Nationstar Mortgage LLC v. Ferrer-Guerrero

NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
03-OCT-2024
10:47 AM
Dkt. 108 SO

NO. CAAP-XX-XXXXXXX

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAIʻI

NATIONSTAR MORTGAGE LLC,
Plaintiff/Counterclaim Defendant-Appellee,
v.
GUIA FERRER-GUERRERO,
Defendant/Counterclaimant-Appellant,
and
PARRISH PERFECTO GUERRERO; NAVY FEDERAL CREDIT UNION; and
EWA BY GENTRY COMMUNITY ASSOCIATION; Defendants-Appellees,
and
JOHN DOES 1-10; JANE DOES 1-10; DOE PARTNERSHIPS 1-10;
DOE ENTITIES 1-10; and DOE GOVERNMENTAL UNITS 1-10, Defendants

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CASE NO. 1CC141001061)

SUMMARY DISPOSITION ORDER
(By: Wadsworth, Presiding Judge, McCullen and Guidry, JJ.)

Defendant/Counterclaimant-Appellant Guia Ferrer-

Guerrero (Ferrer) appeals from the March 2, 2020 Findings of
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Fact and Conclusions of Law and Order (FOF/COL), and July 9,

2024 Amended Final Judgment (Amended Judgment) entered by the

Circuit Court of the First Circuit (circuit court).1 After a

bench trial, the Amended Judgment found Ferrer liable to

Plaintiff/Counterclaimant-Appellee Nationstar Mortgage LLC

(Nationstar) in the amount of $962,598.79 on a 2007 adjustable

rate promissory note (Note) and Mortgage.2

On appeal, Ferrer raises seven points of error,

contending that the circuit court erred in: (1) "denying

Ferrer's motion to file a new amended counterclaim"; (2)

"rejecting Ferrer's undisputed evidence of forgery of her

signature on the Promissory Note and mortgage"; (3) entering

"FOF Nos. 4, 6, 7, 8, 18, 19, 20, 44, and 45"; (4) rejecting

Ferrer's proposed FOF/COL; (5) entering "COL Nos. 6, 8, 9, 10,

11, 12, 13, 17, 18, 19, 20, 21, 22, 25, 26, 27, 28, 30, and 31";

(6) "granting judgment to Nationstar in the sum of $962,598.79

on the first amended complaint and also on the original

complaint"; and (7) entering judgment.

Upon careful review of the record and relevant legal

authorities, and having given due consideration to the arguments

1 The Honorable John M. Tonaki presided.

2 The Note was executed in July 2007, in favor of American Home
Mortgage Acceptance, Inc. (AHMA). The Mortgage, for the Ewa Beach property
owned by Ferrer and her husband, Parrish Perfecto Guerrero, was executed in
connection with the Note in favor of Mortgage Electronic Registration Systems
as nominee for AHMA; the Mortgage was unrecorded. Ferrer alleged below that
her signatures on the Note and Mortgage were forged.

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advanced and the issues raised by the parties, we resolve

Ferrer's points of error as follows:

(1) We review Ferrer's contention that the circuit

court erred in denying her leave to file an amended counterclaim

for abuse of discretion. Century Campus Hous. Mgmt., L.P. v.

Elda Hana, LLC, Nos. CAAP-XX-XXXXXXX and CAAP-XX-XXXXXXX, 2018

WL 637373, at *9 (Haw. App. Jan. 31, 2018) (mem. op.) (citing

Gonsalves v. Nissan Motor Corp. in Haw., Ltd., 100 Hawaiʻi 149,

158, 58 P.3d 1196, 1205 (2002)). Contrary to Ferrer's

contention, the circuit court did not abuse its discretion.

Hawaiʻi Rules of Civil Procedure (HRCP) Rule 13(f)

states that "[w]hen a pleader fails to set up a counterclaim

through oversight, inadvertence, or excusable neglect, or when

justice requires, the pleader may by leave of court set up the

counterclaim by amendment." In seeking leave to file a new

counterclaim,3 Ferrer's counsel attested that he had just entered

his appearance, and as a result of a meeting with Ferrer and her

initial counsel, "it became apparent" the counterclaim, which

sought relief based on allegations that Ferrer's signature on

the Note and Mortgage was forged, "was omitted unintentionally."

Ferrer filed a motion for leave to file a new

counterclaim on July 25, 2018; the motion was heard on

3 In June 2015, Ferrer filed a seven-count counterclaim. Ferrer
stipulated to dismiss her 2015 counterclaim with prejudice in April 2017.

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August 29, 2018. The discovery deadline was August 15, 2018,

which was prior to the hearing. The record reflects that the

allegedly forged signature was known to Ferrer from the time she

examined the original 2007 Note and Mortgage at Nationstar

counsel's office on July 28, 2015. Ferrer's December 24, 2015

pretrial statement gave notice that she would present her

testimony and expert witness testimony that "the signatures on

the Note and the Unrecorded Mortgage are not her signatures."

And Ferrer's answer to Nationstar's First Amended Complaint

denied allegations that she had signed the 2007 Note and

Mortgage, and affirmatively alleged that she did not execute

them.

We cannot conclude, on this record, that the circuit

court abused its discretion in denying Ferrer's 2018 motion to

file a new counterclaim. See Deutsche Bank Nat'l Tr. Co. v.

Kozma, 140 Hawaiʻi 494, 498, 403 P.3d 271, 275 (2017) ("An abuse

of discretion occurs where the court has clearly exceeded the

bounds of reason or disregarded rules or principles of law or

practice to the substantial detriment of a party litigant.")

(cleaned up).

(2) Ferrer contends that the circuit court erred by

rejecting "undisputed evidence" that her signature on the Note

and Mortgage was forged. Ferrer further contends that, because

the signature on the Note and Mortgage was forged, the Note and

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Mortgage were void and unenforceable. We review the circuit

court's evidentiary ruling for abuse of discretion. Kamaka v.

Goodsill Anderson Quinn & Stifel, 117 Hawaiʻi 92, 104, 176 P.3d

91, 103 (2008).

The circuit court did not abuse its discretion

because, even if we assume Ferrer's signature was unauthorized,

the circuit court made specific findings that support its

conclusion that Ferrer ratified the signature on the Note and

Mortgage.

Hawaii Revised Statutes (HRS) § 490:3-401(a) (2008)

provides that "[a] person is not liable on an instrument unless

(i) the person signed the instrument." However, HRS § 490:3-

403(a) (2008) further provides that "[a]n unauthorized signature

may be ratified for all purposes of this article." Id.

(emphasis added).

Comment 3 to the Uniform Commercial Code section 3-403

provides:

The last sentence of subsection (a) allows an unauthorized
signature to be ratified. Ratification is a retroactive
adoption of the unauthorized signature by the person whose
name is signed and may be found from conduct as well as
from express statements. For example, it may be found from
the retention of benefits received in the transaction with
knowledge of the unauthorized signature. Although the
forger is not an agent, ratification is governed by the
rules and principles applicable to ratification of
unauthorized acts of an agent.

Id. (emphasis added).

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The circuit court concluded that Ferrer ratified the

signature on the Note:

17. All of Defendant Ferrer's actions with respect to the
2007 Note, including her retention of the funds
conveyed to her by AHMA, her initial monthly payments
on the loan and her numerous letters to the
subsequent holder of the note, Bank of America N.A.,
prove by a preponderance of the evidence an
acceptance of the terms of the contract and a
ratification of the signature on the 2007 Note.

The circuit court's conclusions regarding ratification are

supported by the following findings, all of which Ferrer

effectively concedes:4

6. On July 9, 2007, Defendant Ferrer received the sum of
the loan proceeds from AHMA through escrow in the
amount of $577,500.00 for her use.

7. Defendant Ferrer knew and understood she was required
to repay the amounts she received from AHMA.

. . . .

13. Defendant Ferrer used approximately $98,000 in
proceeds from the 2007 loan from AHMA to pay Parrish
Perfecto Guerrero for his interest in 91-218 Pihapono
Place.

. . . .

21. From the closing of the Loan until approximately
January 2010, Defendant Ferrer made monthly payments
toward the Loan and 2007 Note.

22. Defendant Ferrer began facing financial difficulties
as evidenced by letters sent by Defendant Ferrer to
the servicer of the Loan.

4 FOFs 13, 21, 22, and 23 are unchallenged. Okada Trucking Co. v.
Bd. of Water Supply, 97 Hawaiʻi 450, 458, 40 P.3d 73, 81 (2002) ("Findings of
fact, however, that are not challenged on appeal are binding on the appellate
court."). FOFs 6 and 7, which are challenged by Ferrer on appeal, are
identical or nearly identical to undisputed facts 5 and 6 that the parties
stipulated to in the December 30, 2019 joint statement of undisputed facts.
"[F]acts within a stipulation are taken to be conclusive and binding upon the
parties, the trial judge and the appellate court." Dera Dev., LLC v.
Mitchell, No. CAAP-XX-XXXXXXX, 2013 WL 5385123, at *3 (Haw. App. Sept. 16,
2013) (mem. op.) (citation omitted).

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23. Defendant Ferrer sent a letter, dated July 8, 2009,
requesting a loan modification and stating that she
was worried about "paying [her] adjustable rate
mortgage payments since [her] divorce and [her] ex-
husband quit helping in paying" the mortgage.

A party ratifies a debt by signing a request for loan

modification. Bank of New York Mellon v. Spielman, No. CAAP-15-

0000648, 2020 WL 588139, at *3 (Haw. App. Feb. 6, 2020) (SDO).

Furthermore, "affirmance of an unauthorized transaction may be

inferred from a failure to repudiate it." Maui Fin. Co. v. Han,

34 Haw. 226, 230 (Haw. Terr. 1937) (concluding that the

defendant ratified his wife's signature on his behalf by not

objecting to it).

Here, the undisputed evidence in the record

demonstrates that Ferrer ratified the allegedly forged

signature. Ferrer stipulated that she received the benefit of

the $577,500 loan proceeds from AHMA and understood that she was

required to repay the amounts. She also requested a loan

modification. Moreover, she dismissed with prejudice her claim

for recission. We thus conclude that the circuit court did not

abuse its discretion in rejecting evidence of Ferrer's allegedly

forged signatures.

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(3) Ferrer challenges the circuit court's FOF/COL, on

the basis that they are erroneous5 and must be vacated because

Nationstar lacked standing. Specifically, Ferrer contends that

Nationstar failed to establish that it was in possession of a

validly signed note when the action commenced, and did not give

value to acquire the Note. Bank of Am., N.A. v. Reyes-Toledo,

139 Hawaiʻi 361, 367, 390 P.3d 1248, 1254 (2017) (holding that

the foreclosing party "must also [inter alia] prove its

entitlement to enforce the note and mortgage"). However, the

record reflects that Nationstar possessed the Note, pursuant to

its servicing agreement with the Note owner, and that the Note

owner gave value to acquire it.

The record reflects that Simon Ward Brown (Ward

Brown), Nationstar's corporate representative/witness6 testified

that when AHMA filed for bankruptcy, Bank of America became its

administrative agent, with authority to service and assign its

residential mortgage loans. In November 2013, Bank of America

sold a pool of loans to the SRP 2013-9 Funding Trust (the Trust)

5 Ferrer specifically challenges various FOFs and COLs, based on
her contention that her signature on the Note and Mortgage was forged. For
the reasons set forth herein, we conclude that error, if any, was harmless.

6 Ward Brown testified that the role of a corporate
representative/witness "entails working with [Nationstar's] in-house legal
department and retained outside counsel in reviewing our business records
with respect to litigated matters and ultimately appearing at settlement
conferences, mediations, depositions, and ultimately at trials if required to
testify."

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for $9,109,756.69. The Trust paid $155,356.68 for the Note and

Mortgage.

The servicing agreement between Nationstar and the

Trust authorizes Nationstar to pursue collection actions on

behalf of the Trust. Nationstar maintains a collateral file,

which shows it took possession of the original wet ink signature

Note on March 10, 2014, and held it in a vault, until sending it

to counsel's office on July 2, 2014. Nationstar's possession of

the original Note thus precedes the filing of the Complaint on

April 24, 2014.

On July 28, 2015, Ferrer examined the original 2007

Note at Nationstar's counsel's office. Nationstar's counsel

also brought the original 2007 Note to the courtroom at the time

of trial and made it available for inspection.

The Note is endorsed by AHMA in blank. HRS § 490:3-

205(b) (2008) provides that "[w]hen indorsed in blank, an

instrument becomes payable to bearer and may be negotiated by

transfer of possession alone until specially indorsed." HRS §

490:3-301 (2008) provides in part that, "'Person entitled to

enforce' an instrument means (i) the holder of the instrument."

On this record, we conclude that Nationstar, the servicing agent

for the owner Trust, and the entity with possession of the

ratified Note at the time of the filing of the Complaint, had

standing to bring this action.

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(4) Ferrer contends that the circuit court erred in

finding that she was unjustly enriched, and awarding Nationstar

$962,598.79 on that basis. Ferrer specifically asserts that

"Nationstar never benefitted Ferrer, therefore[,] the unjust

enrichment decision is reversible error." However, Ferrer's

contention lacks merit.

Nationstar was the agent of the Trust, and gave value

to acquire the Note. "An assignment operates to place the

assignee in the shoes of the assignor, and provides the assignee

with the same legal rights as the assignor had before the

assignment." Fireman's Fund Ins. Co. v. AIG Hawaiʻi Ins. Co.,

109 Hawaiʻi 343, 349, 126 P.3d 386, 392 (2006) (cleaned up).

Ferrer stipulated that she received the benefit of the AHMA loan

proceeds. The circuit court did not err in ruling that, if

Ferrer was not liable for breach of contract, she was unjustly

enriched.7

(5) Ferrer contends that the circuit court erred in

rejecting her proposed FOF/COL, and in entering judgment in

7 The circuit court ruled that Nationstar should be awarded damages
based on breach of contract but that, in the alternative, Ferrer has been
unjustly enriched. See COL 30 ("Plaintiff Nationstar has sustained a loss by
breach of the 2007 Note by Defendant Ferrer and, in the alternative,
Defendant Ferrer has been unjustly enriched by benefits conferred upon her
under that 2007 Note."). On that basis, the circuit court awarded Nationstar
$962,598.79 in damages for unpaid principal, interest, and escrow advance on
the Note.

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favor of Nationstar. For the reasons set forth supra, we need

not reach these remaining contentions.

For the foregoing reasons, we affirm the circuit

court's March 2, 2020 Findings of Fact and Conclusions of Law

and Order, and July 9, 2024 Amended Final Judgment.

DATED: Honolulu, Hawaiʻi, October 3, 2024.

On the briefs: /s/ Clyde J. Wadsworth
Presiding Judge
R. Steven Geshell,
for Defendant/ /s/ Sonja M.P. McCullen
Counterclaimant-Appellant. Associate Judge

Michael L. Lam, /s/ Kimberly T. Guidry
for Plaintiff/Counterclaim Associate Judge
Defendant-Appellee.

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