Gerald K. MOUNT, Jr. and Jane R. Mount, Respondents/Plaintiffs/Counterclaim Defendants/Appellees, v. Margaret APAO, Petitioner/Defendant/Appellant, and Dirk Apao as Co-Personal Representative of the Estate of Rose Marie Alvaro, deceased, Petitioner/Defendant/Counterclaim Plaintiff/ Third-Party Plaintiff/Appellant, and Sesha Lovelace, as Co-Personal Representative of the Estate of Rose Marie Alvaro, deceased, Petitioner/Defendant/Cross-Claim Defendant/Appellee, and U.S. Bank National Association, A National Association As Trustee for the Structured Asset Securities Corporation Mortgage Pass-Through Certificates 2005-SC1, Respondent/Third-Party Defendant/Cross-Claim Plaintiff/Appellee.
SCWC-13-0002977; SCWC-13-0002610; SCWC-14-0000556
Supreme Court of Hawai‘i.
NOVEMBER 1, 2016
384 P.3d 1268
Paul Alston and J. Blaine Rogers, Honolulu, for respondent U.S. Bank National Association, a National Association as Trustee for the Structured Asset Securities Corporation Mortgage Pass-Through Certificates 2005-SC1
Mary Martin, Michael C. Bird, and Summer H. Kaiawe, Honolulu, for respondents Gerald K. Mount, Jr. and Jane R. Mount.
RECKTENWALD, C.J., NAKAYAMA, MCKENNA, POLLACK, AND WILSON, JJ.
OPINION OF THE COURT BY MCKENNA, J.
I. Introduction
This consolidated appeal arises from an ejectment action initiated after a nonjudicial foreclosure on real property pursuant to Hawai‘i Revised Statutes (“HRS“)
With respect to the issues we address on certiorari, the circuit court ruled that a nonjudicial foreclosure conducted pursuant to
- Is a nonjudicial mortgage foreclosure under
HRS § 667-5 a “proceeding to enforce a mortgage” underHRS § 560:3-803(d)(1) , and if not, did U.S. Bank fail to comply withHRS § 560:3-803(c) ‘s requirements for presentation of claims, thereby barring its claims? - Was the nonjudicial foreclosure conducted in violation of
HRS § 667-5(c)(1) , when U.S. Bank failed to provide Lovelace with loan reinstatement figures?
With respect to the first issue, we hold that a nonjudicial mortgage foreclosure conducted pursuant to
With respect to the second issue, we hold that U.S. Bank‘s failure to provide reinstatement figures to Lovelace violated
Our resolution of the second issue resolves the Apaos’ remaining four issues on certiorari, which we therefore do not address.3
Accordingly, we vacate the ICA‘s Judgment on Appeal and the circuit court‘s Final Judgment along with all the orders, writs, and/or judgments referenced in the Final Judgment, and we remand the case to the circuit court for further proceedings consistent with this opinion.
II. Background
A. The Estate and the Nonjudicial Foreclosure Proceeding
In 1999, Alvaro obtained a loan for $500,000, secured by a mortgage (“the Mortgage“) and promissory note (“the Note“) on the subject real property located on the slopes of Diamond Head at 2979 Makalei Place, Honolulu, Hawai‘i 96815 (“the Property“).4 The Property was appraised in 2013 to have a fair market value of $3,535,000.
Alvaro passed away on December 18, 2002. On January 23, 2003, a petition seeking informal probate of her will and for appointment of personal representatives was filed with the probate court in In the Matter of the Estate of Rose Marie Alvaro (“the Estate“), Probate Case No. 03-1-0018. Margaret and Dirk were appointed co-personal representatives
Margaret and Dirk apparently did not notify U.S. Bank or its mortgage servicer, American Home Mortgage Servicing, Inc. (“AHMS“), of Alvaro‘s death, but began making payments on the Note with the Estate‘s funds. The Note apparently went into arrears around November of 2004. A notice of Alvaro‘s death and regarding the informal appointment of Margaret and Dirk as co-personal representatives in an unsupervised administration was published in the Honolulu Star-Bulletin on three dates in May 2005. The notice did not notify creditors of any deadlines to present their claims.
Margaret apparently began living at the Property and collecting the mail in 2006 or 2007. By an order entered on July 11, 2007, the informal probate was converted to a formal probate proceeding. Dirk and Margaret remained as co-personal representatives.
Letters asserting default under the Note, addressed to Alvaro, were mailed to the Property in 2008 and 2009; Margaret disputed receiving them. By March 1, 2009, the Note was clearly in default. AHMS sent a letter addressed to Alvaro dated April 16, 2009 (“Default Notice“). The Default Notice provided the amount to cure the default, $11,606.14, and stated that the loan would be accelerated if not cured within 30 days.
Five months later, on August 5, 2009, Lovelace, as an Estate beneficiary, petitioned the probate court to remove Margaret and Dirk as co-personal representatives. She alleged a conflict of interest between the Apaos and the Estate because they had been living on the Property rent-free for years. Lovelace also asserted:
The current personal representatives would appear to have neglected their duties by failing to process this matter expeditiously. . . . Also, the Estate may owe additional penalties and taxes since the tax returns have not been filed on time. The estate may have claims against the current personal representatives for a surcharge. The current personal representatives are not in a position to handle fairly any such claims that the estate has against them.
By the end of 2009, U.S. Bank was clearly aware of Alvaro‘s death. On December 14, 2009, the law firm of Routh Crabtree Olson (“Routh Crabtree“), as counsel for U.S. Bank, sent a “Notice Under Fair Debt Collection Practices Act” to the “Heirs and/or Devisees of Rose Marie Alvaro,” stating it had been retained to initiate foreclosure proceedings.
On February 1, 2010, U.S. Bank recorded a Notice of Mortgagee‘s Intent to Foreclose Under Power of Sale (“Notice of Intent to Foreclose“) in the Hawai‘i Bureau of Conveyances, setting an auction date of April 1, 2010. According to Routh Crabtree, the Notice of Intent to Foreclose was forwarded to all parties who had recorded encumbrances, liens and/or other claims against the Property. These parties included the “Heirs and/or Devisees of Rose Marie Alvaro,” “Dirk Apao Personal Representative for Rose Marie Alvaro,” and “Sesha Lovelace,” apparently in her personal capacity as a beneficiary of the Estate.
Later that month, pursuant to an order filed February 23, 2010, Lovelace‘s petition to remove the personal representatives was partially granted by the probate court, and Lovelace was substituted as a co-personal representative in place of Margaret to serve with Dirk. This change in co-personal representatives was handwritten on a document entitled “Second Amended Letters Testamentary,” on which Margaret‘s name was crossed out and Lovelace‘s name was written above, and which was signed and certified by the clerk of the probate court.5
Although U.S. Bank was aware of Alvaro‘s death, it continued to send correspondence addressed to Alvaro to the Property, which Margaret apparently received. Then, despite the order two days earlier officially removing her as a co-personal representative, on February 25, 2010, Margaret, claiming to be Alvaro, called AHMS and obtained a verbal reinstatement quote of $72,645.42, valid until March 3, 2010, which AHMS confirmed by a letter of the same date addressed to Alvaro
The day before, on March 30, 2010, Margaret had called AHMS again, asking for an updated reinstatement quote, first pretending to be Alvaro and then claiming to be a personal representative of the Estate. It appears that in order to establish her authorization to receive loan information, pursuant to AHMS‘s request, Margaret faxed the first page of the July 11, 2007 probate court‘s “Order Granting Petition to Transfer from Informal to Formal Proceeding and to Renew Letters Testamentary,” which had continued her and Dirk as co-personal representatives.
U.S. Bank postponed the foreclosure sale scheduled for April 1, 2010. On April 19, 2010, AHMS mailed updated reinstatement figures to Margaret, reflecting a reinstatement amount totalling $80,138.32, which she appears to have also forwarded to Dirk.
Ten months later, on February 3, 2011, U.S. Bank officially served the original Notice of Intent to Foreclose on Lovelace as “as personal representative.” It also served Dirk “as personal representative” on February 5, 2011. This notice still reflected the foreclosure sale date of April 1, 2010, which had already passed.
In any event, pursuant to the Notice of Intent to Foreclose, which directed inquiries to AHMS, Lovelace began requesting reinstatement figures soon after she was served. Although Routh Crabtree had served Lovelace with the Notice of Intent to Foreclose as a personal representative, AHMS questioned Lovelace‘s authority to receive the reinstatement figures. Based on emails between Lovelace and her attorney, it appears that on February 9, 2011, her attorney faxed to AHMS the Second Amended Letters Testamentary of February 23, 2010. On February 18, 2011, Lovelace emailed her attorney, however, stating, “The company will not accept this document because it doesn‘t appear to be original with the names scratched out and hand written in. Is there another copy that is more professional and credible?” Lovelace also emailed her attorney that she was attempting to obtain the mortgage account number from Dirk because “[t]hey will not provide any information without [it].” Lovelace made the following request to her attorney:
Let me know once the documentation is faxed to American Home Mortgaging so I can follow-up with a phone call to determine the specifics on what is happening with [the Property]. I want to know exactly what we owe and how long they have been extending the issue before we make a final decision. I am concerned that the 6 month extention [sic] for the $250,000 would set us up for failure if [the Property] is foreclosed on.
On February 23, 2011, Lovelace sent a follow-up email to Routh Crabtree. The next day, Routh Crabtree billing assistant Julie Cihak (“Cihak“) responded to Lovelace‘s email, stating, “I need the borrower to send in a signed auth [sic] for us to give you the figures, also I have requested the reinstatement figures 3 times and they have only supplied payoff figures I have requested again.”
AHMS mailed two payoff statements dated February 19 and 24, 2011 to the Property, reflecting payoff amounts of $567,635.26 and $573,146.86. Margaret forwarded at least one of them to Dirk.
On March 2, 2011, Lovelace provided the Estate account number to Cihak. On March 3, 2011, Cihak responded that AHMS still had not provided the reinstatement figures to her, but that she would send them to Lovelace as soon as they did. In addition, Routh Crabtree foreclosure analyst Candice Yoo (“Yoo“) emailed Lovelace to ask if she had received her quote and stated, “It looks like the sale is still set for 3-7-11. I believe our fees and costs department have been working on obtaining a reinstatement quote for you.” Lovelace responded that she had not received the figures, and that “AHMSI is insisting that the auction is not scheduled because our property is not listed on their website. Can I trust that this is true? They are also saying that [Routh Crabtree] is a third party and does not have the most updated information.”
Yoo responded the following day, March 3, 2011, to explain that the “sale is still scheduled for 3-7-11, but I am having the sale
On or about March 7, 2011, AHMS apparently posted a reinstatement quote to LPS, a service that lenders and their attorneys use to facilitate communications between each other. According to this reinstatement quote, the reinstatement figure as of March 7, 2011 was $145,486.69. According to AHMS, this reinstatement quote was intended to be released to Lovelace “if and when she provided the required authorization.”
Neither Lovelace, Margaret, or Dirk ever received reinstatement figures at any time after April 2010, despite assurances to Lovelace that the March 7, 2011 continued foreclosure sale was being postponed in order to provide her with those figures. Despite these assurances, U.S. Bank conducted a foreclosure auction on April 4, 2011. At the auction, the Mounts purchased the Property through their company, Fair Horizon LLC,6 for approximately $1.21 million.
On April 6, 2011, Lovelace emailed Cihak to state that she had not received the reinstatement information, but that the Property had been sold. On April 7, 2011, Routh Crabtree lead foreclosure analyst Monica Woodward told Lovelace that “Julie Cihak no longer works on Hawaii files[,]” and invited her to call regarding questions. On April 10, 2011, Lovelace emailed her attorney regarding her conversation with Woodward, stating, “[Woodward] explained to me that the lender would not accept the document in question which is why I never received the reinstatement amount. She emphasized that even though [Routh Crabtree] forwarded them the same document they wouldn‘t accept it as reliable because of the handwritten notes.”
Thus, U.S. Bank failed to provide Lovelace reinstatement figures, alleging she had failed to provide sufficient evidence of her status as a personal representative, despite having served her on February 3, 2011 with the Notice of Intent to Foreclose specifically identifying her as a personal representative of the Estate.
B. The Mounts’ Ejectment Action Against the Apaos
The Mounts received a limited warranty deed to the Property from U.S. Bank, which was recorded on July 22, 2011. On September 7, 2011, the Mounts filed a Complaint in the circuit court against Margaret individually and Dirk and Lovelace as co-personal representatives, asserting claims for ejectment (Count I) and quiet title (Count II) (“Complaint“).
On October 11, 2011, the Apaos filed a joint answer, asserting that the nonjudicial foreclosure and sale were illegal and void. Dirk also filed a “Counterclaim and Third-Party Complaint for Wrongful Foreclosure, Quiet Title, and Damages” against the Mounts and U.S. Bank for violation of the Probate Code,
On May 16, 2012, Lovelace filed a motion to substitute Dirk or, in the alternative, to dismiss any and all claims by and against her pursuant to a “Stipulated Settlement and Release Agreement and Order” filed in the probate court proceeding on November 23, 2011 (“Stipulated Settlement“). The Stipulated Settlement allowed Lovelace to resign as a co-personal representative, but also required her to cooperate and assist the Estate in its defense of the ejectment and foreclosure proceedings involving the Property.7 Al-
though
The Mounts and the Apaos filed various cross-motions for summary judgment on the Complaint, Counterclaim, and Third Party Complaint.9 A consolidated hearing on the various motions was held on May 21, 2013. The circuit court first ruled that
The circuit court entered a writ of ejectment on July 25, 2013, granting the Mounts possession of the Property. Four days later, the circuit court entered a Judgment, reserving the issue of the Mounts’ alleged damages.
On August 6, 2013, the Apaos appealed the July 29, 2013 Judgment, as well as the orders (1) granting the Mounts summary judgment as to Count II of the Complaint and U.S. Bank‘s joinder, (2) granting the Mounts summary judgment as to Count I of the Complaint, (3) granting the Mounts summary judgment as to the Counterclaim, (4) denying the Apaos summary judgment as to the Complaint and partial summary judgment on the Counterclaim and Third-Party Complaint, (5) denying the Apaos’ request for judicial notice of their motion to dismiss filed in the district court, and (6) granting U.S. Bank partial summary judgment on Counts I and IV of the Third-Party Complaint. This appeal initiated CAAP-13-2610. On August 9, 2013, the Apaos were apparently served with a writ of execution, and were informed that they had 48 hours to vacate the property. The Apaos appealed the Writ of Possession on August 22, 2013, initiating CAAP-13-2977. After a hearing on the Mounts’ request for damages, the circuit court awarded the Mounts damages against the Apaos in the amount of $237,504.81 as well as attorneys’ fees and costs in the amount of $208,592.23. The circuit court also awarded U.S. Bank attorneys’ fees and costs of $175,423.45. On March 13, 2014, the circuit court entered a Final Judgment reflecting its various rulings. The Apaos appealed the circuit court‘s Final Judgment, initiating CAAP-14-556.
The ICA consolidated the three appeals (CAAP-13-2610, CAAP-13-2977, and CAAP-14-556) under CAAP-13-2977 by orders dated November 13, 2013 and November 18, 2014.
With respect to the issues on certiorari, the Apaos’ first point of error argued that the circuit court erred in granting judgment in favor of the Mounts and U.S. Bank and against the Apaos because the nonjudicial foreclosure was conducted in violation of (1) the Hawai‘i Probate Code, because U.S. Bank failed to make a proper claim against the Estate by raising it in the probate case or filing a judicial foreclosure action, and (2)
The ICA rejected the Apaos’ points of error as “without merit.” Mount, SDO at 4. First, the ICA affirmed the circuit court‘s ruling that “[t]he non-judicial foreclosure was an exempt proceeding under
U.S. Bank, through American Home Mortgage Servicing (AHMS), provided Alvaro‘s Estate (Estate) with reinstatement information over the phone with Margaret on February 25, 2010, and by letters dated February 25, 2010 and April 19, 2010 and mailed to the Property where Margaret was residing, and also through two pay-off statements in February 2011, at least one of which Margaret received and shared with Dirk. The fact that Margaret received the information after resigning as co-personal representative (Co-PR) is irrelevant because Margaret misrepresented herself to AHMS as a Co-PR of the Estate and shared the reinstatement information she received with Dirk. Also, U.S. Bank informed Lovelace that it would provide her with the reinstatement information she requested if she could provide U.S. Bank with the Estate‘s account number and a credible document showing that she was a Co-PR, but Lovelace did not provide U.S. Bank with either. U.S. Bank did not violate
HRS § 667-5(a)(2) because it provided the Apaos with reinstatement information, and did not violateHRS § 667-5(c)(1) because Lovelace failed to establish that she was a “person entitled to notice” underHRS § 667-5 .
Mount, SDO at 7. The ICA affirmed the circuit court‘s Final Judgment in favor of the Mounts and U.S. Bank on all claims.
D. The Apaos’ Application for Writ of Certiorari
As noted, we address the first two issues raised by the Apaos because they are dispositive of the remaining issues. The Apaos argue that the ICA gravely erred in (1) holding that a nonjudicial mortgage foreclosure conducted under
III. Standards of Review
A. Statutory Interpretation
The standard of review for statutory construction is well-established. The interpretation
B. Motion for Summary Judgment
[An appellate] court reviews a trial court‘s grant of summary judgment de novo. O‘ahu Transit Servs., Inc. v. Northfield Ins. Co., 107 Hawai‘i 231, 234, 112 P.3d 717, 720 (2005). The standard for granting a motion for summary judgment is well settled:
Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. A fact is material if proof of that fact would have the effect of establishing or refuting one of the essential elements of a cause of action or defense asserted by the parties. The evidence must be viewed in the light most favorable to the non-moving party. In other words, [the appellate court] must view all of the evidence and the inferences drawn therefrom in the light most favorable to the party opposing the motion.
Price v. AIG Hawai‘i Ins. Co., 107 Hawai‘i 106, 110, 111 P.3d 1, 5 (2005) (original brackets and citation omitted). Kamaka v. Goodsill Anderson Quinn & Stifel, 117 Hawai‘i 92, 104, 176 P.3d 91, 103 (2008).
IV. Discussion
A. A nonjudicial foreclosure is not a “proceeding to enforce a mortgage” exempt from HRS § 560:3-803 , which sets time limitations for the presentation of claims against a decedent‘s estate.
In their first question on certiorari, the Apaos assert that U.S. Bank was prohibited from pursuing its claim because a
§ 560:3-803 Limitations on presentation of claims.
(c) All claims against a decedent‘s estate which arise at or after the death of the decedent []are barred [] unless presented as follows:
. . . .
(2) [W]ithin []four months after it arises. . . .
(d) Nothing in this section affects or prevents:
(1) Any proceeding to enforce any mortgage, pledge, or other lien upon property of the estate. . . .
Whether a nonjudicial foreclosure conducted pursuant to
According to
Historically, before the merger of legal and equitable actions, actions at law were triable by a jury, while suits in equity were heard by a judge. Mehau v. Reed, 76 Hawai‘i 101, 110, 869 P.2d 1320, 1329 (1994). Both actions at law and suits in equity, however, were presented in courts. Yet, a nonjudicial foreclosure, by its very nature, avoids the court system. See Lee v. HSBC Bank USA, 121 Hawai‘i 287, 289, 218 P.3d 775, 777 (2009) (explaining that
U.S. Bank correctly argues, however, that according to
“Proceeding” is not further defined by
Black‘s Law Dictionary defines “proceeding” as follows:
1. The regular and orderly progression of a lawsuit, including all acts and events between the time of commencement and entry of judgment. 2. Any procedure means for seeking redress from a tribunal or agency. 3. An act or step that is part of a larger action. 4. The business conducted by a court or other official body; a hearing. 5. Bankruptcy. A particular dispute or matter arising within a pending case—as opposed to the case as a whole. . . .
“Proceeding” is a word much used to express the business done in courts. A proceeding in court is an act done by the authority or direction of the court, express or implied. It is more comprehensive than the word ‘action,’ but it may include in its general sense all the steps taken or measures adopted in the prosecution or defense of an action, including the pleadings and judgment. . . .
The definition continues to further explain “action,” making it clear that “action” also means a lawsuit brought in court. Id. The definition lists various types of “proceedings.” With one exception, “administrative proceeding,” all of the examples concern matters in court.
A nonjudicial foreclosure conducted pursuant to
U.S. Bank alternatively argues that even if a nonjudicial foreclosure is not a “proceeding to enforce a mortgage,” it met the presentation of claims requirement of
sented
The circuit court did not address this alternative argument, which involves factual issues. We therefore do not decide whether U.S. Bank met the presentation of claim requirement with respect to the nonjudicial foreclosure and, if not, the effect of any such failure. These issues are not before us. We merely address the question of law raised in the certiorari application and hold that a nonjudicial foreclosure conducted pursuant to
B. The nonjudicial foreclosure sale was conducted in violation of HRS § 667-5(c)(1) , which requires that information to reinstate a loan be provided within five days of a request, rendering the sale voidable, unless the Mounts are innocent purchasers for value.
We next address the second issue on certiorari, whether the nonjudicial foreclosure sale was conducted in violation of
1. As personal representative, Dirk has standing to assert U.S. Bank‘s failure to provide Lovelace with reinstatement figures, as Lovelace was acting as a co-personal representative when she made the request.
As a preliminary matter, U.S. Bank asserts that the Apaos lack standing to raise the issue of its alleged failure to provide Lovelace with reinstatement figures in 2011. As explained above, although U.S. Bank served Lovelace with a Notice of Intent to Foreclose in February 2011 as a personal representative of the Estate, it refused to provide her with the reinstatement figures. We therefore address U.S. Bank‘s threshold argument that the Apaos lack standing to raise a
As noted, in the Final Judgment, all claims against Lovelace were dismissed, and the Counterclaim and Third-Party Claim were brought only by Dirk. At all relevant times, Dirk was a co-personal representative of the Estate with Lovelace. Dirk now remains as sole personal representative of the Estate. He asserted claims against U.S. Bank and the Mounts as a co-personal representative on behalf of the Estate. U.S. Bank asserts that Dirk also lacks “standing” because Lovelace‘s request allegedly was not made on behalf of the Estate, but rather, to evaluate a settlement in the probate proceeding in which she and her family were adverse to the Estate.15 We disagree.
With respect to U.S. Bank‘s assertion, whether or not Lovelace asserted claims against the Estate before being appointed a co-personal representative, there is no dispute that Lovelace requested reinstatement information beginning in February 2011 only after she was served with the Notice of Intent to Foreclose, and that she requested reinstatement in her capacity as co-personal representative, acting on behalf of the Estate.
A personal representative is a fiduciary acting on behalf of an estate.
statement figures belong to the Estate. Dirk, as the current sole personal representative of the Estate, therefore has standing to raise the
2. U.S. Bank violated HRS § 667-5(c)(1) by not providing Lovelace with reinstatement figures.
(c) Upon the request of any person entitled to notice pursuant to this section and sections 667-5.5 and 667-6, the attorney, the mortgagee, successor, or person represented by the attorney shall disclose to the requestor the following information:
(1) The amount to cure the default, together with the estimated amount of the foreclosing mortgagee‘s attorneys’ fees and costs, and all other fees and costs estimated to be incurred by the foreclosing mortgagee related to the default prior to the auction within five business days of the request[.]
In Santiago, 137 Hawai‘i 137, 366 P.3d 612, we stated:
The purpose that prompted the addition of
HRS § 667-5(c) to the foreclosure statute in 2008 was to “ensure that the different nonjudicial foreclosure processes include provisions for interested parties to receive sufficient notice and obtain information about the intent to foreclose [and] amounts to cure the mortgage default.” Conf. Comm. Rep. No. 3-08, in 2008 House Journal at 1710, 2008 Senate Journal at 793. Evident from the legislative history ofHRS § 667-5(c) is the recognition that the right to cure a default is intrinsic in the law and that, therefore,HRS § 667-5(c) merely codified this right to ensure that interested parties were adequately apprised of it.
The common-law right to cure a default originated from the fundamental premise that mortgage foreclosure is a proceeding equitable in nature and is thus governed by the rules of equity. Because equity abhors forfeitures, and regards and treats as done what ought to be done, it is typical in foreclosure cases that a right to cure a default and stop the foreclosure continues up to the day of the confirmation of the sale. Thus, Hawai‘i‘s courts would not prevent a mortgagor from curing the default and halting the foreclosure prior to the entry of a written order confirming the foreclosure sale. Accordingly, our interpretation thatHRS § 667-5(c) provides a right to cure is directed byHRS § 667-5(e) ‘s codification of the same right under the common law. To hold otherwise would be to disregard the emanating purpose ofHRS § 667-5(c) and to indirectly nullify the common-law right to cure as incorporated inHRS § 667-5(c) .
137 Hawai‘i at 156-57, 366 P.3d at 631-32 (emphases in original, internal footnotes, case citations, and case quotation marks omitted).
The circuit court and the ICA ruled that
Dirk, on the other hand, argues that U.S. Bank‘s failure to provide reinstatement figures to Lovelace after her repeated requests from February 2011 until the foreclosure sale on April 4, 2011 render the nonjudicial foreclosure sale void.
Even if U.S. Bank had provided reinstatement figures to Margaret in February and April of 2010, there is no dispute that U.S. Bank, for whatever reason, aborted the original nonjudicial foreclosure sale scheduled for April 1, 2010. Ten months later, on February 3, 2011, it served the Notice of Intent to Foreclose on Lovelace as a personal representative (which still reflected a foreclosure sale date of April 1, 2010). Reinstatement figures from early 2010 which were less than $90,000, were obviously no longer valid in early 2011, and were not the amounts required to “cure” the default. As conceded by AHMS, the reinstatement figure was actually $145,486.69 as of March 7, 2011. This was
After U.S. Bank‘s attorneys served Lovelace with the Notice of Intent to Foreclose as personal representative of the Estate, AHMS refused to provide her with reinstatement figures, alleging that she had to provide proof that she was a personal representative entitled to reinstatement figures. Her alleged failure to provide sufficient authorization to receive the figures was the sole reason given by AHMS for refusing to provide Lovelace with the reinstatement figures.
Routh Crabtree‘s attorneys served Lovelace with the Notice of Intent to Foreclose in her capacity as a personal representative. Routh Crabtree repeatedly acknowledged Lovelace was entitled to receive the reinstatement figures she was requesting and repeatedly postponed the foreclosure sale. Yet, for whatever reason, the foreclosure sale took place on April 4, 2011.
As a co-personal representative of the Estate, Lovelace requested reinstatement figures after U.S. Bank‘s decision to proceed with the nonjudicial foreclosure sale in early 2011. Dirk‘s receipt of reinstatement figures in early 2010 did not eliminate U.S. Bank‘s obligation to provide “cure” or reinstatement figures in early 2011, after it chose to abort the April 2010 foreclosure sale, then rescheduled it in 2011. In addition, whether or not Margaret received payoff figures in February 2011, and whether she provided those figures to Dirk is immaterial, as the “amount to cure the default” under
Based on the undisputed factual chronology and record of this case, U.S. Bank‘s argument that it did not have a “continuing obligation to provide reinstatement figures at the whim of the Estate after having previously complied” is devoid of merit. Even its law firm acknowledged U.S. Bank‘s obligation to provide reinstatement figures to Lovelace before proceeding with a foreclosure sale. Therefore, U.S. Bank failed to comply with its obligation under
The Mounts and U.S. Bank argue that the Apaos’ interpretation of
3. The foreclosure sale is voidable, unless the Mounts are innocent purchasers for value.
Based on U.S. Bank‘s failure to provide reinstatement or cure information to Lovelace, as required by
As far back as 1884, this court voided a mortgage sale of real estate and livestock because the mortgagee had not complied with the conditions of the power of sale by scheduling the foreclosure sale one day too early. Silva v. Lopez, 5 Haw. 262 (1884). In Lee, 121 Hawai‘i at 296, 218 P.3d at 784, we held that “an agreement created at a foreclosure sale conducted pursuant to
The facts in Lee and Kekauoha-Alisa differ from the facts in this case. In Lee, the high bidder at the nonjudicial foreclosure sale had not completed the sale. 121 Hawai‘i at 289, 218 P.3d at 777. Under those facts, we held that the sale was void and that the high bidder was entitled only to return of his down payment plus accrued interest. Id. In Kekauoha-Alisa, the lender itself had purchased the property through a credit bid, so no third party was involved. 674 F.3d at 1086.
In this case, however, the Mounts completed the sale, took possession of the Property, and have now had the Property for some time, similar to the facts in Santiago. In Santiago, we held that “[w]here it is determined that the nonjudicial foreclosure of a property is wrongful, the sale of the property is invalid and voidable at the election of the mortgagor, who shall then regain title to and possession of the property.” 137 Hawai‘i at 158, 366 P.3d at 633. We also held that where the property has passed into the hands of an innocent purchaser for value, rendering the voiding of a foreclosure sale impracticable, an action at law for damages is generally the appropriate remedy. Id.
As noted earlier, based on its other rulings in favor of the Mounts, the circuit court deemed moot their motion for partial summary judgment alleging bona fide purchaser status, and the Mounts withdrew that motion. Therefore, the circuit court never addressed whether the Mounts qualify as “innocent purchasers for value” under the Santiago rule. Upon remand, the circuit court is to apply Santiago to determine an appropriate remedy for the wrongful foreclosure.
U.S. Bank‘s nonjudicial foreclosure was conducted in violation of the requirements of
V. Conclusion
Based on the foregoing, we vacate the ICA‘s Judgment on Appeal and the circuit court‘s Final Judgment along with all the orders, writs, and/or judgments referenced in the Final Judgment, and we remand the case to the circuit court for further proceedings consistent with this opinion.
Notes
(c) All claims against a decedent‘s estate which arise at or after the death of the decedent [] are barred [] unless presented as follows:
. . . .
(2) [W]ithin the later of four months after it arises. . . .
§ 560:3-804 Manner of presentation of claims. Claims against a decedent‘s estate may be presented as follows:
(1) The claimant may deliver or mail to the personal representative a written statement of the claim indicating its basis, the name and address of the claimant, and the amount claimed, or may file a written statement of the claim, in the form prescribed by rule, with the clerk of the court. The claim is deemed presented on the first to occur of receipt of the written statement of claim by the personal representative, or the filing of the claim with the court. If a claim is not yet due, the date when it will become due shall be stated. If the claim is contingent or unliquidated, the nature