Sigwart v. The Office of David B. Rosen, SCAP-13-0005253

Background

Plaintiffs Julie M. Sigwart and James L.K. Dahlberg defaulted on mortgages that contained nonjudicial power-of-sale clauses; foreclosing mortgagees retained attorney David B. Rosen to conduct sales under Part I of HRS Ch. 667.
Sigwart’s sale notices were published only in a Hawai‘i County paper despite the property being in Maui County; the initial sale was postponed via mesne postponements and the sale occurred after missed continued-date publications; U.S. Bank was the sole bidder.
Dahlberg’s sale was published with a September 10, 2010 sale date, postponed by mesne postponements without further publication; Wells Fargo was the highest bidder at the eventual sale on January 7, 2011.
Plaintiffs sued Rosen alleging failures to properly advertise and conduct the nonjudicial foreclosures in violation of their mortgages, HRS §§ 667-5 and 667-7, common law duties, and the consumer protection statute HRS § 480-2 (UDAP).
Rosen moved to dismiss under HRCP 12(b)(6), arguing publication of continuances was not required, statutory publication requirements did not give rise to private causes of action against the foreclosing attorney, and the plaintiffs lacked standing for a chapter 480 claim.
The circuit court granted dismissal; on appeal the Hawai‘i Supreme Court affirmed, relying on its prior decision declining to recognize a private statutory or UDAP cause of action against a foreclosing mortgagee’s attorney under the alleged facts.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Rosen’s failure to publish notices of postponed sale dates violated HRS §§ 667-5 and 667-7 and creates a private right of action	Statutory publication requirements were violated and thus give rise to a private cause of action against Rosen	Publication of continuances was not required; statutes do not create a private right of action against the foreclosing attorney	Court held plaintiffs cannot enforce HRS §§ 667-5 and 667-7 directly against the attorney (no private right recognized)
Whether alleged statutory violations support a UDAP claim under HRS § 480-2	The publication and conduct failures were unfair/deceptive practices actionable under HRS § 480-2	Allowing a UDAP claim against a foreclosing attorney would create conflicts, intrude on attorney-client relationship, and impede zealous advocacy	Court declined to recognize a UDAP claim against the foreclosing attorney on these facts; dismissal affirmed
Whether plaintiffs have standing to assert a chapter 480 UDAP claim against the attorney	Plaintiffs (non-clients) argued they were consumers harmed by deceptive foreclosure practices and thus had standing	Rosen argued plaintiffs lacked standing because they were not his clients and he owed them no duty of care	Court agreed plaintiffs lacked a viable UDAP claim in this context; standing insufficient to sustain chapter 480 claim
Whether the alleged conduct was so patently illegal that UDAP liability should nonetheless attach	Plaintiffs maintained the failures were unlawful and sufficiently egregious to overcome policy concerns	Rosen asserted the conduct did not amount to patently illegal acts and policy concerns precluded liability	Court found allegations did not describe patently illegal conduct that would overcome the court's policy-based reluctance to impose UDAP liability on a foreclosing attorney

Key Cases Cited

Hungate v. Law Office of David B. Rosen, [citation="139 Hawai'i 394, 391 P.3d 1"] (Haw. 2017) (court declined to recognize private statutory or UDAP claims against a foreclosing mortgagee’s attorney under similar facts)
In re Estate of Rogers, [citation="103 Hawai'i 275, 81 P.3d 1190"] (Haw. 2003) (pleading standards: view allegations as true and in the light most favorable to the plaintiff on a Rule 12(b)(6) motion)
Touchette v. Ganal, [citation="82 Hawai'i 293, 922 P.2d 347"] (Haw. 1996) (dismissal under HRCP 12(b)(6) appropriate when complaint itself shows plaintiff has no claim)