Deutsche Bank Trust Company Americas v. Szymanski

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
31-JAN-2025
08:39 AM
Dkt. 150 SO

NOS. CAAP-XX-XXXXXXX AND CAAP-XX-XXXXXXX

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI#I

CAAP-XX-XXXXXXX
DEUTSCHE BANK TRUST COMPANY AMERICAS,
AS TRUSTEE FOR RESIDENTIAL ACCREDIT LOANS, INC.,
MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATES,
SERIES 2005-Q01, Plaintiff-Appellee,
v.
MICHAEL JON SZYMANSKI, Defendant-Appellant, and
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.,
AS NOMINEE FOR COUNTRYWIDE MORTGAGE VENTURES, LLC,
dba WESTERN PARADISE FINANCIAL; WAILEA COMMUNITY ASSOCIATION;
WAILEA PUALANI ESTATES HOMEOWNERS ASSOCIATION;
WELLS FARGO BANK, N.A. AS INDENTURE TRUSTEE
FOR GMACM HOME EQUITY LOAN TRUST 2002-HE1,
GMACM HOME EQUITY LOAN-BACKED TERM NOTES 2002-HE1,
Defendants-Appellees,
and
JOHN DOES 1-20; JANE DOES 1-20;
DOE CORPORATIONS 1-20; DOE ENTITIES 1-20; and
DOE GOVERNMENTAL UNITS 1-20, Defendants

MICHAEL JON SZYMANSKI, Counterclaimant-Appellant,
v.
DEUTSCHE BANK TRUST COMPANY AMERICAS,
AS TRUSTEE FOR RESIDENTIAL ACCREDIT LOANS, INC.,
MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATES,
SERIES 2005-Q01, Counterclaim Defendant-Appellee

AND
CAAP-XX-XXXXXXX
DEUTSCHE BANK TRUST COMPANY AMERICAS,
AS TRUSTEE FOR RESIDENTIAL ACCREDIT LOANS, INC.,
MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATES,
SERIES 2005-Q01, Plaintiff-Appellee,
v.
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

MICHAEL JON SZYMANSKI, Defendant-Appellant, and
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.,
AS NOMINEE FOR COUNTRYWIDE MORTGAGE VENTURES, LLC
dba WESTERN PARADISE FINANCIAL; WAILEA COMMUNITY ASSOCIATION;
WAILEA PUALANI ESTATES HOMEOWNERS ASSOCIATION;
WELLS FARGO BANK, N.A. AS INDENTURE TRUSTEE
FOR GMACM HOME EQUITY LOAN TRUST 2002-HE1,
GMACM HOME EQUITY LOAN-BACKED TERM NOTES 2002-HE1,
Defendants-Appellees,
and
JOHN DOES 1-20; JANE DOES 1-20;
DOE CORPORATIONS 1-20; DOE ENTITIES 1-20; and
DOE GOVERNMENTAL UNITS 1-20, Defendants

MICHAEL JON SZYMANSKI, Counterclaimant-Appellant,
v.
DEUTSCHE BANK TRUST COMPANY AMERICAS,
AS TRUSTEE FOR RESIDENTIAL ACCREDIT LOANS, INC.,
MORTGAGE ASSET-BACKED PASS-THROUGH CERTIFICATES,
SERIES 2005-Q01, Counterclaim Defendant-Appellee

APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUIT
(CASE NO. 2CC181000015)

SUMMARY DISPOSITION ORDER
(By: Hiraoka, Presiding Judge, Nakasone and McCullen, JJ.)

Michael Jon Szymanski appeals from the April 20, 2020
Judgment for Deutsche Bank Trust Company Americas entered by the
Circuit Court of the Second Circuit.1 Szymanski challenges the
circuit court's April 20, 2020 findings, conclusions, and order
granting foreclosure (the Foreclosure Decree); May 27, 2021 order
denying reconsideration; July 18, 2022 order denying his motion
to vacate the Judgment; and September 8, 2022 order denying
reconsideration.2 We vacate the Judgment, vacate in part and
affirm in part the Foreclosure Decree, and remand for further
proceedings.

1
The Honorable Rhonda I.L. Loo presided.
2
Judge Loo entered the April 20, 2020 and May 27, 2021 orders. The
Honorable Kirstin M. Hamman entered the July 18, 2022 and September 8, 2022
orders.

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NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

In 2005, Szymanski signed a promissory Note to
Homecomings Financial Network, Inc. The Note was secured by a
Mortgage on real property in Wailea, Maui. The Mortgage was
ultimately assigned to Deutsche Bank. Szymanski allegedly
defaulted on the Note in 2008. By letter dated September 30,
2014, Deutsche Bank notified Szymanski of his alleged default.
The letter told Szymanski he could cure his default by paying
$796,873.85 by November 4, 2014, plus other amounts that become
due after the date of the letter, and told him how to find out
the amount needed to cure his default.
Deutsche Bank filed a mortgage foreclosure complaint on
January 11, 2018. On April 20, 2020, the circuit court entered
the Foreclosure Decree and the Judgment. Szymanski appeals. He
argues that the circuit court erred procedurally and
substantively when it entered the Foreclosure Decree. We address
his procedural arguments first, then his dispositive substantive
argument.
(1) Szymanski contends Deutsche Bank's lawsuit was
barred by res judicata because an earlier foreclosure action by
Deutsche Bank's predecessor in interest was dismissed with
prejudice. In Aurora Loan Services LLC v. Szymanski,
No. CAAP-XX-XXXXXXX, 2024 WL 4814872 (Haw. App. Nov. 18, 2024)
(SDO), we affirmed the circuit court's ruling that the dismissal
was without prejudice. We held the dismissal was not a decision
on the merits. Claim preclusion does not bar Deutsche Bank's
lawsuit.
(2) Szymanski contends the circuit court erred by
entering the Foreclosure Decree without first determining the
specific amount he owed. His claim lacks merit.

To be entitled to a decree of foreclosure, the Bank
was required to prove [the mortgagor]'s default. It was not
required to prove the exact amount owed under the [Note]
until after the confirmation of the foreclosure sale.
Consequently, despite lacking the specific amount of
indebtedness, the [foreclosure] Decree is valid.

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Bank of Honolulu, N.A. v. Anderson, 3 Haw. App. 545, 550, 654
P.2d 1370, 1374 (1982).
(3) Szymanski contends Deutsche Bank's foreclosure
claim is time-barred because he defaulted in 2008, Deutsche Bank
sued him in 2018, and the statute of limitations for a default
under a promissory note is Hawaii Revised Statutes (HRS) § 657-1
(six years). Szymanski is correct that HRS § 657-1 applies to
actions to recover on a debt based on a contract. But "[a]
foreclosure action is a legal proceeding to gain title or force a
sale of the property for satisfaction of a note that is in
default and secured by a lien on the subject property." Bank of
Am., N.A. v. Reyes-Toledo, 139 Hawai#i 361, 368, 390 P.3d 1248,
1255 (2017). "[T]he statute of limitations on actions 'to
recover possession of any lands, or make any entry thereon,'
under HRS § 657-31 [is] most analogous to a foreclosure action,
as opposed to an action to recover a debt[.]" Bowler v.
Christiana Tr., No. CAAP-XX-XXXXXXX, 2018 WL 4659562, at *8 (Haw.
App. Sept. 28, 2018) (mem. op.), cert. denied, SCWC-XX-XXXXXXX,
2019 WL 951008 (Haw. Feb. 26, 2019).3 The limitation period
under HRS § 657-31 (2016) is twenty years. Deutsche Bank's
mortgage foreclosure action is not time-barred.
(4) Szymanski contends the circuit court erred by
granting Deutsche Bank's motion for summary judgment. We review
a circuit court's grant of summary judgment de novo. Nozawa v.
Operating Engineers Local Union No. 3, 142 Hawai#i 331, 338, 418
P.3d 1187, 1194 (2018). Szymanski argues that Deutsche Bank
didn't lay the foundation required to admit its documents under
U.S. Bank Trust, N.A. v. Verhagen, 149 Hawai#i 315, 326, 489 P.3d
419, 430 (2021) and Deutsche Bank National Trust Co. v. Yata, 152
Hawai#i 322, 331, 526 P.3d 299, 308 (2023). We agree that
foundation was lacking for the records Deutsche Bank incorporated
from Aurora Bank FSB.

3
We note that Deutsche Bank is not seeking a deficiency judgment
against Szymanski because his debt under the Note was discharged in
bankruptcy.

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Rebecca Wallace signed a declaration to authenticate
Deutsche Bank's documents. Wallace was authorized to sign her
declaration by Nationstar Mortgage LLC. Nationstar became
Deutsche Bank's servicing agent on July 1, 2012, and maintained
Deutsche Bank's records for Szymanski's loan. Nationstar took
over servicing from Aurora. "Nationstar took custody and control
of loan documents and business records of [Aurora] and
incorporated all such records into the business records of
Nationstar." Those incorporated records "are regularly used and
relied upon by Nationstar[.]"

[W]hen an entity incorporates records prepared by another
entity into its own records, they are admissible as business
records of the incorporating entity provided that it relies
on the records, there are other indicia of reliability, and
the requirements of [Hawaii Rules of Evidence (HRE)]
Rule 803(b)(6) are otherwise satisfied.

State v. Fitzwater, 122 Hawai#i 354, 367–68, 227 P.3d 520, 533–34
(2010).

Incorporated records are admissible under HRE Rule 803(b)(6)
when a custodian or qualified witness[4] 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, 414 P.3d
89, 97 (2018) (emphasis added).
Wallace's declaration satisfied the first two Behrendt
elements. As to circumstances indicating trustworthiness of the
incorporated documents, Wallace's declaration stated:

31. Before [Aurora]'s records were incorporated into
Nationstar's own business records, it conducted an
independent check into [Aurora]'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 [Aurora]'s records were made as part of a regularly

4
Wallace was a qualified witness because she had knowledge of
Nationstar's record-keeping system and Nationstar's incorporation of prior
loan servicers' documents. See Yata, 152 Hawai#i at 334 n.17, 526 P.3d at 311
n.17.

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conducted activity, met industry standards and determined to
be trustworthy.
. . . .
33. Nationstar's records and files, including those
integrated from prior servicers, are deemed trustworthy.
These records and files are deemed trustworthy because,
among other things, the mortgage servicing industry is a
heavily regulated industry, with the investors periodically
performing audits of Nationstar's business records, which
includes the prior servicer records.

. . . .
36. Nationstar has confirmed [Aurora]'s records were
properly boarded onto Nationstar's business records
otherwise the [Szymanski] loan would have been rejected and
would not have been activated for servicing.

In Verhagen, the loan servicer's declaration stated:

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.

149 Hawai#i at 326, 489 P.3d at 430 (emphasis added). 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
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. (emphasis added). The supreme court held the incorporated
records admissible under HRE Rule 803(b)(6). Id. at 327, 489
P.3d at 431.
In Yata, the loan servicers' declarations stated:

SLS maintains quality control and verification procedures as
part of the boarding process to ensure the accuracy of the
boarded records.

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152 Hawai#i at 325, 328, 526 P.3d at 302, 305. The supreme court
held:

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 (emphasis added) (citations omitted).
Here, Wallace's declaration made conclusory statements,
like the declarations in Yata. Wallace didn't explain what
"specific methods of validation" Nationstar used in its pre-
incorporation vetting to determine that Aurora's records were
made as part of a regularly conducted activity, met industry
standards, and were trustworthy. "[A]ffidavits that state
ultimate or conclusory facts cannot be used in support of or in
opposition to a motion for summary judgment." Nozawa, 142
Hawai#i at 338, 418 P.3d at 1194.
Wallace's declaration stated that Nationstar and
Deutsche Bank had "a contractual right of recourse against
[Aurora] for any loss or damage caused by [inaccuracies in
Aurora]'s records." Deutsche Bank argues that its right of
recourse establishes trustworthiness under Fitzwater, 122 Hawai#i
at 369, 227 P.3d at 535 (noting that "some courts have found it
significant that the entity that created the documents did so in
connection with a contractual obligation owed to the second
entity"). The argument is not persuasive. The situations
described in Fitzwater involved one party creating a record for
another party, or to document a service performed according to
the other party's requirements. Id. Here, Aurora didn't create

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its records for Nationstar, or to document a service it performed
according to Nationstar's requirements. Nationstar's ability to
recover contractual damages from Aurora is an unacceptable
alternative to Nationstar conducting its own due diligence review
before incorporating Aurora's records into its own. On this
record, we conclude that Wallace's declaration did not show
circumstances establishing that the information in Aurora's
records was trustworthy. See Yata, 152 Hawai#i at 335, 526 P.3d
at 312.
Szymanski allegedly defaulted on the Note in 2008, four
years before Nationstar began servicing his loan for Deutsche
Bank. Exhibit 11, the payment history for Szymanski's loan, has
information from before Nationstar took over the loan servicing.
Wallace's declaration did not explain what specific methods of
validation Nationstar used to make sure that information was
accurate. Exhibit 11 was not admissible under the HRE
Rule 803(b)(6) exception to the hearsay rule. Wallace's
testimony about Szymanski's default, being based on Exhibit 11,
was inadmissible hearsay. Having failed to show Szymanski's
default through admissible evidence,5 Deutsche Bank did not
satisfy its burden as summary judgment movant. Nozawa, 142
Hawai#i at 342, 418 P.3d at 1198.
But some documents created by Nationstar, and Wallace's
related declaration testimony, were admissible. Wallace stated
that Deutsche Bank had the original indorsed-in-blank Note when
the foreclosure complaint was filed on January 11, 2018.
Exhibit 3, on Nationstar's letterhead, showed that Nationstar
sent the original Note to Deutsche Bank's counsel one year before
the complaint was filed. Deutsche Bank's counsel's declaration
supporting the motion for summary judgment stated his law firm
still had the original Note. Deutsche Bank's own business
records showed it had standing to enforce the Note when the
action below was filed, as required under Bank of Am., N.A. v.

5
Szymanski's answer denied a default.

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Reyes-Toledo, 139 Hawai#i 361, 368, 390 P.3d 1248, 1255 (2017).
Finding of fact no. 13 in the Foreclosure Decree is affirmed.
Wallace also stated that written notice of default was
given to Szymanski. Exhibit 10, also on Nationstar's letterhead,
was a notice-of-default-and-right-to-cure letter dated
September 30, 2014, sent to Szymanski via certified mail.
Szymanski's opposition to Deutsche Bank's motion did not dispute
that the letter was mailed. Deutsche Bank showed it gave notice
of default, as required under Reyes-Toledo, 139 Hawai#i at 367-
68, 390 P.3d at 1254-55. The portion of finding of fact no. 20
in the Foreclosure Decree stating: "Due notice of the
acceleration of the Note was given to Borrower," is affirmed; the
remainder of finding of fact no. 20 is vacated.
We need not address Szymanski's other arguments. The
circuit court's April 20, 2020 "Findings of Fact, Conclusions of
Law and Order Granting Plaintiff's Motion for Summary Judgment
Against All Defendants and for Interlocutory Decree of
Foreclosure" is affirmed in part as stated above, and is
otherwise vacated; the April 20, 2020 "Judgment" is vacated; and
this case is remanded for further proceedings consistent with
this summary disposition order.
DATED: Honolulu, Hawai#i, January 31, 2025.

On the briefs:
/s/ Keith K. Hiraoka
Keith M. Kiuchi, Presiding Judge
for Appellant Michael
Jon Szymanski. /s/ Karen T. Nakasone
Associate Judge
Charles R. Prather,
Robin Miller, /s/ Sonja M.P. McCullen
Sun Young Park, Associate Judge
Peter T. Stone,
for Appellee Deutsche Bank
Trust Company Americas,
as Trustee for Residential
Accredit Loans, Inc., Mortgage
Asset-Backed Pass-Through
Certificates, Series 2005-Q01.

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