Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Lisse v. Select Portfolio Servicing, Inc.

United States District Court, W.D. Wisconsin

December 5, 2017

SONDRA KAY LISSE, Appellant,
v.
SELECT PORTFOLIO SERVICING, INC., and HSBC BANK USA, NATIONAL ASSOCIATION, AS TRUSTEE, IN TRUST FOR THE REGISTERED HOLDERS OF ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2006-NC3, ASSET BACKED PASS-THROUGH CERTIFICATES, Appellees. SONDRA KAY LISSE, Appellant,
v.
SELECT PORTFOLIO SERVICING, INC., and HSBC BANK USA, NATIONAL ASSOCIATION, AS TRUSTEE, IN TRUST FOR THE REGISTERED HOLDERS OF ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2006-NC3, ASSET BACKED PASS-THROUGH CERTIFICATES, Appellees. SONDRA KAY LISSE, Appellant,
v.
SELECT PORTFOLIO SERVICING, INC., and HSBC BANK USA, NATIONAL ASSOCIATION, AS TRUSTEE, IN TRUST FOR THE REGISTERED HOLDERS OF ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2006-NC3, ASSET BACKED PASS-THROUGH CERTIFICATES, Appellees.

          OPINION & ORDER

          JAMES D. PETERSON DISTRICT JUDGE.

         This is a consolidated bankruptcy appeal. Appellant Sondra Lisse and her husband, Steven Lisse, mortgaged their home, and the mortgage was later assigned to appellee HSBC Bank USA, National Association. The Lisses defaulted on their mortgage, HSBC filed a foreclosure action against the Lisses in state court, and HSBC prevailed at summary judgment and before the Wisconsin Court of Appeals. The Lisses then filed two separate Chapter 13 bankruptcy petitions, which resulted in the automatic stay that stalled the foreclosure of their home. HSBC moved the bankruptcy court in Sondra Lisse's case for relief from the automatic stay, and Lisse argued in response that HSBC lacked standing to seek any relief from the bankruptcy court because the loan document underlying the mortgage (Note) had been forged. Lisse moved the bankruptcy court to compel discovery on various matters, including the Note's authenticity, and to sanction HSBC; HSBC moved for a protective order in response.

         Lisse now appeals three orders issued by the bankruptcy court: (1) a March 6, 2017 order denying Lisse's motion to compel discovery, to determine the sufficiency of HSBC's discovery responses, and to sanction HSBC, No. 16-cv-206, Dkt. 1-3; (2) a March 6, 2017 order granting HSBC's motion for a protective order, No. 16-cv-207, Dkt. 1-2; and (3) a March 7, 2017 order granting HSBC's motion for relief from the automatic stay, No. 16-cv-208, Dkt. 1-2.[1] This court will affirm all three decisions. Lisse's discovery requests posed an undue burden for HSBC. The Note's authenticity was already decided in Lisse's foreclosure action in state court, so the doctrine of issue preclusion barred Lisse from litigating the same issue again.

         PRELIMINARY MATTERS

         The court begins by addressing a few preliminary matters. First, Lisse has not provided a jurisdictional statement as required. See Fed. R. Bankr. P. 8014(a)(4). This court has jurisdiction over appeals from “final judgments, orders, and decrees.” 28 U.S.C. § 158(a)(1). The bankruptcy court's March 7 order granting HSBC relief from the automatic stay constitutes a final judgment. Colon v. Option One Mortg. Corp., 319 F.3d 912, 916 n.1 (7th Cir. 2003). This court has jurisdiction over the appeals from the March 6 discovery orders as well because “once a final judgment is entered and appealed, the appellant can challenge any interlocutory order.” In re James Wilson Assocs., 965 F.2d 160, 166 (7th Cir. 1992).

         Second, Lisse named a wrong entity as the appellee. She named HSBC's subservicer, Select Portfolio Servicing, Inc. (SPS), as the appellee, and HSBC has been added as another appellee by the clerk of court. SPS does not claim any right as to the Note and has nothing to do with the bankruptcy court's orders challenged on this appeal. Those orders pertain to HSBC, and the outcome of this appeal determines rights of HSBC, so HSBC is the proper appellee. See In re Trans Union Corp. Privacy Litig., 664 F.3d 1081, 1084 (7th Cir. 2011).

         Lisse contends that SPS is the proper appellee and that SPS should have been named as a party during the bankruptcy proceedings because HSBC signed a power of attorney authorizing SPS to collect Lisse's debt on HSBC's behalf. Dkt. 15, at 5 (citing Dkt. 7-22). Lisse did not raise this argument before the bankruptcy court, so it is waived. See Smith v. Capital One Bank (USA), N.A., 845 F.3d 256, 262 (7th Cir. 2016). Besides, the power of attorney says, “Nothing contained herein shall be construed to grant [SPS] the power to . . . initiate or defend any suit, litigation, or proceeding in the name of Trustee, ” which is defined as HSBC. Dkt. 7- 22, at 3. So Lisse is mistaken as to the identity of the proper appellee, and the court will amend the caption to show HSBC as the only appellee.

         Third, Lisse asks the court to take judicial notice of various court orders from cases other than her own bankruptcy case, documents filed in those cases, and certain documents filed public (e.g., assignment of mortgage filed in Dane County). Dkt. 8 and Dkt. 15-1. On a bankruptcy appeal, this court may take judicial notice of court orders, litigants' submissions in other cases, and documents made part of the public record. See In re Salem, 465 F.3d 767, 771 (7th Cir. 2006) (taking judicial notice of court orders and public documents); Cancer Found., Inc. v. Cerberus Capital Mgmt., LP, 559 F.3d 671, 676 n.2 (7th Cir. 2009) (taking judicial notice of complaint from another case). The court will take notice of the court orders, public documents, and those documents' contents. The court will not, however, accept the truth of the matters asserted in Lisse's court submissions, namely Lisse's contention that the Note was forged. See Dkt. 8-6, at 11-19; Opoka v. I.N.S., 94 F.3d 392, 395 (7th Cir. 1996) (“A court may take judicial notice of a document filed in another court not for the truth of the matters asserted in the other litigation, but rather to establish the fact of such litigation and related filings.” (quoting Liberty Mut. Ins. Co. v. Rotches Pork Packers, Inc., 969 F.2d 1384, 1388 (2d Cir. 1992))). The court will take notice that those documents were filed with court and that Lisse advocated for what she stated in her court submissions.

         Fourth, Lisse filed her briefs late. Lisse does not explain why she could not file her opening brief by the deadline. As for the reply brief, she says her counsel, Wendy Nora, could not finish the brief on time because “a recent update to her Acrobat program . . . prevented her from selecting text from PDF documents.” Dkt. 14, at 1. This is not a good reason for failing to meet the deadlines, but the court will nonetheless consider Lisse's arguments and the merits of this case so that Lisse is not penalized for her counsel's conduct.

         BACKGROUND

         The court draws the following facts from Lisse's appendices, exhibits attached to her briefs, her bankruptcy and state-court foreclosure proceedings, and documents subject to judicial notice. See, e.g., Dkts. 2-3, 7-9, 15; In re Lisse, 16-bk-12556 (Bankr. W.D. Wis. filed July 23, 2016); HSBC Bank USA National Association v. Lisse, No. 2010-cv-2642 (Dane Cty. Cir. Ct. filed May 17, 2010).

         A. Lisse's loan and mortgage

         In June 2006, Lisse and her husband obtained the Note from New Century Mortgage Corporation to finance their home. B. Dkt. 57-1.[2] The Lisses also signed a mortgage designating their home as security for the Note (Mortgage). B. Dkt. 57-2.

         In 2010, New Century assigned the Mortgage to HSBC. B. Dkt. 57-3. As for the Note, it was indorsed in blank, B. Dkt. 57-1, at 6, so under the Uniform Commercial Code, a party who possesses the Note is its holder and has the right to enforce it. See Wis. Stat. §§ 401.201(2)(km)(1); 403.205(2); 403.301. HSBC possesses the Note.

         B. Lisse's foreclosure action in state court

         In April 2009, the Lisses stopped making payments for the Note, and in May 2010, HSBC filed a foreclosure action against the Lisses in Dane County. The Lisses filed a motion demanding inspection of the Note, and HSBC produced it at an evidentiary hearing. The Lisses adduced no evidence to dispute the Note's authenticity at the hearing.

         HSBC then moved for summary judgment. HSBC adduced an affidavit from an employee of HSBC's subservicer, SPS, and the affiant stated that she was familiar with the business records maintained by SPS, that she reviewed the Lisses' loan documents, that those documents were part of SPS's business records, that the Note possessed by HSBC was the original, and that the Lisses defaulted on their payments. In response, the Lisses argued that the affiant lacked personal knowledge because she did not see the Lisses sign the Note. B. Dkt. 56-5. The circuit court rejected this argument, explaining that a witness need not have personal knowledge of the particular transaction to satisfy the business records exception to the hearsay rule under Wisconsin law. Dkt. 8-6, at 50 (citing Wis.Stat. § 908.03(6)). The circuit court granted summary judgment in favor of HSBC.

         The Lisses moved for reconsideration, and the circuit court held another hearing. The Lisses' counsel argued that the Note and Mortgage produced by HSBC were not the original documents and that HSBC had committed fraud. But when the circuit court asked for evidence of forgery, the Lisses' counsel admitted that there was none. B. Dkt. 74, at 29-30. The circuit court then explained:

The bank has brought into court today a document that I've determined to be an original document. It is the note and the mortgage, two documents in this case which appear to be the original documents. On the face of it they are the holders of those documents because they're right there on the table here in the courtroom in the possession of the bank's counsel and they are --the note is endorsed in blank without recourse by the original lender.
Well, there was no evidence presented on summary judgment or the last time we saw a document here in court in April of last year to rebut the bank's contention that they are the holders of the original note and mortgage and my examination today persuades me of that. And there is no evidence offered today that that's not the original note and mortgage, and I think under the law they are the holders of the note and entitled to collect on it. So the motion for reconsideration is denied.

         B. Dkt. 74, at 30-32.

         The Lisses appealed, arguing that the Note and Mortgage were “unauthenticated.” See Brief of Appellant at 9, HSBC Bank USA v. Steven R. Lisse, No. 2015AP273 (Wis. Ct. Appeals, filed Aug. 4, 2015). The Wisconsin Court of Appeals affirmed, noting that whether HSBC possessed the original Note was not “in dispute” at summary judgment. HSBC Bank USA v. Lisse, 2016 WI.App. 26, ¶ 8, 367 Wis.2d 749, 877 N.W.2d 650. The Lisses moved for reconsideration, arguing that they did contest the Note's authenticity, B. Dkt. 56-6, at 2, and the Wisconsin Court of Appeals summarily denied the Lisses' motion. Id. at 21.

         C. ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.