The Bank of New York Mellon v. R. Onaga, Inc.
140 Haw. 358
| Haw. | 2017Background
- BONY sued to foreclose a mortgage on Land Court–registered property owned by the Marquezes; Onaga claimed a competing first-priority interest and filed a separate foreclosure action. The actions were consolidated.
- The circuit court granted summary judgment to BONY, concluding BONY held the first priority note and mortgage; Onaga appealed but did not post a supersedeas bond or otherwise obtain a stay of enforcement.
- The foreclosure sale proceeded; Lyle and Linda Ferrara were the high bidders, the commissioner’s deed was recorded, and a new Land Court certificate of title was issued to them.
- Onaga appealed the order confirming sale to the ICA; the ICA vacated BONY’s summary-judgment ruling in a related appeal and denied the Ferraras’ motion to dismiss Onaga’s sale-confirmation appeal as moot.
- The Hawai‘i Supreme Court granted certiorari to decide whether the appeal was moot where the appellant failed to post a supersedeas bond before a bona fide purchaser acquired title via a confirmed judicial sale.
Issues
| Issue | Plaintiff's Argument (Ferraras) | Defendant's Argument (Onaga) | Held |
|---|---|---|---|
| Whether an appeal of an order confirming a judicial foreclosure sale is moot when appellant failed to post a supersedeas bond and property was sold to a bona fide purchaser with new certificate of title | Sale to a good-faith purchaser during appeal renders challenge moot; purchaser received certificate of title and commissioner's deed, so title is conclusive | Certificate of title is void under HRS §501-118 unless a certified copy of final judgment is filed after appeals are exhausted; purchaser should not obtain title while appeal pending | Appeal is moot. Appellant must post a supersedeas bond or obtain a stay; absent stay, bona fide purchaser’s title (via Land Court certificate) is conclusive and appeal cannot afford effective relief |
| Whether HRS §501-118 prevents issuance of new certificate of title to purchaser until appeal is finally resolved | §501-118 does not exclusively require filing certified copy after appeals are exhausted; other statutory mechanisms (e.g., recording the commissioner’s deed under §501-155) suffice to obtain certificate | §501-118 requires certified copy of final judgment filed after appeal period/appeal resolution; Ferraras’ certificate is invalid if appeal pending | §501-118 provides a nonexclusive method to obtain a certificate; recording the commissioner’s deed and obtaining a certificate under other Land Court provisions is sufficient; §501-118 does not bar good-faith purchaser from receiving title |
| Whether Land Court certificate of title conclusively establishes purchaser’s title against prior challenger who failed to obtain a stay | Certificate of title is conclusive; Torrens/Land Court policy favors certainty for purchasers | Onaga argued right to appeal could affect title; certificate issued during appeal is void | Certificate of title is conclusive; Aames and Land Court principles apply to judicial foreclosures; challenger who did not secure stay cannot undo title |
| Whether exceptions apply when reversal is on jurisdictional grounds or purchaser is mortgagee | Ferraras: not applicable here | Onaga: suggested broader protection for appeals | Court: recognized City Bank rule exceptions—jurisdictional reversals and purchaser being mortgagee—but neither applies here |
Key Cases Cited
- City Bank v. Saje Ventures II, 7 Haw. App. 130, 748 P.2d 812 (Haw. App. 1988) (general rule protecting good-faith judicial-sale purchasers when no supersedeas bond is filed)
- Lathrop v. Sakatani, [citation="111 Hawai'i 307, 141 P.3d 480"] (Haw. 2006) (appellant’s failure to seek a stay can render appeal moot when post-appeal transactions prevent effective relief)
- Aames Funding Corp. v. Mores, [citation="107 Hawai'i 95, 110 P.3d 1042"] (Haw. 2005) (certificate of title should be given conclusive effect; discusses Land Court/Torrens scheme)
- Mortgage Electronic Registration Sys., Inc. v. Wise, [citation="130 Hawai'i 11, 304 P.3d 1192"] (Haw. 2013) (orders confirming sale are separately appealable; foreclosure judgment determines the merits and later proceedings enforce it)
- Ocwen Fed. Bank, FSB v. Russell, [citation="99 Hawai'i 173, 53 P.3d 312"] (Haw. 2002) (possession of negotiable note and assignment evidence in foreclosure context)