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U.S. Bank National Association v. McCoy

Court of Appeals of Oregon

February 28, 2018

U.S. BANK NATIONAL ASSOCIATION, as Trustee for the Structured Asset Investment Loan Trust, 2005-10, its successors in interest and/or assigns, Plaintiff-Respondent,
v.
Donald E. McCOY, III, aka Donald Eugene McCoy, III, Defendant-Appellant, and Virginia Lee McCOY, aka Virginia Lee McLaughlin; et al., Defendants.

          Argued and submitted October 25, 2016

         Jackson County Circuit Court 13CV03561; A159998 Timothy C. Gerking, Judge.

          Jeffrey A. Long argued the cause and fled the briefs for appellant.

          Valerie I. Holder argued the cause for respondent. On the brief were Molly J. Henry and Keesal, Young & Logan.

          Before DeHoog, Presiding Judge, and Egan, Chief Judge, and Aoyagi, Judge. [*]

         [290 Or. 526]Case Summary:

         In this judicial foreclosure action, defendant appeals an award of summary judgment to plaintiff. Defendant assigns error to the trial court's ruling denying his motion to strike the assertion, set forth in a declaration submitted by plaintiff, that plaintiff had possession of defendant's promissory note at the time that it commenced its foreclosure action.

         Held:

         The trial court erred in denying the motion to strike because a portion of the declaration consisted of inadmissible hearsay. Without that inadmissible evidence, the record did not establish that plaintiff was entitled to judgment as a matter of law.

         Reversed and remanded.

         [290 Or. 527] DEHOOG, P. J.

         In this judicial foreclosure action, defendant appeals an award of summary judgment to plaintiff and raises two assignments of error. In his first assignment, defendant argues that the trial court erred in denying his motion to strike the assertion, set forth in a declaration submitted by plaintiff, that plaintiff had possession of defendant's promissory note at the time that it commenced its foreclosure action. Defendant argues that the challenged assertion was inadmissible, because it was not based on the declarant's personal knowledge and because it was hearsay. Defendant further asserts that, without the inadmissible portion of its declaration, plaintiff could not establish its standing to enforce defendant's promissory note and, therefore, was not entitled to judgment as a matter of law. In his second assignment of error, defendant argues that factual disputes regarding the validity of the note's indorsement and plaintiff's corresponding entitlement to enforce the note precluded summary judgment. For the reasons that follow, we agree with defendant's contention that a portion of the declaration consists of inadmissible hearsay and that, without that inadmissible evidence, the record does not establish that plaintiff was entitled to judgment as a matter of law. Accordingly, we reverse and remand.[1]

         The facts material to defendant's appeal are largely procedural and undisputed. In 2005, defendant borrowed funds from BNC Mortgage, Inc. (BNC) to finance the purchase of a home. Defendant executed a promissory note payable to BNC and secured by a trust deed on the home. Defendant subsequently defaulted on the loan, giving rise to this foreclosure action. In 2009, following defendant's default, BNC assigned the trust deed and promissory note to plaintiff, a mortgage-backed trust, and recorded that assignment.

         Plaintiff filed the present action in 2013. Shortly thereafter, plaintiff moved for summary judgment on its foreclosure claim. See ORCP 47.[2] [290 Or. 528]

         To prevail on its foreclosure claim, plaintiff must show that the trust deed securing defendant's promissory note authorizes the remedy of foreclosure upon default; that defendant is in default under the terms of the loan; and that defendant failed to cure the default despite having had an opportunity to do so. Churchill v. Meade, 88 Or. 120, 124, 171 P 565 (1918) (stating those requirements for mortgage foreclosure); Deutsche Bank Trust Co. Americas v. Walmsley,277 Or.App. 690, 695, 374 P.3d 937 (2016) (a trust deed securing the sale of property may be judicially foreclosed in the same manner as a mortgage). Central to this appeal, plaintiff must also show that it is a party entitled to enforce the note. Deutsche Bank Trust Co. Americas, 277 Or.App. at 695. In this case, plaintiff sought to establish its authority to enforce the note through proof that it possessed the note when it filed for foreclosure. See ORS 73.0301 (a person entitled to enforce an instrument includes the "holder of the instrument"); ORS 71.2010(2)(u)(A) (a "[h]older" is a "person in possession of a negotiable instrument" (emphasis added)); Investment Service v. Martin Bros.,255 ...


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