NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS OR THE PACIFIC REPORTER

NO. CAAP-18-0000927

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI#I

BLUE MOUNTAIN HOMES, LLC, Plaintiff-Appellee, 

v.

PENNY PAGE, Defendant-Appellant,

and

JOHN DOES 1-5, and JANE DOES 1-5, Defendants

and

PENNY PAGE, Counterclaim Plaintiff/

Third-Party Plaintiff-Appellant, 

v.

BLUE MOUNTAIN HOMES, LLC, Counterclaim Defendant-Appellee,

and

THE BANK OF NEW YORK MELLON FKA THE BANK OF NEW YORK

AS TRUSTEE FOR THE CERTIFICATEHOLDERS CWALT, INC. 

ALTERNATIVE LOAN TRUST 2005-69 MORTGAGE PASS-THROUGH

CERTIFICATE SERIES 2005-69, and DOE DEFENDANTS 1-20,

Third-Party Defendants

APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUIT

(CIVIL NO. 14-1-0037(2))

SUMMARY DISPOSITION ORDER

(By: Leonard, Presiding Judge, and Hiraoka and Wadsworth, JJ.)

This appeal arises from an ejectment action brought by

the third-party purchaser of real property following a nonjudicial foreclosure on, and later sale of, the property. 

Defendant/Counterclaim Plaintiff/Third-Party Plaintiff-Appellant

Penny Page (Page) appeals from the November 9, 2018 "Judgment Re:

Order Granting Plaintiff[/Counterclaim Defendant-Appellee] Blue

Mountain Homes, LLC's [(Blue Mountain)] Motion for Summary

Judgment [Filed July 28, 2018]," entered in favor of Blue

Electronically Filed

Intermediate Court of Appeals

CAAP-18-0000927

23-MAR-2023

07:53 AM

Dkt. 69 SO
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Mountain and against Page by the Circuit Court of the Second

Circuit (Circuit Court),1/ pursuant to Hawai#i Rules of Civil

Procedure (HRCP) Rule 54(b).2/ Page also challenges the

November 9, 2018 "Order Granting Blue Mountain['s] Motion for

Summary Judgment [Filed July 28, 2018]" (Summary Judgment Order).

On appeal, Page contends that the Circuit Court erred

"in granting summary judgment and holding that Blue Mountain

. . . was a bona fide purchaser for value, and thereby

erroneously disregarded the fact that the underlying nonjudicial

foreclosure was improperly conducted and therefore invalid." 

Upon careful review of the record and the briefs

submitted by the parties, and having given due consideration to

the arguments advanced and the issues raised by the parties, as

well as the relevant statutory and case law, we resolve Page's

contention as follows and affirm.

I. Background

In February 2011, Third-Party Defendant The Bank of New

York Mellon FKA The Bank of New York, as Trustee for the

Certificate Holders CWALT, INC., Alternative Loan Trust 2005-69

Mortgage Pass-Through Certificates, Series 2005-69 (BNYM)

conducted a non-judicial foreclosure on the subject property

(Property). 

In June 2013, Blue Mountain purchased the property from

BNYM. Specifically, pursuant to a Special Warranty Deed dated

June 4, 2013, and recorded in the Bureau of Conveyances on

July 30, 2013, BNYM conveyed the property to Blue Mountain. 

On January 27, 2014, Blue Mountain filed a complaint

for ejectment against Page. On December 9, 2014, Blue Mountain

filed a motion for summary judgment. On March 20, 2015, the

Circuit Court entered its "Findings of Fact, Conclusions of Law

1/ The Honorable Peter T. Cahill presided.

2/ On October 1, 2019, pursuant to this court's August 30, 2019

order, the Circuit Court filed an Amended Judgment, which entered judgment for

possession in favor of Blue Mountain and against Page and dismissed all

remaining claims as to all parties. Page's December 5, 2018 notice of appeal

is timely as to the Amended Judgment, pursuant to Hawai#i Rules of Appellate

Procedure Rule 4(a)(2).

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and Order Granting . . . Blue Mountain['s] . . . Motion for

Summary Judgment," concluding that Blue Mountain was a bona fide

purchaser for value and granting summary judgment for Blue

Mountain. On the same date, the court also entered a judgment

for possession and a writ of possession in favor of Blue Mountain

and against Page. 

On May 27, 2015, Page appealed from the judgment for

possession and writ of possession, initiating CAAP-15-0000429. 

See Blue Mountain Homes, LLC v. Page (Blue Mountain I), No CAAP15-0000429, 2018 WL 2316520 (Haw. App. May 22, 2018) (SDO). Page

contended that the Circuit Court erred in granting summary

judgment because Blue Mountain had failed to "demonstrate 'that

the nonjudicial foreclosure sale was conducted in a manner that

was fair, reasonably diligent, and in good faith, and to

demonstrate that an adequate price was procured for the

property.'" Id. at *1 (brackets omitted). Blue Mountain argued

in part that it did not bear that burden, because it was a bona

fide purchaser of the Property. Id. at *2.

Addressing Blue Mountain's argument, we ruled that

"based on our review of the record, Blue Mountain did not carry

its initial burden to establish that it was a bona fide

purchaser." Id. at *4. We noted in particular that there was no

evidence in the record as to the amount that Blue Mountain paid

to acquire title to the Property. Id. at *3. We concluded there

were "genuine issues of material fact as to whether [BNYM]

purchased the property in good faith for valuable consideration." 

Id. at *4. We thus concluded that summary judgment was

unwarranted and vacated the judgment for possession. Id.

On remand, Blue Mountain filed a motion for summary

judgment seeking determinations that Blue Mountain (1) paid

valuable consideration for the Property and (2) was a bona-fide

purchaser. Page filed a memorandum in opposition, arguing that

BNYM's nonjudicial foreclosure was invalid; Blue Mountain was not

a bona fide purchaser for value because it had constructive

notice of Page's possession, and thus her claims and defenses, at

the time of sale; and Blue Mountain failed to conduct reasonable

due diligence as a sophisticated investor with a heightened duty

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of inquiry. 

At the October 19, 2018 hearing of Blue Mountain's

motion, the Circuit Court stated its understanding that on

remand, "the only thing that was going to be decided was whether

-- what was the price that was paid." During the hearing, Page

conceded that the amount paid for the Property constituted

valuable consideration, but asserted: "[t]he issue here is, did

[Blue Mountain] take the [P]roperty with notice, either actual or

constructive notice, of the claims, disputes of the borrower?" 

Following oral argument the Circuit Court granted Blue Mountain's

motion for summary judgment and engaged in the following exchange

with Blue Mountain's counsel:

[BLUE MOUNTAIN'S COUNSEL]: I just wanted to confirm,

so the value is reasonable and we are a bona fide purchaser

for value?

THE COURT: Yes. Yes. I mean, . . . they're not

disputing the amount, and I'm making the necessary finding,

over their objection, noting that there is this argument

that . . . the original mortgagor/owner was still in

possession, but I don't think that that rises to the level

of the notice requiring your client to go back and make all

of these inquiries. . . .

On November 9, 2018, the Circuit Court entered the

Summary Judgment Order, concluding that: "(1) The amount paid by

[Blue Mountain] to purchase the subject real property was fair,

reasonable and valuable consideration; and (2) [Blue Mountain]

was a bona fide good faith purchaser for value." (Formatting

altered.) 

II. Discussion

At the outset, we address a purported jurisdictional

issue raised in Blue Mountain's January 17, 2020 statement

contesting jurisdiction, which was joined by BNYM. Specifically,

Blue Mountain contends that "the scope of appellate jurisdiction

should be limited to the scope of remand set forth in this

Court's SDO [in Blue Mountain I]." Blue Mountain argues in turn

that the "scope of remand" was limited to "the discrete issue

. . . [of] whether the amount paid by [Blue Mountain] was

valuable consideration [.]" Based on this premise, Blue Mountain

appears to contend that our appellate jurisdiction should be

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limited to the "valuable consideration" issue and encompass no

other aspect of Blue Mountain's "[bona-fide purchaser] status." 

We first note that we have jurisdiction over this

appeal pursuant to HRS § 641-1(a) (2016). That Page may have

raised an issue on remand beyond the scope of this Court's remand

order does not deprive this court of jurisdiction over the

Circuit Court's determination of that issue. 

In any event, Blue Mountain's argument regarding the

scope of remand is without merit. In vacating the judgment for

possession in Blue Mountain I, we did not limit the scope of

remand to a determination as to whether the amount paid by Blue

Mountain for the Property constituted "valuable consideration."

See In re Hawai#i Elec. Light Co. (HELCO), 149 Hawai#i 239, 241-

42, 487 P.3d 708, 710-11 (2021) ("[T]he scope of remand is

determined 'not by formula, but by inference from the opinion as

a whole.'" (quoting United States v. Parker, 101 F.3d 527, 528

(7th Cir. 1996))). Rather, in addressing Blue Mountain's

argument that it is a bona fide purchaser of the Property, we

determined that: (1) "Blue Mountain must demonstrate that it

actually is a bona fide purchaser for value[;]" (2) in reviewing

the Circuit Court's grant of summary judgment, we were not bound

by the court's conclusion that Blue Mountain was a bona fide

purchaser; and (3) "based on our review of the record, Blue

Mountain did not carry its initial burden to establish that it

was a bona fide purchaser." Blue Mountain I, 2018 WL 2316520, at

*3-4. We noted that a bona fide purchaser is "one who acquires

an interest in a property for valuable consideration, in good

faith, and without notice of any outstanding claims which are

held against the property by third parties." Id. at *3 (quoting

Kondaur Cap. Corp. v. Matsuyoshi, 136 Hawai#i 277, 240 n.27, 361

P.3d 454, 467 n.27 (2015) (quoting 92A C.J.S. Vendor and

Purchaser § 547 (2010))). While our analysis pointed out the

lack of evidence in the record on the "valuable consideration"

issue, we ruled more generally that "[t]here are genuine issues

of material fact as to whether [Blue Mountain] purchased the

property in good faith for valuable consideration. Id. at *4

(emphasis added). We thus concluded that summary judgment was

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unwarranted and vacated the judgment for possession. Id. We did

not "explicitly delimit[] the purpose of the remand" or otherwise

give directions limiting the scope of the remand. HELCO, 149

Hawai#i at 242, 487 P.3d at 711 (2021); see Chun v. Bd. of Trs.

of Emps.' Ret. Sys. of State of Hawai#i, 106 Hawai#i 416, 439, 106

P.3d 339, 362 (2005) ("[I]t is the duty of the trial court, on

remand, to comply strictly with the mandate of the appellate

court according to its true intent and meaning, as determined by

the directions given by the reviewing court[.]" (quoting State v.

Lincoln, 72 Haw. 480, 485, 825 P.2d 64, 68 (1992))). 

Moreover, it appears that the Circuit Court, after

indicating that it would consider only the valuable consideration

issue, ultimately decided not only that Blue Mountain paid

valuable consideration to purchase the Property, but also that

"[Blue Mountain] was a bona fide good faith purchaser for value." 

In deciding the latter issue, the court specifically rejected

Page's argument that because she was still in possession of the

Property at the time of sale, Blue Mountain had constructive

notice of Page's claims. We thus consider the Circuit Court's

conclusion that Blue Mountain was a bona fide purchaser for

value. 

"An 'innocent' or good faith purchaser is 'one who, by

an honest contract or agreement, purchases property or acquires

an interest therein, without knowledge, or means of knowledge

sufficient to charge him in law with knowledge, of any infirmity

in the title of the seller." Bank of New York Mellon v. R.

Onaga, Inc., 140 Hawai#i 358, 367 n.13, 400 P.3d 559, 568 n.13

(2017) (quoting Ka#u Agribusiness Co. v. Heirs or Assigns of

Ahulau, 105 Hawai#i 182, 193, 95 P.3d 613, 624 (2004)); see

Kondaur, 136 Hawai#i at 240 n.27, 361 P.3d at 467 n.27 (defining

a bona fide purchaser as "one who acquires an interest in a

property for valuable consideration, in good faith, and without

notice of any outstanding claims which are held against the

property by third parties" (quoting 92A C.J.S. Vendor and

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Purchaser § 547)).3/ "Purchasers who have constructive notice of

another's interest in a property 'cannot accurately be referred

to as innocent purchasers.'" Schick v. Nationstar Mortg. LLC,

No. CAAP-18-0000103, 2022 WL 2315570, at *8 (Haw. App. June 28,

2022) (mem.) (quoting Pelosi v. Wailea Ranch Estates, 91 Hawai#i

478, 489, 985 P.2d 1045, 1056 (1999)). "Constructive notice

arises as a legal inference, where 'circumstances are such that a

reasonably prudent person should make inquiries, and therefore

the law charges a person with notice of facts which inquiry would

have disclosed.'" Id. (brackets omitted) (quoting In re Henshaw,

585 B.R. 605, 615 (D. Haw. 2018)).

Here, there is no dispute that Blue Mountain paid

valuable consideration for the Property. Rather, Page argues

that Blue Mountain is not a bona fide purchaser because it had

constructive notice of Page's claims "based upon her possession

of the property at the time of the alleged sale." Page further

argues that "Blue Mountain . . ., wh[ich] was aware that the

property was being sold 'AS IS,' failed to conduct reasonable due

diligence, and as a sophisticated foreclosed [sic] property

investor, had a heightened duty of inquiry, which it failed to

uphold, further precluding its status as a bona fide purchaser

for value." 

We recently addressed similar arguments in Mount v.

Apao, No. CAAP-17-0000401, 2021 WL 944203 (Haw. App. March 12,

2021) (mem.). There, the parties claiming bona-fide purchaser

status bought the property at issue at a public auction pursuant

to a nonjudicial foreclosure. There, as here, the appellants

cited a number of cases, including Achi v. Kauwa, 5 Haw. 298, 299

(Haw. Kingdom 1885), for the proposition that "a purchaser of

land takes his title subject to the claims of parties in

possession, and the possession is constructive notice to the

purchaser of all the rights of the possessor." Id. at *4. We

distinguished Achi as follows:

3/ Conversely,"[a] non-bona fide purchaser is one who does not pay

adequate consideration, 'takes with knowledge that his transferor acquired

title by fraud, or buys registered land with full notice of the fact that it

is in litigation between the transferor and a third party.'" Delapinia v.

Nationstar Mortgage LLC, 150 Hawai#i 91, 100 n.12, 497 P.3d 106, 115 n.12

(2021) (quoting Kondaur, 136 Hawai#i at 240 n.27, 361 P.3d at 467 n.27).

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There, the plaintiff's interest in the subject property was

through a grant under a recorded deed. The defendants

claimed rights under an unrecorded deed and showed that some

defendants lived on and were supported by the land,

cultivated and fenced part of the land, and had two houses

on the land that had stood for a long time. [5 Haw.] at

298. The plaintiff claimed the unrecorded deed was void

under a statute that provided such unrecorded deed "shall be

void against any subsequent purchaser in good faith and for

a valuable consideration not having actual notice of such

conveyance, whose conveyance shall be first duly recorded." 

Id. The Achi court rejected the plaintiff's argument,

holding that:

In equity and at common law without reference to

special statutes; and, it seems to us, upon reason;

good faith requires a purchaser of land to take his

title subject to the claims of parties in possession

when he buys[.] Under our statute, if the party in

open possession is unable to show actual notice of his

unregistered deed to a subsequent purchaser, his

possession is constructive notice to such purchaser of

all his rights, and he cannot be disturbed therein.

Id. at 299. Whereas Achi involved the defendants' claims

under an unrecorded deed, in the instant case there are no

competing deeds related to the subject property. Rather,

the Mounts obtained title through the nonjudicial

foreclosure due to the default on the mortgage by the

Estate.

Id.

Similarly, here, there are no competing deeds related

to the Property. Blue Mountain obtained title from BNYM pursuant

to the Special Warranty Deed, after BNYM acquired title through

the nonjudicial foreclosure.

We recognize, however, that Page's possession of the 

Property when it was sold to Blue Mountain was inconsistent with

record title, which was held by BNYM.4/ Under these

4/ It appears to be undisputed that Page was in open possession of

the Property when it was sold to Blue Mountain in June 2013. Blue Mountain

submitted evidence that the Property was occupied in 2013, and the purchase

agreement between Blue Mountain and BNYM provided, inter alia:

BUYER UNDERSTANDS AND ACKNOWLEDGES: (1) SELLER HAS ACQUIRED

TITLE TO THE PROPERTY THROUGH FORECLOSURE, DEED IN LIEU OF

FORECLOSURE, OR SIMILAR JUDICIAL, STATUTORY OR CONTRACTUAL

PROCESS; (2) SELLER HAS NEVER OCCUPIED THE PROPERTY; . . . .

BUYER AGREES IT IS BUYING THE PROPERTY AS IS, WHERE IS, AS

AVAILABLE, AND WITH ALL FAULTS AND LIMITATIONS (INCLUDING,

BUT NOT LIMITED TO, PHYSICAL CONDITION, NATURE AND EXTENT OF

IMPROVEMENTS, SUITABILITY FOR ANY PARTICULAR PURPOSE,

THIRD-PARTY OCCUPANCY/POSSESSION, RESTRICTIONS ON USE,

CLOUDS ON TITLE, TAX BURDENS, LIENS, COMPLIANCE WITH LAWS,

ETC.)

. . . .

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circumstances, Blue Mountain was required to make a reasonable

inquiry as to Page's claims or interests in the Property. Cf.

Mount, 2021 WL 944203, at *5 ("A purchaser does not have a duty

to inquire regarding any unknown claims or interests by a person

in possession of real property where the occupant's possession is

consistent with the recorded title on the property."); see Yee

Hop v. Young Sak Cho, 25 Haw. 494, 505, 506 (Haw. Terr. 1920)

(holding that "petitioners being in open possession the law

imposes upon respondents the duty to make reasonable inquiry as

to the rights of the persons in possession").

Here, as Blue Mountain points out, Page has provided

"no insight into what said 'inquiry would reveal.'" The record

reflects that at the time Blue Mountain purchased the Property,

there was no pending litigation filed by Page relating to the

Property.5/ It is also undisputed that Page had not filed a lis

pendens or taken any other action that could have provided notice

to Blue Mountain or others that Page had any claim or interest in

the Property. See Mount, 2021 WL 944203, at *6. It was two

weeks after Blue Mountain purchased the Property, on June 18,

2013, when Page filed a complaint against BNYM in the Circuit

Court, initiating Civil No. 13-1-0698.6/ Based on the undisputed

facts, Page's possession of the Property at the time of sale did

not give Blue Mountain constructive notice of any claims or

interests by Page in the Property. Accordingly, the Circuit

Court did not err in concluding that Blue Mountain was a bona

fide purchaser for value. 

BUYER UNDERSTANDS THAT THE PROPERTY MAY BE OCCUPIED AND IN

THE PHYSICAL POSSESSION OF A THIRD-PARTY OR SUBJECT TO

CLAIMS THEREFORE. . . . 

5/ We take judicial notice of the Circuit Court's docket entries and

records in Civil No. 11-1-0569, indicating that: (1) On August 24, 2011, BNYM

filed an ejectment action against Page; (2) On September 22, 2011, Page filed

a counterclaim and third-party complaint; (3) On April 4, 2012, the parties

filed a stipulation dismissing Page's counterclaim and third-party complaint

pursuant to HRCP Rule 41(c); and (4) On May 29, 2013, the Circuit Court

entered an order dismissing the complaint pursuant to then-Rules of the

Circuit Courts Rule 12(q). It thus appears that Page's claims relating to the

Property had been dismissed for over a year by the time Blue Mountain acquired

the Property from BNYM.

6/ We take judicial notice of the June 18, 2013 complaint, as well as

the January 31, 2014 stipulation for voluntary dismissal of the action, filed

in Civil No. 13-1-0698. 

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In light of our conclusion, we need not reach Page's

contention that the nonjudicial foreclosure conducted by BNYM was

invalid.7/

For the reasons discussed above, we affirm the

following judgments entered by the Circuit Court of the Second

Circuit: (1) the November 9, 2018 "Judgment Re: Order Granting

Plaintiff Blue Mountain Homes, LLC's Motion for Summary Judgment

[Filed July 28, 2018]"; and (2) the October 21, 2019 Amended

Judgment.

DATED: Honolulu, Hawai#i, March 23, 2023.

On the briefs:

Frederick J. Arensmeyer

for Defendant/Counterclaim

Plaintiff-Appellant.

Matson Kelley and

Alex Wilkins

(Law Offices of Kelley &

Wilkins)

for Plaintiff/Counterclaim

Defendant-Appellee.

/s/ Katherine G. Leonard

Presiding Judge

/s/ Keith K. Hiraoka

Associate Judge

/s/ Clyde J. Wadsworth

Associate Judge

7/ As we stated in Blue Mountain I, "this case is different from

Kondaur to the extent that the deed transferring the property to Blue Mountain

does not contain any limitations to the transfer based on any of Page's

rights, the party who was subject to the nonjudicial foreclosure." 2018 WL

2316520, at *2. In addition, because Blue Mountain established that it was a

bona fide purchaser for value, it did not bear the burden of demonstrating

that the nonjudicial foreclosure sale was conducted in a manner that was

"fair, reasonably diligent, and in good faith and that an adequate price was

procured for the property." Id. (quoting Kondaur, 136 Hawai#i at 229, 361 P.3d

at 456); see also Delapinia, 150 Hawai#i at 116, 497 P.3d at 101 (holding that

a wrongful foreclosure in violation of the power of sale is voidable, not

void). 

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