Case Title: Aames Funding Corporation v. Mores. S.Ct. Order of Amendment, filed 05/11/2005 [pdf]. S.Ct. Order Granting in Part and Denying in Part Appellants' Motion for Reconsideration, filed 05/11/2005 [pdf], 107 Haw. 348.

Citation: 107 Haw. 95

Docket Number: 

State: hawaii

Court: Hawaii Supreme Court

Date: 2005-04-22T00:00:00Z

Document:
W UBRARY

 

FOR PUBLICATION*#*

ee

IN THE SUPREME COURT OF THE STATE OF HAWAI'D!

  

 

qa

  

ee
RAMES FUNDING CORPORATION, a California ai = S
corporation, dba Aames Home Loan, Plaintiff-Appellee

vs.

PONCIANO MILLORA MORES and PATRICIA ROSETE MORES,
Defendants-Appellants

and

JOHN DOE 1-10, JANE DOES 1-10, and DOE PARTNERSHIPS,
CORPORATIONS and OTHER ENTITIES 1-20, Defendants

OO
Wo. 24758

APPEAL FROM THE DISTRICT COURT OF THE FIRST CIRCUIT
(CIV. NO, 1RCO1-5476)

APRIL 22, 2005
MOON, C.J., LEVINSON, NAKAYAMA, ACOBA, AND DUFFY, JJ.

OPINION OF THE COURT BY ACOBR, J.
Defendants-Appellants Ponciano Millora Mores and
Patricia Rosete Mores (the Moreses) appeal from the October 11,

2001 order of the district court of the first circuit (the
 

FOR PUBLICATION:

 

 

district court)* granting a writ of possession for property
located in Aiea, Hawai'i (the Property) in favor of Plaintiff-
Appellee Aanes Funding Corporation (Aames). The Moreses also
challenge the October 11, 2001 findings of fact and conclusions
of law, and the October 24, 2001 order of the district court
denying the Moreses’ motion to dismiss filed on October 3, 2001.

Based on the reasons set forth herein, the district
court’s October 11, 2001 and October 24, 2001 orders are
affirmed.

1.

On July 5, 2000, the Moreses entered into a residential
mortgage loan (Mortgage) with Aames in the principal amount of
$227,500 for the Property. The Mortgage was filed in the office
of the Registrar of the Land Court of the State of Hawai'i (Land
Court) as Document No. 2637478, and was the first mortgage lien
on the Property.

‘The Mortgage expressly states that the Moreses “dol]
hereby mortgage, grant and convey to [Aames], with power of sale,
the [Property].” The Mortgage also contains conditions regarding
acceleration of the loan, notice for default and, subsequent
forfeiture of the loan, and the curing of default. The Mortgage
states in relevant part:

Tf the default is not cured on or before the date specified

in the notice, (Aames], at its option, may require immediate
payzent in full of all suns secured by this Security

 

+ The Honorable David 1. Fong presides:

2
‘#*FOR PUBLICATION***
eee

Instrument without further demand and may_invoke the power
‘af-sale and any other reaedies permitted by applicable law.

(Emphasis added.)

on August 14, 2000, the Moreses filed a Warranty Deed
in the Land Court, executed on July 6, 2000, which conveyed the
Property to the Moreses family trust dated April 24, 1995. On
November 15, 2000, Aames mailed, inter alia, a “Notice of
Default” to the Moreses indicating that the Moreses had breached
their financial obligations under the Mortgage and owed $8,685.01
on the Mortgage as of November 15, 2000.

on January 4, 2001, Aames issued a “Notice for Non-
Judicial Foreclosure of Sale” to the Moreses. The notice
announced the sale of the Property by public auction. On April
10, 2001, a second “Notice of Non-Judicial Foreclosure Sale” was
sent to the Moreses. This notice was sent via certified mail,
specified the default, detailed the action required to cure said
default, indicated the date by which the default must be cured,
and stated that non-compliance would result in acceleration of
the mortgage sums due and in the sale of the Property.

Apparently, @ public auction of the Property was
conducted? and on July 17, 2001, Aames filed a Commissioner's
Deed in the Land Court denominated as Document No. 2722965. This

Deed was executed “in accordance with the terms of that certain

 

+ the April 10, 2001 “Notice of Non-Judicial Foreclosure Sa
fed that a public suction was scheduled for May 31, 2001 at 12:00 noon
Front entrance of the First Circuit Court at 177 Punchbowl Str
Honolulu, Hawai's

   
‘**sFOR PUBLICATION*#*
Affidavit of Exercise of Power of Sale dated June 15, 2001,
recorded in [the Land Court] as Document No. 2714670.”
on July 20, 2001, the Land Court issued Aames a
‘Transfer Certificate of Title (TCT) No. 587,098 to the Property.

‘The Moreses refused to surrender possession. On August 15, 2001,

 

Aames filed an action for ejectment against the Moreses in the
district court. On August 29, 2001, the Moreses mailed Aanes a
letter notifying Aames of the Moreses’ “right and option to
cancel and rescind” the Mortgage “based upon numerous federal
Truth-In-Lending Violations . . . , none the least of which was
(Aames’s] failure to deliver . . . any completed copies of the
Notice of Right to Cancel with all requisite dates filled in.”

on August 30, 2001, citing the Havai'l District Court
Rules of Civil Procedure (HDCRCE), the Moreses filed a “Rule 12.1
Joint Declaration . . . Objecting to Subject Matter Jurisdiction”
(declaration). Apparently, on August 31, 2001, the district
court conducted a return hearing, in which the Moreses appeared
pro se and entered general denials. Aanes’s ejectment action was
set for trial on October 5, 2001.

On October 3, 2001, the Moreses filed a motion to
dismiss based on (1) “lack of subject matter jurisdiction” and
(2) “lack of admissible evidence." on October 3, 2001, Aanes
responded with a memorandum in opposition.

on October 5, 2001, trial on Aames’s ejectment action

was conducted before the district court. Trial began with both
‘***FOR PUBLICATION®#*

parties stipulating to the authenticity of (1) a certified copy
of the July 17, 2001 Commissioner's Deed, (2) a certified copy of
the 2001 real property tax assessment records for the Property,
and (3) a certified copy of TCT No, 587,098. The district court
accepted all three decunents into evidence

‘anes then requested that the district court “take
judicial notice of the general denial that the (Noreses] entered

sion, {and}

 

in this case,

 

scognize . . . that they dispute poss
our right to possession of the (P]roperty[.]” The Moreses
responded to this request by orally moving to “dismiss the case
on the basis that (Aames has] not fulfilled their [sic]
requirements under law for presenting adaissible evidence.” In
this regard, the Moreses made six “offers of proof.”? The
district court accepted the Moreses’ offers of proof subject to

Aames’s objection as to the relevance of said offers.

 

7 The offers of proof were as follows:

[120] they did not receive the contractual required notice
of default that their loan was in default which is @
Condition precedent to the right of the lender to accelerate
the loan and to exercise the power of [i2)) they
id not receive the contractual required notice of right to
Gancel which is specified in the Mortgage as a precondition
Eo the right of (hemes) to exercise the power of sale... .
[(3)1 the requirements at the auction were that the bidders
had to have a hundred-percent deposit in advance... «
T(4)] the auction price as s hundred thousand dollars or
nore below the fair market value. -.. [(3)] they have
ever seen, they have never been presented, and this court
Jacks in the record[,] admissible evidence showing the
General Loan ledger as required by... (GE Capital

96 Hawai'i 32, 25 P34 807 (App.

 

 

 

Mawel’, Inc. vs Yonenaka,
2001)].- -» and [(6)] they sent a cancellation letter
£6 anes luhereby within three yeare, they

 

 

Cancelled the Mortgage pursuant to their rights’ under
federal law and. «+ that they did not each receive two
Completed copies of |. . the notice of right to cancel,
thereby as « matter of Law cancelling this loan.

 

5
‘***FOR PUBLICATION*#*

‘Thereafter, the district court ruled that such offers were not

relevant and sustained Aames’s objection.

 

The district court then announced its ruling “in favor
of [Aames}” and “grant(ed) judgment for possession and writ of
possession . . . effective . . . November 1{, 2001].” on
october 11, 2001, the district court entered its written findings
of fact, conclusions of law and order. the district court found

in relevant part as follows:

 

1. Ranes . . . holds title to the (Property)
2. hanes | |. 4s the registered owner of the
(Property):

3. (The Moreses) disputed {hanes’s} right to
possession of the subject property by entering 2 general
Genial to the complaint filed by (Aames) for Ejectment.

   

The district court ordered “Judgment for Possession” and a “Writ

on” be entered in favor of Aames. Attorney's fees and

 

of Pos:

 

costs were avarded to Aames. On October 24, 2001, the district
court entered its “Order Denying Mores Defendants’ Notice of
Motion and Motion to Dismiss Filed October 3, 2001.”

filed a notice of

 

on November 9, 2001, the More:
appeal, As mentioned previously, they appeal from the

october 11, 2001 order and dispute the October 11, 2001 findings
of fact and conclusions of law and the October 24, 2001 order

denying their motion to dismiss the complaint.‘

+ the october 11, 2001 order finally determined the complaint for
ejectment and is an appealable final order under Hawai'i Revised statutes
(Rs) § 641-1 (2), which authorizes an appeal from a final order in @ district
court civil case. Casumpang v ILM, Local 142, 91 Hawai't 425, 426, 98¢ P24
3251, 1252 (1999) (per curiam) (explaining that district court order that

 

        

Hinally decides ail rights and liabilities of all parties is an appealable
final order under HRS § 641-1(a)). The Moreses’ motion to dismiss the
(continued...)
‘***FOR PUBLICATION*#*
1.

on appeal, the Noreses argue that (1) the district
court lacked subject matter jurisdiction because their
declaration established that Aanes’s complaint involved a dispute
as to title to real property, (2) Aanes’s complaint failed to
state a claim for relief that could be granted by the district
court because the complaint did not plead that the Mortgage was
in default during the attempted acceleration, non-judicial
foreclosure sale, and at the time title was transferred, (3) the
“power of sale” clause is an unenforceable “contract of
adhesion,” rendering Aames’s non-judicial transfer of title both
unconscionable and void, and (4) the district court had no
subject matter jurisdiction to eject the Moreses because the

Moreses did not receive the requisite copies of the Truth In

 

Lending Act (TILA) “Notice of Right to Cancel
Aanes, in response, argues that (1) the district court
had jurisdiction to decide the ejectment proceeding because
Aanea’s title to the Property was conclusive and unimpeachable
following the entry of a certificate of title in favor of Aanes,
(2) the district court had jurisdiction to decide the ejectment
proceeding because the Moreses did not file an affidavit that

ynts of HOCRCP Rule 12.1,

 

complied with the “unambiguous” requir

(.. continued)
complaint, that was disposed of by the court's October 24, 2001 denial, is
Feviewable on appeal from the October 11, 2001 order. See

Marg, 3¢ Haw, 686, 694 (1938) (stating that an appeal from a final judgment
Springs up for review all interlocutory orders not appealable as of right
which deal with Seaues in the case”)

 

 
‘***FOR PUBLICATION®#*
and (3) the Moreses did not raise a timely or proper defense to
the ejectment proceeding.

qin,
~The existence of [subject matter] jurisdiction is a

question of law" that is “review(able) de novo under the right/

wrong standard.” Lester v. Rapp, 65 Hawai'i 238, 241, 942 P.2d
502, 505 (1997). See also Casumpana v, ILMU, Local 142, 94

Hawas's 330, 337, 13 P.3d 1235, 1242 (2000) ("A trial court's
dismissal for lack of subject matter jurisdiction is a question
of law, reviewable de novo.”) Additionally, “review of a motion
to dismiss . . . is based on the contents of the complaint, the
allegations of which we accept as true and construe in the light

most favorable to the plaintiff.” Id, (quoting Norris v.

Hawaiian Airlines, Inc., 74 Haw. 235, 239-40, 842 P.2d 634, 637
(1992) (brackets omitted)). The trial court, however, “is not

restricted to the face of the pleadings, but may review any
evidence, such as affidavits and testimony, to resolve factual
disputes concerning the existence of jurisdiction.” Id. (quoting
Norris, 74 Haw. at 239-40, 842 P.2d at 637 (internal quotation
marks, brackets, and citations omitted)).
Iv.

With respect to the Moreses’ first argument regarding
subject matter jurisdiction, Hawai'i Revised Statutes (HRS)
§ 604-5(d) (Supp. 1995) states in relevant part that “the

district courts shall not have cognizance of real actions, nor
***FOR PUBLICATION*#*

a
actions in which the title to real estate comes in question{.1”
The Noreses argue that their declaration of August 30, 2001
raises an issue as to title to real property in accordance with
HDCRCP Rule 12.1 (2001). In pertinent part, HDCRCP Rule 12.1

follow:

   

provides

Whenever, in the district court, In defense of an action in
the nature of an action of trespass or for the sumnary

possession of land, or any ether action, the defendant shall
feck to interpose a defense to the durisdiction to the

‘affect that the action is a real action, oF one in which the
title to real estate is involved, such defense shall be
asserted by written anser or written motion, shich shall

 

(Emphases added.)

‘The Noreses’ declaration states in item 2, that “[t]his
action involves a dispute as to title to real property.” In item
8, the Moreses declare, “{iJe claim that we have title to the

[Plroperty{.1” However, Aames maintains the Moreses did not

 

comply with HDCRCP Rule 12.1 because (1) the Moreses did not

assert their defense in a “written answer” or “written motion,”

 

(2) the Moreses’ mere assertion that “title is at 4 vas
insufficient to validate their claim, and (3) even if the

declaration is construed as a proper “written answer or . . «
motion," the Moreses failed to denonstrate the merits of their

claim in not identifying the “source,” “nature,” and “extent” of

 

their title claims in an affidavit.
‘***FOR PUBLICATION®#*

 

According to HOCRCP Rule 12.1, the “defense
(regarding title) shall be asserted by written answer or written
motion{.]" (Emphasis added.) The Moreses contend that they
satisfied this requirement because the written motion to dismiss
“referenc(ed)” their declaration as to title and was
“specifically recognized, argued, and denied by the district

court{.]” In addition, they point out that the district court

 

declared in its finding no, 3 that the “(Moreses) disputed
[Aames’s] right to possession of the subject property by entering
a general denial(*) to the complaint filed by [Aames) for
Ejectment.”

Although the Moreses’ declaration and subsequent
motion to dismiss together may be construed as fulfilling the
HOCRCP Rule 12.1 requirement that a defense to title be asserted
in a “written motion” or “written answer,” the Moreses failed to
assert the “source,” “nature,” and “extent” of their title clains
in an affidavit.

First, the Moreses’ declaration was not an affidavit

that was “confirmed” by the Moreses before a person authorized to

* At the October 5, 2001 hearing, Aanes's counsel stated, in
fant part, that

 

Lwle'd ask the (clourt take Judicial notice of the general
denial that the (Moreses] have entered in this case,
recognize it as a confession, that they dispute possession,
our right to possession of the [P]roperty, and with that, we
would submit that we've met our burden of showing that. Mo
have title of the [Plroperty and that our right to
Possession is in dispute, being disputed.

    

 

10
FOR PUBLICATION*#*

administer the Moreses’ oath or affirmation.‘ An affidavit is

 

“{a) written or printed declaration or statement of facts, made
voluntarily, and confizmed by the oath or affirmation of the
party making it, taken before a person having authority to
administer such oath or affirmation.” Black's Law Dictionary 58
(6th ed. 1990) (emphasis added) .

Second, assuming azquende that the declaration may be
construed as an affidavit for the purposes of HOCRCP Rule 12.1,
the declaration merely asserts that title was at issue, and fails
to provide information as to the “source,” “nature,” and “extent”
of this claim, The Moreses’ declaration and memorandum of law
include statements objecting to the manner in which the Mortgage
was consummated such as the purported lack of an explanation of
the “power of sale” clause or of an appended copy of the TILA
“Notice of Right to Cancel.”’ None of these matters, however,

+ an unworn declaration may be treated as an affidavit in other
instances. See, guasr fawal'l Rules of Penal Procedure Rule 47(a) (2001) ("In
fee of afeidavits ah unsworn declaration nay be made by a person, in wetting,
subscribed as true under penalty of lew, and dated(-1") However, there is no
Hocnc® Rale thet provides for substitution of a declaration for an affidavit.

HDcacP Rule 6(d) (2001) provides in relevant part that “(wlhen a motion 19
supported by affidavit, the affidavit shall be served with the motion(.1*

   

 

» the Moreses’ declaration stipulated that the Mortgage states that
“iE default is not cored... Lender... may invoke the power of sale(.]”
Reading the declaration and the menorandim of law together, the Moreses clai
‘that (1) they were not allowed adequate tine to review the terms and
conditions of the Mortgage, (2) these terms and conditions were not explained
to then, (3) a8 laypeople, ‘the Moreses had unequal bargaining powers in
comparison to Aanes, (4) Aanes’s failure to explain the “power of sale” clause
Eendered the Mortgage unenforceable as = “contract of adhesion|,]” (5) without
notice and a hearing, “substantial property rights” wore lost as a
Constitutional matter “at the time of the non-judicial auction(,]” and (6) the
hon-judicial foreclosure procedures pursuant to HRS § 667-5 raise fairness and
doe process problens insofar as a 100s cash closing was required at the public

(continued...)

   

 

 

 

     

a
‘***FOR PUBLICATION®#*

” nature,”

 

are germane to informing the court as to the “sour
and “extent” of the title claimed by the Moreses as to the land

in question. Hence, the Moreses’ mere assertion that “title is

 

at issue” is insufficient to validate their jurisdiction defen:
maintains that Territory v. Kapiolani Gatate,
Ltd., 18 Haw. 640 (1908), is instructive as to the objective of

HDCRCP Rule 12.1. In Kapiolani Estate, a summary possession

action was brought by plaintiff-lessor against defendant-lessee

ane

 

for failure to make rental payments, Id. at 641-42. Plaintiff-
lessor sought to recover possession of the disputed leased

property. Id, at 641. The action was adjudicated in district

 

and circuit courts in favor of plaintiff-lessor and was,
ultimately, appealed by defendant-lessee to the territorial
supreme court. Id. at 641-42. The defendant-lessee contended
that district courts “shall not have cognizance of real actions
nor actions in which the title to real estate shall come in
question.” Id, at 642-43. The court overruled the “exceptions”
brought by the defendant-lessee. Id. at 646. Rule 15 of the
territorial supreme court, entitled “Defense of Title in District
courts,” and in effect at the time provided as follows:
Whenever, in the District Courts, in defense of an
action of trespass, of a suit for the euamary possession of
and, or any other action, the defendant shall plead to the

Jurisdiction in effect that the suit isa real action, or

(...continued)
auction that allowed Aenea to purchi

 

the Property on "sel f-determined

 

‘The Moreses’ declaration also asserted that Aanes failed to
provide the required federal TILA "Notice of Right to Cancel,” ellowing then
fo cancel the loan within three years of ite consunnation.

 

  

12
‘***FOR PUBLICATION***

 

‘igiSitene af the title clalaad by defendant to the iond tn

uection, and such further particulars es ball fully

Spprise the court of the nature of the defendant’ claim.

Ida at 643 (emphases added). On its face, Rule 15 is
substantially similar to HOCRCP Rule 12.1.

The territorial supreme court observed that “(t]he
object of [Rule 15] was to prevent [defendants) from ousting the
district court of jurisdiction in this class of cases by merely
saying that the title to real estate would cone in question and
thereby depriving the (plaintiff) of the summary remedy given by
the statute . . . for obtaining possession of land{.]" id. In
Light of the Moreses’ similar insufficient showing under HOCRCP
Rule 12.1, the district court, as indicated in Kapiolani Estate,
cannot be ousted from jurisdiction.

The Moreses thus failed to adhere to the requirenents
set forth in HDCRCP Rule 12.1 and, therefore, did not properly
interpose the defense of lack of subject matter jurisdiction.

v.
Aames’s argunent that TCT No. 587,098 is conclusive and

unimpeachable evidence as to title in any foreclosure proceeding

 

is dispositive of the Noreses’ second, third and fourth points

insofar as those points are supported by discernible arguments.
a

Relying on HRS § 501-118 (Supp. 2001), Aames asserts

that the Moreses “did not have the right or power . . . to

2B
‘***POR PUBLICATION*++

 

impeach the foreclosure proceeding” during the subsequent
ejectment action because, intex alia, the Moreses’ defenses
against district court jurisdiction were raised in an untimely
manner. According to Aanes, the Moreses’ defenses “should have
been raised . . . before the completion of the (foreclosure)
sale, and certainly no later than the entry of the new
certificate of title.”

HRS chapter 501 pertains to “registration of title
[with the Land Court] to land and easements or rights in land
held and possessed in fee simple within the state of Hawaii.”
HRS § 501-1 (1993). The 1903 legislative history of HRS chapter
501 is sparse. However, the legislature indicated that Act 56,
which established the statute, incorporated what is commonly
known as the “Torrens Land Act.” S. Com. Rep., in 1903 Senate
Journal, at 337. According to the legislative history,

[eihis Act Ss what is commonly know es the “Torrens Land

‘Act, and has been adopted by many states of the United
States, and is in use in the District of Columbia.

 

1s provides an economical and convenient manner of
recording land titles, which, wien the plan is fully adopted
by tne people, will do away with the present cumbersome plan
of records and largely reduce the expense of land transfer:

   

 

The plan proposed is such thet under it lend can be

ransferred with as areat facilitv aa shares of atock are at
‘the present tine.

 

Id. (emphases added). The system of land title registration
adopted by the Torrens Land Act and codified in HRS chapter 501
is “a system for registration of land under which, upon the

landowner's application, the court may, after appropriate

us
***FOR PUBLICATIONS **

 

proceedings, direct the issuance of a certificate of title.” In
re Campbell, 66 Haw. 354, 358, 662 P.2d 206, 209 (1983). The
purpose of this “registration system is to conclusively establish

title to land through the issuance of a certificate of title.”

GSS HI), Inc, v. New York Diamond (in re 2003 Ala Wai Blvd.), 85
Hawai's 398, 405, 944 P.2d 1341, 1348 (App. 1997), overruled on

other grounds, Knauer v, Foote, 101 Hawai'i 81, 85-89, 63 P.3d
389, 393-97 (2003).

HRS § 501-118, relied on by Aames, is entitled
“Foreclosure,” and states that

(mortgages of registered land aay be foreclosed 1ike
nortgages of unzegistered land.

Tn case of foreclosure by auction, a certified copy of
the final Judgment of th fonfirning the sale may be
Hed or recorded with the assistant registrar or the deputy
after the time for eppealing therefrom has expired and the
Purchaser shall thereupon be entitied to the entry of a new
Certificate

In case of foreclosure by exercising the power of sale
without a previous Sudgeent, the affidavit required by
Chapter 667 shall be recorded with the assistant registrar
‘The purchaser or the purchaser's assigns at the foreclosure
sale may thereupon at any time present the deed under the
Power of sale to the assistant registrar for recording and
obtain # new certificate. Nothing in this chapter shall be
‘Sonstiusd to prevent the martaasor ox other eeraon in
any foreslowure orosaedinas affecting recistered land, otior

fs new certiti

‘Aicer a nou certificate of title has been entered no

7 7 £08
‘hereon shall operate to open the foxeclomuse or attact the
Eitle to reaistesed land.

(Emphasis added.) The underscored language of HRS § 501-118

 

  

 

  

 

clearly recognizes a mortgagor's right to challenge a foreclosure

proceeding, stating that “[nJothing . . . shall . . . prevent the

as
 

FOR PUBLICATION***

 

mortgagor . . . from directly impeaching . . . any foreclosure
proceedings.” Id, However, the statute directs that such a
right is to be exercised “prior to the entry of a new certificate

of title.” Id, Consistent with this proposition, HRS § 501-118

 

provides that “[a]fter a new certificate of title has been
entered, no Judgment recovered on the mortgage note for any
balance due thereon shall operate to open the foreclosure or
affect the title to registered land.” Id. (emphasis added).
This indicates that conclusive effect is to be given the
certificate of title on the question of title to land.

Accordingly, it may be surmised from the text of HRS
§ 501-118 that @ mortgagor's right to “impeach(] . . . any
foreclosure proceeding” is expressly limited to the period before
entry of a new certificate of title. This proposition appears to
be buttressed by HRS § 501-88 (1993), which provides that the
matters stated in the certificate are to be given conclusive
effect in the courts.

Certificate as evidence, The original certificate in

the registration book, and any copy thereof duly certified

under the signature of the registrar... , and the seal of

the court, alall be feceived as evidence inal che course

chapter
(Emphasis added.) Such a construction of HRS § 501-118 would
effectuate the legislature's intent that the recording systen

adopted be an “economical” and “convenient” method of “recording

land titles” allowing transfer of titles to be completed with

16
***FOR PUBLICATION®#*
—_SSSSSSSSSSSSSSSSSSSSSSsSses
wgreat facility” and ease. Sen. Com. Rep., in 1903 Senate
Journal, at 337.

In 1998, Act 122, entitled “An Act Relating to

Foreclosures,” made amendments to HRS § 501-118 and additions to

 

L. Act 122, $§ 1 and 3, at 468,

 

HRS chapter 667. 1998 Haw. Se:
477-78. HRS chapter 667 as titled, relates to “Mortgage

of Act 122 vas to “establish an

 

Foreclosures.” the purpo:
alternate nonjudicial foreclosure process." Conf. Com. Rep. No.
75, in 1998 House Journal, at 979. Anew part to HRS chapter 667
was added, entitled “Alternate Power of Sale Foreclosure

Process.” 1998 Haw. Sess. L. Act 122, § 1, at 468. See HRS

§ 667-21 (Supp. 1998) (defining “power of sale foreclosure” as “a

nonjudicial foreclosure”). The legislature sought to “provide(]
an alternate nonjudicial foreclosure process which reduces the
time and cost of the current foreclosure process and contains
additional safeguards not required in the current power of sale
foreclosure law that are needed to protect the interests of
consumers.” Conf. Com. Rep. No. 75, in 1998 House Journal, at
973.

Concerns that such a measure would result in “taking

away home ownership” were raised.’ Comment by Representative

* Upon consideration of the passage of House Bill No. 2506 from the
final reading stage by the House, Representative Ward voiced objection to
House Bill No, 2506 and stated, in pertinent part, “I don’t think (the ou!
Of Representatives) need[s] to faciiitete in taking avay hone ownership... .
What the downside [of this Bi12] will be ie that it’s going to take hone

comment by Representative Ward in 1998 House

   

   

 

ownership away from people)"
Journal, at 766.

(continued.

 

uv
 

Ward, in 1998 House Journal, at 766. In apparent response, the

amendments made to HRS chapter 667 and HRS § 501-118, inter alia,

(7) Requix(ed} a11 financial institutions,
mortgagees, lenders, business entities and organizations,
land persons who intend to use this power of aale foreclosure
Process to educate and inform borrowers and mortgagors and
develop informational materials:

(8) Restrict(ed) the use of the alternate nonjudicial
power of sale foreclosure process to mortgages, loans
Agreements, and contracts containing power of sale
foreclosure language executed by the borrowers or mortgegors

after July 1388) and

3) nal statutory Languace in

 

 

Conf. Com. Rep. No. 75, in 1998 House Journal at 980 (emphases
added). Items such as (7), by which mortgagees are required to
“educate and inform” mortgagors, and item (8), where such

measures were limited to mortgages executed after July 1, 1999,
continued)

Representative Thielen algo voiced her opposition to House BiLl
No. 2506 and stated, in relevant part, a2 follow:

 

 

This bill... . sets up a process where the court is
not involved, which means that a lender could foreclose upon
3 hone without the court ever being involved in that
Process, and the court being able to provide a fair forum
for the homeowner.

‘The rush to foreclose measure puts convenience above
fairness and equity in foreclosure proceedings. Mr.

Speaker, I'm not talking about lenders like the Bank of
Hawaii Or First Hawaiian Bank. I’m talking about more
questionable lenders who are going to use this process to be
able to take a person's hone away from the family that has
worked their whole lives to purchase that hone.

 

 

 

 

 

Eeticioncy in the legal system, although an adairable
objective, should not restrict access to the court and
elisinate impartial resolution of mortgage disputes. This
DALI mainly compounds existing party inequities and
‘streamlines the process of losing one’s hone in the name of
the convenience for lenders.

 

 

Comment by Representative Thielen in 1998 House Journal, at 766.

 

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were seen as “additional safeguards not required in the
[previous] power of sale foreclosure law . . . needed to protect

" [ds at 979. However, the

 

the interests of consune:
legislature decided, as announced in item (9), to “(rletain{] the
original statutory language” of HRS § 501-118. Id, at 980.

The legislative history of HRS § 501-118 confirms the
textual command that defenses to mortgages foreclosed upon by
exercise of the mortgagee’s power of sale must be raised “prior
to the entry of a new certificate of title.” HRS § 501-118. The
Moreses’ objections contained in their August 30, 2001 joint
declaration came after, and not prior to, the Land Court's
issuance of TCT No. $87,098. Accordingly, title to the subject
property in Aames became “conclusive and unimpeachable.”

B,

Inre Bishop Trust Co., 35 Haw. 816 (1941), on which

Aames also relies, is consistent with the foregoing discussion.

 

In that case, the original registered landowner was described on
two transfer certificates of title as an unmarried man. Id. at
817-18. The landowner did not anend these certificates to
reflect the fact that he had married. Id, at 618-19. This
allegedly affected (1) the issuance of two trust deeds from
himself to the appellee-buyer, and (2) the entry of three new
certificates of title in favor of appellee-buyer. Id, The two
trust deeds were executed on Decenber 14, 1935. Id. at 818.

Pursuant to these deeds, appellant “joined with her husband and

1s
 

released her claim to dower” in the disputed property. Id.

Thus, appellee had knowledge of appellant before the issuance of
the certificates. Id, Following the death of the landowner, a
dispute arose between the appellee-buyer and appellant, the
landowner’s widow, as to whether appellant’s dower right took
priority over appellee's rights under the certificates. Id. at
820.

‘This court held that the appellee-buyer, as the later
registered owner of the subject property, was entitled to
possession because the new certificate of title was “conclusive”
with regard to “all matters contained therein,” i.e. that the
registered landowner was “an unmarried man.” Id. at 822. In

pertinent part, the territorial supreme court noted:

1d, a certificate of title ts un
Sonclusive excent a2 otherwise orovided by law, it would be
ff the purch

‘for value had inowledge of an existing uncediaterad
‘encumbrance. To do so would be to rob a certificate of
Hite of iss conclusive and unimpeachable character and
place it in the same coteaory as the ordinary record in the
‘bureau of convevances, It the intent and purpose of the law
pertaining to the reaistration of land titles is to be
Breserved, the intearity of certificates of title must be
‘scrupulously observed and every subsequent purchaser of
Fegistered land who takes a certificate of title for value,
except in cases of fraud to which he is a party, is entitled
under the provisions of section S041 to hold the sane free
from ali encumbrances except those noted on the certificate
and the statutory encumbrances enumerated.

Id. at 825 (emphasis added).
vi.
In their reply brief, the Moreses seemingly attempt to

distinguish In re Bishop Trust Co. by citing to language in that

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eee

case that qualifies the “conclusive and unimpeachable” nature of
title in instances “otherwise provided by law” as “in cases of
fraud,” but only where “the rights of the purchaser for value and
in good faith had [not] intervened.”? Id, at 625-26.

Three types of fraud have been recognized in this

(1) fraud in the factum,

 

jurisdiction in the mortgage context:
(2) fraud in the inducement, and (3) constructive fraud,

Honolulu fed. Sav, 6 Loan Ass'n v, Murphy, 7 Haw. App. 196, 202,
753 P.2d 607, 811 (1988). “*Fraud in the factum is fraud which
goes to the nature of the document itself.’” Id. at 201 n.6, 753
P.2d at 811 n.6 (quoting Adair v. Hustace, 64 Haw. 314, 320 n.4,
640 P.2d 294, 299 n.4 (1982). “*Fraud in the inducement is
fraud which induces the transaction by misrepresentation of
motivating factors.’” Id, at 201, 753 P.2d at 811 (quoting
Adaix, 64 Haw. at 320 n.4, 640 P.2d at 299 0.4 (internal
quotation marks and citation omitted)). “Constructive fraud is

characterized by the breach of fiduciary or confidential

 

7 the Moreses apparently rely on the language in in re Bishop Trust,
Co. which states that

[4Jn conclusion we might add that nothing that we have said
should be construed as intimating in any way the Lecal’

sffect, if any, of the failure of the reaistered amex or

ther 2 snanent
‘Existing cortifleates registered in the name of (the prior
Tandowner) upon the right of dower inchoate in (his wife)

 

 

intervened end (the prior landowner] had died seized of the
Tone in question. We are alone concerned with the legal
effect of the failure by the parties concerned to effect
Such anendnent in respect to the rights, under the statute,
Of # purchaser for value possessing actual notice of the
‘the relation of husband and wife subsequent to
registered omer.

Ince Bishop Trust Co,, 35 Haw. at 826 (emphases added).
2a

     

 
 

relationship.” Id, at 201 n.6, 753 P.2d at 811 n.6 (citing Silva
YsBisbee, 2 Haw. App. 168, 190, 628 P.2d 214, 216 (1981).

However, the Moreses do not provide a discernible factual or

 

at bar

 

Legal argument in support of their position that the c
involves any one of the three types of fraud mentioned. See
Hawai‘ Rules of Appellate Procedure Rule 28(b) (7) (2001)
("Points not argued may be deemed waived.”)

As to the Moreses’ assertion that Aanes was not a
“purchaser for value,” this assertion is based on contentions
that (1) Aames declared default, scheduled and auctioned off the

Property, filed a HRS § 667-5 affidavit," and transferred title

 

to itself without the Moreses’ approval; and (2) Aames’s counsel
signed the “Commissioner's Deed” and conveyed the property to
ames as “Grantor” in contravention of Hawai'i Rules of
Professional Conduct (#RPC) Rule 3.7(a) (2001). However, the
Moreses do not indicate why Aames’s actions, pursuant to HRS §
667-5 (1993), required their approval or make clear why Aames’s
actions contravene HRPC Rule 3.7(a). In any event, inasmuch as
the Moreses have not set forth a legal basis for fraud, the
question of whether Aames was a purchaser for value whose rights
would be protected even where fraud had been perpetuated on the

Moreses, does not arise.

 

RS § 667-5 requires that “(t]he affidavit and copy of the notice
lof non-judicial sale) shall be recorded and Indexed by the registrar, in the
manner provided in [HRS] chapter 501 or 502, as the case may be.”

 

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Insofar as Aames is the registered owner of the
Property as evidenced by TCT No. 587,098 and this title is

conclusive and unimpeachable, see discussion supra, Aames was
entitled to a writ of ejectment. Carter vs Kaikainahaole, 14
Haw. 515, 516 (1902) (explaining that “a complainant who has the
title to and right of possession of certain land and from whom
possession is unlawfully withheld by another” is entitled to “the
ordinary remedy of law of an action of ejectment”)."

% in Light of the foregoing analysis, we need not address the
Noreses! second, third, of fourth argunents. However, we cbserve as to, the
wore: cond’ argument, that the Mores
Support the rule that "s loan default most be
‘evidence before sunsary adjudication ‘8 perat
Courts” is misplaced. ‘These cases are distinguishable in:
Gates do not concern real property and ejectnent action!
29 Hawai'i 244, 245-47, 971 P.24 717, 718-20 (1999) (involving a medical
naipractice claim); Bac Concrete Fed, Credit Union x Kauanaa, 62 Haw. 334,
‘Sas, 614 P.2d 936, 937 (1960) (reaolving dispute over two connercial monetary
loan transactions) 7 1 78 Hawas's 213,
2ier1s, 881 P.24 300, 308-06 Tapp. 1998) (pertaining to allegedly untair or
Goceptive collection practices by collection agencies); or (2) the cases
Gnvolve real property and Judicial foreclosure proceedings rather than
Ronjudicisl foreclosure proceedings, ges Havai'l Cuty, Fed. Credit Union ve
Keka, 9¢ Hawai'i 213, 217-18, 11 P.34 1, 5-6 (2000) (relating to foreclosure
Complaint filed by mortgages and counterclaim fled by mortgagor alleging
hegligent misrepresentation, unfair and deceptive trade practices, TILA
Wielations and enction distress); GE Capital Hawai'i, Inc. v. Youenaka,
Kawato, oy Sb b3a G07, 810 (Ape atOLT inolving. clapae seat ated b
Rortgagee'’s filing of a complaint against mortgegor followed by a cross-claim
Gnd third-party complaint filed by mortgagor ageinst a guarantor on the
mortgage) and GE Cepital Hawaii, Inc, ¥. Miquel, 92 Hawai'i 236, 238, 990
P.2d 134, 136 (App. 1999) (concerning complaint filed by mortgagee against
noregagor seeking foreclosure of disputed property).

Rs to the Moreses’ third ang fourth arguments, the legislative
history to HRS § 501-116, mentioned previously, suggests that mortgages are
required to “educate and inform borrowers and mortgagors” about the “power of
sale foreclosure process." Conf. Com, Rep. No. 75, in 1998 House Journal at
580. owever, as previously stated, legislative history to HRS § 501-118 also
Indicates that mortgagor must smpeach a foreclosure proceeding “prior to the
entry of a new certificate of title.” Jd, (emphasis added). Here,
foreclosure of the Property occurred before the Moreses filed their joint
Geclaration on August. 30, 2001, asserting their claims of unenforceable “power
of sale” clauses and their TILA clains.

‘in thelr opening brief, the Moreses reiterate their arguments
about Aanes's failure to provide then with the "Notice of Right to Cancel” and
Quote @ paragraph from valley Fs en 791 Fa2d

)

 
  
  

 

 

 

 

 

 

 

 

 

 

 

 

(continued,

 

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vir.
Based on the foregoing, we affirm the district court's

October 11, 2001 order granting Aames a writ of possession and

 

the October 24, 2001 order denying the Moreses’ motion to dismi

filed on October 3, 2001.

on the briefs:
Gary Victor Dubin for
defendants-appellants. Bac Hehans

Adelbert Green (Dwyer
Schraff Meyer Joseen & Besceate Coa biy net

Bushnell) for plaintiff

appellee. A “ <

 

(.--continued)
699, 701-02 (9th Cir. 1986), which references 15 U.S.C. § 1635(f). The
Moreses do nat specifically set forth any statutory provision, or explain how
15 U.5.C. § 1635(f), Lf applicable, affects title that has become conclusive
and tninpeachable. ‘Because the Moreses do not provide any discernible legal
argument as to their contention that the court had no. svb:

Jurisdiction because the Moreses did not receive the requisite copies of the
TILA “Notice of Right to Cancel,” we do not address this contention further.

 

 

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