United States District Court, D. New Mexico
MEMORANDUM OPINION AND ORDER
matter comes before the Court upon Plaintiff Volt Asset
Holdings Trust XVI's (Volt) Motion for Summary Judgment,
Default Judgment, and for Order for Foreclosure Sale
(Motion), filed July 29, 2015. (Doc. 118). Volt seeks a
default judgment against Defendants Felix Joe Martinez Public
Trust and Southwest Financial Services, Inc., summary
judgment against pro se Defendants Marie and Felix
Martinez (the Martinezes), and a judgment and order of
foreclosure on the Martinezes' Mortgage, including the
appointment of a special master and an award of reasonable
attorneys' fees and costs. The Martinezes filed a
response on August 17, 2015, in which they (1) move to strike
Melinda Girardeau's Affidavit and Verification, and her
Affidavit Regarding Notice of Right to Cure Default,
including the attachments to those affidavits, (2) move to
dismiss the claims against Defendants Marie Martinez and
Felix Joe Martinez Public Trust for lack of personal
jurisdiction, and (3) oppose the motion for summary judgment.
(Doc. 121). Volt filed an amended reply on November 1, 2016.
considered the Motion, the accompanying briefs, and the
relevant law and evidence, the Court (1) denies the
Martinezes' request to strike Girardeau's affidavits,
(2) denies the Martinezes' request to dismiss the claims
against Defendants Marie Martinez and Felix Joe Martinez
Public Trust for lack of personal jurisdiction, (3) denies
Volt's request for an entry of default judgment against
Defendants Felix Joe Martinez Public Trust and Southwest
Financial Services, Inc., (4) grants summary judgment against
the Martinezes, (5) defers entering an order of foreclosure,
including the appointment of a special master, until the
Court determines the interests of Defendants Felix Joe
Martinez Public Trust and Southwest Financial Services, Inc.
in the subject property, and (6) defers ruling on Volt's
request for reasonable attorneys' fees and costs.
The Complaint for Foreclosure (Complaint)
a lawsuit to foreclose a mortgage on a Chimayo, New Mexico
property apparently refinanced by the Martinezes. On
September 13, 2006, Oak Street Mortgage loaned the Martinezes
$270, 000.00. (Doc. 1-1) at 8-10. The Note, attached to the
Complaint, contains an undated special indorsement from Oak
Street Mortgage payable to the order of Oak Street Mortgage
LLC. Id. at 10. The Note also contains an undated
blank indorsement from Oak Street Mortgage LLC which states
“pay to the order of.” Id. Donna J.
Parker signed both indorsements as an authorized signer for
Oak Street Mortgage and Oak Street Mortgage LLC. Id.
Street Mortgage secured the Note with a Mortgage on the
Chimayo property. Id. at 11-26. The Mortgage,
attached to the Complaint, names Mortgage Electronic
Registration Systems, Inc. (MERS) as a nominee for Oak Street
Mortgage and for Oak Street Mortgage's “successors,
and assigns.” Id. at 11. The Mortgage was
recorded with the Rio Arriba County Clerk on September 18,
1, 2012, MERS, as nominee for Oak Street Mortgage and its
successors and assigns, assigned the Mortgage to HSBC
Mortgage Services, Inc. (HSBC). Id. at 27. This
assignment, which is attached to the Complaint, was recorded
with the Rio Arriba County Clerk on June 4, 2012.
March 19, 2013, HSBC filed the Complaint to foreclose on the
Mortgage in state court. HSBC brought the Complaint against
the (1) Martinezes for defaulting on the Note, and (2) Felix
Joe Martinez Public Trust and Southwest Financial Services,
Inc., because they may claim an interest in the Chimayo
property. (Doc. 1-1) at 4-5, ¶¶ 14-15. HSBC alleges
that it was in possession of both the Note and the Mortgage
at the time it filed the Complaint. Id. at 2, ¶
8. On May 31, 2013, the Martinezes removed the state
foreclosure action to this Court. (Doc. 1).
January 14, 2014, HSBC assigned the Mortgage to Volt.
(Doc.118-1). The Court, subsequently, held that HSBC had
standing to bring this lawsuit and ordered that Volt be
substituted for HSBC as HSBC's successor in interest.
(Docs. 97 and 100). The Court further held that “once
[HSBC] physically transferred the Note to Volt, it became
holder of the Note with the right enforce both the Note and
the Mortgage.” (Doc. 100) at 6. Consequently, the Court
concluded that “Volt has standing to proceed as
Evidence Provided in Conjunction with the Motion
Girardeau's Affidavit and Verification
is a duly appointed representative of Caliber Home Loans,
Inc. (Caliber), Volt's mortgage servicer. (Doc. 118-1) at
1, ¶ 1. Girardeau's affidavit is based on her
familiarity with the Note and knowledge of the
“original books and records maintained” in
Caliber's office. Id. The “books and
records include data compilations of the [mortgage] payments
… and are kept in the course of a regularly conducted
business activity by Caliber Home Loans, Inc.”
Id. at 2-3, ¶ 1. Girardeau attests that it is
Caliber's regular practice to make payment entries
“at or near the time each payment is received or
amounts are paid by persons with knowledge of the information
being recorded.” Id. at 2, ¶ 1. Because
“[t]he original books of entry are contained in a
computer database, which is voluminous when printed out and
presented in its original form, ” Girardeau summarized
those records. Id.
also attests that the following documents attached to her
Affidavit and Verification are “true and correct copies
of the loan documents:” the Note (identical to the Note
attached to the Complaint), the Mortgage (identical to the
Mortgage attached to the Complaint), the assignment of the
Mortgage from MERS to HSBC (identical to the assignment
attached to the Complaint), the assignment of the Mortgage
from HSBC to Volt, and the payoff amounts through July 21,
2015. Id. at 2-3, ¶ 2.
Martinezes seek to strike this affidavit's attachments as
impermissible hearsay. The Federal Rules of Evidence, however,
provide an exception to the rule against hearsay for business
records. Federal Rule of Evidence 803(6) states that records
of actions are admissible if a “custodian or another
qualified witness” testifies that a
(A) the record was made at or near the time by-or from
information transmitted by- someone with knowledge;
(B) the record was kept in the course of a regularly
conducted activity of a business …;
(C) making the record was a regular practice of that
activity…. and the party opposing the admission of the
record “does not show that the source of information or
the method or circumstances of preparation indicate a lack of
described above, Girardeau, as Caliber's representative,
attests that she is familiar with the loan at issue and has
knowledge of the books and records maintained by Caliber
including data compilations created from payment entries made
at or near the time payments were received. The Court,
therefore, finds that Girardeau is a custodian or qualified
witness under Rule 803(6). Additionally, Girardeau attests
that it is Caliber's regular practice to keep these
records of payments in the course of its regularly conducted
business. These attestations comply with the business records
exception to the hearsay rule.
the Martinezes dispute the trustworthiness of Girardeau's
Affidavit and Verification. To demonstrate that lack of
trustworthiness, the Martinezes produced a copy of the Note
purportedly sent by Caliber to the Martinezes in November
2013, after HSBC filed the Complaint in March 2013 and after
Caliber began servicing the loan in June 2013. (Doc. 36-2) at
2-7. This copy of the Note, unlike the copy of the Note
attached to the Complaint and to Girardeau's Affidavit
and Verification, has a bar code at the bottom of the first
page and does not show the indorsements. Volt argues that the
Court should disregard the November 2013 copy of the Note on
the basis of hearsay and lack of authentication.
the Note produced in November 2013 contains statements not
made at a trial or hearing, the Martinezes do not offer it
“to prove the truth of the matter asserted in”
that Note. Rather, the Martinezes offer the copy of the Note
produced in November 2013 to show that it is different from
the one Girardeau produced and, thus, demonstrates the
untrustworthiness of Girardeau's Affidavit and
Verification. (Doc. 121-5) at 2, ¶ 3. Hence, the copy of
the Note produced in November 2013 is not hearsay.
See Rule 801(c).
so, under Fed.R.Evid. 901(a), the proponent of a document
must authenticate it by producing “evidence sufficient
to support a finding that the item is what the proponent
claims it is.” To determine whether a proponent has
authenticated a document, the Court “must ascertain
whether there is a reasonable probability that the evidence
has not been altered in any material aspect ….”
United States v. Brewer, 630 F.2d 795, 802 (10th
Cir. 1980). Here, the copy of the Note attached to the
Complaint in March 2013 preceded the November 2013 production
of the Note, and Girardeau attests and swears that the copy
of the Note she produced, the exact same copy as that
attached to the Complaint, is true and correct. In light of
this time line and Girardeau's attestations, there is a
reasonable probability the Note produced in November 2013 was
materially altered, i.e., the indorsements were omitted and a
bar code was added. The Court, therefore, does not accept the
copy of the Note produced in November 2013 as authentic and
will not consider it.
the Martinezes have not convinced the Court that Girardeau,
in making her attestations regarding the authenticity of the
loan documents, is somehow untrustworthy. Consequently, the
loan documents attached to Girardeau's Affidavit and
Verification are admissible under the business records
exception to the hearsay rule. The Court will, therefore, not
strike Girardeau's Affidavit and Verification and the
attached loan documents.
Note states that, in return for a loan, the Borrower, the
Martinezes, promises to pay the Lender, Oak Street Mortgage,
$270, 000.00, plus interest. (Doc. 118-3) at 4. In addition,
the Note states that the Lender may transfer the Note.
Id. “The Lender or anyone who takes this Note
by transfer” is the “Note Holder.”
Note further indicates that the interest is 9.450% per year
and that this interest rate applies “both before and
after any default….” Id. Monthly
payments are $2, 260.46 per month until the maturity date in
2036. Id. The Note also provides for late charges
for overdue payments. Id. at 5. If the Borrower does
“not pay the full amount of each monthly payment on the
date it is due, ” the Borrower is in default.
Note Holder may also send a defaulting Borrower written
notice that, if the Borrower does not pay the overdue amount
by a certain date, the Note Holder can require immediate
payment of the unpaid principal and interest. Id. In
that situation, the Note Holder has the right to be paid back
“all of its costs and expenses in enforcing [the] Note
to the extent not prohibited by applicable law.”
Id. Those expenses include “reasonable
attorneys' fees.” Id. The Note further
states that a mortgage, dated the same date as the Note,
protects the Note Holder from losses which might result if
the Borrower does not adhere to the terms of the Note.
Id. The Note also shows a special indoresement from
Oak Street Mortgage to Oak Street Mortgage LLC and a blank
indorsement from Oak Street Mortgage LLC. Id. at 6.
The Martinezes do not dispute that they signed the Note.
Mortgage, as a security instrument, secures to the Lender,
Oak Street Mortgage, repayment of the Note and the
Borrower's, the Martinezes, performance of the Note and
Mortgage. (Doc. 1-1) at 13. To do this, the Borrower
mortgaged, granted, and conveyed the Chimayo property to
“MERS (solely as nominee for Lender and Lender's
successors and assigns) and to the successors and assigns of
MERS….” Id. The Borrower agreed,
pursuant to the Mortgage, to maintain the property.
Id. at 17. In addition, the Borrower's
obligations and liability are joint and several. Id.
the Borrower fail to perform as agreed in the Mortgage, the
“Lender may do and pay for whatever is reasonable or
appropriate to protect Lenders' interest in the Property
and rights under” the Mortgage, including, inter
alia, “assessing the value of the Property,
” “appearing in court, ” and “paying
reasonable attorneys' fees.” Id. at 18.
“Any amounts disbursed by Lender” to protect its
interest in the property and rights under the Mortgage
“shall become additional debt of” the Borrower
secured by the Mortgage. Id. “These amounts
shall bear interest at the Note rate from the date of
disbursement and shall be payable, with such interest, upon
notice from Lender to Borrower requesting payment.”
the Borrower default on the Note,
Lender may charge Borrower fees for services performed in
connection with Borrower's default, for the purpose of
protecting Lenders' interest in the Property and rights
under this [Mortgage], including, but not limited to,
attorneys' fees, property inspection and valuation fees.
In regard to any other fees, the absence of express authority
in this [Mortgage] to charge a specific fee to Borrower shall
not be construed as a prohibition on the charging of such
fee. Lender may not charge fees that are expressly prohibited
by this [Mortgage] or by Applicable Law.
Id. at 21. Upon default, the Lender can accelerate
payment of the Note provided the Lender gives the Borrower
notice (1) of the default, (2) of what can be done to cure
the default, (3) of a date (more than 30 days from the date
of the notice) to cure the default, and (4) that failure to
cure the default by the specified date may result in
acceleration of payment of the Note, foreclosure, and sale of
the property. Id. at 23. If the default is not cured
by the specified date, the Lender may require immediate
payment of the Note in full “without further demand and
may foreclose” the Mortgage “by judicial
proceeding.” Id. In that event, Lender is
“entitled to collect all expenses incurred in pursing
the remedies provided in [the Mortgage], including, but not
limited to, reasonable attorneys' fees and costs of title
Borrower has the right to discontinue the enforcement of the
Mortgage by paying the Lender all sums owed including
“expenses incurred in enforcing [the Mortgage],
including, but not limited to, reasonable attorneys'
fees, property inspection and valuation fees, and other fees
incurred for the purpose of protecting Lender's interest
in the Property and rights under [the
Mortgage]….” Id. at 22. The Lender may
require the Borrower to pay those sums and expenses with
certified funds instead of with cash. Id.
Mortgage further states that the Note and Mortgage “can
be sold one or more times without prior notice to
Borrower” and might result in a change in the servicer,
the entity that collects the payments due under the Mortgage
and performs other mortgage loan servicing obligations.
Id. at 22.
Martinezes duly signed the Mortgage and the Mortgage was
recorded with the Rio Arriba County Clerk. Id. at
The Assignment of the Mortgage from MERS, as Nominee for Oak
Street Mortgage and its Successors and Assigns, to HSBC
2012, MERS, as nominee for Oak Street Mortgage and its
successors and assigns, transferred the Mortgage to HSBC.
(Doc. 1-1) at 27. This assignment was recorded with the Rio
Arriba County Clerk. Id.
The Assignment of the Mortgage ...