SUMMARY DISPOSITION ORDER
This appeal arises from U.S. Bank National Association as Trustee for CSMC Mortgage Loan Trust 2006-7s (“U.S. Bank”) motion for summary judgment and interlocutory decree of foreclosure (“MSJ”) against Watoshina Lynn Compton (“Compton”).
U.S. Bank initiated foreclosure proceedings against Compton in January 2017. In February 2018, U.S. Bank moved for summary judgment. U.S. Bank supported its MSJ with loan documents, including a promissory note (the “Note”) executed by Compton in favor of Countrywide Home Loans, Inc. (“Countrywide”). Two declarations also supported U.S. Banks MSJ. Carol Davis, an employee of Nationstar Mortgage LLC, U.S. Banks loan servicer, prepared one; Gina Santellan, a custodian of records for U.S. Banks counsel wrote the other.
The circuit court granted U.S. Banks motion. It entered judgment for U.S. Bank. Compton appealed. On appeal, Compton argued that because U.S. Bank had not established its possession of the Note at the time it filed its complaint, the circuit court had erred in concluding U.S. Bank had standing to sue. The ICA agreed. It ruled that because neither Davis nor Santellan could speak to the record-keeping practices of the Notes creator, Countrywide, the Note could not be admitted under the business records exception to the hearsay rule. Given the inadmissibility of the Note, the ICA concluded, U.S. Bank was not entitled to summary judgment: there was a “genuine issue of material fact as to whether U.S. Bank had standing to initiate this foreclosure action when it was commenced.”
On certiorari, U.S. Bank presents two questions: (1) “To introduce a promissory note into evidence, must a creditor satisfy the business records exception to the hearsay rule?” and (2) “If a party incorporates a third partys records into its own, must it present testimony about the third partys record-keeping in order to satisfy the business records exception?”
We answered these questions in U.S. Bank v. Verhagen, SCWC-17-0000746 (Haw. June 21, 2021).
As we explained in Verhagen, promissory notes are not hearsay because they have independent legal significance. Here, U.S. Bank presented the Note to establish Comptons legal obligation to the Notes holder. The Note was therefore not hearsay and need not fall within an exception to the hearsay rule to be admissible.
Our opinion in Verhagen also explained that under the incorporated records doctrine, the foundation for the admission of business records incorporated into the records of a receiving business can, in certain cases, be established by testimony from a custodian or other witness qualified to testify about the record-keeping practices of the incorporating business. The ICA thus erred in ruling that the Note was inadmissible absent testimony about its creators record-keeping systems.
Accordingly, we hold the ICA erred in reversing the circuit courts grant of summary judgment to U.S. Bank. We vacate the ICAs memorandum opinion and judgment on appeal. We remand this matter to the circuit court for a determination of whether U.S. Bank has submitted admissible evidence that collectively shows it is entitled to summary judgment against Compton. In making this determination, the circuit court shall apply the incorporated records doctrine as outlined in State v. Behrendt, 124 Hawai‘i 90, 237 P.3d 1156 (2010), and clarified in Verhagen.