Russell L. HUNGATE, Plaintiff-Appellant, v. The LAW OFFICE OF DAVID B. ROSEN, a Law Corporation, David B. Rosen, and Deutsche Bank National Trust Company, Defendants-Appellees.
SCAP-13-0005234
Supreme Court of Hawai‘i.
FEBRUARY 27, 2017
391 P.3d 1
James J. Bickerton, John Francis Perkin, Stanley K. Roehrig, Honolulu, for appellant
Christopher T. Goodin, David B. Rosen, Peter W. Olsen, Honolulu, for appellee Rosen.
Judy A. Tanaka, Honolulu, for appellee Deutsche Bank.
RECKTENWALD, C.J., NAKAYAMA, MCKENNA, POLLACK, AND WILSON, JJ.
This case concerns a non-judicial foreclosure conducted pursuant to Hawai‘i Revised Statutes (HRS) § 667 Part I (Supp. 2008), which was repealed by the state legislature on June 28, 2012 by Act 182. Plaintiff-Appellant Russell L. Hungate (Hungate) appeals the Circuit Court of the First Circuit‘s (circuit court) order granting Defendants-Appellees David B. Rosen‘s and his law office‘s
On appeal, we consider whether the circuit court wrongly dismissed Hungate‘s claims alleging Deutsche Bank and Rosen violated statutory, contractual, and common law duties, and committed unfair or deceptive acts or practices (UDAP). We conclude the circuit court erred in dismissing the majority of Hungate‘s claims. Accordingly, we vacate in part the circuit court‘s November 5, 2013 order granting Rosen‘s motion to dismiss, vacate in part the circuit court‘s April 8, 2014 order granting Deutsche Bank‘s motion to dismiss, and remand for further proceedings.
I. Background
Because the circuit court dismissed Hungate‘s August 6, 2013 complaint and his first amended complaint, filed December 19, 2013, pursuant to Hawai‘i Rules of Civil Procedure (HRCP) Rule 12(b) (6) (2000), we take the factual allegations from the complaints as true for purposes of this appeal. See Young v. Allstate Ins. Co., 119 Hawai‘i 403, 406, 198 P.3d 666, 669 (2008). Hungate‘s initial complaint and first amended complaint included the following factual allegations.
A. Factual Allegations
Hungate secured a mortgage loan from IndyMac Bank, F.S.B. (IndyMac), in the amount of $ 324,090 to purchase real property in Kalāheo, Kaua‘i in 2007.2 Hungate executed the mortgage on February 10, 2007 and recorded it in the Bureau of Conveyances on February 16, 2007. In March 2007, IndyMac assigned its interest in Hungate‘s mortgage to one of its subsidiaries, which then assigned its interest to Deutsche Bank.
To address the possibility of foreclosure, the mortgage contract included a power of sale clause that allowed the property to be sold through a non-judicial foreclosure. The power of sale clause, found in section 22 of Hungate‘s mortgage, reads in relevant part as follows: “Lender shall publish a notice of sale and shall sell the Property at the time and place and under the terms specified in the notice of sale.”
On August 5, 2008, IndyMac notified Hungate that his loan was in default because he had not made the required payments. On January 14, 2009, an individual acting on behalf of IndyMac3 executed a notice of mortgagee‘s intention to foreclose under power of sale. On March 16, 2009, the notice of intention of foreclosure was properly filed at the Bureau of Conveyances by IndyMac on behalf of Deutsche Bank as the holder of the note. The notice offered Hungate‘s property for sale with a quitclaim deed and made no warranties.
Deutsche Bank retained Rosen, a Hawai‘i-licensed attorney, to conduct the foreclosure of Hungate‘s property. Deutsche Bank followed the non-judicial foreclosure process set forth in
To begin the non-judicial foreclosure process, Rosen published a notice of sale in The Garden Island, a newspaper of general circulation, as required by former
Rosen then postponed the sale a total of four times in 2009: from April 17 to May 15, from May 15 to June 12, from June 12 to July 17, and from July 17 to August 14. These dates were never published. Whether the postponement was publicly announced to the bidders who attended each sale date, as required by
At the August 14, 2009 sale, Deutsche Bank was the sole bidder with a winning credit bid of approximately $ 161,250. This amount was substantially below the market value of Hungate‘s property. A “Mortgagee‘s Grant Deed Pursuant to Power of Sale” was recorded at the Bureau of Conveyances on October 30, 2009 by Deutsche Bank.
B. Procedural History
On August 6, 2013, Hungate filed his initial complaint against Rosen and Deutsche Bank. Hungate contended that Deutsche Bank and Rosen wrongfully conducted the foreclosure of Hungate‘s property by (1) advertising a proposed sale date 28 days after the date of the first published notice, when
Rosen filed a motion to dismiss under HRCP Rule 12(b) (6). Rosen argued (1) the initial sale date was scheduled after the expiration of four weeks, when including the date first advertised, and thus he complied with
On November 5, 2013, the circuit court granted Rosen‘s motion to dismiss.10 The court ruled that (1) Rosen complied with HRS §§ 667-5 and 667-7 as a matter of law; (2)
On December 19, 2013, Hungate filed his first amended complaint against Rosen and Deutsche Bank. The claims were nearly identical
Deutsche Bank filed a motion to dismiss the first amended complaint, making arguments similar to those presented by Rosen.
On April 8, 2014, the circuit court granted in part12 Deutsche Bank‘s motion to dismiss Hungate‘s first amended complaint. As with its prior dismissal of Hungate‘s August 6, 2013 complaint, the court ruled that (1) Deutsche Bank complied with the notice requirement under HRS §§ 667-5 and 667-7 as a matter of law, and (2)
After appealing to the Intermediate Court of Appeals, the parties filed applications for transfer that were subsequently granted by this court.
II. Standards of Review
A. Motion to Dismiss
The circuit court‘s grant of a motion to dismiss is reviewed de novo. Kamaka v. Goodsill Anderson Quinn & Stifel, 117 Hawai‘i 92, 104, 176 P.3d 91, 103 (2008), as amended (Jan. 25, 2008). Further, the appellate court must accept the allegations made in the complaint as true and “view them in the light most favorable to the plaintiff[s]; dismissal is proper only if it ‘appears beyond doubt that the plaintiff[s] can prove no set of facts in support of [their] claim[s] that would entitle [them] to relief.‘” Wong v. Cayetano, 111 Hawai‘i 462, 476, 143 P.3d 1, 15 (2006) (citations omitted). “However, in weighing the allegations of the complaint as against a motion to dismiss, the court is not required to accept conclusory allegations on the legal effect of the events alleged.” Pavsek v. Sandvold, 127 Hawai‘i 390, 403, 279 P.3d 55, 68 (App. 2012) (citation omitted).
B. Statutory Interpretation
Statutory interpretation is reviewable de novo. Citizens Against Reckless Dev. v. Zoning Bd. of Appeals, 114 Hawai‘i 184, 193, 159 P.3d 143, 152 (2007). When construing statutes, the court is governed by the following rules:
First, the fundamental starting point for statutory interpretation is the language of the statute itself. Second, where the statutory language is plain and unambiguous, our sole duty is to give effect to its plain and obvious meaning. Third, implicit in the task of statutory construction is our foremost obligation to ascertain and give effect to the intention of the legislature, which is to be obtained primarily from the language contained in the statute itself. Fourth, when there is doubt, doubleness of meaning, or indistinctiveness or uncertainty of an expression used in a statute, an ambiguity exists.
When there is ambiguity in a statute, “the meaning of the ambiguous words may be sought by examining the context, with which the ambiguous words, phrases, and sentences may be compared, in order to ascertain their true meaning.” Moreover, the courts may resort to extrinsic aids in determining legislative intent, such as legislative history, or the reason and spirit of the law.
Id. at 193-94, 159 P.3d at 152-53 (citations omitted).
C. Interpretation of Contracts
“[T]he construction and legal effect to be given a contract is a question of law freely reviewable by an appellate court.” Hawaiian Ass‘n of Seventh-Day Adventists v. Wong, 130 Hawai‘i 36, 45, 305 P.3d 452, 461 (2013) (citation omitted).
III. Discussion
Taking the facts alleged in Hungate‘s complaints as true, the circuit court improperly
In Part A, we hold the circuit court erred in dismissing the majority of Hungate‘s claims against Deutsche Bank regarding the alleged HRS chapter 667 Part I violations. Additionally, we conclude the mortgage‘s power of sale clause required Deutsche Bank to publish all postponements of the foreclosure sale. Regarding Hungate‘s HRS chapter 667 Part I claims against Rosen, we conclude that the statute required Rosen (1) to give proper notice of the sale date under former
In Part B, we determine that Deutsche Bank had a common law duty to Hungate to use reasonable means to obtain the best price for Hungate‘s property. In Part C we hold that the circuit court erred in dismissing Hungate‘s unfair or deceptive acts or practices claim against Deutsche Bank, but properly dismissed Hungate‘s UDAP claim against Rosen.
A. The Circuit Court Erred in Dismissing the Majority of Hungate‘s Claims Alleging HRS Chapter 667 Part I Violations against Deutsche Bank
Hungate alleges that Deutsche Bank and Rosen improperly conducted the foreclosure sale of Hungate‘s property. Specifically, Hungate contends Rosen and Deutsche Bank: (1) advertised a foreclosure date earlier than permitted under HRS § 667 Part I; (2) failed to publish the notices of postponements of the sale as was required by the power of sale clause; and (3) improperly permitted a non-attorney to prepare and sign the notice of sale.
We hold that the circuit court erred in dismissing Hungate‘s complaints against Deutsche Bank on the basis of the first two allegations. As to the third allegation, former
Regarding the allegations against Rosen, we conclude that Hungate does not have a cause of action against Rosen for violating statutory requirements under HRS chapter 667, or for his failure to adhere to the requirements of the mortgage‘s power of sale clause.13
1. HRS § 1-29 Governs the Scheduling of a Foreclosure Sale Under Former HRS § 667 Part I
Former
Hungate contends that
Deutsche Bank and Rosen argue that we should apply the time computation rule set forth in Silva v. Lopez, 5 Haw. 262, 270 (Haw. Kingdom 1884), which required that we “include the day of the first publication and exclude the day the act is advertised to be done.” The time computation rule of Silva indicates that Deutsche Bank and Rosen advertised a sale date in compliance with the four-week requirement.
We hold that
2. The Power of Sale Clause Required Deutsche Bank to Publish Postponements of the Foreclosure Sale
Hungate argues that Deutsche Bank and Rosen were required to publish all postponements of the April 17, 2009 sale date for two reasons: (1) the original sale date advertised in the notice was one day early and thus notice was not properly given, and (2) the power of sale clause of Hungate‘s mortgage required publication of postponements of the foreclosure sale.
Deutsche Bank and Rosen contend the power of sale clause cannot require publication of postponements because former
Even assuming Deutsche Bank provided timely notice of the date of sale by public announcement, Hungate contends Deutsche Bank was required—pursuant to former
In contrast to Hungate‘s position, Deutsche Bank and Rosen interpret the power of sale clause to allow postponement by public announcement because the notice of sale expressly permits oral postponement. The power of sale clause states that the mortgagee “shall sell the Property at the time and place and under the terms specified in the notice of sale.” (Emphasis added). Because the notice of sale expressly states that the sale “may be postponed from time to time by public announcement made by Mortgagee or someone acting on Mortgagee‘s behalf,” Deutsche Bank and Rosen assert that oral postponement complied with the “terms specified in the notice of sale.” According to Deutsche Bank‘s and Rosen‘s analysis of the power of sale clause, only a single notice must be published, and not “a notice of sale for each postponed date.” (Emphasis added) (citing Lima v. Deutsche Bank Nat‘l Trust Co., 943 F.Supp.2d 1093, 1101 (D. Haw. 2013)). Thus, under Deutsche Bank‘s and Rosen‘s interpretation of the power of sale clause, once a notice of sale is published, the power of sale is complied with as long as future postponements are publicly announced orally at the time of the scheduled sale.
Because there are two reasonable interpretations of the power of sale clause, an ambiguity exists as to whether a new notice must be published to postpone the foreclosure sale. See Wong, 130 Hawai‘i at 45, 305 P.3d at 461 (explaining a contract is ambiguous “when its terms are reasonably susceptible to more than one meaning“). The application of contract interpretation principles to resolve the power of sale clause‘s ambiguity supports the conclusion that Deutsche Bank was required to publish postponement notices. “[A]ny ambiguity in a mortgage instrument should be construed against the party drawing the documents,” State Sav. & Loan Ass‘n v. Kauaian Dev. Co., 62 Haw. 188, 198, 613 P.2d 1315, 1322 (1980), or in other words, “against the party who supplies the words[.]” Restatement (Second) of Contracts § 206 (Am. Law Inst. 1981). The ambiguity in the power of sale clause should thus be resolved against Deutsche Bank, as the party who supplied the words of the contract. Thus, the more stringent interpretation, which requires postponements of the sale be published through a new notice, prevails. Accordingly, the circuit court should not have dismissed Hungate‘s complaints based on its reasoning that Deutsche Bank was not required to publish all postponements of the foreclosure sale.
3. A Hawai‘i-licensed Attorney Is Not Required to Prepare or Sign a Notice of the Mortgagee‘s Intention to Foreclose
Former
The language of former
Additionally, the legislative history of
Accordingly, the circuit court properly dismissed Hungate‘s first amended complaint as to his claim that a non-attorney prepared and signed the notice of sale.
4. Former HRS §§ 667-5 and 667-7 Create No Private Right of Action Against a Foreclosing Mortgagee‘s Attorney
Hungate contends Rosen owed statutory duties under HRS §§ 667-5 and 667-7. In response, Rosen argues former
Requirements imposed by statutes do not necessarily give rise to a private right of action. Cannon v. University of Chicago, 441 U.S. 677, 688, 99 S. Ct. 1946, 60 L. Ed. 2d 560 (1979) (noting that the fact that a “statute has been violated and some person harmed does not automatically give rise to a private cause of action in favor of that person“). In considering whether a duty imposed by statute creates a private right of action, our court has consistently focused on the intent of the legislature. Whitey‘s Boat Cruises, Inc. v. Napali-Kauai Boat Charters, Inc., 110 Hawai‘i 302, 312, 132 P.3d 1213, 1223 (2006). We review such questions de novo as a matter of law. Namauu v. City & Cty. of Honolulu, 62 Haw. 358, 362, 614 P.2d 943, 946 (1980) (noting that “the nature and extent of duty imposed by statute is a matter of law“).
The language of former
In determining whether a private cause of action should be recognized based on statutory requirements, we consider the following factors: (1) whether the plaintiff is “one of the class for whose especial benefit the statute was enacted“; (2) whether there is “any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one“; and (3) whether a private cause of action would be “consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff.” Whitey‘s Boat Cruises, 110 Hawai‘i at 312, 132 P.3d at 1223. While each factor is relevant, “the key factor” is whether the legislature “intended to provide the plaintiff with a private right of action.” Id. at 313 n.20, 132 P.3d at 1224 n.20; see also Touche Ross & Co. v. Redington, 442 U.S. 560, 575, 99 S. Ct. 2479, 61 L. Ed. 2d 82 (1979) (noting that the three factors used to assess whether a private cause of action may be implied from statutory language ultimately “are ones traditionally relied upon in determining legislative intent“).
We first consider whether Hungate was a member of the class for whose special benefit the statute was enacted. As discussed supra, the statute was amended to benefit the “party in breach of the mortgage agreement.” H. Stand. Comm. Rep. No. 1192, in 2008 House Journal, at 1450. As the party in breach of the mortgage contract, Hungate falls within the class for whom the statute was enacted.
The second factor considers whether there is “any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one.” Whitey‘s Boat Cruises, Inc., 110 Hawai‘i at 312, 132 P.3d at 1223. Former
We turn, then, to the third factor, whether a private cause of action would be consistent with “the underlying purposes of the legislative scheme.” Whitey‘s Boat Cruises, Inc., 110 Hawai‘i at 312, 132 P.3d at 1223. Here, amendments to the foreclosure process set forth in HRS chapter 667 Part I were intended to “expand[] the rights of mortgagors.” Kondaur Capital Corp. v. Matsuyoshi, 136
Hawai‘i 227, 239, 361 P.3d 454, 466 (2015) (explaining that amendments to former
However, a close reading of the legislative history of the 2008 amendment shows it was enacted to set additional burdens on the mortgagee to protect the mortgagor; the statute was not amended to regulate attorneys representing mortgagees. The amendment‘s structure or scheme attempted “to streamline and ensure transparency in the non-judicial foreclosure process by requiring a foreclosure mortgagee to provide pertinent information regarding the property to interested parties.” S. Stand. Comm. Rep. No. 2108, in 2008 Senate Journal, at 917 (emphasis added).
The committee reports explain that potential buyers and other interested parties faced difficulties in obtaining updated information regarding foreclosure sales from banks and entities located outside of Hawai‘i: “A large number of Hawaii foreclosures are handled by servicing corporations located on the mainland that provide little to no information relating to the foreclosure to parties that are entitled to information regarding the property to be foreclosed.” Conf. Comm. Rep. No. 3-08, in 2008 House Journal, at 1710, 2008 Senate Journal, at 793. Due to the growing concern that mortgagees were creating obstacles for parties seeking information, the legislature required a mortgagee to hire a Hawai‘i-licensed attorney, who is physically present in the state, to serve as a “contact individual.” S. Stand. Comm. Rep. No. 2108, in 2008 Senate Journal, at 917. The legislature concluded that a “Hawaii-based attorney will ensure that interested parties have a means to obtain information from a person with a local presence and the ability to provide useful information.” Conf. Comm. Rep. No. 3-08, in 2008 House Journal, at 1710, 2008 Senate Journal, at 793. Thus, the underlying structure and intent of the amendment was to enable interested parties to request and receive information in a timely manner from mortgagees, and not to regulate attorneys’ conduct. Permitting a mortgagor to assert a claim against the foreclosing mortgagee‘s attorney for failure to comply with former
We also consider the further factor of whether “additional remedies are unnecessary” when determining whether to recognize a new cause of action. Best Place, Inc. v. Penn America Ins. Co., 82 Hawai‘i 120, 126, 920 P.2d 334, 340 (1996). In this case, creating a cause of action under former
In sum, we conclude that recognizing a cause of action based upon former
Hungate also makes a contract-based argument that Rosen was required to adhere to the mortgage‘s power of sale clause because former
B. Deutsche Bank Must Use Reasonable Means to Obtain the Best Price for a Foreclosed Property
In addition to Hungate‘s allegations that Deutsche Bank and Rosen violated HRS § 667 Part I and the mortgage contract, Hungate asserts that Deutsche Bank violated common law duties established in Silva and Ulrich v. Sec. Inv. Co., 35 Haw. 158 (Haw. Terr. 1939). Quoting Ulrich, Hungate contends that failing to give proper notice under former
1. Deutsche Bank Owes a Common Law Duty to Hungate
We recently reaffirmed Ulrich and recognized that this common law duty extends to mortgagees conducting non-judicial foreclosure sales of real property. See Kondaur Capital Corp. v. Matsuyoshi, 136 Hawai‘i 227, 240, 361 P.3d 454 (2015). At the time Ulrich was decided, the law did not distinguish between real property and chattel mortgages;19 accordingly, the court did not limit Ulrich‘s holding to chattel mortgages. See RLH § 4724; Kondaur, 136 Hawai‘i at 240, 361 P.3d at 467 (analyzing RLH § 4727); Ulrich, 35 Haw. at 163-68. In Kondaur, we explained that Ulrich‘s rationale, to protect the mortgagor from being “wrongfully and unfairly taken advantage of by the mortgagee,” applies with equal force to non-judicial foreclosure sales of real property. Kondaur, 136 Hawai‘i at 240, 361 P.3d at 467. Mortgagors of both real and personal property therefore continue to benefit from the protections set forth in Ulrich. Id. at 240, 361 P.3d at 467. Accordingly, under Kondaur and Ulrich, in addition to the duties required under the now-repealed HRS § 667 Part I, a mortgagee has a duty to use “fair and reasonable means in obtaining the best prices for the property on sale.” Id. at 235, 361 P.3d at 462 (citing Ulrich, 35 Haw. at 168); see also Silva, 5 Haw. at 265 (requiring the mortgagee “to use discretion in an intelligent and reasonable manner, not to oppress the debtor or to sacrifice his estate“).
We further clarify that the mortgagee‘s duty to seek the best price under the circumstances does not require the mortgagee to obtain the fair market value of the property. Indeed, “[m]any commentators
2. Deutsche Bank Carries the Additional Burden to Demonstrate a Regular and Fair Sale and an Adequate Sale Price
In addition to the duty of a mortgagee to use fair and reasonable means to obtain the best price for the property, a mortgagee who purchases the foreclosed property has the burden to show that the sale was “regularly and fairly conducted” and that “an adequate price” was paid under the circumstances. Ulrich, 35 Haw. at 168; see also Kondaur, 136 Hawai‘i at 241-42, 361 P.3d at 468-69. As we explained in Kondaur, “[i]n instances where the mortgagee assumes the role of a purchaser in a self-dealing transaction, the burden is on the mortgagee ... to establish its compliance with these obligations.” Id. at 240, 361 P.3d at 467. This burden properly falls on the mortgagee because in choosing to conduct the non-judicial foreclosure sale under
There is no neutral party, such as a court, supervising the sale and ensuring a fair and reasonable process. When the non-judicial foreclosure sale results in the mortgagee purchasing the property, it is therefore imperative that the mortgagee establish that this result occurred after a fairly conducted sale. Id. at 241-43, 361 P.3d at 468-70. Accordingly, because Deutsche Bank purchased Hungate‘s property, Deutsche Bank has the burden to establish that the sale was fairly conducted and resulted in an adequate price under the circumstances. Id. at 240-42, 361 P.3d at 467-69.
C. The Circuit Court Erred in Dismissing Hungate‘s Unfair or Deceptive Acts or Practices Claim Against Deutsche Bank, but Properly Dismissed Hungate‘s Claim Against Rosen
Hungate alleged that Deutsche Bank and Rosen committed unfair or deceptive acts or practices, in violation of
To assert an unfair or deceptive acts or practices claim pursuant to
1. Hungate Sufficiently Alleged Deutsche Bank Violated HRS § 480-2 by Engaging in Unfair or Deceptive Acts or Practices
As a mortgagor who purchased residential property, Hungate alleges he qualifies as a consumer under HRS chapter 480. A consumer is a “natural person who, primarily for personal, family, or household purposes, purchases, attempts to purchase, or is solicited to purchase goods or services or who commits money, property, or services in a personal investment.”
We also conclude Deutsche Bank‘s acts occurred in trade or commerce. Trade or commerce means a “business context.” Cieri, 80 Hawai‘i at 65, 905 P.2d at 40. Transactions conducted in a business context, “by their very nature, include transactions conducted by a financial institution,” such as a “loan extended by a financial institution[.]” Keka, 94 Hawai‘i at 227, 11 P.3d at 15. Thus, the nature of a non-judicial foreclosure, which results from a loan transaction, is that of a transaction conducted in the business context. It is undisputed that Deutsche Bank is a financial institution regularly engaged in providing loans and conducting foreclosures. Deutsche Bank‘s acts throughout the foreclosure proceedings therefore occurred in the business context.
We next consider whether Hungate alleged sufficient facts that Deutsche Bank engaged in unfair or deceptive acts.21 “The question of whether a practice constitutes an unfair or deceptive trade practice is ordinarily a question of fact.” Balthazar v. Verizon Haw., Inc., 109 Hawai‘i 69, 72 n.4, 123 P.3d 194, 197 n.4 (2005) (citation omitted). To determine sufficiency, we accept the allegations made in Hungate‘s complaints as true and “view them in the light most favorable to” Hungate. Cayetano, 111 Hawai‘i at
476, 143 P.3d at 15. “[D]ismissal is proper only if it ‘appears beyond doubt that the plaintiff[s] can prove no set of facts in support of [their] claim[s] that would entitle [them] to relief.‘” Id. (citation omitted).
A practice “is unfair when it [1] offends established public policy and [2] when the practice is immoral, unethical, oppressive, unscrupulous or [3] substantially injurious to consumers.” Keka, 94 Hawai‘i at 228, 11 P.3d at 16 (citation omitted). Hungate need not allege that Deutsche Bank‘s actions meet all three of these factors to assert an unfair act or practice. See id. at 229, 11 P.3d at 17 (determining that the conduct in question was “unethical, oppressive, unscrupulous and substantially injurious to consumers,” but not addressing whether the conduct offended public policy); Kapunakea Partners v. Equilon Enters. LLC, 679 F.Supp.2d 1203, 1210 (D. Haw. 2009) (analogizing the three factors as applied to federal antitrust laws to application of
A practice may be unfair if it “offends public policy as it has been established by statutes, the common law, or otherwise[.]” Kapunakea Partners, 679 F.Supp.2d at 1210 (citing FTC v. Sperry & Hutchinson, 405 U.S. 233, 244 n.5, 92 S. Ct. 898, 31 L. Ed. 2d 170 (1972)). Hungate claims Deutsche Bank‘s conduct offended public policy because Rosen‘s actions, on behalf of Deutsche Bank, violated
Hungate also alleged that Deutsche Bank conducted the non-judicial foreclosure deceptively. A deceptive act or practice is “(1) a representation, omission, or practice[] that (2) is likely to mislead consumers acting reasonably under the circumstances [where] (3) [] the representation, omission, or practice is material.” Courbat v. Dahana Ranch, Inc., 111 Hawai‘i 254, 262, 141 P.3d 427, 435 (2006) (citation omitted). A representation, omission, or practice is material if it “involves information that is important to consumers and, hence, likely to affect their choice of, or conduct regarding, a product.” Id. (citation omitted). The test to determine deceptiveness “is an objective one, turning on whether the act or omission ‘is likely to mislead consumers,’ ... as to information ‘important to consumers’ ... in making a decision regarding the product or service.” Id. (citations omitted). “[P]roof of actual deception is unnecessary.” Rosa v. Johnston, 3 Haw. App. 420, 427, 651 P.2d 1228, 1234 (1982).
The same conduct that Hungate alleges to be unfair may also be considered to be deceptive. Hungate contends Rosen‘s practice, on behalf of Deutsche Bank, of conducting foreclosure sales on the 28th rather than 29th day from the date of first publication and failing to publish postponements of the sale date was likely to mislead reasonable consumers and could reduce buyer interest. Such practices could render potential buyers less able to determine whether the property was available for sale and less able to obtain important information regarding the property. As the United States Court of Appeals for the Ninth Circuit explained, “[p]roper notice of the actual date of a foreclosure auction is essential to ensure that foreclosed properties bring adequate prices and that the public has an appropriate opportunity to bid.” Kekauoha-Alisa v. Ameriquest Mortg. Co. (In re Kekauoha-Alisa), 674 F.3d 1083, 1091 (9th Cir. 2012). Although Kekauoha-Alisa present-ed
In addition to adequately alleging sufficient facts that Deutsche Bank‘s conduct were unfair or deceptive pursuant to
Accordingly, we hold that Hungate sufficiently alleged claims of unfair and deceptive acts or practices under
2. Under the Circumstances, Hungate Cannot Claim Unfair or Deceptive Acts or Practices by Rosen
Hungate also argues that he has standing as a consumer to assert an unfair or deceptive acts or practices claim against Rosen. Rosen maintains that the circuit court properly dismissed Hungate‘s unfair or deceptive acts or practices claim because Hungate was not a consumer of Rosen‘s services.
We rejected a similar contention in Flores. In Flores, the plaintiffs brought an unfair or deceptive acts or practices claim against a collection agency that provided subrogation and claims recovery services to the Hawai‘i Medical Services Association (HMSA) based on actions conducted in regards to a loan agreement between plaintiffs and HMSA. Flores, 117 Hawai‘i at 155-57, 177 P.3d at 343-45. Citing the statute‘s definition of “consumer,” the collection agency argued that the plaintiffs were not consumers because the plaintiffs did not purchase, attempt to purchase, or solicit to purchase goods or services from the agency. Id. at 163, 177 P.3d at 351; see
Additionally, Hungate argues that Rosen acted as an agent for Deutsche Bank in conducting the foreclosure, and thus should be similarly held liable under the UDAP statute. Hungate cites Cieri v. Leticia Query Realty, Inc., 80 Hawai‘i 54, 65, 905 P.2d 29, 40 (1995), to show that an agent or broker in a real estate transaction can be sued for UDAP under
In contrast, the role of an attorney involves representing a client‘s interests against those of an opposing party within an adversary system. Attorneys bear a duty to zealously represent clients “within the bounds of the law.” Giuliani v. Chuck, 1 Haw. App. 379, 384, 620 P.2d 733, 737 (1980); see also Hawai‘i Rules of Professional Conduct, “Preamble,” ¶¶ 2; 8; 9.22 In other settings, we have declined to recognize a duty in favor of a plaintiff adversely affected by an attorney‘s performance of legal services on behalf of the opposing party. In Boning, we noted that “creation of a duty in favor of an adversary of the attorney‘s client would create an unacceptable conflict of interest. Not only would the adversary‘s interests interfere with the client‘s interests, the attorney‘s justifiable concern with being sued for negligence would detrimentally interfere with the attorney-client relationship.” Boning, 114 Hawai‘i at 220, 159 P.3d at 832.
Permitting a party to sue his or her opponent‘s attorney for UDAP under
Accordingly, the circuit court properly dismissed Hungate‘s complaint alleging Rosen violated
IV. Conclusion
For the foregoing reasons, we vacate in part the circuit court‘s November 5, 2013 order granting Rosen‘s motion to dismiss, and vacate in part the circuit court‘s April 8, 2014 order granting Deutsche Bank‘s motion to dismiss, and remand to the circuit court for proceedings consistent herewith.