Hungate v. Law Office of David B. Rosen
139 Haw. 394
| Haw. | 2017Background
- Hungate obtained a 2007 mortgage and defaulted; Deutsche Bank became the note holder and elected a nonjudicial foreclosure under former HRS chapter 667 Part I.
- Rosen, a Hawaii-licensed attorney retained by Deutsche Bank, published a notice of sale March 20, 27, and April 3, 2009, stating an April 17 sale date; the sale was postponed four times (postponement dates not republished).
- Deutsche Bank was the sole bidder at the August 14, 2009 sale and acquired the property by credit bid for substantially less than market value.
- Hungate sued Rosen and Deutsche Bank alleging statutory violations of HRS chapter 667 Part I (insufficient notice and failure to publish postponements), breach of the mortgage power-of-sale clause, common-law duties to obtain best price, and UDAP violations under HRS § 480-2.
- The circuit court dismissed the complaints against Rosen and Deutsche Bank; the Hawaiʻi Supreme Court reviewed de novo and reversed in part, vacating portions of the dismissals and remanding for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether time computation for the 4-week notice uses HRS § 1-29 or Silva rule | Hungate: compute by excluding first day (HRS § 1-29) => April 17 was too early | Deutsche Bank/Rosen: Silva rule (include first day) => April 17 OK | HRS § 1-29 governs; April 17, 2009 did not satisfy the "after expiration of four weeks" requirement (April 18 earliest) |
| Whether mortgage power-of-sale clause required publication of each postponement | Hungate: clause requires publishing any change to time/place/terms, so postponements required new notices | Deutsche Bank/Rosen: single published notice permitting oral/public announcement postponements suffices | Clause ambiguous; construed against drafter (mortgagee). More stringent interpretation prevails: publication of postponements required; dismissal on this ground was error |
| Whether former HRS § 667-5/667-7 create a private cause of action against the foreclosing mortgagee's attorney | Hungate: statute imposes duties on attorney that are enforceable by mortgagor | Rosen: no special relationship; creating action would conflict with attorney-client role and is not the legislature's intent | No private right of action against the attorney under former HRS §§ 667-5/667-7; statutory duties do not create an enforceable claim against opposing counsel |
| Whether a Hawaii-licensed attorney must prepare/sign the notice of sale | Hungate: notice was not prepared/signed by an attorney => statutory violation | Deutsche Bank/Rosen: statute only requires attorney representation and notice be given; preparation/signature not required | Former HRS § 667-5 does not require an attorney to prepare or sign the notice; dismissal on that claim affirmed |
| Whether Deutsche Bank owed a common-law duty to obtain best price and bore burden when it purchased at foreclosure | Hungate: bank must use fair/reasonable means; bank purchasing at sale must show sale was regular and price adequate | Deutsche Bank: (argued compliance with statutes and procedures) | Mortgagee owes common-law duty to use fair and reasonable means to obtain best price; when mortgagee buys, it bears burden to show sale was regularly and fairly conducted and price adequate |
| Whether UDAP claim under HRS § 480-2 lies against Deutsche Bank and Rosen | Hungate: deficient notice and failure to publish postponements are unfair/deceptive and caused injury => UDAP liability | Rosen: Hungate not a consumer of Rosen; exposing attorneys to UDAP liability would conflict with attorney-client role; Deutsche Bank argued proper notice | UDAP claim against Deutsche Bank survives at pleading stage (Hungate is a consumer; conduct plausibly unfair/deceptive and caused injury). UDAP claim against Rosen dismissed — attorneys cannot be held liable here without undermining advocacy/conflict concerns |
Key Cases Cited
- Young v. Allstate Ins. Co., [citation="119 Hawai'i 403"] (Haw. 2008) (pleading standards — accept factual allegations as true on Rule 12(b)(6))
- Wong v. Cayetano, [citation="111 Hawai'i 462"] (Haw. 2006) (dismissal standard; view facts in plaintiff's favor)
- Silva v. Lopez, 5 Haw. 262 (Haw. Kingdom 1884) (historical time-computation rule contrasted with HRS § 1-29)
- Ulrich v. Security Inv. Co., 35 Haw. 158 (Terr. 1939) (mortgagee's duty to use fair and reasonable means to obtain best price; burden when mortgagee purchases)
- Kondaur Capital Corp. v. Matsuyoshi, [citation="136 Hawai'i 227"] (Haw. 2015) (applies Ulrich to nonjudicial foreclosures and clarifies mortgagee's duties)
- Buscher v. Boning, [citation="114 Hawai'i 202"] (Haw. 2007) (limitations on imposing duties on attorneys to non-clients to avoid conflicts)
- Compton v. Countrywide Fin. Corp., 761 F.3d 1046 (9th Cir. 2014) (interpreting HRS § 480-2 remedial breadth and standing)