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SJC of Maine Vacates SJ No Mention of MERS in Note, HSBC failed to include any facts to “properly presented proof of… all assignments and endorsements of the note

SJC of Maine Vacates SJ No Mention of MERS in Note, HSBC failed to include any facts to “properly presented proof of… all assignments and endorsements of the note


MAINE SUPREME JUDICIAL COURT

HSBC BANK USA, N.A., AS TRUSTEE UNDER THE POOLING AND
SERVICING AGREEMENT DATED AS OF DECEMBER 1, 2005, FREMONT
HOME LOAN TRUST 2005-E

v.

JANELLE GABAY

EXCERPT:

[¶1] Janelle Gabay appeals from a summary judgment entered in the District
Court (Bridgton, Powers, J.) in favor of HSBC Bank USA, N.A., as Trustee under
the Pooling and Servicing Agreement dated as of December 1, 2005, Fremont
Home Loan Trust 2005-E, on HSBC’s complaint for foreclosure and sale pursuant
to 14 M.R.S. §§ 6321-6325 (2010).1 Gabay argues that HSBC’s motion for
summary judgment should have been denied because HSBC’s statement of
material facts left unresolved genuine issues of material fact as to (1) whether
HSBC is the owner and holder, pursuant to a valid endorsement, of the promissory
note due to HSBC’s failure to present adequate evidence of such; (2) the order of
priority among creditors; (3) the sufficiency of identification of the court costs that
HSBC sought to collect; and (4) the identification of the premises to be foreclosed
upon. Because genuine issues of material fact exist, we vacate the judgment and
remand for further proceedings.

[…]

II. LEGAL ANALYSIS

[¶8] We review a grant of summary judgment de novo, viewing the
evidence in the light most favorable to the nonmoving party to determine “whether
the parties’ statements of material facts and the referenced record evidence reveal a
genuine issue of material fact.” JPMorgan Chase Bank v. Harp, 2011 ME 5, ¶ 15,
10 A.3d 718. In so doing, we consider only the material facts set forth, and the
portions of the record referred to, in the statements of material facts. Salem
Capital Grp., LLC v. Litchfield, 2010 ME 49, ¶ 4, 997 A.2d 720. In summary
judgment practice, the court “is neither required nor permitted to independently
search a record to find support for facts offered by a party.” Levine v. R.B.K. Caly
Corp., 2001 ME 77, ¶ 9, 770 A.2d 653. A party’s motion for summary judgment
may not be granted if that party fails to properly put the material facts before the
court, “regardless of the adequacy, or inadequacy, of the nonmoving party’s
response.” Id. ¶ 5.

[¶9] HSBC contends that it need not properly identify which paragraph of a
supporting record reference is the basis for a particular statement of material fact
when (i) the supporting record is included in its entirety in the summary judgment
record, or (ii) the critical paragraph in the record has been cited to support a
different material fact. However, our rules require that each statement of material
fact must directly refer the court to “the specific portions of the record from which
each fact is drawn.” Id. ¶ 9; M.R. Civ. P. 56(h)(1), (4). We have repeatedly noted
the importance of applying the summary judgment rules strictly in the context of
mortgage foreclosures. See HSBC Mortg. Servs., Inc. v. Murphy, 2011 ME 59, ¶ 9,
19 A.3d 815; JPMorgan Chase Bank, 2011 ME 5, ¶ 15, 10 A.3d 718.

[¶10] “In residential mortgage foreclosure actions, certain minimum facts
must be included in a mortgage holder’s statement of material facts on summary
judgment.” HSBC Mortg. Servs., 2011 ME 59, ¶ 9, 19 A.3d 815; see also M.R.
Civ. P. 56(j). To support a summary judgment motion in a residential mortgage
foreclosure action, the mortgage holder must include, at a minimum, the following
facts in its statement of material facts, each supported by evidence of a quality that
could be admissible at trial:

(1) The existence of the mortgage, including the book and page
number of the mortgage, and an adequate description of the
mortgaged premises, including the street address, if any;

(2) Properly presented proof of ownership of the mortgage note and
the mortgage, including all assignments and endorsements of the note
and the mortgage;

(3) A breach of condition in the mortgage;

(4) The amount due on the mortgage note, including any reasonable
attorney fees and court costs;

(5) The order of priority and any amounts that may be due to other
parties in interest, including any public utility easements;

(6) Evidence of properly served notice of default and mortgagor’s
right to cure in compliance with statutory requirements;

(7) After January 1, 2010, proof of completed mediation (or waiver or
default of mediation), when required, pursuant to the statewide
foreclosure mediation program rules; and

(8) If the homeowner has not appeared in the proceeding, a statement,
with a supporting affidavit, of whether or not the defendant is in
military service in accordance with the Servicemembers Civil Relief
Act.

HSBC Mortg. Servs., 2011 ME 59, ¶ 9 n.6, 19 A.3d 815; Chase Home Fin. LLC v.
Higgins, 2009 ME 136, ¶ 11, 985 A.2d 508; see also M.R. Civ. P. 56(j) (providing,
among other things, that a summary judgment may not be entered in a foreclosure
action unless it is determined that “the plaintiff has properly certified proof of
ownership of the mortgage note and produced evidence of the mortgage note, the
mortgage, and all assignments and endorsements of the mortgage note and the
mortgage”).

[¶11] Our analysis focuses on the first, second, fourth, and fifth
requirements listed above. We begin our discussion with the second requirement.
A. Ownership and Endorsement of the Note

[¶12] As noted above, HSBC is required to include the following
properly-supported facts in its statement of material facts: “properly presented
proof of ownership of the mortgage note . . . , including all assignments and
endorsements of the note . . . .” HSBC Mortg. Servs., 2011 ME 59, ¶ 9 n.6, 19
A.3d 815; Chase Home Fin., 2009 ME 136, ¶ 11, 985 A.2d 508.

[¶13] In its statement of material facts, HSBC asserts that it is the “current
holder of the Note,” citing to paragraph seven of its complaint and to paragraph
four of the Lender affidavit. There are multiple deficiencies in this statement of
material fact as it concerns proof of ownership of the note.

[¶14] First, neither of the citations included to support the bare factual
statement that HSBC is the current holder of the note properly supports that factual
statement. The cited paragraph of the Lender’s affidavit refers only to HSBC’s
being the current holder of the mortgage. The cited paragraph of the complaint
asserts that “[HSBC] is the current holder of the Note and Mortgage by virtue of an
assignment dated on or about December 22, 2008.” However, the assignment
expressly referred to in that averment, which assignment was not attached to the
complaint but which is included in the summary judgment record, did not assign
the note to HSBC. The December 22, 2008, assignment, entitled “ASSIGNMENT
OF MORTGAGE,” assigned MERS’s interest in the mortgage, but not the note, to
HSBC.8

[¶15] While an averment in a complaint that a defendant has failed to deny
is generally deemed admitted, see M.R. Civ. P. 8(d), the statement in HSBC’s
complaint that it is the current holder of the note pursuant to the December 22,
2008, assignment is not sufficiently supported in the context of a residential
mortgage foreclosure proceeding. When, as here, the mortgage-holder must
strictly comply with the requirements of 14 M.R.S. §§ 6321-6325 and M.R. Civ. P.
56(j), the paragraph of HSBC’s complaint cited in support of HSBC’s statement of
material facts providing that it is the current holder of the note does not properly
support that fact.

[¶16] An additional deficiency in HSBC’s statement of material facts is that
HSBC failed to include any facts relating to “properly presented proof of . . . all
assignments and endorsements of the note.” Chase Home Fin., 2009 ME 136,
¶ 11, 985 A.2d 508. HSBC was required to provide such proof, as it is undisputed
that the note was originally executed and delivered to Fremont Investment. HSBC
suggests in its brief, but does not specify in its statement of material facts, that the
summary judgment record contains evidence of a valid endorsement of the note to
HSBC including (1) paragraph two of the Lender’s affidavit, which states that
HSBC holds the note pursuant to a special endorsement, and (2) a copy of the
purported endorsement itself, included in the record as a separate page
accompanying, but not discernably affixed to, a photocopy of the note. Because
the statement of material facts contains no fact concerning properly presented
proof as to any endorsement of the note, however, much less a statement supported
by proper record references, we will not independently search the record to find
such evidence, see id. ¶ 12 n.4; Levine, 2001 ME 77, ¶ 9, 770 A.2d 653, and HSBC
would not be entitled to judgment as a matter of law.

[¶17] Our statement that we will not, and trial courts should not,
independently search a record to find evidence to support a party’s claim when that
claim is insufficiently referenced in that party’s statement of material facts is no
mere technicality to make summary judgment practice more difficult. Certainly in
each individual case it can be argued, as HSBC argues here, that review of the
entire record, with the specific facts now identified in the brief on appeal,
demonstrates that there really is no material fact in dispute. Such arguments
illustrate the need to identify material facts with specific citations to the record in
the statement of material facts filed in the trial court. If an essential fact can be
stated, with a proper record reference, in a brief on appeal, that fact could have and
should have been stated, with a proper record reference, in the statement of
material facts filed in the trial court. Before easy identification by brief on appeal,
the information to make an inadequate statement of material facts complete may
have been locatable only by a search of a record of fifty, one hundred, or more
pages. Placing every material fact in the statement of material facts, with a proper
record citation, as the rules require, avoids the necessity for such a time-consuming
search. Trial courts, who may have to consider multiple motions for summary judgment
at a time, could be considerably burdened searching for facts through
hundreds of pages of records, if the rules requiring complete, properly supported
statements of material facts are not enforced on appeal.

[¶18] Because HSBC’s statement of material facts fails to properly present
proof of ownership of the mortgage note, including all assignments and
endorsements of the note, genuine issues of material fact regarding HSBC’s
ownership of the note exist, precluding entry of judgment as a matter of law.

[…]

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