Don’t Forget PH&H vs. Kolodziej

This case goes to unauthenticated copies of the documents used in court.

Foreclosures; Mortgages

PHH Mortgage Corp v Kolodziej, 2010 AP 60 (Wis Ct App, 2011).

Facts: In 2006, Marcella Kolodziej took out a mortgage on her property and executed a promissory note to Citizens Bank. After her death, Kolodziej’s estate, represented by Robert Kolodziej and Debra Snobl,, ceased making payments still owed on the note.

PHH Mortgage Corporation (PHH) brought a foreclosure action against the estate and alleged in its complaint that it was the holder of the note and the mortgage. To establish ownership, PHH presented copies of the note and the mortgage. However, both documents specified Citizens Bank as the lender-not PHH. In addition, the note was not endorsed. PHH moved for summary judgment and entered several more documents as supporting evidence. First, PHH submitted an affidavit from a vice president of the company, Marc Hinkle, who averred that PHH was the holder of the mortgage and the note. PHH next submitted an affidavit from its records custodian, Mike Damelag, which included an assignment of the mortgage to PHH. Finally, PHH submitted an affidavit from one of its attorneys, Brian Quirk, and attached a copy of the note, which Quirk averred was a correct copy of the original. KariAnn Moore endorsed this attached note on behalf of Citizens Bank, although the estate challenged her authority to do so.

The estate objected to PHH’s standing to bring the action, arguing that the supporting affidavits did not meet the requirements for admissibility set forth in Wisconsin Statutes Section 802.08(3). This section concerns supporting papers for summary judgment and states that documents must be “made on personal knowledge and shall set forth such evidentiary facts as would be admissible in evidence.” Despite the estate’s objection, the trial court granted summary judgment. The estate appealed, contending that the lower court granted summary judgment in error because PHH failed to prove ownership and thus failed to make out aprima faciecase for foreclosure.

Holding: Reversed and remanded. The court held that the assignment of the mortgage, attached to Damelag’s affidavit, and the endorsed note, attached to Quirk’s affidavit, did not meet the requirements of Section &§802.08(3) because they would not be admissible as evidence. PHH argued that the assignment of the mortgage would be admissible as evidence under Section 909.02(12) because it was a “record of regularly conducted activity” and Damelag authenticated it.

The court rejected this argument because an assignment itself is not a record, and Damelag’s affidavit did not “show any basis for first-hand knowledge of how the assignment was made.” The assignment was not certified and Damelag’s affidavit did not aver that he had specific personal knowledge of how the assignment was made. Therefore, the assignment was not admissible and PHH could not use it to establish ownership. The court threw out the endorsed note for the same reason. Quirk did not show a “basis for his personal knowledge that it is the original note.” The court also disregarded Hinkle’s statement that PHH was the holder of the note because it was a legal conclusion and did not “substitute for the inadmissibility of the endorsed note.”

Because PHH did not present any admissible evidence showing that it was the holder of the note and the mortgage, it did not establish aprima faciecase for foreclosure and summary judgment was inappropriate.

The estate also argued that the court of appeals should dismiss PHH’s complaint with prejudice as a sanction against PHH for committing fraud and conducting the litigation in bad faith. The court ruled that the estate’s legal arguments on this subject were undeveloped and thus remanded the case instead of dismissing it.

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