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Lisse v. Select Portfolio Servicing, Inc.

United States District Court, W.D. Wisconsin

February 12, 2018

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.

          ORDER

          JAMES D. PETERSON, District Judge

         In this consolidated bankruptcy appeal, Appellant Sondra Lisse contends that appellee HSBC Bank USA, National Association, attempted to foreclose Lisse's home based on a loan document (Note) that Lisse alleges is forged. This court affirmed the bankruptcy court's decisions denying Lisse's motion to compel discovery, granting HSBC's motion for a protective order, and granting HSBC's motion for relief from an automatic stay. Dkt. 17.

         Lisse has filed two motions for reconsideration. Dkt. 19 (original motion for reconsideration) and Dkt. 20 (amended motion). Her arguments in support of these motions are variations of the arguments that the court has already addressed, but the court will address some of Lisse's arguments to correct certain mischaracterizations of the record and this court's opinion.

         First, Lisse contends that the court erred by applying issue preclusion to a state court's conclusion that the Note was authentic because she never had an opportunity to present to the state court her evidence that the Note was forged. She states that she was “surprised by [this court's] erroneous finding that evidentiary hearings were held” because, during the two hearings held before the state court, one on April 28, 2014, and another on March 13, 2015, the parties neither called nor examined any witness during those hearings. Dkt. 20, at 6. At both hearings, Lisse and her husband had the opportunity to adduce evidence to challenge the Note's authenticity. The first hearing was held because the Lisses asked HSBC to produce the original Note for inspection. Dkt. 8-7, at 3. At the hearing, the Lisses' attorney indicated that the Note produced by HSBC was indeed original, but the endorsement on the back page might not be the original endorsement:

MS. YANKE: I would concede that it is a true and correct copy of the document that is --
THE COURT: But you're just contesting whether this endorsement on the original is actually an original endorsement?
MS. YANKE: Yes. I don't know that it's an original and my client will be providing testimony that that was not part of the note.
THE COURT: Right. Which is typically true of endorsements, isn't it, that they're not part of the note at the time the note is made and at some later time somebody endorses the note over to somebody else.
MS. YANKE: And that's exactly what we'd like to find out.
THE COURT: Okay. Well, I'm going to give you back the original and we're going to mark this copy as Exhibit 1 for today's hearing. And I'm going to make a finding that Exhibit 1 is a true and correct copy of the document represented by plaintiff to be the original note and a true and correct copy of the endorsement that appears on the reverse of the final page of the original note, without making any finding as to the validity or legal effect of that endorsement.

Dkt. 8-7, at 5, 8-9. At summary judgment, the Lisses adduced no evidence to dispute the Note's authenticity, and the court entered summary judgment in HSBC's favor. The Lisses then moved for reconsideration, and the court held another hearing. Here is how the hearing went:

THE COURT: You don't have any evidence to present then that that is not Mr. Lisse's signature?
THE DEFENDANT: That's correct. This is trumped by fraud.
THE COURT: Okay. That argument makes, I'm sorry, is not one that I can understand. 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 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. I think under the UCC that makes the bank the holder of the note, and whether they broke into the vaults of somebody else and ...

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