawai'i, Respondent-Appellee
    NO. CAAP-17-0000562
    Intermediate Court of Appeals of Hawai'i.
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    WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee Under Pooling and Servicing Agreement Dated as of June 1, 2006 Securitized Asset Backed Receivables LLC Trust 2006-FR2 Mortgage Pass-Through Certificates, Series 2006-FR2, Plaintiff-Appellee, v. Philip DETOL, Roxanne Tom-Detol, Defendants-Appellants and John Does 1-20; Jane Does 1-20; Doe Corporations 1-20; Doe Entities 1-20; and Doe Governmental Units 1-20, Defendants
    NO. CAAP-17-0000873
    Intermediate Court of Appeals of Hawai'i.
    February 8, 2019
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    STATE of Hawai'i, Plaintiff-Appellee, v. Erik ERNES, Defendant-Appellant
    NO. CAAP-17-0000507
    Intermediate Court of Appeals of Hawai'i.
    February 7, 2019.
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    Justin D. DOBBS, Plaintiff-Appellant, v. COUNTY OF MAUI; James D. Lloy; Franklyn Silva; Bill D. Pacheco; Harry Matsuura, Sr., Defendants-Appellees, and John Does 1-10; Doe Entities 1-10, Defendants
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    Intermediate Court of Appeals of Hawai'i.
    February 20, 2019 As Corrected March 13, 2019
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text:
    STATE of Hawai'i, Plaintiff-Appellee v. James SIUGPIYEMAL, Defendant-Appellant
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    Intermediate Court of Appeals of Hawai'i.
    February 15, 2019
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    Affirmed.


text:
    STATE of Hawai'i, Plaintiff-Appellee, v. Dawn A. PHILLIPS, Defendant-Appellant
    NO. CAAP-17-0000620
    Intermediate Court of Appeals of Hawai'i.
    February 15, 2019
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    STATE of Hawai'i, Plaintiff-Appellee, v. Craig CONKLIN, Defendant-Appellant,
    NO. CAAP-18-0000137
    Intermediate Court of Appeals of Hawai'i.
    February 12, 2019
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text:
    STATE of Hawai'i, Plaintiff-Appellee, v. Donald NICOL, Defendant-Appellant
    NO. CAAP-16-0000681
    Intermediate Court of Appeals of Hawai'i.
    February 25, 2019
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text:
    In the INTEREST OF LK
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    Intermediate Court of Appeals of Hawai'i.
    February 25, 2019
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    STATE of Hawai'i, Plaintiff-Appellee, v. Calvin BORGE, Defendant-Appellant
    NO. CAAP-18-0000012
    Intermediate Court of Appeals of Hawai'i.
    February 21, 2019
    SUMMARY DISPOSITION ORDER
    Vacated. Remanded.


text:
    STATE of Hawai'i, Plaintiff-Appellee, v. Michael GLENN, Defendant-Appellant
    NO. CAAP-16-0000604
    Intermediate Court of Appeals of Hawai'i.
    February 21, 2019
    SUMMARY DISPOSITION ORDER
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text:
    KEAUHOU CANOE CLUB, a Hawaii Nonprofit Corporation, Plaintiff-Appellee, v. DEPARTMENT OF LAND AND NATURAL RESOURCES, State of Hawai'i; Division of Boating and Ocean Recreation of the Department of Land and Natural Resources, State of Hawai'i; Suzanne Case in Her Official Capacity as Chairperson of the Board of Land and Natural Resources, State of Hawai'i; Ed Underwood in His Official Capacity as Administrator of the Division of Boating and Ocean Recreation, Department of Land and Natural Resources, State of Hawai'i; and David Y. Ige in His Official Capacity as Governor of the State of Hawai'i, Defendants-Appellants, and John Does 1-100, Jane Does 1-100, Doe Corporations 1-100, Doe Partnerships 1-100, and Richard Roes 1-100, Roe Corporations 1-100, Roe Partnerships 1-100, Roe Entities 1-100, Defendants.
    NO. CAAP-16-0000141
    Intermediate Court of Appeals of Hawai'i.
    February 25, 2019
   MEMORANDUM OPINION

AFFIRMED. REVERSED.

1 Pursuant to Hawai`i Rules of Appellate Procedure Rule 43(c)(1), State of Hawai`i Board of Land and Natural Resources (BLNR) Chairperson Suzanne Case was automatically substituted as a Delendant-Appellant in place of former BLNR Chairperson William J. Aila, Jr. David Y Ige, the current Governor of the State of Hawai`i was automatically substituted as a Defendant-Appellant in place of lot net Governor Neil Abercrombie.

--------


text:
    Dutchie Kapu SAFFERY and Mike Yellen, Plaintiffs-Appellants, v. UNIVERSITY OF HAWAI'I, Department of Land and Natural Resources, State of Hawai'i, Board of Regents, Office of Mauna Kea Management, Department of Hawaiian Home Lands, President Barack Obama/Predecessor, United States Military, Governor David Ige/Predecessor, Defendants-Appellees, and Jane/John Does 1-1000, Defendants
    NO. CAAP-16-0000145
    Intermediate Court of Appeals of Hawai'i.
    February 25, 2019
    SUMMARY DISPOSITION ORDER
    AFFIRM.


text:
    STATE of Hawai'i, Plaintiff-Appellee, v. Kaiolohia Peter GALANTE, Defendant-Appellant
    NO. CAAP-15-0000376
    Intermediate Court of Appeals of Hawai'i.
    February 26, 2019
    SUMMARY DISPOSITION ORDER
    Vacate. Remand.


text:
    JF, Petitioner-Appellee, v. LR, Respondent-Appellant, and Child Support Enforcement Agency, State of Hawai'i, Respondent-Appellee
    NO. CAAP-15-0000886
    Intermediate Court of Appeals of Hawai'i.
    February 26, 2019
    MEMORANDUM OPINION
    Affirmed.


author: BEVAN, Justice

text:
    Victoria H. SMITH, BY AND THROUGH Her Attorney in Fact, Vernon K. SMITH, By and Through His Durable and Irrevocable Power of Attorney, Plaintiff-Appellant, v. TREASURE VALLEY SEED COMPANY, LLC, and Don Tolmie, in His Individual Capacity, and as Owner, Representative and Authorized Agent of Treasure Valley Seed Company, LLC, Defendants-Respondents.
    Docket No. 45543
    Supreme Court of Idaho, Boise, November 2018 Term.
    Filed: January 29, 2019 Rehearing Denied March 7, 2019
    Vernon K. Smith, Boise, attorney for appellant .

      Richard B. Eismann represented the Respondents in proceedings below; however, the Respondents took no part in this appeal and no brief was filed on their behalf.

   BEVAN, Justice

I. NATURE OF THE CASE

Vernon K. Smith appeals from the district court's award of sanctions. In a prior appeal in this case, we held that attorney fees could not be awarded against Smith under section 12-121 because Smith was counsel on the case, rather than a party to the case. We remanded this dispute for further proceedings to determine whether attorney fees should be awarded against Mr. Smith personally. On remand, the district court considered all options available to it and awarded attorney fees as a sanction under Idaho Rule of Civil Procedure 11, stating that the original case never should "have been brought in the fashion that it was," and that "the harm to be avoided ... is the unnecessary expense and inconvenience of dealing with litigation [having] no legal basis." Thus, the district court found that the "conduct to be sanctioned was the fostering of litigation without legal grounds, by someone trained in the law." Smith now appeals and we affirm.

II. FACTUAL AND PROCEDURAL BACKGROUND

This case originally arose from a contract for the sale of lima beans between Victoria H. Smith ("Victoria") and Treasure Valley Seed Company ("TVSC"). Smith by and through Smith v. Treasure Valley Seed Co. , LLC, 161 Idaho 107, 108, 383 P.3d 1277, 1278 (2016) ( Smith I ). On December 13, 2013, Victoria's son, Vernon K. Smith ("Smith") filed a complaint against TVSC for breach of contract. Id. The original complaint named, as plaintiff, Victoria H. Smith, by and through her attorney in fact, Vernon K. Smith, by and through his "Durable and Irrevocable Power of Attorney." Id. at 108-09, 383 P.3d at 1278-79.

On March 3, 2014, TVSC learned that Victoria had died on September 11, 2013, about three months before Smith's filing of the complaint. Id. at 109, 383 P.3d at 1279. Based on Victoria's death, TVSC moved to dismiss the complaint, arguing that there was no longer a real party in interest. Id. Smith argued that he was a real party in interest because the power of attorney he drafted was irrevocable. Id. The district court held that Smith's power of attorney terminated on Victoria's death and held that there was no real party in interest and thus granted TVSC's motion to dismiss. Id.

TVSC then filed a timely memorandum of costs and requested attorney fees under Idaho Code section 12-120(3), Idaho Code section 12-121, and Idaho Rule of Civil Procedure 11(a)(1). Id. At the hearing for costs and fees, the district court reiterated that it granted TVSC's motion to dismiss because Smith's power of attorney terminated because of Victoria's death. Id. The court also stated that Victoria's estate should have brought the action, but because no probate had been filed, there was no real party in interest able to substitute or join. Smith I , 161 Idaho at 109, 383 P.3d at 1279. After ruling that the complaint was unreasonable and without foundation, the district court awarded attorney fees to TVSC under Idaho Code section 12-121, to be assessed jointly and severally against Victoria and Smith, as counsel. Id.

Smith appealed both the dismissal of the case and the award of attorney fees, but his appeal of the dismissal was not filed timely, so this Court only addressed Smith's appeal of the attorney fees. Id. After upholding the district court because Smith's power of attorney for Victoria terminated upon her death, we determined that Smith was not authorized to sue on his mother's behalf, and as such he was not a party in interest for the issue of dismissal, even if Smith's appeal had been timely filed. Id. at 109-10, 383 P.3d at 1279-80. Even so, we held that since attorney fees had been awarded against Victoria and Smith jointly and severally, Smith was a "party aggrieved" by the judgment of the district court and was thus a real party in interest for the awarded attorney fees. Id. at 110, 383 P.3d at 1280. We then ruled that the district court erred in awarding attorney fees under Idaho Code section 12-121. Id. at 111, 383 P.3d at 1281. We so ruled because Smith was acting as counsel in pursuing the litigation; he was not a party to the case. Section 12-121 does "not authorize an award of attorney fees assessed against counsel." Id. We thus vacated the judgment for attorney fees, but we specifically noted that upon remand, the district court would not be limited in considering all legal bases for an award of attorney fees against Smith personally. Id. We even suggested that the trial court reconsider the avenues originally sought by TVSC, including Idaho Rule of Civil Procedure 11, or Idaho Code section 12-123(d). Id. at n.2.

At the hearing on July 17, 2017, following remand, Smith argued that TVSC had to make a new request or motion for attorney fees, to which he could object before the matter moved forward. The district court disagreed, noting that requiring TVSC to file another motion seeking fees under the current iteration of Rule 11(a)(2)"would work an injustice." The district court noted that TVSC "made a proper request for attorney fees based on Rule 11 as it existed at the time the request was made. It was the legal error of the [c]ourt that led to the fees not being granted on the grounds that counsel violated Rule 11 in bringing the case." Thus, the district court decided the matter would go forward on the original motion and record, giving Smith fourteen days to file a brief setting forth any arguments he had regarding the request for fees as originally filed on April 17, 2014. Smith filed an untimely brief and affidavit on August 3, 2017. Even though the brief was untimely, the district court considered one of Smith's arguments about the requested attorney fees. Ultimately, the district court ruled that attorney fees would be awarded against Smith personally in the amount of $15,826.50 (the amount awarded erroneously under section 12-121 ). The district court entered judgment accordingly on October 4, 2017. Smith timely filed an appeal on November 15, 2017.

III. ISSUES ON APPEAL

1. Did this Court establish the "law of the case" regarding the power of attorney which it stated in Smith I terminated upon the death of Victoria H. Smith?

2. Did the lower court err in awarding attorney fees under Rule 11 ?

IV. STANDARD OF REVIEW

The "law of the case" doctrine prevents consideration on a subsequent appeal of a challenge of factual findings that were affirmed in the earlier appeal. Rockefeller v. Grabow , 139 Idaho 538, 543, 82 P.3d 450, 455 (2003). However, whether the "law of the case" doctrine applies is a question of law upon which this Court exercises free review. See State v. Hawkins , 155 Idaho 69, 71, 305 P.3d 513, 515 (2013) (reviewing the law of the case doctrine with respect to retroactive application).

The standard of review for an appellate court reviewing a trial court's imposition of sanctions under Idaho Rule of Civil Procedure 11 is one of abuse of discretion. Flying A Ranch, Inc. v. Bd. of Cnty. Comm'rs for Fremont Cnty. , 156 Idaho 449, 454, 328 P.3d 429, 434 (2014). In determining whether a trial court abused its discretion, this Court must review whether a four-prong standard has been met. Lunneborg v. My Fun Life , 163 Idaho 856, 867, 421 P.3d 187, 198 (2018). The standard asks whether the trial judge:

(1) Correctly perceived the issue as one of discretion; (2) acted within the outer boundaries of its discretion; (3) acted consistently with the legal standards applicable to the specific choices available to it; and (4) reached its decision by the exercise of reason.

Id.

V. ANALYSIS

A. The "law of the case" doctrine prevents this Court from addressing the issue regarding the power of attorney relied on by Smith.

Smith argues that the trial court's decision not to analyze his legal position on remand regarding the power of attorney was erroneous. He claims that neither the district court nor this Court viewed the power of attorney before deciding that it terminated upon his mother's death. He alleges that this Court, in determining previously that fees under Idaho Code section 12-121 were inappropriate, simply mentioned the irrevocable power's termination in passing and in a footnote, making it dicta not necessary to the decision in Smith I . He contends that since the irrevocability of the power of attorney was not before this Court on appeal, it cannot be held that it was necessary to this Court's decision and as such, cannot be the "law of the case." He asserts that had either the district court or this Court realized the power of attorney was, in fact, irrevocable, there would be no legal basis for a court to award attorney fees to TVSC under Rule 11, because such a claim, in Smith's view, is neither frivolous nor without foundation.

Idaho adheres to the "law of the case" doctrine, which provides that when this Court,

in deciding a case presented states in its opinion a principle or rule of law necessary to the decision, such pronouncement becomes the law of the case and must be adhered to throughout its subsequent progress, both in the trial court and upon subsequent appeal. This doctrine also prevents consideration on a subsequent appeal of alleged errors that might have been, but were not, raised in the earlier appeal.

PHH Mortg. v. Nickerson , 164 Idaho 33, 38, 423 P.3d 454, 459 (2018) (internal quotations and citations omitted).

Smith's appeal seeks to revisit issues relative to the power of attorney that this Court decided in Smith I . Of the three issues presented in his opening brief, all three involve at least a partial attempt to relitigate the prior determination of this Court regarding "the irrevocable power of attorney." In Smith I , we stated in the body of the opinion:

Vernon contends he is authorized to sue on Victoria's behalf, citing his power of attorney. We are not persuaded. A power of attorney terminates once the principal dies. I.C. § 15-12-110(1)(a). Vernon's power of attorney, therefore, terminated at Victoria's death-roughly three months before the complaint was filed.

161 Idaho at 109-10, 383 P.3d at 1279-80.

The determination that the power of attorney terminated at the death of Smith's mother was necessary to reach the ultimate conclusion in Smith I that Smith was a real party in interest in the original case, at least for part of his appeal. To determine whether Smith was a real party in interest with regard to attorney fees, we had to analyze whether Victoria's death affected Smith's interest in the case at all. Although the Court determined that Smith was not a real party in interest regarding the original dismissal of the complaint, our determination that the power of attorney, irrevocable or not, had terminated upon Victoria's death, was critical to this Court's ultimate decision relative to the issue of attorney fees.

Since our holding relative to the power of attorney was necessary to the ultimate decision in Smith I , it is the law of the case. The "law of the case" doctrine therefore precludes Smith's attempt to relitigate these issues anew in this second appeal. See PHH Mortg. , 164 Idaho at 38, 423 P.3d at 459.

Without something like it, an adverse judicial decision would become little more than an invitation to take a mulligan, encouraging lawyers and litigants alike to believe that if at first you don't succeed, just try again.

Id . (quoting Entek GRB, LLC v. Stull Ranches, LLC , 840 F.3d 1239, 1240 (10th Cir. 2016) (internal quotation marks omitted) ).

We decline to offer Smith an opportunity for a mulligan on his arguments about the power of attorney. Thus, his attempt to relitigate the issues about the power of attorney is precluded by the law of the case.

B. The district court did not abuse its discretion when it awarded attorney fees under Rule 11.

Smith argues that the district court abused its discretion in making an award of attorney fees to TVSC through Rule 11 upon remand, since in the first hearing about awarding attorney fees before the appeal in Smith I , the court declined to award attorney fees under Rule 11. At the hearing before the first appeal, the district judge stated:

I am not comfortable that the procedure required by Rule 11, that is, the opportunity-the notice ... to withdraw a pleading and get out from under the potential sanction was followed in this case ... I'm going to decline to award fees under Rule 11.

Smith claims that this statement was binding upon TVSC and the district court in future actions because it was the "final decision of the lower court."

Smith also argues that Rule 11 sanctions cannot be imposed against him because procedural prerequisites were not followed by TVSC or the district court in awarding fees. He alleges TVSC needed to file a new motion requesting Rule 11 sanctions, based on the wording of the Rule as of July 1, 2016. He claims the initial motion which the district court relied on is insufficient because the district court denied Rule 11 sanctions at the original hearing regarding attorney fees. We disagree with both assertions.

First, Smith seeks to rely on the district court's erroneous reasoning in failing to award Rule 11 sanctions which was reversed by this Court in Smith I . We specifically noted that "the district court erred in its Rule 11 analysis" because

Rule 11 did not require notice and an opportunity to respond at the time of the hearing. The district court held the attorney fee hearing on July 28, 2014. But the amendment requiring notice and an opportunity to respond under Rule 11 did not become effective until July 1, 2016.

Smith I , 161 Idaho at 111 n.2, 383 P.3d at 1281 n.2.

Thus, Smith's claims are merely a regurgitation of what was argued and ruled upon by this Court previously. His attempts to relitigate this issue are therefore precluded by the "law of the case" doctrine.

Second, Smith's claim that TVSC needed to file another motion under the 2016 version of Rule 11 after remand likewise fails. Upon remand the district court noted that TVSC made a proper request for attorney fees based on Rule 11 as it existed at the time the request was made in 2014. The only reason the Rule 11 request for attorney fees was not granted by the district court at that time was because the district court committed a legal error by applying the wrong version of Rule 11 to its analysis. See id . The district court also recognized that to require TVSC to serve a separate motion and not file it for 21 days, per the 2016 rule, would be an exercise in futility, where the complaint had long been dismissed, with that decision affirmed in Smith I . We agree.

In the present case, the district court articulated that the case "should not have been brought in the fashion it was." The original filing (the complaint) was improper because the contentions contained within it were based on Smith's belief that he could proceed with the suit through his power of attorney, despite Victoria's death. Once the complaint was dismissed based on the termination of Smith's power of attorney with the death of his mother, continued pursuit of the litigation had no legal basis. As the district court aptly stated, "[t]he conduct to be sanctioned is the fostering of litigation without legal grounds by a person trained in the law."

Also, Smith's persistence in this appeal regarding the Rule 11 sanctions imposed by the district court came despite this Court's prior ruling that a new motion need not be filed to satisfy the notice requirement of Rule 11 as amended. We held that upon remand the district court was in no way limited "from considering all legal bases for awarding attorney fees." 161 Idaho at 111, 383 P.3d at 1281.

Thus, the district court did not abuse its discretion in awarding attorney fees under Rule 11. The district court correctly perceived the issue as one within its discretion, acted within the boundaries of that discretion (as evidenced by this Court's suggestion of Rule 11 sanctions in Smith 1 ), acted consistently with the legal standards provided by Rule 11 as it existed during the time the request for such was filed, and gave reasoning for doing so. We affirm the discretion of the district court in awarding attorney fees as Rule 11 sanctions.

C. Neither party is entitled to attorney fees on appeal.

Neither Smith nor TVSC are entitled to attorney fees on appeal. In order to be entitled to attorney fees on appeal, authority and argument establishing a right to fees must be presented in the first brief filed by a party with this Court. Kelley v. Yadon , 150 Idaho 334, 338, 247 P.3d 199, 203 (2011). Although it is the prevailing party, TVSC did not participate in this appeal, so no fees or costs may be awarded on that basis. Further, attorney fees can only be awarded to the prevailing party. Id. Since Smith is not the prevailing party on appeal, he is not entitled to an award of attorney fees.

VI. CONCLUSION

For the reasons set forth above, the judgment of the district court is affirmed. The district court did not abuse its discretion in awarding Rule 11 sanctions against Smith. We award no attorney fees or costs.

Chief Justice BURDICK, Justices BRODY, STEGNER and HORTON concur.

      We note parenthetically that placement of this holding in a footnote does not make this statement dicta. It related directly to the district courts error in misapplying the wrong version of Rule 11.