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COURT OF APPEALS
DECISION
DATED AND FILED
March 24, 2011
A.
John Voelker
Acting Clerk of Court of Appeals
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NOTICE
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This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official
Reports.
A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See Wis. Stat. § 808.10 and Rule 809.62.
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Appeal No.
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STATE OF WISCONSIN
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IN COURT OF
APPEALS
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DISTRICT IV
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Aurora Loan
Services LLC,
Plaintiff-Respondent,
v.
David J. Carlsen and Nancy L. Carlsen,
Defendants-Appellants.
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APPEAL
from a judgment of the circuit court for Rock County: james
welker, Judge. Reversed.
Before Vergeront, P.J., Lundsten and Blanchard, JJ.
¶1 LUNDSTEN, J. This appeal involves a foreclosure
action initiated by Aurora Loan Services against David and Nancy Carlsen. Following a court trial, the circuit court
granted judgment of foreclosure in favor of Aurora,
finding that Aurora
is the holder of the note and owner of the mortgage and that the Carlsens were
in default. We conclude that the circuit
court’s finding that Aurora
was the holder of the note, a finding essential to the judgment, is not supported
by admissible evidence. We therefore reverse
the judgment.
Background
¶2 Aurora Loan Services brought a foreclosure suit against David
and Nancy Carlsen, alleging that Aurora
was the holder of a note and owner of a mortgage signed by the Carlsens
encumbering the Carlsens’ property. The
Carlsens denied several allegations in the complaint and, especially pertinent
here, denied that Aurora
was the holder of the note. Aurora moved for summary
judgment, but that motion was denied.
¶3 A trial to the court was held on June 9, 2010. Aurora called one of its employees, Kelly
Conner, as its only witness. Aurora
attempted to elicit testimony from Conner establishing a foundation for the
admission of several documents purportedly showing that Aurora was the holder
of a note that obligated the Carlsens to make payments and that the Carlsens
were in default. It is sufficient here
to say that the Carlsens’ attorney repeatedly objected to questions and answers
based on a lack of personal knowledge and lack of foundation, and that the
circuit court, for the most part, sustained the objections. Aurora’s
counsel did not move for admission of any of the documents into evidence. After the evidentiary portion of the trial,
and after hearing argument, the circuit court made findings of fact and entered
a foreclosure judgment in favor of Aurora.
The Carlsens appeal. Additional facts will be presented below as
necessary.
Discussion
¶4 It is undisputed that, at the foreclosure trial, Aurora had the burden of proving, among other things, that
Aurora was the current “holder” of a note
obligating the Carlsens to make payments to Aurora.
Because Aurora was not the original note
holder, Aurora
needed to prove that it was the current holder, which meant proving that it had
been assigned the note. There appear to
be other failures of proof, but in this opinion we focus our attention solely
on whether Aurora presented evidence supporting
the circuit court’s findings that “the business records of Aurora Loan Services
show ... a chain of assignment of that ... note” and that “Aurora is the holder of the note.”
¶5 As to assignment of the note, the Carlsens’ argument is
simple: the circuit court’s findings are
clearly erroneous because there was no admissible evidence supporting a finding
that Aurora had
been assigned the note. The Carlsens
contend that, during the evidentiary portion of the trial, the circuit court
properly sustained objections to Aurora’s
assignment evidence, but the court then appears to have relied on mere argument
of Aurora’s
counsel to make factual findings on that topic.
We agree.
¶6 We focus our attention on a document purporting to be an
assignment of the note and mortgage from Mortgage Electronic Registration
Systems to Aurora. At trial, this document was marked as Exhibit
D. Although Aurora’s counsel seemed to suggest at one
point that certain documents, perhaps including Exhibit D, were certified, the
circuit court determined that the documents were not certified. Under Wis.
Stat. § 889.17,
certified copies of certain documents are admissible in evidence based on the
certification alone. Aurora does not contend that Exhibit D is
admissible on this basis.
¶7 Aurora argues that Conner’s
testimony is sufficient to support the circuit court’s finding that Aurora had been assigned
the note. Our review of her testimony,
however, reveals that Conner lacked the personal knowledge needed to
authenticate Exhibit D. See Wis. Stat. § 909.01 (documents
must be authenticated to be admissible, and this requirement is satisfied “by
evidence sufficient to support a finding that the matter in question is what
its proponent claims”). Relevant here, Conner
made general assertions covering several documents. Conner either affirmatively testified or
agreed to leading questions with respect to the following:
·
She works for Aurora.
·
She “handle[s] legal files” and she “attend[s]
trials.”
·
“Aurora
provided those documents that are in [her] possession.”
·
She “reviewed the subject file” in preparing for
the hearing.
·
She declined to agree that she is the “custodian
of records for Aurora.”
·
She “look[s] at documentation ... [does] not
physically handle original notes and documents, but [she does] acquire documentation.”
·
“Aurora
[is] the custodian of records for this loan.”
·
She is “familiar with records that are prepared
in the ordinary course of business.”
·
She has “authority from Aurora
to testify as to the documents, of [Aurora’s]
records.”
As it specifically pertains to Exhibit
D, the document purporting to evidence the assignment of the note and mortgage
from Mortgage Electronic Registration Systems to Aurora, Conner testified:
·
Aurora
has “possession of Exhibit D.”
·
Exhibit D is “an assignment of mortgage.”
With respect to possession of Exhibit
D, Conner did not assert that Exhibit D was an original or that Aurora had possession of
the original document. For that matter,
Conner did not provide a basis for a finding that any original document she
might have previously viewed was what it purported to be.
¶8 Thus, Conner did no more than identify herself as an Aurora
employee who was familiar with some unspecified Aurora documents, who had reviewed
some Aurora documents, and who had brought some documents, including Exhibit D,
to court. Although Conner was able to
say that Exhibit D, on its face, was an assignment, she had no apparent
personal knowledge giving her a basis to authenticate that document. See
Wis. Stat. § 909.01.
¶9 Aurora
points to various provisions in Wis.
Stat. chs. 401 and 403, such as those relating to the definition of a
“holder” (Wis. Stat. § 401.201(2)(km)),
to a person entitled to enforce negotiable instruments (Wis. Stat. § 403.301), and to the assignment of
negotiable instruments (Wis. Stat. §§ 403.203,
403.204, and 403.205). This part of Aurora’s argument addresses the underlying substantive law
regarding persons entitled to enforce negotiable instruments, such as the type
of note at issue here, but it says nothing about Aurora’s proof problems. That is, Aurora’s discussion of the
underlying law does not demonstrate why Exhibit D was admissible to prove that
Aurora had been assigned the note and was, under the substantive law Aurora
discusses, a party entitled to enforce the note.
¶10 Similarly, Aurora
discusses the relationship between a note and a mortgage and, in particular,
the equitable assignment doctrine. But
here again Aurora’s discussion fails to come to grips with Aurora’s failure to
authenticate Exhibit D, the document purporting to be an assignment of the note
to Aurora. Aurora
points to testimony in which Conner asserted that Aurora acquired and possessed Exhibit D, but
possession of Exhibit D is meaningless without authentication of the exhibit.
¶11 Aurora
argues that we may look at the “record as a whole,” including summary judgment
materials, to sustain the circuit court’s factual findings. Thus, for example, Aurora asks us to consider an affidavit filed
with its summary judgment motion. In that
affidavit, an Aurora senior vice-president avers
that the note was assigned to Aurora, that the
assignment was recorded with the Rock County Register of Deeds, and that Aurora is the holder of
the note. This argument is
meritless. Aurora was obliged to present its evidence at trial. It could not rely on the “record as a whole”
and, in particular, it could not rely on summary judgment materials that were
not introduced at trial. See Holzinger
v. Prudential Ins. Co., 222 Wis.
456, 461, 269 N.W. 306 (1936). For that
matter, even if Aurora
had, at trial, proffered the affidavit of its senior vice-president, the
affidavit would have been inadmissible hearsay. See Wis. Stat. § 908.01(3) (“‘Hearsay’
is a statement, other than one made by the declarant while testifying at the
trial or hearing, offered in evidence to prove the truth of the matter
asserted.”).
¶12 In sum, Aurora
failed to authenticate Exhibit D, the document purporting to be an assignment
of the note. Thus, regardless of other
alleged proof problems relating to that note and the Carlsens’ alleged default,
the circuit court’s finding that Aurora
was the holder of the note is clearly erroneous—no admissible evidence supports
that finding. Aurora failed to prove its case, and it was
not entitled to a judgment of foreclosure.
By the Court.—Judgment reversed.
Not
recommended for publication in the official reports.