so you may proceed thank you mia please the court your honors my name is david rosen i p o here today as counsel for myself and my law firm which i'll be referring to collectively is the rosen defendants there are three cases where the rosen defendants were named by plaintiffs counsel in the federal courts lima and bald be referring to these three cases is the federal court case the court is aware there were also t state court cases brought against myself and my law firm as well those are the ones that have been argued before the why supreme court and submitted was one of the things that troubles me about your appeal is given the discussion that we just had in the earlier case it seems to me that there are some pretty substantial issues of hawaii consumer and nine hundred issue of foreclosure law that are not clearly decided one way or the other by state and federal authority why isn't this appeal frivolous where the district court essentially found that you can't sanction counsel when there are serious questions to be resolved that's a very good question your honor let me just say that i think i'm the only one in the room who's actually done a foreclosure and i've done thousands your honor has as well but it's california law that there was only one claim asserted against the rosen defendants and that related to the issue of postponements and we actually have very developed statutory and case law on that issue counsel who face those same kind of an issue here that folks on the other side actually not be on the same side to some degree faced in the earlier case as my colleague just mentioned you've got turns out now at least two cases in with you deb and various underlying common law potential causes of action that are being decided by the awarding supreme court since at least if i understand it correctly why in spring court didn't have to take piece cases it chose to take the cases so doesn't that by its very nature mean that these are not laughable these are they are potentially going to result in something you don't like they may or may not but the reality is when you're talking about rule eleven we're basically saying these have to be honorably baseless they've got to just laffer is nobody could even pay any attention to them clearly these are those kinds of cases where they are your honor and i'll explain why ok there they are frivolous as against me and my firm for two reasons one the statute expressly provides again the state court cases involved if some very different issues and common law and whether or not a duty was owed was argued and pled much differently in those state court cases than in the federal court cases the federal court standard for dismissal is very different than the state court standard under as against me though there's an added hurdle if you're sue your opponent's counsel you have to show some nexus that either there was a relationship or that that party that that attorney owed you some sort of duty that they were for do shiri you were a third party beneficiary they were holding your funds those are the those are the reported hawaii supreme court decisions but i'm sort of the that's not you doubt that we're talking about the past i get that that's what we have one call lucas versus ham you got some others and it's certainly true under the common law except in the estate planning area it's extremely unusual for a lawyer who is not representing someone to be charged with negligence or whatever else has to be foreseeable it be a state playing but the question as i see it is under your dad if you can be found to fit within these  descriptors you know the underlying transaction right can you be held now there's nothing so far but the but the whole why and supreme court is considering this is it not there are elements under you that they're not even played in these complaints one of the primary elements of you that claim is that the plaintiffs needs to be a consumer of the defendant services let's just say let's say you're correct no doubt you are in that point would the issue be whether or not the court should allow an amendment to the complaint if the hawaii supreme court decides it contrary to you then it would be sent back and they have the trial court would say ok you can amend your complaint you know what you just say go ahead i agre ok and that's what the court did court granted the motions to dismiss allowed leave to amend and plaintiffs in all three cases declined to amend their complaints they could have under it all and promptly they could have pled them better they could have gone through the elements of the you that claim with respect to me they didn't it's not in their first amended complaint in lima it's not in the original complaint and bawled what about  action and it's not alleged again we have to deal with what's in these complaints but isn't the theory that borrowers are typically consumers who are financing the acquisition of their homes through the lending practices of the banks that there's no doubt that borrowers and their lenders have a consumer relationship right and then on top of that you have a contractual relationship and bodied in the loan documents correct which provide certain contractual duties upon default that the lender or mortgage e must follow in order to recoup the debt or the obligation by the b er and the attorney is acting as the agent of the lender or in discharging those duties through these non judicial foreclosure proceedings so we have an element here that involves consumer transactions we have a principal agency relationship between the lawyer and the lender in this and the allegation is that the duties were discharged unfairly in a manner calculated to in essence reduce the amount of money that might have been realized if more  transparent bidding process played this council has conceded that there was no deficiency judgment sought in any of these cases other than that there's no damages allege that the problem your honor with the damage just theory is that had this been done of using my term more tran sparently there might have been greater participation by potential bidders instead of only a single credit bit by the bank who held the mortgage instead let's say on a four hundred thousand or loan instead of a three hundred twenty five thousand dollars bid it might have been three hundred fifty thousand isn't that the theory well again i can only look at the complaint but i also know what actually happened in one of your honor's raise the question were the borrowers the plaintiffs given notice of postponements they were i'll tell you that mailed notice went out for each postponement and that is a fact that the court can take the disallowed notice of because as part of the mortgages affidavit which is in the record of this case attached to that is a certificate of mailing for each postponement notice so the borrowers were given notice every time there was a postponement the public i was also given notice that's the public announcement and there's another side to this and this is critical i think that the court really needs to understand  if you are going to require first of all there is no statute or case law and the contract itself do not require publishing postponement notices but if you are going to do that there is a a very significant side effect which is the cost of those postponement notices and if you want to talk about a consumer protection issue passing on the cost of hundreds of dollars per postponement publication to a consumer who may be trying to save their home and bring their long current that could very easily be viewed as a consumer violation so we're put in this very difficult position first of all we follow this is you know a court of law not a court of yes and we have to look at what the law required and the law six six seven dash five says you can postpone by public announcement the contract allows for the lender to dictate the terms of the sale and in the notice which is part of the contract it allowed for postponements from time to time via public announcement and the law is probably all true counsel but you're still at least in my mind with this problem even if everything you did was in accordance with typical hawai'ian practice you no have here a rule eleven claim yes you've got a district judge over whose ruling we have to grant an abuse of discretion standard and the question for her was is there any possibility any possibility that the this case could result in a different result i mentioned to your opposing counsel the other case i said what if there were twenty postpone any honestly said well i don't know it all so the reality is you didn't have twenty postponements but the theory is that if the facts of a given case got too bad then you might have a problem now i know you claim that you're not covered because the definition the statute but the one you supreme court finds differently then you've got a problem so we're faced with the issue of are there any circumstances under which regardless of whether there is a common law claim counsel might be held liable then we have to uphold what the district court did you agree with that i do your honor and i don't have any problem with this court waiting for the why supreme court  decisions it it i think it at the very least it's going to provide clarity that you can't sue your ponens counsel in this type of situation but what your honor was getting that's specific issue was not raised as it is yes we raised familiar with the specific facts and briefing on that but your honor what your honor was talking about is if there is anything that could have been pled if there's any potential in the case that they could have stated a claim that we were looking at one document the pleading the first amended complaint in people in lima and the original complaint in bald and what rule eleven says is when you sign your name on those documents there has to be a good faith basis in those documents it's not what could have happened and what your honor is getting to if they had put those things then the the complaints may not have been volunt of rule eleven but they didn't say any of those things and effective plaintiffs of knowledge that in ball they dismissed me and my firm on the eve of the motion to dismiss hearing after not responding to a rule eleven letter and the motion to dismiss all of the briefing they didn't even respond there's a reason for this and this is the critical thing this is one of the critical things that i think the court needs to consider why why were myself and my firm brought into this judge put please see had no doubt in his decision on the real man this you he found that the joinder of myself or my firm was a frivolous jointer that the only reason we were brought in was to attempt to defeat diversity jurisdiction plaintiffs don't even look at and no where in their pleadings the address their basis for suing their opponents counsel it's not their could they have  amended maybe but they did in the court gave them an opportunity and they didn't do it we gave them notice and they didn't do it so what the court should be looking at isn't what the facts might have been deal because it put that issue to bed at least as far as all of the foreclosure attorneys and parties were concerned it said that a public announcement is sufficient and in fact the statute says it's all that's required so if you're going to go to the extra step and you're going to actually publish you better have a really good reason for doing so so that you don't get thank you i want to correct one thing that mr rosen said at the beginning and he suggested that in each case of these three people eamonn ball that the court offered a chance to amend in the bald case the court did not and that's the one we just heard the merits argument on the court issued the order without giving and that's for example why you might if you don't see the twenty eight day claim is a well what would you amend your complaint in ball to say if you had leave if we had been given leave well i think it would have been futile at that point because of judge more ways precaution mindset but the additional claim that's out there is the one that was recognized by judge kobayashi in the cigarette case which is also want to appeal because she threw the case out on other grounds but she recognized that this twenty eight days violates the statute it's supposed to be twenty nine days in the vault case there are two plaintiffs bald unless all this handled by a different law firm rushmore they follow the they they they gave twenty nine days notice and then they published the postponement the thing that mr rosen says is so expensive we don't want to burden the poor consumer with those other firms did it mark in any answer i'm sorry simple question guess what out your complaint enough if there is some eight ball in other words i think someone was arguing there's an eight ball versus twelve lee standard i don't think that if someone has just not put in enough detail or plausibility they get a chance to invent a show oyur i think all the facts are there already you know so if we gave you leave to a man you wouldn't have anything new so we would we would put in the facts that were presented on the motion in other words the sixty eight percent postponement rate which makes most of his notices false from the get go because he knows there's a likelihood that dates are never going to happen the quitclaim is a possibility i'm not sure that we would we have not alleged against an attorney i thought that was given up but that's in other cases it's a to address we had never played it against mr rosen is very clear from the complaint he thought it might be in there but it wasn't in the complaint but i also would like to point out one reason why we dropped mr rosen since he wants to speculate and there's nothing in the record about why it was done but you can look at all three of these cases and see that judge mol way this goes to the real eleven twice issued inclinations to deny the motions to dismiss what happened was in the limo and give arguments she was trouble because she didn't want mr rosen to be in the case  she was trying to if you read the transcript she's trying to decide to decide a way in which he can be released and the bank stays in and we pointed out it was really difficult to do that and so she flipped from her inclination and let them both out of the case so when ball came up a few weeks later we said look at seems to be the problem the judge mall way has is the presence of this attorney you know we really want to press forward with this the argument that we don't sue the we just sue the attorney to get into federal court what about the kid one hundred eight case we only sued rosen initially we later cigarette case in state court there are two sick words one in state and one in federal and state court we sued rosen alone in federal court we sued the bank we filed in federal court because there was pure diversity so we don't have any on the federal what's the status of that case now pending in this court fully briefed no no argument sent none set yet as far as i know so the to get back to your question i'm forgive me for not focusing in on the attorney's point we would certainly have alleged the statistics and patterns and practice that we presented to the judge factually as additional detail there was a germ of that in the complaint because we pointed out that other lawyers don't  complaint but not much more than one hundred complaint only i think at the time we filed the complaint in one day we had not done all of the statistical analysis again they were briefed to the court and they're part of the record in the hyundai case they're there in that case as well done that's not the point where our cases focus on the publication to third party potential good or that's what this is about the person who is being foreclosed is pretty much likely broke it's nice to let them know what's going on and maybe they have a friend or family member who can step in and bid and maybe they can come up with a solution or find a buyer but by and large the money that's going to bail everyone out is coming from third party bidders and in this case it's worth pointing out that there were no third party bidders in the vault case in the lima case there was one of the plaintiffs had a third party bidder and in the give a case one of the plaintiffs played if there had a third party better so if it happens but statistically it's quite rare it's less than five percent of the cases that there's a third party bitter or another thing that true just generally in hawaii no and i can't speak to why but in california it's extremely rare unless you've got a re choice piece of property for anybody to show up but the credit bidder is that true and why we presented the evidence and it's in the record in this case and it was although people complained that it was inappropriate to put in evidence on a rule twelve frankly your honor i've never quite figured out what this plausibility means and i think that to show that something's plausible i should at least be able to show some of the extrinsic facts but you're not answering my question did show why we showed that in hawaii in judicial foreclosures are not nontraditional non judicial foreclosures is what is the practice here to people show up or not other than the credit or there are bidders do show up and i don't we do not know at what percentage we know what percentage they and getting successfully and that is ranging between four and five percent depending on which i realized we're talking please here which is very different than the questions i'm asking but i'm trying to understand the you regime so i can understand the fairness etc and i guess what i'm concerned about is there any practical difference in one  the only person that's there is the credit bitter versus if there is no postponement and you still have the same predator i think it does make a difference because the first of all invite economic conditions change over time some of these postponements or many months a postponement can happen your first option might be on a day when six other properties are being auctioned that day so even if there are ten or twelve interested people they may be focused on something else a postponement could be a day when there's no one else compet works both ways right because oh for example if you post bond and it turns out to a beautiful sunny day in the proper usual really well you might have twenty people there where you might not have anybody on the first one you're more likely to get those twenty if you put it in the newspaper and that's  common is that system the result of these very opaque and insider e type practices of not publishing and of only you know announcing it to the people who showed up first time again we're both kind of speculating i suppose but i'm to meet i practiced real estate law for thirty seven years and what i saw was what i just described i would be very surprised were any different and why i'm asking you whether it is different i think that it's safe to say that the majority of third party purchasers are people who are in the business of doing that random person looking for a home but we have actually presented this statistics on these buyers and given their names and there is some variation there be two or three companies that might repeat and then there are individuals who just buy ones and so it's hard to say until we get to discovery the precise answer to your question i think it's a mix here ok land is extremely sought after in hawaii in california i'm sure there's lots of wide open space and farmland that may go begging but because there are now than there used to be because we're on an island there is a very high demand for the land and the options that i've seen are generally attended by someone  at the peak of this foreclosure wave i think it was tough there weren't enough buyers to go around but certainly judicial foreclosures we see that all the time and then they often show up at the confirmation hearing and they bid outside the courtroom as well and drive the price up further one one of two things i wanted to touch on before i run out of time mr rosen continually refers to you know the opponents lawyer or the opposing lawyer and  we had this discussion in the supreme court back in june and that is you have to step back and ask yourself are they really my adversary doesn't an adversary require a referee in a system of rules to really have an adversary i mean if you're if you're shooting fish in a barrel the fish out your adversary's i mean they're not happy and they're and they're reacting negatively but there it isn't a fair fight it's not an ad for your degree that if the if the foreclosure proceeded judicially it's still an identical foreclosure proceeding in the sense that the ultimate aim of which is to sell the property to the highest bidder and hopefully recover as much of the lenders loss as possible there is there is a judge there to make that we site the wood river case in our briefs and that's very important case because it explains what the conflict is in a non judicial and why it's different from judicial well maybe you can educate me because it seems to me that aside from the fact that you do have a referee the whole point of the exercises to sell the property hopefully for as much money as you can that where where there is not a lot of bidders out there and the bank calculates that it can sell get more for this property if it's able to retail it subsequent to the auction it has an incentive to drive away other buyers at the auction but it also has an incentive not to to issue the judicial process because the non judicial process is quicker cheaper and more efficient theoretically yes but that comes with the price that they're not willing to pay in this case which is that there's a consumer law would provide some protections to the borrower if they cut those corners but but that conflict where you know the banks what they do is they bid a low credit bid and then they turn around and sell it six months later through a realtor advertising a limited warranty deed with showing and they get fifty or s thousand thing after a judicial foreclosure proceeding if they were the successful if they were the successful better but there's a judge there who has no interest in that happening who has a real interest in getting that if there are no competing bidders they can bid the same  credit amount that they would bid in a non judicial that is true but there is a judge and with respect there is a judge there who is trying to make sure there are competing bidders and the fact that that judge is going to warrant the title in effect through his final judgment is the assurance t people that someone isn't going to come in and challenge we've you've got cases in front of you in the district court has dozens of them where people have refused to vacate and challenge the foreclosures having been done improperly buyers would much prefer to go to a judicial auction and say i want the judges imprimatur i know i'm not going to have to deal with this disgruntled mortgage or then go to a judicial sale where there's no warranty at all and where there's very every likelihood you're going to face litigation with that mortgage or after you get one of the reasons why a quit claim deed might be the only deed offered because there could be potential detainer problems we're not suggesting that the problems that  predate or even the can to the season argument that they make that's another red herring what are allegation is that if you are selling someone else's property you should warrant at least that you did it correctly and did not violate the law you have to warrant that so that the people know that it was done correctly that's what the judicial foreclosure in effect gives a bitter but i thought the purpose of the deed was more to protect both the seller and the purchaser from subsequent claims by third parties who might allege of competing interest in the property it's to protect the bidder certainly the warranty deed protects the bitter because a bank stands behind it and says we did this sale correctly we promise well i think that the bank could give such a warranty deed because when it was mortgaged they did a title search they had title insurance for that mortgage and there are no subsequent lee existing junior lien is not going to defeat their mortgage they don't do that more found that we stated a claim and therefore it never went up you're the only court currently i think appellate court considering that particular question and we submit that there is a certain amount of twelve the six there is a basis to say that given the comparison between how often third party bidders bid a judicial versus non judicial that this use of the quitclaim deed where the bank is refusing to even tell the public that they've done the foreclosure correctly you're selling someone else's property and you're not standing behind your work thank you council your time has expired or question one just one quick question is there any evidence in the record that a bank run a deficiency claim against someone whose property was sold for less than fair market value from your perspective there is not in this record but i think there may be and i have to look at these all three of these cases to know there are second mortgages  in some year wiped out then are they not when they are foreclosed the the mortgage may be wiped out but the debt is not well but we are not a car and so far as the third party is concerned it's gone up the property right the person who buys the property doesn't have to worry about the mortgage but the the debtors debt the mortgage or its debt to that is not like california where we have non recourse financing it's all recourse here so you still owe that that debt but there's no evidence in the record about that river case would river yeah i'm looking at your brief and i can't find it what  well that's fine except that if you want us to look at the case you're going to give us the site and so far we don't have any s y you may do so and please do so and and serve a copy on your opposing counsel all right the case just argued will be submitted for decision and the court will take a ten minute recess