873 F. Supp. 2d 1268
D. Haw.2012Background
- Plaintiff Hele Ku KB, LLC seeks partial summary judgment related to a foreclosure sale of 811 Hele Ku Street, Lahaina, Hawai‘i; BAC Home Loans Servicing, LP acts as loan servicer for FNMA, which owns the beneficial interest in the Samsons’ loans.
- Sampson family owned the Property; a HAMP trial modification and forbearance were involved between the Sampsons and BAC.
- The August 5, 2010 nonjudicial foreclosure sale occurred with Hele Ku as the high bidder; a Limitation Clause limited remedies if title was not conveyed.
- Defendant later attempted to rescind the sale in late 2010/early 2011; a Limited Warranty Deed was tendered but not accepted.
- Plaintiff asserts breach of contract and related claims, while Defendant argues the sale was void or improperly conditioned, and seeks dismissal or limiting remedies.
- Court proceedings culminated in a May 31, 2012 Order denying Plaintiff’s motion, granting in part Defendant’s motion, and dismissing/denying Counts II–V as moot; specific performance was denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the Limitation Clause enforceable to cap Plaintiff’s remedies? | Limitation Clause improperly allows unbridled cancellation. | Limitation Clause permits cancellation with no further recourse. | Genuine issue of material fact on good faith compliance; Limitation Clause not unlimited. |
| Was there a valid forbearance agreement that voided the Sale under the statute of frauds? | Oral forbearance created enforceable modification. | No writing; forbearance unenforceable under statute of frauds. | Oral forbearance unenforceable; sale not voided solely by forbearance. |
| Did the Agreement of Sale exist and bind the parties? | Notice of Sale plus signed documents form the Agreement of Sale. | Written agreements and related documents constitute the Agreement of Sale; forbearance not required. | Agreement of Sale exists among specified documents; Plaintiff’s breach claim viable in part. |
| Is Defendant liable for breach of the implied covenant of good faith and fair dealing in canceling the sale? | Covenant limits Defendant’s discretion under the Limitation Clause. | Covenant does not constrain the Limitation Clause beyond objective impossibility. | Genuine issue of material fact; cannot grant summary judgment on this theory. |
| Can Defendant be compelled to provide specific performance? | Court should order conveyance of Property to Plaintiff. | Bank and FNMA ownership prevent specific performance by Defendant. | Court cannot grant specific performance; remedy limited to other relief against Defendant. |
Key Cases Cited
- Lee v. HSBC Bank USA, N.A., 121 Hawai‘i 287 (Haw. 2009) (foreclosure sale void if borrower not in default; downpayment rule)
- Residential Capital, LLC v. Cal-Western Reconveyance Corp., 134 Cal.Rptr.2d 162 (Cal.App. 2003) (pre‑auction forbearance/loan modification outcomes; cure of default in some contexts)
- Staffordshire Investments, Inc. v. Cal-Western Reconveyance Corp., 149 P.3d 150 (Or.App. 2006) (written forbearance may cure default; impact on foreclosure)
- Taylor v. Just, 59 P.3d 308 (Idaho 2002) (forbearance/neutralization of default; modification contexts)
- Ravelo v. County of Hawai‘i, 66 Haw. 194, 658 P.2d 883 (Haw. 1983) (detrimental reliance in contract-like claims; promissory estoppel principles)
- Best Place, Inc. v. Penn Am. Ins. Co., 82 Hawai‘i 120, 920 P.2d 334 (Haw. 1996) (implied covenant of good faith and fair dealing governs contracts)