HSBC Bank USA, National Association, as Trustee for Bear Stearns Mortgage Funding Trust 2006-AC1, Asset Backed Certificates, Series 2006-AC1 v. Donnette Dunbar, (A/K/A Donnette Dunbar English, Donnette D. English, Donnette English)

Judgment rendered October 2, 2024.
Application for rehearing may be filed
within the delay allowed by Art. 2166,
La. C.C.P.

No. 55,854-CA

COURT OF APPEAL
SECOND CIRCUIT
STATE OF LOUISIANA

*****

HSBC BANK USA, NATIONAL Plaintiff-Appellee
ASSOCIATION, AS TRUSTEE FOR
BEAR STEARNS MORTGAGE
FUNDING TRUST 2006-AC1,
ASSET BACKED CERTIFICATES,
SERIES 2006-AC1

versus

DONNETTE DUNBAR, (A/K/A Defendant-Appellant
DONNETTE DUNBAR ENGLISH,
DONNETTE D. ENGLISH,
DONNETTE ENGLISH)

*****

Appealed from the
First Judicial District Court for the
Parish of Caddo, Louisiana
Trial Court No. 526,204

Honorable Michael A. Pitman, Judge

*****

KELVIN G. SANDERS Counsel for Appellant

MCGLINCHEY STAFFORD, PLLC Counsel for Appellee
By: Amanda S. Stout
Jonathan G. Wilbourn

JACKSON & MCPHERSON, LLC
By: Cris Jackson

*****

Before STEPHENS, ROBINSON, and HUNTER, JJ.

STEPHENS, J.

This appeal arises out of a lawsuit involving the efforts of the plaintiff,

HSBC Bank USA, National Association (“HSBC”), as trustee for Bear

Stearns Mortgage Funding Trust 2006-AC1 Asset Backed Certificates,

Series 2006-AC1 (“Bear Stearns Mortgage Funding Trust”), to collect on a

lost note currently held by Bear Stearns Mortgage Funding Trust that

represents indebtedness currently outstanding and due on an obligation

entered into by the defendant debtor/mortgagor, Donnette Dunbar (“Ms.

Dunbar”), with the original creditor/mortgagee in connection with Ms.

Dunbar’s purchase of a home. For the reasons set forth below, we affirm the

trial court’s judgment granting a motion for summary judgment filed by

HSBC and denying an exception of res judicata filed by Ms. Dunbar.

FACTS AND PROCEDURAL HISTORY

On February 27, 2006, Ms. Dunbar executed a promissory note (the

“Note”) payable to Home 123 Corporation, a California corporation, in the

principal amount of $156,000 which was secured by an act of mortgage (the

“Mortgage”) on a home located in Caddo Parish, Louisiana.

Ms. Dunbar failed to pay her mortgage, and suit was filed on the Note

and to enforce the Mortgage on November 7, 2008, by Wells Fargo Bank,

acting as trustee of the Bear Stearns Mortgage Funding Trust.1 On

December 5, 2008, Ms. Dunbar filed an answer denying the allegations of

the petition. On October 12, 2012, Wells Fargo Bank filed a motion to file a

copy of the Louisiana Assignment of Mortgage transferring all of the rights,

1
The petition was initially fax-filed by Wells Fargo Bank, then the holder of the
Note and Mortgage, on November 7, 2008, but it was not physically filed with the Caddo
Parish Clerk of Court’s Office until November 12, 2009. A copy of the Note was
attached to the November 2009 filing.

title and interest in the loan documents, and liens of Home 123 Corporation

to Wells Fargo Bank as an exhibit to its original petition. On February 26,

2013, a supplemental and amending petition to update the amounts owed

under the mortgage loan was filed. On May 13, 2013, Ms. Dunbar filed a

general denial to the original and amended petitions. On July 22, 2013, Ms.

Dunbar filed a second general denial to the amended petition.

On August 29, 2016, HSBC filed a motion to substitute party plaintiff,

attaching an agreement documenting its appointment as successor trustee for

Bear Stearns Mortgage Funding Trust as of November 1, 2006. Thereafter,

various exceptions and motions filed by both parties were filed, heard and

denied by the trial court (except for the counsel substitution and continuance

motions, which were granted pro forma).

On October 5, 2020, Ms. Dunbar filed a motion for summary

judgment praying for the trial court to find that the Note, which was lost,

was not advertised in a reasonable time in accordance with La. R.S. 13:3741,

and that plaintiff’s original and amended complaint be dismissed with

prejudice. HSBC filed an opposition to Ms. Dunbar’s motion, noting that on

March 7, 2014, JPMorgan Chase Bank, N.A., as servicer for HSBC,

executed an Affidavit of Lost Note attesting that the Note was lost and could

not be found after a thorough and diligent search of the hard copy collateral

file pertaining to Ms. Dunbar’s loan,2 and that on April 8, 2014, an

advertisement appeared in the Shreveport Times stating that the Note had

been lost or destroyed and advising that if the Note was found it should be

2
In its responses to interrogatories, HSBC further provided that a previous
servicer, EMC Mortgage Corporation, on December 1, 2008, executed an affidavit of lost
note.

2

returned to Graham, Arceneaux & Allen, L.L.C. It was HSBC’s position that

the lost note had been advertised in a reasonable time.

A hearing was held on Ms. Dunbar’s motion for summary judgment.

After hearing arguments of counsel, the trial court granted Ms. Dunbar’s

motion, finding that HSBC had not advertised the loss of the Note within a

reasonable time. In that same judgment, HSBC’s request to post a

commercial bond pursuant to La. R.S. 13:3741 was granted.

HSBC later obtained a lost instrument bond from Capital Indemnity

Corporation, a Nebraska corporation authorized to transact surety business

in Louisiana. This bond was recorded with the Caddo Parish Caddo Clerk of

Court. HSBC then filed a motion for summary judgment on February 6,

2023, seeking a judgment in its favor against Ms. Dunbar in the amount of

$376,196.68, together with interest at a rate of 6.625% per annum from

January 28, 2023, until paid, reasonable attorney fees and for all costs of the

proceedings, and with a request that the Mortgage be maintained and

recognized.

Ms. Dunbar opposed HSBC’s motion for summary judgment and filed

a peremptory exception of res judicata, asserting that HSBC was attempting

to relitigate issues that were decided at the March 1, 2021, hearing on her

motion for summary judgment. HSBC opposed Ms. Dunbar’s exception of

res judicata. A hearing was held. The trial court granted HSBC’s motion for

summary judgment and denied Ms. Dunbar’s exception of res judicata. It is

from this judgment that Ms. Dunbar has appealed.

3

DISCUSSION

Consideration of HSBC’s Untimely Opposition to Ms. Dunbar’s Motion
for Summary Judgment

Ms. Dunbar’s first assignment of error is that the trial court erred in

considering HSBC’s untimely opposition to Ms. Dunbar’s motion for

summary judgment. Ms. Dunbar’s motion for summary judgment, filed on

October 5, 2020, was based on HSBC’s failure to advertise the lost

promissory note within a reasonable time as required by La. R.S. 13:3741.

HSBC filed its opposition to Ms. Dunbar’s motion on February 21, 2021, a

mere nine days before the March 1, 2021, hearing, in violation of La. C.C.P.

art. 966(B)(2). The trial court granted the motion for summary judgment

filed by Ms. Dunbar. However, in its untimely opposition, HSBC had

requested that it be allowed to post a security bond. Ms. Dunbar takes the

position that the trial court, by law, could not consider HSBC’s request to

post a security bond filed in an untimely opposition. By doing so, the trial

court violated both La. C.C.P. art. 966(C)(2) and La. R.S. 13:3741. Ms.

Dunbar urges that the trial court erred in granting HSBC’s untimely request

to post a security bond (which order was contained in its judgment granting

Ms. Dunbar’s motion for summary judgment).3

HSBC points out that the trial court only determined that the loss of

the Note had not been advertised promptly as required by La. R.S. 13:3741.

According to HSBC, the trial court correctly determined that advertisement

3
Ms. Dunbar took a writ to this Court from that part of the trial court’s judgment
ordering that HSBC be allowed to post a security bond. The writ was denied by the
Second Circuit. Ms. Dunbar then applied for a writ of certiorari to the Louisiana
Supreme Court, which was also denied. See, Wells Fargo Bank, National Association, As
Trustee for Certificate Holders of Bear Stearns Mortgage Funding Trust 2006-AC1,
Asset-Backed Certificates, Series 2006-AC1 v. Dunbar, 21-01066 (La. 11/03/21), 326 So.
3d 894.

4

of the lost note was not the only method by which HSBC could satisfy La.

R.S. 13:3741. Thus, in its judgment granting Ms. Dunbar’s motion for

summary judgment, the trial court granted HSBC’s request to post a

commercial bond. Although HSBC did ask that it be allowed to post a bond

in its untimely response to Ms. Dunbar’s motion for summary judgment,

HSBC emphasizes that it also requested the trial court’s permission to post a

bond during the hearing on Ms. Dunbar’s summary judgment motion.

Nonetheless, HSBC’s request was granted by the trial court as it is included

in the judgment granting Ms. Dunbar’s summary judgment motion.

Thereafter, HSBC obtained a bond and filed its own motion for summary

judgment, which HSBC contends was properly granted by the trial court.

This assignment of error is without merit. The transcript from the

hearing on Ms. Dunbar’s motion for summary judgment specifically reflects

the trial judge’s recognition of and decision not to consider HSBC’s late

opposition to Ms. Dunbar’s summary judgment. In fact, the transcript shows

the trial judge did not consider the issue of whether HSBC may post a bond

to even be before the Court as it was not specifically raised in Ms. Dunbar’s

motion for summary judgment or in a motion filed by HSBC. The judgment

signed by the trial court which contained the language providing that HSBC

be allowed to post a bond was prepared by defense counsel.

Trial Court’s Denial of Ms. Dunbar’s Exception of Res Judicata

Ms. Dunbar argues that the trial court erred when it denied her

exception of res judicata, which was filed in response to HSBC’s motion for

summary judgment filed on February 6, 2023. According to Ms. Dunbar, in

the instant case, the trial court should have granted her exception of res

judicata because: (1) the March 12, 2021, judgment granting her motion for

5

summary judgment is a valid judgment; (2) the March 12, 2021, judgment is

final because HSBC did not take an appeal; (3) the parties in the previous

motion for summary judgment are clearly the same; (4) the cause of action

asserted by HSBC in its motion for summary judgment existed at the time

the March 12, 2021, judgment was rendered by the trial court; and (5) the

cause of action asserted by HSBC in its motion for summary judgment arises

out of the same transaction and occurrence which is the subject matter of this

litigation.

On the other hand, HSBC contends that the trial court correctly denied

Ms. Dunbar’s exception of res judicata. In her exception of res judicata,

Ms. Dunbar asserted that the trial court’s March 12, 2021, judgment is a

final judgment, and HSBC is attempting to relitigate issues that were

decided by that judgment in the motion for summary judgment it

subsequently filed. Ms. Dunbar argued in the exception she filed that

HSBC’s motion for summary judgment was barred by res judicata, and all

claims by HSBC against her should be dismissed.

However, notes HSBC, in Ms. Dunbar’s motion for summary

judgment, all that she asserted was that HSBC’s advertisement of the lost

promissory note was not done in a reasonable time pursuant to La. R.S.

13:3741. While Ms. Dunbar argued that HSBC’s case should be dismissed

in its entirety, the trial court properly granted Ms. Dunbar only the partial

relief she requested. The trial court determined that HSBC had not

advertised the loss of the Note within a reasonable time. As a result, HSBC

was unable to rely on the first clause of La. R.S. 13:3741. However, because

La. R.S. 13:3741 also provides that advertisement “shall not be necessary”

when a commercial bond meeting the requirements of R.S. 13:3741 is

6

posted, the judgment signed by the trial court granting Ms. Dunbar’s

summary judgment also allowed HSBC to post a commercial bond in

accordance with R.S. 13:3741. According to Ms. Dunbar, this ruling is a

final judgment.

HSBC next argues that the fundamental problem with Ms. Dunbar’s

position, both before the trial court and on appeal, is that there is no second

suit. At its core, res judicata envisions a second suit. Instead, this case

involves an interlocutory, partial judgment on Ms. Dunbar’s motion for

summary judgment. Res judicata is not the proper procedural term for

describing the relationship between this prior judgment and the judgment

rendered by the trial court on HSBC’s motion for summary judgment in this

case.

Applicable Law

Under La. R.S. 13:4231, a second action is precluded when all of the

following are satisfied: (1) the judgment is valid; (2) the judgment is final;

(3) the parties are the same; (4) the cause or causes of action asserted in the

second suit existed at the time of final judgment in the first litigation; and,

(5) the cause or causes of action asserted in the second suit arose out of the

transaction or occurrence that was the subject matter of the first litigation.

Chauvin v. Exxon Mobil Corp., 14-0808 (La. 12/09/14), 158 So. 3d 761;

Bankers Ins. Co. v. State, 53,140 (La. App. 2 Cir. 11/20/19), 285 So. 3d 59;

Barnett v. Louisiana Medical Mutual Ins. Co., 51,908 (La. App. 2 Cir.

5/23/18), 248 So. 3d 594, writ denied, 18-0944 (La. 9/28/18), 253 So. 3d

154. The doctrine of res judicata is stricti juris; any doubt concerning

application of the principle of res judicata must be resolved against its

7

application. Cox v. O’Brien, 49,278 (La. App. 2 Cir. 8/13/14), 147 So. 3d

809, writ denied, 14-1907 (La. 11/21/14), 160 So. 3d 972.

Under its plain language, Louisiana’s res judicata statute applies to

bar “a subsequent action” between the same parties as to causes of action

existing at the time of the final judgment and arising out of the same

transaction or occurrence that is the subject matter of the litigation. La. R.S.

13:4231(2); Sutton v. Adams, 22-01672, p. 4 (La. 3/07/23), 356 So. 3d 1017,

1021. Additionally, “[a] judgment in favor of either the plaintiff or the

defendant is conclusive, in any subsequent action between them, with

respect to any issue actually litigated and determined if its determination was

essential to that judgment.” La. R.S. 13:4231(3); Sutton, supra. (Emphasis

added). The Supreme Court has previously explained that, regarding res

judicata, “the chief inquiry is whether the second action asserts a cause of

action which arises out of the same transaction or occurrence that was the

subject matter of the first action.” Burguieres v. Pollingue, 02-1385, p. 7

(La. 2/25/03), 843 So. 2d 1049, 1053. (Emphasis added).

Because the principle of res judicata envisions a second suit, it does

not apply in a case where there is no second action but merely judgments of

the trial and appellate courts within the same suit. Family Worship Center

Church, Inc. v. Solomon, 17-0064, p. 14 (La. App. 1 Cir. 6/21/18), 255 So.

3d 649, 658, writ denied, 18-1778 (La. 1/28/19), 263 So. 3d 247; Quality

Environmental Processes, Inc. v. IP Petroleum Co., Inc., 16-0230, p. 10 (La.

App. 1 Cir. 4/12/17), 219 So. 3d 349, 364, writ denied, 17-00915 (La.

10/09/17), 227 So. 3d 833. In those instances, the law of the case doctrine is

the proper procedural principle for describing the relationship between prior

judgments by the trial and appellate courts rendered within the same case.

8

Id.; Lomont v. Myer-Bennett, 16-436, p. 8 (La. App. 5 Cir. 12/14/16), 210 So.

3d 435, 443, writ denied, 17-0088 (La. 2/24/17), 216 So. 3d 59.

However, the law of the case doctrine does not apply in the context of

a trial court’s ruling on interlocutory issues, Land v. Vidrine, 10-1342, p. 9

(La. 3/15/11), 62 So. 3d 36, 42; Lathon v. Leslie Lakes Retirement Center,

54,479, pp. 6-7 (La. App. 2 Cir. 9/21/22), 348 So. 3d 888, 892, writ denied,

22-01566 (La. 12/20/22), 352 So. 3d 80, nor does it attach on the basis of the

denial of writs. Babineaux v. Pernie-Bailey Drilling Co., 262 So. 2d 328,

332 (La. 1972); Lathon, 54,479 at p. 7, 348 So. 3d at 892-93. The denial of

writs is a decision to not decide the issues raised in the writ application.

Levine v. First National Bank of Commerce, 06-0394, p. 6, fn. 4 (La.

12/15/06), 948 So. 2d 1051, 1054; Lathon, 54,479 at p. 7, 348 So. 3d at 893.

More specifically, as noted by this Court in Aymond v. Citizens

Progressive Bank, 52,623, pp. 35-36 (La. App. 2 Cir. 6/26/19), 277 So. 3d

477, 498, writ denied, 19-1200 (La. 10/15/19), 280 So. 3d 602:

[a]denial of supervisory review is merely a decision not to
exercise the extraordinary powers of supervisory jurisdiction
and does not bar reconsideration of, or different consideration
on, the same question when an appeal is taken from a final
judgment. (Citations omitted).

Analysis

This assignment of error is without merit. The transcript from the

hearing on HSBC’s motion for summary judgment indicates that the trial

court considered its prior ruling on Ms. Dunbar’s summary judgment as set

forth in the March 12, 2021, judgment to be the “law of the case” as to the

issue(s) adjudicated therein, and on that basis granted HSBC’s motion for

summary judgment. Furthermore, the trial judge stated:

9

As Mr. Sanders pointed out, he took a writ to the Second
Circuit. This Court’s Opinion was confirmed, and the
Louisiana Supreme Court denied writs on that very issue, so
that has become the law of this case. Therefore, the exception
of res judicata, if it was even applicable in this matter, the
exception of res judicata is overruled.

As noted above, the denial of writs by this Court and the Louisiana

Supreme Court is a decision to not decide the issues raised in the writ

application. Levine, supra; Lathon, supra; Aymond, supra. That said,

however, the trial court did not err in overruling Ms. Dunbar’s exception of

res judicata. There is no second suit, thus res judicata does not apply.4

Trial Court’s Grant of HSBC’s Motion to Post Bond/HSBC’s Motion for
Summary Judgment

In her second assignment of error, Ms. Dunbar urges that the trial

court erred in granting HSBC’s untimely request to post a security bond 13

years after it had notice of the lost Note. In her fourth assignment of error,

she argues that because HSBC’s opposition to her motion for summary

4
Furthermore, we note that the first judgment granting Ms. Dunbar’s motion for
summary judgment was not certified as a final judgment, and no appeal was filed
therefrom. Instead, Ms. Dunbar correctly filed an application for supervisory writs to this
Court. Ms. Dunbar’s writ application alleged the following errors:

1. The Trial Court Allowing Plaintiffs To Post A Security Bond Thirteen
(13) Years After It Became Aware That Promissory Note Was Lost
Was A Legal Error, Caused Defendant Irreparable Injury And Created
And Undermined The Legislative Intent Of LSA-R.S. 13:3741.

2. The Trial Court’s Failure To Strike Defendant’s Untimely Opposition
To Defendant’s Motion For Summary Judgment Was A Legal Error
And Caused Defendant Irreparable Injury in violation of LSA-R.S.
966(B)(2).

Ms. Dunbar asked this Court for the following relief:

[D]efendant Prays that The Trial Court Ruling That Plaintiffs Be Allowed
To Post A Security Bond Per La. RS 13:3741 And Failure To Strike
Plaintiffs Opposition To Defendants Motion For Summary Judgment Be
Reversed And Defendant’s Motion For Summary Judgment Be Granted
And Plaintiffs’ Claims Be Dismissed With Prejudice.

If this Court’s and the Supreme Court’s denial of writs were to be taken as final
judgments or “law of the case” as Ms. Dunbar seems to be arguing, she would be
precluded from making the very arguments she is urging in her appeal.

10

judgment was not timely, its request to post a bond could not be considered

by the trial court at the hearing on her motion for summary judgment on

March 1, 2021. Based on the trial court’s erroneous ruling, HSBC was able

to file its motion for summary judgment, which the trial court then granted.

Ms. Dunbar argues that allowing HSBC to post a bond 13 years after the

Note was lost was a violation of La. R.S. 13:3741.

We will address these two assignments of error together. However, as

set forth above, the untimeliness of HSBC’s opposition to Ms. Dunbar’s

motion for summary judgment is irrelevant to the issues of whether the trial

court erred in allowing HSBC to post bond and/or in granting its motion for

summary judgment.

According to Ms. Dunbar, the language of La. R.S. 13:3741 is clear

and unambiguous—it requires that a holder such as HSBC either advertise

the lost note or post security “in lieu of” publishing the advertisement.

Moreover, assuming that the trial court’s interpretation that La. R.S. 13:3741

was silent as to when the bond was to be posted is correct, its ruling was still

a legal error, urges Ms. Dunbar. Additionally, the trial court erred in finding

that Ms. Dunbar did not raise the issue of HSBC’s failure to post a security

bond in her motion for summary judgment.

According to Ms. Dunbar, the trial court’s reasoning that HSBC’s

advertisement of a lost note some 67 months after the Note was lost did not

comply with La. R.S. 13:3741 but the posting of a security bond 13 years

after default will lead to “absurd” results. If allowed to stand, the trial

court’s interpretation of La. R.S. 13:3741 “would provoke confusion in the

lower courts” and “lead to absurd results.”

11

HSBC’s conduct in this case is a prime example of the absurd results

of the trial court’s ruling, argues Ms. Dunbar. She points out that the trial

court granted HSBC the right to post a security bond on March 1, 2021.

However, HSBC did not post its security bond until December 12, 2022,

more than 20 months after the trial court’s ruling. According to Ms. Dunbar,

the trial court’s ruling has rendered the “reasonable time” requirements of

the statute meaningless.

HSBC asserts that the trial court did not err in allowing it to post a

surety bond. Ms. Dunbar argues that the trial court erred when it granted

HSBC’s request to post a surety bond because the request was not made

within a reasonable time. HSBC notes that its request to post a bond was

granted in the trial court’s judgment which granted Ms. Dunbar’s motion for

summary judgment that had alleged only that HSBC had not advertised the

loss of the Note in a reasonable time period. Thus, HSBC was precluded

from relying only on that part of La. R.S. 13:3741 to establish its entitlement

to recover on a lost note.

Furthermore, urges HSBC, the rules of statutory construction do not

support Ms. Dunbar’s position. Starting with the clear and unambiguous

language of La. R.S. 13:3741, in all cases involving a lost note that rely on

advertisement, the loss must be advertised within a reasonable time.

However, advertisement is not required if a bond is obtained. HSBC

contends that La. R.S. 13:3741 does not require that this bond be obtained

within any certain time—other than it is needed in order to obtain a

judgment on a lost note if there is no timely advertisement.

Considering La. R.S. 13:3740 and 13:3741 together, it is clear that the

only time period for posting a bond is before a judgment is rendered on the

12

lost Note, argues HSBC. La. R.S. 13:3740 requires that when a judgment is

sought on a lost instrument, evidence must be given of the instrument’s

contents and that the loss is probable. The trial court may also order

reasonable security be given to indemnify the party against the appearance

of the instrument.

La. R.S. 13:3741 then allows alternatives—either an advertisement or

a bond. A mortgagee/creditor can proceed with its case when the loss of the

note has been advertised within a reasonable time and proper means are

taken to recover the instrument. The clear purpose of an advertisement is to

alert the public of the loss and to recover the note if possible. If the note is

recovered, the maker avoids the risk that someone else could claim rights

under the note. In the alternative, one seeking to enforce the note can

dispense with an advertisement by obtaining a surety bond. The lost

instrument surety bond protects the parties in the event another person seeks

to enforce the instrument.

According to HSBC, this interpretation of the purpose and intent of

La. R.S. 13:3741 is consistent with the plain language of the statute. The

semicolon in R.S. 13:3741 signals two related, independent clauses, and the

use of the word “provided” is a disjunctive signaling that advertisement of

the lost note is not required if a surety bond is obtained. Ms. Dunbar urges

the Court to ignore the disjunctive semicolon and “provided,” and conclude

that the phase “within a reasonable time” applies to both the advertisement

and acquisition of the bond.

HSBC emphasizes that La. R.S. 13:3740-3741 do not impose a duty

to obtain a bond. HSBC concedes that these statutes do provide for a bond

when ordered by the court, then points out, however, that a court order is not

13

required for the enforcement of a lost note or for acquisition of a bond in

relation thereto. Instead, a party can obtain a bond on its own as an

alternative to advertising the lost note. Therefore, a person trying to enforce

a lost note does not have a statutory obligation to secure a bond.

HSBC further reasons that the purpose of a bond is to protect the

maker from multiple claims, irrespective of when the claim may arise. To

make this protection available only if a bond is obtained by a certain time

would significantly impact the rights of secured lenders. As was the case

here, mortgage loans are often sold, loan servicers are engaged and replaced,

and different entities may be the custodian of records for the secured party.

Occasionally during the transfer of the physical collateral file associated

with these changes, notes will be lost. Sometimes, the loss is not discovered

until the loan becomes delinquent and the lender looks for the note in order

to institute foreclosure proceedings. If this Court were to hold that a bond

must be obtained at the time of the loss of the note or at a time other than

before a judgment is rendered, such a precedent would have far-reaching

effects and devastating consequences, urges HSBC.

Finally, HSBC asserts that its request to post a bond was in fact

timely. The Code of Civil Procedure specifically allows motions to be made

during a hearing or in open court. La. C.C.P. art. 961. HSBC made such a

motion during the hearing on Ms. Dunbar’s motion for summary judgment

and admits that the transcript of the hearing reflects that the trial court stated

that the issue was not before it that day, and HSBC could move for such

relief at a later date. Nonetheless, as noted above, the judgment prepared

and submitted by Ms. Dunbar’s counsel included an order that HSBC be

allowed to post a bond. This judgment was signed by the trial court.

14

HSBC reiterates that La. R.S 13:3740 and 13:3741 do not require a

court order for a holder to obtain and post a bond. La. R.S. 13:3740

provides that a court may order reasonable security be given. On the other

hand, La. R.S. 13:3741 provides that the holder may obtain a bond to

dispense with the requirement of advertising the lost instrument in a

reasonable time. HSBC had the right to post a bond with or without specific

authority from the trial court. Thus, whether the trial court considered

HSBC’s written request in its opposition is irrelevant and did not impact the

trial court’s ruling on Ms. Dunbar’s motion for summary judgment. The trial

court admitted Ms. Dunbar’s evidence and granted the motion for summary

judgment she filed on the grounds upon which it was based.

As for the trial court’s grant of HSBC’s motion for summary

judgment, HSBC points out that all Ms. Dunbar contests is the order

allowing HSBC to post a bond, which she alleges was not obtained timely.

She does not object to any of the other facts or legal arguments in support of

HSBC’s motion. Therefore, since the trial court had the discretion to order

HSBC to post a bond, and this bond was posted before HSBC sought its

summary judgment against Ms. Dunbar, HSBC urges this Court to affirm the

trial court’s judgment granting summary judgment in HSBC’s favor.

According to HSBC, the following facts and legal arguments pertain to the

merits of its summary judgment motion.

HSBC produced a true and correct copy of the Note, which sets forth

Ms. Dunbar’s unconditional promise to pay $156,000, with an interest rate

of 6.625%. Monthly payments are due on the 1st of each month beginning

April 1, 2006, with a maturity date of March 1, 2036. The Note also

provides for the payment of late charges of 5.00% for each overdue principal

15

and interest payment, and the right to recover all costs and expenses incurred

by the Note holder related to enforcement of the Note, including reasonable

attorney fees.

The Note is paraphed “Ne Varietur” with the Mortgage of the same

date. The Mortgage sets forth Ms. Dunbar’s obligations to escrow an

amount to pay taxes, assessments, insurance, and other charges, as well as

the lender’s right to take action if she fails to perform the conveyances and

agreements set forth in the Mortgage. Specifically, the lender has the right

to do and pay for whatever is reasonable or appropriate to protect the

lender’s interest in the property and rights under the Mortgage. Any

amounts that the lender incurs in taking such action is an additional debt of

Ms. Dunbar’s secured by the Mortgage.

Ms. Dunbar admits that she executed the Note. The Mortgage is an

authentic act as it was executed before a notary and two witnesses.

Accordingly, the Mortgage constitutes full proof of its terms. La. C.C. art.

1835. Two lost note affidavits, each with a copy of the Note, have been

produced. Select Portfolio Services, the current servicer and attorney-in-fact

for HSBC, obtained a commercial surety bond in the amount of $195,000 on

December 12, 2022, which is the face amount of the Note plus 25 percent.

Because the requirements of La. R.S. 13:3740 and 3741 have been met, as

have those of La. R.S. 10:3-301 and 3-309,5 and HSBC has produced a copy

5
La. R.S. 10:3-301 defines a “person entitled to enforce” an instrument as (i) the
holder of the instrument, (ii) a nonholder in possession of the instrument who has the
rights of a holder, or (iii) a person not in possession of the instrument who is entitled to
enforce the instrument pursuant to R.S. 10:3-309 or 10:3-418(d). Because the mortgage
is an accessory obligation to the note, which is the principal obligation, by proving its
right to enforce the note, the creditor may also enforce the mortgage without the necessity
for an assignment of that mortgage. La. C.C. arts. 2645, 3282; Gaines v. Bonnabel, 168
La. 262, 266, 121 So. 764, 765-66 (1929); U.S. Bank National Ass’n v. Dumas, 12-1902,

16

of the Note and Mortgage, HSBC asserts that it is entitled to payment under

the terms of the Note and Mortgage.

In support of its motion for summary judgment, HSBC submitted the

affidavit of Document Control Officer Sherry Benight. In her affidavit, she

detailed the amounts owed under the terms of the Note and Mortgage and

the existence of default. Specifically, Ms. Benight confirmed that the Note

and Mortgage were due for the March 1, 2009, payment. She also identified

the unpaid principal balance, the interest due through January 27, 2023, the

p. 19 (La. App. 1 Cir. 4/03/14), 144 So. 3d 29, 43, writ denied, 14-0943 (La. 8/25/14),
147 So. 3d 1119.

HSBC does not have possession of the original Note, which is lost. A person not
in possession of an instrument is entitled to enforce the instrument if (1) the person was
in possession of the instrument and entitled to enforce it when loss of possession
occurred, (2) the loss of possession was not the result of a transfer by the person or a
lawful seizure, and (3) the person cannot reasonably obtain possession of the instrument
because the instrument was destroyed, its whereabouts cannot be determined, or it is in
the wrongful possession of an unknown person or a person that cannot be found or is not
amenable to service of process. La. R.S. 10:3-309(a). If the requirements of La. R.S.
10:3-309(a) are met, and the person proves the terms of the instrument and the right to
enforce it, La. R.S. 10:3-108 applies as if the person seeking to enforce the instrument
had produced the instrument. La. R.S. 10:3-309(b).

La. R.S. 10:3-308 provides that if the validity of signatures on an instrument is
admitted or proved, the plaintiff producing the instrument is entitled to payment if the
plaintiff proves he is entitled to enforce the instrument under La. R.S. 10:3-301, unless
the defendant proves a defense or claim in recoupment. La. R.S. 10:3-308(b).

Standing to enforce the Note arises from the Bear Stearns Mortgage Trust’s
possession of the Note, endorsed in blank, and its compliance with La. R.S. 13:3740-
3741. The Note was originally payable to Home123 Corporation. The Note was then
endorsed by Home123 Corporation to New Century Mortgage Corporation. Since the
Note and the Home 123 Corporation endorsement state it was payable to an identified
entity, the Note was an Order Note per La. R.S. 10:3-109(b). New Century Mortgage
Corporation then endorsed the Note in blank, making it bearer paper and enforceable by
the holder of the Note. See, La. R.S. 10:3-205(b), La. R.S. 10:3-109(c). Possession of
the Note was then placed into the Bear Stearns Mortgage Trust. EMC Mortgage
Corporation served as the loan servicer and received the original Note on behalf of the
trustee for the Bear Stearns Mortgage Trust. At that time, Wells Fargo served as the
trustee for the Bear Stearns Mortgage Trust.

On December 1, 2008, loan servicer EMC Mortgage Corporation executed a lost
note affidavit confirming that trustee Wells Fargo was the holder of the Note, which had
been misplaced or lost and could not be located. Wells Fargo resigned as trustee, and
HSBC was appointed the new trustee. Servicing of the loan was transferred to JPMorgan
Chase Bank, N.A. On March 7, 2014, JPMorgan Chase executed a lost note affidavit
confirming that the original Note could not be located, and that loss of possession of the
Note was not due to cancellation or transfer of the Note.

17

per diem owed after January 27, 2023, and several other charges due under

the terms of the Note and Mortgage. As a matter of law, the Note and

Mortgage, together with the affidavit, establish the existence of and the

extent of the indebtedness. See, Capital One NA v. Walters, 47,157, pp. 5-6

(La. App. 2 Cir. 6/20/12), 94 So. 3d 972, 975.

The evidence establishes that the Note and Mortgage are due and

unpaid, no payment having been tendered for the installments due March 1,

2009, and thereafter. Demand was made on Ms. Dunbar to bring the loan

current, but she did not comply with said demand. All payments were

properly applied to the loan. As of December 28, 2022, the outstanding

amount is $376,193.68, plus additional interest from January 28, 2023, and

other amounts, including reasonable attorney fees, which are due under the

terms of the Note and Mortgage.

Applicable Law

La. R.S. 13:3740 provides for proof of the contents of a lost

negotiable instrument, providing:

When an instrument in writing, containing obligations which
the party wishes to enforce, has been lost or destroyed, by
accident or force, evidence may be given of its contents,
provided the party show the loss, either by direct testimony, or
by such circumstances, supported by the oath of the party, as
render the loss probable; and in this case, the judge may, if
required, order reasonable security to be given to indemnify the
party against the appearance of the instrument, in case
circumstances render it necessary.

In such cases, La. R.S. 13:3741 requires that the loss of the note be

advertised or that a bond be posted. See, Wells Fargo Financial Louisiana,

Inc. v. Bordelon, 21-80 (La. App. 5 Cir. 12/22/21), 334 So. 3d 996; U.S.

Bank National Ass’n v. Custer, 09-802 (La. App. 5 Cir. 2/09/10), 33 So. 3d

303. Specifically, La. R.S. 13:3741 states:

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In every case where a lost instrument is made the foundation of
a suit or defense, it must appear that the loss has been
advertised within a reasonable time in a public newspaper and
proper means taken to recover the possession of the instrument;
provided, that advertisement of a lost note shall not be
necessary in any case where a surety bond given by a person
who owns property liable to seizure, and who is domiciled in
the parish where the security is to be given, or a commercial
bond issued by an insurance company licensed to do business in
the state of Louisiana, is furnished to protect the maker and/or
his endorsers of said note falling into the hands of a holder in
due course provided that the bond must be in amount equal to
the face of the note plus twenty-five percent thereof.

In a foreclosure proceeding by ordinary process, the general rules

applicable to ordinary lawsuits are followed. In the instant case, which is a

foreclosure by ordinary process, because the Note that is secured by the

Mortgage was alleged to have been lost, it could not be introduced into

evidence, which is why HSBC is bound by the evidentiary requirements of

La. R.S. 13:3741. See, Hatch v. Acadiana Bank & Trust Co., 488 So. 2d

437, 441 (La. App. 3 Cir. 1986); Hammond Asphalt Co. v. Joiner, 270 So. 2d

244, 246 (La. App. 1 Cir. 1972).

In the predecessors to La. R.S. 13:3740 and 13:3741, as part of the

necessary preliminary proof of the contents of a lost instrument, testimonial

proof was admissible to prove the contents of a lost instrument, upon proof

of the loss (La. C.C. art. 2279 (1870)), and the loss was required to have

been advertised in newspapers, unless adequate security was given by the

party of interest (La. C.C. art. 2280 (1870)). Saul Litvinoff, 5 Louisiana

Civil Law Treatise, The Law of Obligations, §12.09 (2d ed. 2001).

Although jurisprudence interpreting these provisions is not plentiful,

Louisiana courts have held that the failure to advertise a lost note prior to

filing suit is not fatal to a foreclosure action and does not otherwise bar

recovery on the note. Likewise, older cases have held that a plaintiff’s

19

failure to advertise, even when the suit is pending, only abates the case until

the advertisement is accomplished. Shreveport Long Leaf Lumber Co. v.

Garson Bros., 152 La. 343, 93 So. 117 (1922); Glennon v. Holmes, 1915 WL

1604 (La. App. Orl. 1915). More recently, the First Circuit recognized that,

by complying with the bond portion of the statute, advertisement of the lost

note can be dispensed with, and the problem of whether an advertisement is

untimely can be avoided. Hammond Asphalt Co., supra.

Appellate courts review summary judgments de novo under the same

criteria that govern the trial court’s consideration of whether summary

judgment is appropriate. Leisure Recreation & Entertainment, Inc. v. First

Guaranty Bank, 21-00838 (La. 3/25/22), 339 So. 3d 508; Elliott v.

Continental Cas. Co., 06-1505 (La. 2/22/07), 949 So. 2d 1247; Reynolds v.

Select Properties, Ltd., 93-1480 (La. 4/11/94), 634 So. 2d 1180; Davis v.

Whitaker, 53,850 (La. App. 2 Cir. 4/28/21), 315 So. 3d 979. A motion for

summary judgment will be granted if the motion, memorandum, and

supporting documents show that there is no genuine issue as to material fact,

and that the mover is entitled to judgment as a matter of law. La. C.C.P. art.

966(A)(3).

Where the facts are undisputed and the matter presents a purely legal

question, summary judgment is appropriate. Higgins v. v. Louisiana Farm

Bureau Cas. Ins. Co., 20-01094 (La. 3/24/21), 315 So. 3d 838. Plaintiff

establishes a prima facie case to enforce a promissory note where plaintiff

(1) produces and presents the note into evidence; (2) shows that it was

signed by the defendant; (3) that the defendant has defaulted; and (4) as to

an assignee, presents evidence of a chain of assignments. National

Collegiate Student Loan Trust 2003-1 v. Thomas, 48,627 (La. App. 2 Cir.

20

11/20/13), 129 So. 3d 1231; Security National Partners, Limited Partnership

v. Baxley, 37,747 (La. App. 2 Cir. 10/29/03), 859 So. 2d 890.

Once the plaintiff submits evidence establishing its prima facie case,

the summary judgment burden then shifts to the defendant to submit

evidence establishing the existence of a triable issue of fact with respect to a

bona fide defense. National Collegiate Student Loan Trust 2003-1, supra;

Thomas v. Bryant, 597 So. 2d 1065 (La. App. 2 Cir. 1992).

Analysis

We will first address Ms. Dunbar’s contentions that the trial court

erred in finding that she did not raise the issue of HSBC’s failure to post a

security bond in her motion for summary judgment, and that the trial court

erred in granting HSBC’s motion to post bond. This Court has examined the

record in its entirety. The trial court’s judgment granting Ms. Dunbar’s

motion for summary judgment was clear—it was granted solely upon the

basis she urged in her motion, which was that HSBC did not advertise the

lost note within a reasonable time. The trial court could not grant relief

which was not sought.

As to HSBC’s “motion to post bond,” the trial court stated on the

record that it was aware that HSBC’s opposition was untimely, and the court

advised HSBC to file a motion “at a later date.” However, the judgment

prepared for the trial court to sign granting defendant’s summary judgment

also included the following language—“IT IS FURTHER ORDERED,

ADJUDGED, AND DECREED that plaintiff, HSBC BANK USA, be

allowed to post a bond in this matter with the Caddo Parish Clerk of Court.”

This does not mean that the trial court granted HSBC’s motion. Instead, it

appears that the trial court reconsidered its decision on the issue or simply

21

signed the judgment it was presented with by counsel. Nonetheless, as set

forth below, the trial court had the discretion to allow HSBC to post a bond.

Furthermore, we find, as argued by HSBC, said bond could have been filed

without leave of court.

From a contextual standpoint, while we agree with Ms. Dunbar that

La. R.S. 13:3741 has a “reasonableness” requirement, it is clearly limited to

the advertisement option. First, the word “reasonable” occurs within a

phrase describing the advertisement itself— “it must appear that the loss

has been advertised within a reasonable time in a public newspaper.”

Second, use of the disjunctive “provided” between the two phrases setting

forth the alternatives further indicates the legislature’s intent to limit the

“reasonableness” restriction to the advertisement option. Ms. Dunbar’s

interpretation of La. R.S. 13:3741 as grafting the reasonable time

requirement for a lender choosing to advertise a lost note onto a holder who

posts a bond in accordance with the second part of La. R.S. 13:3741 in its

enforcement of an obligation involving a lost note would create an untenable

and inequitable position for said creditor, one this Court thinks was not

envisioned by the drafters of the statute.

Instead, our legislature’s requirement that an advertisement be posted

within a reasonable time, or a bond be obtained by a creditor/holder prior to

obtaining judgment against a debtor ensures that there is no “easy way out”

of an obligation to pay for borrowers like Ms. Dunbar who choose not to pay

on their mortgage loans for 14 years.

By not imposing a time period on the posting of a bond, other than the

implied requirement that a bond must be in place before judgment can be

rendered in a lender’s/subsequent holder’s favor, our legislature has

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protected that lender’s/holder’s right to proceed with its otherwise valid

claim, even if advertisement is not timely made, while at the same time

protecting borrowers from the risk of multiple claims arising from the same

indebtedness. Although, per the clear language of La. R.S. 13:3741, the

advertisement of a lost note must occur within a reasonable time, a lender

can obtain a surety bond at any time, and the person who has the right to

enforce the note can obtain a judgment in its favor as long as the trial court

determines that the maker is adequately protected from loss.

Furthermore, although there is no “reasonable time period” as to that

part of La. R.S. 13:3741 concerning bonds, we find that HSBC’s efforts to

secure and post the bond in this case were in fact reasonable. The trial

court’s order allowing HSBC to post a bond was issued in March 2021.

HSBC located a commercial surety to issue a bond, and the bond was issued

in September 2022. HSBC then executed the bond, which was recorded in

December 2022. All of this occurred before HSBC filed its motion for

summary judgment on February 6, 2023.

Although whether the trial court correctly allowed HSBC to post bond

pursuant to La. R.S. 13:3741 was the sole basis for Ms. Dunbar’s opposition

to HSBC’s summary judgment motion, this Court will now review the

remainder of the merits of HSBC’s motion for summary judgment.

HSBC produced a true and correct copy of the Note which outlines

Ms. Dunbar’s loan obligations and shows that it is a negotiable instrument.

As noted above, Ms. Dunbar admits that the Note is a true and correct copy

of the Note she signed. The Note is payable to the order of “Lender,”

identified as Home 123 Corporation. HSBC presented evidence, not

contradicted by Ms. Dunbar, that the Note was endorsed to New Century

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Mortgage Corporation, which endorsed the Note in blank, and possession of

the Note was transferred to the loan servicer, EMC Mortgage Corporation,

which held the Note for Wells Fargo, as trustee for the Bear Stearns

Mortgage Trust. Therefore, HSBC established that the Note is a promissory

note, and HSBC’s entitlement to enforce said note. In support of the motion

for summary judgment, HSBC submitted an affidavit setting forth the

existence and the extent of the indebtedness.

As set forth previously, see fn. 5, HSBC established that the Bear

Stearns Mortgage Trust, through its trustee, was the last known holder of the

Note prior to its loss. There were two lost note affidavits executed wherein

representatives of the loan’s servicers confirmed the loss of the original

Note, its inability to be located, and that the loss of possession of the Note

was not due to its cancellation or transfer. Thus, the Bear Stearns Mortgage

Trust, through its trustee, was the last known holder of the Note and,

although not currently in possession of the Note, HSBC, as the current

trustee, is entitled to enforce the Note.

HSBC also alleged in its motion for summary judgment that Select

Portfolio Servicing, Inc., the current loan servicer and attorney-in-fact for

HSBC, secured a Lost Instrument Bond in the amount of $195,000, an

amount equal to the face amount of the Note plus 25%. Further, this Bond

has been recorded in the public record, and a certified copy of the Bond is

attached to HSBC’s motion for summary judgment. This Court, reviewing

the record de novo, finds that the trial court did not err in granting summary

judgment in favor of HSBC.

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CONCLUSION

For the reasons set forth above, the March 22, 2023, judgment of the

trial court granting the motion for summary judgment filed by plaintiff-

appellee, HSBC Bank USA, National Association, as trustee for Bear

Stearns Mortgage Funding Trust 2006-AC1 Asset Backed Certificates,

Series 2006-AC1, and denying the exception of res judicata filed by

defendant-appellant, Donnette Dunbar, is affirmed. Costs of this appeal are

assessed to defendant-appellant, Donnette Dunbar.

AFFIRMED.

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