HSBC Bank USA, National Ass'n v. Anderson, 2017 MT 257

Background

Defendant Richard Anderson (Canadian) managed Limegrove Overseas, Ltd., a BVI corporation that owned a Lake Whitefish, Montana vacation property; Limegrove pledged that property as loan collateral to HSBC.
HSBC made a $15.5 million loan (2006) secured by a Trust Indenture on the Montana property; the Note, TLA, Replacement Note, and seven forbearance amendments contained New York choice‑of‑law clauses; the Trust Indenture expressly invoked the law of the jurisdiction where the land is located (Montana).
Anderson defaulted by failing to make required principal payments and because pledged stock fell below a trigger price; HSBC and Anderson executed a Forbearance Agreement and seven subsequent amendments extending maturity dates; no eighth extension was granted and Anderson failed to pay after the final maturity (Jan. 15, 2012).
HSBC initiated a judicial foreclosure in Montana (2012). Anderson asserted defenses (estoppel, waiver) and counterclaims (breach of implied covenant, breach of implied contract, Montana Consumer Protection Act). Limegrove later dismissed its claims; Anderson remained the sole defendant asserting defenses/counterclaims.
Discovery dispute: Anderson disclosed a banking expert after the discovery deadline and after HSBC produced some internal policies; the district court excluded Anderson’s expert under M. R. Civ. P. 37(c)(1) for untimely disclosure (no substantial justification or harmlessness) and struck his affidavit.
The district court granted HSBC summary judgment on foreclosure and on Anderson’s counterclaims; judgment awarded HSBC the outstanding principal, interest, costs, and foreclosure decree. Anderson appealed.

Issues

Issue	Plaintiff's Argument (HSBC)	Defendant's Argument (Anderson)	Held
1. Exclusion of late‑disclosed expert	Exclusion proper under M. R. Civ. P. 37(c)(1); no substantial justification or harmlessness	Late disclosure was substantially justified by HSBC’s late production of credit policies/CARMS	Affirmed: court did not abuse discretion excluding expert (no substantial justification or harmlessness)
2. Choice of law for foreclosure vs. defenses/counterclaims	Montana law governs foreclosure (real property); New York law governs defenses/counterclaims because Anderson is party to contracts with New York choice‑of‑law	Trust Indenture (governed by Montana) controls and thus Montana law should govern whole dispute	Affirmed: Montana governs foreclosure; New York governs defenses/counterclaims (Anderson not party to Trust Indenture)
3. Summary judgment to foreclose (non‑payment)	HSBC proved debt, nonpayment, and ownership of debt—entitled to foreclosure	Anderson claims waiver/estoppel from repeated extensions; contends HSBC waived right to payment	Affirmed: no material fact on nonpayment or waiver; forbearances did not waive HSBC’s right to demand payment beyond agreed extension periods
4. Summary judgment on counterclaims	Anderson failed to produce admissible evidence (excluded expert; contradicted sworn testimony); New York law applies and does not support claimed breaches	Implied covenant and Montana consumer protection claims were viable under Montana law	Affirmed: summary judgment for HSBC on counterclaims—implied covenant cannot create obligations beyond contract; Anderson did not plead or prove a New York law violation

Key Cases Cited

Doherty v. Fannie Mae, 374 Mont. 151, 319 P.3d 1279 (sanctions under M. R. Civ. P. 37(c)(1) are self‑executing absent substantial justification or harmlessness)
Sunburst School Dist. No. 2 v. Texaco, Inc., 338 Mont. 259, 165 P.3d 1079 (district court’s exclusion of expert testimony reviewed for abuse of discretion)
Masters Group Intl., Inc. v. Comerica Bank, 380 Mont. 1, 352 P.3d 1101 (Montana choice‑of‑law test; enforce clear contractual choice unless Montana public policy is contravened)
Farm Credit Bank v. Hill, 266 Mont. 258, 879 P.2d 1158 (elements required for a prima facie foreclosure case)
First Natl. Bank v. Quinta Land and Cattle Co., 238 Mont. 335, 779 P.2d 48 (foreclosure prerequisites)