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IN THE SUPREME COURT OF THE STATE OF HAWAI‘I

---o0o---

HAWAIIUSA FEDERAL CREDIT UNION,

Respondent/Plaintiff-Appellee,

vs.

JONNAVEN JO MONALIM; MISTY MARIE MONALIM, 

Petitioners/Defendants-Appellants,

and

ASSOCIATION OF APARTMENT OWNERS OF BEACH VILLAS AT KO OLINA, 

by its Board of Directors; KO OLINA COMMUNITY ASSOCIATION, INC., 

a Hawai‘i nonprofit corporation; 

Respondents/Defendants-Appellees. 

SCWC-16-0000807

CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS 

(CAAP-16-0000807; CIV. NO. 10-1-1388)

APRIL 30, 2020

McKENNA, POLLACK, AND WILSON, JJ., WITH NAKAYAMA, J., CONCURRING 

AND DISSENTING, WITH WHOM RECKTENWALD, C.J., JOINS

OPINION OF THE COURT BY POLLACK, J.

The law has long permitted a borrower, or mortgagor, 

to pledge real property to a lender, or mortgagee, as security 

Electronically Filed

Supreme Court

SCWC-16-0000807

30-APR-2020

10:08 AM
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for a loan. In the event of a default, the mortgagee may sell 

the property to generate funds that will go toward paying what 

is owed. In some instances, however, the proceeds of the sale 

are insufficient to pay what is due under the mortgage, and the 

mortgagee is entitled to a deficiency judgment holding the 

mortgagor liable for the remaining balance.

Such a deficiency occurred in this case. The 

mortgagors defaulted on the loans, the property was sold, and 

the foreclosure sale price was less than the amount due on the 

mortgage. Thereafter, the mortgagee waited over four years, 

without explanation, before attempting to collect a deficiency

judgment. The mortgagors contend that this delay was 

unreasonable and prejudiced them because they had begun to 

rebuild their lives in the years since the sale, and the 

mortgagee should therefore be barred from now seeking a 

deficiency judgment by the doctrine of laches. They also argue 

that, because the circumstances of a foreclosure auction are 

likely to result in the sale of the property for less than its 

fair market value, the process by which Hawai‘i courts calculate 

a deficiency judgment is unfair. They ask that we instead adopt 

the approach favored by a majority of other jurisdictions and 

the Restatement (Third) of Property, in which the greater of the 

fair market value as of the date of the foreclosure sale or the 
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sale price of the property is deducted from the money owed when

calculating the deficiency.

On review, we hold that the mortgagors’ challenge to 

the deficiency judgment is not barred by res judicata and that 

the circuit court erred by failing to rule on their laches 

defense. We also hold that, because the traditional approach 

can result in unjust enrichment and the majority rule protects 

all parties to the mortgage, the equities weigh in favor of 

adopting the method of calculating a deficiency judgment 

employed by a majority of other jurisdictions. However, our 

adoption of the majority rule is prospective in effect and 

applies only to foreclosure cases in which a deficiency judgment 

is entered after the date of this opinion.

I. FACTS AND PROCEDURAL HISTORY

A. Background

In 2008, Jonnaven Jo Monalim and Misty Marie Monalim 

(the Monalims) received two loans from HawaiiUSA Federal Credit 

Union (HawaiiUSA) to purchase a property located in Kapolei, 

Hawai‘i (the Property). The Property was a three bedroom, three 

bathroom unit of the Beach Villas at Ko Olina Condominium built 

in 2008. The first loan (Note 1) was for $911,200.00; the 

second loan (Note 2) was for $113,900.00. Each loan was secured 

by a mortgage on the Property to HawaiiUSA. 
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On June 24, 2010, HawaiiUSA filed a complaint in the 

Circuit Court of the First Circuit (circuit court) against the 

Monalims,1 alleging that the Monalims had defaulted on the notes

and seeking to foreclose on the mortgages. Thereafter, 

HawaiiUSA filed a motion for summary judgment, which the circuit 

court granted on August 29, 2011 (Foreclosure Order). The 

circuit court found that the Monalims owed $1,024,428.04 on Note 

1 and $121,547.20 on Note 2 and that HawaiiUSA was entitled to 

foreclose upon the mortgages securing the notes. On the same 

day, the circuit court entered its judgment on the Foreclosure 

Order (Foreclosure Judgment). 

In the Foreclosure Order, the circuit court appointed 

a commissioner to take possession of the Property and oversee 

its sale, subject to confirmation by the court. HawaiiUSA was 

allowed under the Foreclosure Order to request a deficiency 

judgment in the event that the proceeds recovered from the 

Property’s auction were insufficient to cover the Monalims’ 

outstanding debt on the notes:

At the hearing for confirmation of sale, if it appears that 

the proceeds of the sale of the Mortgaged Property are 

insufficient to pay all amounts due and owing to 

[HawaiiUSA], [HawaiiUSA] may request a deficiency judgment

in its favor and against the [Monalims] for the amount of 

the deficiency which shall be determined at the time of 

confirmation and have immediate execution thereafter. 

 1 The Honorable Bert I. Ayabe presided. 
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The Monalims filed an appeal of the Foreclosure Order 

and Foreclosure Judgment to the Intermediate Court of Appeals 

(ICA) on September 28, 2011. The appeal was dismissed on 

September 20, 2012, for failure to submit an opening brief.

The Property was auctioned at public sale on October 

24, 2011. Prior to the sale, the Property received a 2011 tax 

assessment from the City and County of Honolulu in which it was 

valued at $703,600.00. According to the commissioner’s report, 

only three people attended the auction and sixteen bids were 

received. The last bid was for $760,000.00. In the report, the 

commissioner stated that $760,000.00 was a fair and reasonable 

bid price based on comparable sales and recommended that the 

court confirm the sale. HawaiiUSA filed a motion to confirm the 

sale and for deficiency judgment. After a hearing, the circuit 

court entered an order granting the motion on December 22, 2011. 

The circuit court outlined the amounts outstanding and 

directed the commissioner to disburse the proceeds of the sale 

in order of priority.2 The court further ordered

that since the proceeds from the sale of the Mortgaged 

Property are insufficient to fully satisfy the amounts due

to [HawaiiUSA], that a motion for deficiency judgment may 

 2 The circuit court found that as of October 31, 2011, the Monalims

owed $1,080,852.79 on Note 1, which included the principal balance, interest, 

accumulated late charges, and an escrow advance, and owed $127,821.36 on Note 

2, which included the principal balance and interest, plus any accruing late 

charges or advances up to the date of escrow closing. The order granting 

confirmation of sale also included amounts for commissioner’s and attorneys’ 

fees and costs.
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subsequently be filed by [HawaiiUSA] against [the 

Monalims], jointly and severally. 

The record indicates that the circuit court--based on the 

Monalims’ objection--ordered a further hearing on the matter of 

the deficiency judgment. The judgment confirming the sale was 

also entered on December 22, 2011.

B. HawaiiUSA’s Motion for Deficiency Judgment

Over four years later, on January 12, 2016, HawaiiUSA 

filed a motion for deficiency judgment. In its motion, 

HawaiiUSA requested $355,687.07 on Note 1 and $131,755.87 on 

Note 2, which it alleged remained outstanding as of December 30, 

2011, the closing date of the sale.3 The amount outstanding on 

Note 1 was calculated by subtracting the net proceeds of the 

sale ($735,045.92) from the amount owed on Note 1 

($1,090,732.99). Because the net proceeds were insufficient to 

pay the full amount owed on Note 1, no sale proceeds were 

applied to the outstanding balance on Note 2. 

The Monalims filed a memorandum opposing HawaiiUSA’s 

motion for deficiency judgment, contending that the motion was 

untimely because HawaiiUSA waited “for more than an 

unprecedented four [] years” to bring the motion and that 

 3 HawaiiUSA requested the following additional sums: “continuing 

interest” on both notes from December 30, 2011, until “the date of entry of 

the deficiency judgment and statutory interest” thereafter on both notes; 

attorneys’ fees and costs for the preparation of the motion for deficiency 

judgment; and attorneys’ fees and costs related to the Monalims’ previously 

dismissed ICA appeal. 
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HawaiiUSA was therefore barred by the doctrine of laches. 

According to the Monalims, HawaiiUSA was required by the 

Foreclosure Order to request the amount of any deficiency 

immediately following the sale of confirmation, “which it [] 

deliberately chose [] not to do.” The Monalims averred that 

they could have filed for Chapter 7 Bankruptcy and suffered no 

deficiency judgment had HawaiiUSA filed its motion in 2011. 

Instead, the Monalims contended, “in reliance upon there being 

no deficiency judgment they [had] set out to rebuild their 

lives.” They each started a business, began saving for their 

daughter’s college tuition, and were only a few months from 

clearing the foreclosure from their credit reports, the Monalims 

stated in an appended declaration. HawaiiUSA’s unexplained 

delay in filing its motion for deficiency judgment would 

“overwhelming[ly] prejudice” them, they argued.

The Monalims also challenged the method used for

calculating the deficiency judgment and contended that an 

evidentiary hearing should be held to determine the fair market 

value of the Property at the time of the sale. According to the 

Monalims, Hawai‘i courts currently calculate the amount of a

deficiency judgment by “mathematically” subtracting the net 

proceeds of the sale from the mortgage debt without considering 

any evidence of a higher property valuation or any subsequent 

sales for higher prices. Hawai‘i courts will set aside the 
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earlier auction price only if it is said to “shock the 

conscience of the Court,” the Monalims related. The Monalims 

contended that this “completely ignores reality and equity”

because lenders have the ability to routinely “credit bid” for 

the property at the foreclosure auction, thereby scaring away 

competition.4 This enables a mortgagee to recover the property 

at less than fair market value and secure a windfall, the 

Monalims asserted. The result, the Monalims argued, is that 

borrowers are penalized beyond what the foreclosing mortgagee 

actually lost.

The Monalims contended that this procedure for 

calculating deficiency judgments violates both procedural and 

substantive due process because mortgagees are constitutionally 

entitled to no more than payment in full. The Monalims 

maintained that Hawai‘i’s method represents the minority view 

among states and that the circuit court should instead conduct a 

separate evidentiary hearing to determine the fair market value 

of the Property, which would be deducted from the mortgage debt 

 4 A credit bid allows a secured lender to bid up to the amount of 

debt owed to it in lieu of cash at sale. Lambert v. Teisina, 131 Hawai‘i 457, 

459 n.5, 319 P.3d 376, 378 n.5 (2014) (per curiam) (“A ‘credit bid’ is a bid 

up to an amount equal to the unpaid principal and interest of a debt, 

together with costs, fees, and other expenses, without tendering cash.”). 
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in lieu of the sale price if it is the greater of the two. 

(Citing Sostaric v. Marshall, 766 S.E.2d 396 (W.Va. 2014).)

In its reply, HawaiiUSA argued that its motion for 

deficiency judgment was proper because Hawai‘i law does not 

require such a motion to be filed within a certain time from the 

date of confirmation. Further, HawaiiUSA argued, the Monalims 

did not suffer any prejudice because HawaiiUSA did not prevent 

the Monalims from filing bankruptcy or make representations that 

it would not seek a deficiency judgment, and the Monalims could 

still file for bankruptcy. HawaiiUSA also contended that under 

Hawai‘i caselaw, the court may refuse to confirm the sale if the 

highest bid “is so grossly inadequate as to shock the 

conscience,” which it was not in this case. (Quoting Wodehouse 

v. Hawaiian Trust Co., 32 Haw. 835, 854 (Haw. Terr. 1933).) 

HawaiiUSA maintained that third party bidders were not 

discouraged from bidding; HawaiiUSA did not receive a windfall; 

and the Monalims’ due process rights were not violated. 

At the hearing on the motion for deficiency judgment, 

the circuit court asked counsel for HawaiiUSA if there was any 

reason why it had waited four years to file the motion. Counsel 

responded that, without going into attorney-client privileged 

information, counsel could not “comment about any particular 

client’s” propensity to seek a motion. However, counsel

contended that once a judgment is obtained it lasts for ten 
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years and, by analogy, the motion should be considered timely 

because it was brought within that time period. The Monalims 

responded that the analogy worked the opposite way because 

HawaiiUSA could wait an indefinite amount of time to seek the 

deficiency judgment, effectively extending the statutory period 

for collecting the judgment, which was contrary to the 

legislature’s intention to give the borrower some peace by 

limiting the time period of liability. HawaiiUSA replied that a 

further hearing on the deficiency judgment was ordered based on 

the Monalims’ objection at the confirmation hearing and argued 

that the foreclosure price was reasonable. 

On October 13, 2016, the circuit court entered its 

“Order Granting in Part and Denying in Part [HawaiiUSA’s] Motion

for Deficiency Judgment Against [the Monalims] Filed January 12, 

2016” (Order Granting Deficiency Judgment) and the “Deficiency 

Judgment Against the [the Monalims] and in Favor of [HawaiiUSA]”

(Deficiency Judgment). The Order Granting Deficiency Judgment 

awarded HawaiiUSA a deficiency judgment of $493,282.04.5 “[D]ue 

to the delay in filing” the motion, however, the circuit court 

denied HawaiiUSA’s request for interest for the period between 

the closing date of the sale and the entry of the Deficiency 

 5 The amount included the deficiencies on the two loans, attorneys’ 

fees and costs incurred in the preparation of the motion, and attorneys’ fees 

and cost associated with the Monalims’ dismissed ICA appeal. 
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Judgment, as well as its request for statutory interest for the 

period after the entry of the Deficiency Judgment. The Order 

Granting Deficiency Judgment did not address the laches defense 

raised by the Monalims or their request for a hearing as to the 

market value of the Property. The Monalims appealed to the ICA.

C. ICA Proceedings

On appeal, the Monalims maintained that HawaiiUSA’s 

motion for deficiency judgment was barred by laches and that the 

circuit court should have held evidentiary hearings on prejudice 

resulting from the untimely motion and on the amount owed.

The ICA entered its Summary Disposition Order (SDO) on 

May 17, 2018.6 The ICA held that the Monalims’ assertion that 

the deficiency judgment was required to be determined at the 

time of the confirmation of sale was without merit because the 

Monalims objected and sought a further hearing in regard to the 

deficiency judgment.

The ICA also stated that the Monalims made no 

discernable argument about laches. Nevertheless, the ICA 

addressed the prejudice posed by HawaiiUSA’s delay in filing the 

motion, concluding that the order confirming the sale of the 

Property gave the Monalims notice of the possibility of a 

deficiency judgment such that their contentions related to 

 6 The ICA’s SDO can be found at HawaiiUSA Fed. Cred. Union v. 

Monalim, No. CAAP-16-0000807, 2018 WL 2254707 (May 17, 2018).
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prejudice were without merit. The ICA additionally found that 

the Monalims had not requested a hearing on prejudice and held 

that the circuit court therefore did not deny their request for 

a hearing. Further, the ICA noted, the circuit court did 

address potential prejudice to the Monalims when it denied 

HawaiiUSA’s request for continuing interest from the closing 

date of the sale to the entry of the Deficiency Judgment and for 

statutory interest after the entry of the Deficiency Judgment. 

The ICA also pointed to the Monalims’ failure to seek a 

dismissal under Hawai‘i Rules of Civil Procedure (HRCP) Rule 

41(b)(1) or to file a motion to bring closure to the 

proceedings.

The ICA likewise rejected the Monalims’ contention 

that the circuit court should have held an evidentiary hearing 

on the amount owed. The ICA ruled that the method for 

calculating the deficiency was not determined by the Deficiency 

Judgment but rather the amount was incident to the enforcement 

of the Foreclosure Judgment. The ICA found that the Monalims 

had the opportunity to challenge how the deficiency judgment 

would be calculated in their first appeal, and they failed to do 

so. The ICA therefore held that the Monalims were precluded by 
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res judicata from challenging the method of calculating the 

Deficiency Judgment and affirmed the circuit court.7

II. STANDARDS OF REVIEW

A. Questions of Law

“Questions of law are reviewed de novo under the 

right/wrong standard of review.” Roes v. FHP, Inc., 91 Hawai‘i 

470, 473, 985 P.2d 661, 664 (1999) (quoting Francis v. Lee 

Enters., Inc., 89 Hawai‘i 234, 236, 971 P.2d 707, 709 (1999)).

B. Courts Sitting in Equity

The extent of the relief granted by a court in equity 

rests within the sound discretion of the circuit court and will 

not be disturbed unless the circuit court abused its discretion. 

Peak Capital Grp., LLC, v. Perez, 141 Hawai‘i 160, 172, 407 P.3d 

116, 128 (2017); Hawaii Nat’l Bank v. Cook, 100 Hawai‘i 2, 7, 58 

P.3d 60, 66 (2002). A court abuses its discretion by “issuing a 

decision that clearly exceeds the bounds of reason or 

disregard[ing] rules or principles of law or practice to the 

substantial detriment of the appellant.” Cook, 100 Hawai‘i at 7, 

58 P.3d at 66 (quoting Shanghai Inv. Co. v. Alteka Co., 92 

Hawai‘i 482, 493, 993 P.2d 516, 526 (2000)).

 7 The Monalims further argued as points of error that the 

deficiency judgment was “contrary to the law of the case,” HawaiiUSA waived 

its right to a deficiency judgment, and they were irreparably prejudiced 

because they reasonably relied on HawaiiUSA’s waiver. The ICA did not 

address the merits of these issues. 
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C. Statutory Interpretation

The interpretation of a statute is a question of law 

that is reviewed de novo. Deutsche Bank Nat’l Trust Co. v. 

Greenspon, 143 Hawai‘i 237, 243, 428 P.3d 749, 755 (2018).

III. DISCUSSION

A. The Monalims’ Challenge to the Deficiency Judgment Is Not 

Barred by Res Judicata.

The ICA held that res judicata barred the Monalims

from challenging the method in which the Deficiency Judgment was 

calculated because they failed to raise the issue in their 

appeal of the Foreclosure Judgment. It is true that the 

doctrine of res judicata prohibits parties from relitigating a 

previously adjudicated cause of action or claims that could have 

been brought in a previous action between the same parties but 

were not. Mortg. Electr. Registration Sys., Inc. v. Wise, 130 

Hawai‘i 11, 17-18, 304 P.3d 1192, 1198-99 (2013). However, under 

this court’s precedents, “foreclosure cases are bifurcated into 

two separately appealable parts: (1) the decree of foreclosure 

and the order of sale, if the order of sale is incorporated 

within the decree, and (2) all other orders.” Id. at 16, 304 

P.3d at 1197 (quoting Sec. Pac. Mortg. Corp. v. Miller, 71 Haw. 

65, 70, 783 P.2d 855, 857 (1989)). And the bifurcated nature of 

mortgage foreclosure proceedings is treated as two separate 
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proceedings for res judicata purposes. Id. at 17, 304 P.3d at

1198. 

Additionally, Hawai‘i Revised Statutes (HRS) 

§ 667-51(a) (Supp. 2010) sets forth the specific orders that are 

deemed final and appealable in the foreclosure context. Section 

667-51(a)(1)8 provides that an adjudication of the right to a 

deficiency judgment incorporated into a judgment on a decree of 

foreclosure is final and appealable. Separately, section 

667-51(a)(3)9 states that an appeal may be taken from the amount

 8 HRS § 667-51(a)(1) provides as follows:

(a) Without limiting the class of orders not specified in 

section 641-1 from which appeals may also be taken, the 

following orders entered in a foreclosure case shall be 

final and appealable:

(1) A judgment entered on a decree of foreclosure, and 

if the judgment incorporates an order of sale or an 

adjudication of a movant’s right to a deficiency 

judgment, or both, then the order of sale or the 

adjudication of liability for the deficiency judgment 

also shall be deemed final and appealable[.] 

Additionally, HRS § 667-51(a)(2) provides that, in the event it is not 

incorporated with another order, “[a] judgment entered on an order confirming 

the sale of the foreclosed property,” is appealable “if the circuit court 

expressly finds that no just reason for delay exists, and certifies the 

judgment as final pursuant to rule 54(b) of the Hawaii rules of civil 

procedure[.]”

9 HRS § 667-51(a)(3) provides that the following order entered in a 

foreclosure case shall be final and appealable: 

(3) A deficiency judgment; provided that no appeal from a 

deficiency judgment shall raise issues relating to the 

judgment debtor’s liability for the deficiency judgment (as 

opposed to the amount of the deficiency judgment), nor 

shall the appeal affect the finality of the transfer of 

title to the foreclosed property pursuant to the order 

confirming sale.
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of a deficiency judgment provided that the appeal does not raise 

issues related to the judgment debtor’s right to the deficiency 

judgment or affect the finality of the transfer of title of the 

foreclosed property. It is thus unsurprising that in Wise, this 

court held that the defendant’s “timely appeal from the 

Deficiency Judgments would entitle it to challenge errors unique 

to it, such as an erroneous upset price or miscalculation of 

deficiency.”10 130 Hawai‘i at 16, 304 P.3d at 1197 (second 

emphasis added) (quoting Miller, 71 Haw. at 71, 783 P.2d at

858). 

The ICA misapprehended this holding in concluding that 

because the Monalims failed to challenge the method for 

calculating the deficiency in their appeal of the Foreclosure 

Judgment--which was dismissed--they were barred by res judicata

from challenging it in an appeal of the Deficiency Judgment. In 

Wise, the petitioner appealed from an order confirming sale,

challenging the respondent’s standing to bring the foreclosure 

suit “in the first place.” 130 Hawai‘i at 15, 17, 304 P.3d at

1196, 1198. We concluded that because the issue of standing 

could have been raised at any time, it was not “unique” to the 

confirmation of sale and should therefore have been challenged 

 10 Although the court did not cite HRS § 667-51(a) as a basis for 

its decision in Wise, its holding is consistent with the statute.
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in an appeal from the judgment of foreclosure. Id. at 17, 304 

P.3d at 1198. 

In contrast to the standing issue before the Wise

court, the Monalims’ appellate challenge is to the method by 

which the circuit court calculated the deficiency judgment, 

which pertains to the amount of the deficiency judgment--not 

HawaiiUSA’s right to collect it “in the first place.” See id.

at 15, 17, 304 P.3d at 1196, 1198. When the Monalims’ appeal of 

the Foreclosure Judgment was dismissed by the ICA, the Monalims 

lost the ability to contest HawaiiUSA’s right to a deficiency 

judgment pursuant to the Foreclosure Judgment. However, 

pursuant to HRS § 667-51(a)(3) and this court’s precedents, the 

Monalims may still appeal the Deficiency Judgment as long as 

their challenge contests the calculation of the deficiency 

amount and not HawaiiUSA’s right to the deficiency judgment

under the Foreclosure Judgment. The Foreclosure Judgment did 

not set out the amount or method for calculating the deficiency 

judgment. Because the Monalims were not required to contest the 

amount of the deficiency judgment in their appeal from the 

Foreclosure Judgment, the prior proceeding does not implicate 

res judicata. The ICA therefore erred in concluding that the 
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Monalims were barred from contesting the method for calculating 

the amount of the deficiency judgment.11

B. The Circuit Court Failed To Address the Monalims’ Laches 

Argument.

“Mortgage foreclosure is a proceeding equitable in 

nature and is thus governed by the rules of equity.” Beneficial 

Hawaii, Inc. v. Kida, 96 Hawai‘i 289, 312, 30 P.3d 895, 918 

(2001). An equity court’s sound discretion is not bound by 

strict rules of law, but it can be molded to do justice. Id.

Although laches was originally a doctrine reserved for equitable 

proceedings like the present case, this court has stated that, 

in the State of Hawai‘i, “laches is a defense in all civil 

actions.” Ass’n of Apartment Owners of Royal Aloha v. Certified 

Mgmt., Inc., 139 Hawai‘i 229, 235, 386 P.3d 866, 872 (2016). 

Therefore, laches is a defense against a motion for deficiency 

judgment. See BayBank Conn., N.A., v. Thumlert, 610 A.2d 658, 

662 (Conn. 1992) (“[A] defendant who is demonstrably prejudiced 

by a plaintiff’s delay in filing a motion for deficiency 

judgment may invoke the equitable defense of laches.”); E. 

Banking Co. v. Robbins, 149 N.W. 779, 780 (Neb. 1914) (holding

 11 We also overrule the following ICA cases to the extent that they 

held that res judicata barred the mortgagee from challenging the method in 

which the deficiency judgment was calculated: Ke Kailani Partners, LLC v. Ke 

Kailani Dev. LLC, Nos. CAAP-12-0000758 & CAAP-12-0000070, 2016 WL 2941054 

(App. Apr. 29, 2016) (mem.); LCP-Maui, LLC v. Tucker, No. CAAP-15-0000109, 

2018 WL 1082855 (App. Feb. 28, 2018) (SDO). 
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that “a court of equity in the exercise of its inherent power to 

deny relief on account of laches, independently of the statute 

of limitations, should refuse to enter a deficiency judgment” 

when the petitioner had waited more than 14 years). 

The doctrine of laches reflects the maxim that equity 

aids the vigilant, not those who slumber on their rights. Small 

v. Badenhop, 67 Haw. 626, 640, 701 P.2d 647, 656 (1985). There

are two prongs of the laches defense, both of which must be 

satisfied in order for the doctrine to become applicable:

First, there must have been a delay by the plaintiff in 

bringing his claim, and that delay must have been 

unreasonable under the circumstances. Delay is reasonable 

if the claim was brought without undue delay after 

plaintiff knew of the wrong or knew of facts and 

circumstances sufficient to impute such knowledge to him. 

Second, that delay must have resulted in prejudice to 

defendant. 

Herrmann v. Herrmann, 138 Hawai‘i 144, 153, 378 P.3d 860, 869 

(2016) (quoting Adair v. Hustace, 64 Haw. 314, 321, 640 P.2d 

294, 300 (1982)). 

Despite ruling that the Monalims made no discernable 

argument as to a laches defense, the ICA also stated that the 

Monalims’ arguments as to prejudice--the second prong of laches-

-were without merit. However, a review of the record 

demonstrates that the Monalims raised substantive arguments as 

to both of the defense’s requirements. 

When evaluating the first prong of laches, a court 

considers whether, under the circumstances, the delay in 
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bringing the claim was unreasonable. Id. In this case, the 

judgment confirming the sale was entered on December 22, 2011. 

More than four years later, on January 12, 2016, HawaiiUSA filed 

its motion for deficiency judgment. The Monalims argued in 

their opposition to HawaiiUSA’s motion that the four-year delay 

was unprecedented, and that HawaiiUSA had provided no 

explanation for the delay in its submissions to the court. And 

when asked directly during the hearing on the motion, counsel 

for HawaiiUSA declined to provide an explanation for the delay, 

citing attorney-client privilege. The Monalims’ establishment 

of a four-year delay in HawaiiUSA seeking to recover a 

deficiency amount from the Monalims and the lack of any 

explanation for this delay by HawaiiUSA satisfied the Monalims’ 

burden to adduce sufficient facts to raise a laches defense with

regard to the first prong. Cf. Herrmann, 138 Hawai‘i at 153-54, 

378 P.3d at 869-70 (noting that the plaintiff did not proffer a 

satisfactory excuse for the almost seven-year delay in bringing 

suit); see also In re Kawai, 36 Haw. 533, 536 (Haw. Terr. 1943) 

(observing that a party who waited nearly five years after the 

final order of distribution before commencing an action to 

revoke a will did not provide a “satisfactory excuse”).

As to the second prong, that the delay must have 

resulted in prejudice to the defendant, we have stated, “What 

qualifies as prejudice for purposes of the laches doctrine 
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invariably depends on the facts and circumstances of a 

particular case, but it is ordinarily understood as anything 

that places the defendant ‘in a less favorable position.’” 

Herrmann, 138 Hawai‘i at 154, 378 P.3d at 870 (citing 27A 

Am.Jur.2d Equity § 143 (2008)). 

At the circuit court, the Monalims averred in a 

declaration that they had planned to file a Chapter 7 Bankruptcy 

Petition to discharge the potential deficiency judgment but had 

abandoned their plan “after waiting close to a year” in 

anticipation of the deficiency judgment. In the interim, the 

Monalims explained, they had each started a business, started 

saving for their daughter’s college tuition, and were only 

months from clearing the foreclosure from their credit reports. 

The Monalims argued to the circuit court that the deficiency 

judgment would “wipe out” all of their financial gains since the 

confirmation of sale, which would not have occurred if HawaiiUSA 

moved for a deficiency judgment in 2011. The Monalims therefore 

contended that they would be in a significantly worse position--

and suffer significant prejudice--as a result of HawaiiUSA’s 

delay. 

The Monalims thus alleged facts concerning each prong 

of their laches defense. See Kerrigan v. Kerrigan, 642 A.2d 

1324, 1327 (D.C. App. 1994) (holding that the defendant made a 

prima facie showing sufficient to establish that injustice would 
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result from the plaintiff’s unexplained eight-year delay in 

bringing suit based on evidence that the defendant’s financial 

situation had greatly changed in the interim). The ICA in this 

case thus clearly erred in holding that the Monalims made no 

discernable argument as to a laches defense. Additionally, 

despite the presentation of the defense, the circuit court did 

not render findings of fact and conclusions of law or otherwise 

rule upon the applicability of the Monalims’ laches defense in 

its Order Granting Deficiency Judgment or the Deficiency 

Judgment.

The present case is analogous to Herrmann v. Herrmann, 

in which the plaintiff brought a motion for post-decree relief 

against the defendant to recover overpaid child support 

approximately seven years after being notified about the 

overpayments. 138 Hawai‘i at 147-48, 378 P.3d at 863-64. The 

defendant argued that the seven-year delay was unreasonable and 

that the plaintiff provided no explanation for waiting to bring 

the action for reimbursement. Id. at 148, 378 P.3d at 864. The 

family court denied the plaintiff’s motion, citing the sevenyear delay in raising the issue and concluding that the 

plaintiff was “estopped” from pursuing the claim. Id. at 150, 

378 P.3d at 866. On appeal, the ICA determined that the family 

court’s decision was based on “estoppel by laches” and that the 

family court had not made an independent conclusion as to 
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prejudice. Id. at 150, 378 P.3d at 866. Applying its own 

judgment, the ICA held that both requirements of “estoppel by 

laches” were not present, and it accordingly vacated the family 

court’s decision. Id. at 150-53, 378 P.3d at 866-69. 

On review, this court determined that there were three 

possible explanations for the family court’s failure to make 

findings of fact as to prejudice: (1) the family court did not 

apply the laches doctrine; (2) the court implicitly found that 

the prejudice prong had been satisfied; or (3) the family court 

failed to recognize that prejudice was a required prong for the 

application of laches. Id. at 155, 378 P.3d at 871. Because of 

the family court’s silence, we stated that it was uncertain 

whether the prejudice prong had been satisfied, and the case was

remanded to the family court to render factual findings with 

respect to whether the defendant was prejudiced by the delay. 

Id.

Similarly, there are at least three possible 

explanations for the circuit court’s silence regarding the 

Monalims’ laches defense: (1) the circuit court implicitly 

concluded that laches was inapplicable because it determined 

that there was no unreasonable delay or that the Monalims

suffered no prejudice; (2) the circuit court failed to properly 

apply the laches defense; or (3) the circuit court failed to

duly consider the Monalims’ laches defense. That is to say, 
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based on the circuit court’s lack of findings as to the laches 

defense, we are unable to determine on review whether the 

circuit court appropriately considered this defense presented by 

the Monalims.12 See 138 Hawai‘i at 155, 378 P.3d at 871. 

The ICA alternatively held that the circuit court 

addressed the potential prejudice to the Monalims by denying

HawaiiUSA’s requested interest on the deficiency amount.

However, as our holding in Herrmann illustrates, because the 

circuit court did not issue any findings with regard to 

prejudice, we cannot know whether this constituted appropriate 

consideration of the laches defense. See Herrmann, 138 Hawai‘i

at 155-56, 378 P.3d at 871-72. The ICA also concluded that the 

Monalims were on notice of the deficiency amount such that their 

contentions related to prejudice were without merit. Though the 

 12 The concurring and dissenting opinion (dissent) agrees with our 

conclusion that the circuit court erred by failing to address the Monalims’ 

laches argument, but it then proceeds to consider and rule on the merits of 

the Monalims’ claim as if it were in the position of the trial court. 

Dissent at 23. When an appellate court discerns that a trial court has 

failed to make a finding because of an erroneous view of the law, the 

standard rule is that the case should be remanded to the trial court to 

permit that court to evaluate and render the findings that should have been 

made in the first instance. Pullman-Standard v. Swint, 456 U.S. 273, 291 

(1982). The only exception to this rule is when the record permits only one 

resolution of the factual issue. Sprint/United Mgmt. Co. v. Mendelsohn, 552 

U.S. 379, 387 (2008). Because the trial court in this case failed to rule 

upon the applicability of the Monalims’ laches defense and rendered no 

findings of facts on this defense, this court is clearly not in a position to 

rule as a matter of law regarding factual aspects of the Monalims’ laches 

defense. We accordingly decline to deviate from the basic principle of law 

that fact-finding should be left to the fact-finder. See also Goo v. 

Arakawa, 132 Hawai‘i 304, 317, 321 P.3d 655, 668 (2014) (“[A] trial court is 

better equipped than an appellate court operating at a distance to fashion 

equitable relief.”).
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fact that the Monalims were on notice of the potential 

deficiency judgment against them in 2011 is part of the 

circumstances to be considered by the circuit court in 

evaluating the prejudice prong, it is not dispositive of the 

Monalims’ contention that they have been prejudiced by 

HawaiiUSA’s delay in pursuing the deficiency judgment, nor can 

we conclude that this fact was actually considered by the 

circuit court.13 See id.; Badenshop, 67 Haw. at 640, 701 P.2d at 

657 (“Prejudice has been found . . . where changes in the value 

of the subject matter or in the defendant’s position have 

occurred[.]” (emphasis added)).

In sum, we hold that the ICA erred in affirming the 

circuit court’s Deficiency Judgment without the circuit court 

having demonstrably addressed the Monalims’ laches defense.14

 13 The ICA also noted that the Monalims did not seek a dismissal 

order or file any motions to bring closure to the proceeding. However, under 

a laches analysis, the Monalims are not required to show they actively tried 

to bring the proceedings to a close to demonstrate prejudice. 

14 The Monalims also argued to the ICA that the Deficiency Judgment 

violated the “Law of the Case” and that HawaiiUSA waived its right to the

deficiency judgment. On certiorari review, the Monalims additionally argue 

the defense of estoppel by acquiescence. The Monalims’ contentions are 

premised on their interpretation of the term “shall” in the provision in the 

Foreclosure Order granting HawaiiUSA the right to a deficiency judgment. 

At the hearing for confirmation of sale, if it appears that 

the proceeds of the sale of the Mortgaged Property are 

insufficient to pay all amounts due and owing to 

[HawaiiUSA], [HawaiiUSA] may request a deficiency judgment 

in its favor and against the [Monalims] for the amount of 

the deficiency which shall be determined at the time of 

confirmation and have immediate execution thereafter. 

(continued . . .) 
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And thus, the Order Granting Deficiency Judgment and the 

Deficiency Judgment must be vacated, and on remand the circuit 

court shall consider and render a determination on the Monalims’ 

laches defense.15 

C. The Traditional Approach to Determining a Deficiency Judgment

May Hold Mortgagors Liable for More than What Is Owed and 

Grant Mortgagees a Windfall.

In what appears to be a matter of first impression

before this court, we review the method by which Hawai‘i courts 

calculate deficiency judgments. The Monalims argue that courts 

in Hawai‘i “matter-of-factly” calculate a deficiency judgment by 

subtracting the net proceeds of the foreclosure sale from the 

mortgage debt owed without considering evidence of the

foreclosed property’s true market value at the time of sale. 

The Monalims contend that lower courts should be instructed to 

hold an evidentiary hearing to determine the true value of a 

property when calculating a deficiency judgment, and that this 

 

(. . . continued)

(Emphases added.)

On its face, the term “shall” in the provision relates only to 

when the court intended to determine the amount of the deficiency judgment 

should one be requested. By contrast, the order specified that HawaiiUSA 

“may” request a deficiency judgment at the hearing on the confirmation of 

sale--a right HawaiiUSA appears to have exercised. We therefore hold that 

these arguments are without merit. 

15 In light of our disposition, we do not address the Monalims’ 

contention that the circuit court should have conducted a separate 

evidentiary hearing on prejudice.
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amount should be deducted from the mortgage debt in lieu of the 

sale price if it is the greater of the two.

Determination of the amount of a deficiency judgment 

generally follows two approaches. Under the traditional

approach, the price obtained at a foreclosure sale is the 

“conclusive measure” of the amount to be deducted from the 

outstanding mortgage debt. Restatement (Third) of Property: 

Mortgages § 8.4 cmt. a. (Am. Law Inst. 1997).16 The amount of 

the deficiency judgment is thus automatically calculated by 

subtracting the foreclosure sale price from the outstanding 

mortgage debt. 1 Grant S. Nelson & Dale A. Whitman, Real Estate 

Finance Law § 8:3 (6th ed. 2014). A majority of jurisdictions 

have rejected this approach, however. “Whether by judicial 

decision or by statute, the majority view ‘afford[s] the 

deficiency defendant the right to insist that the greater of the 

fair market value[17] of the real estate or the foreclosure sale 

price be used in calculating the deficiency.’” Sostaric v. 

 16 “At the opposite extreme, some states flatly prohibit deficiency 

judgments in certain contexts.” Restatement (Third) of Property: Mortgages § 

8.4 Reporters’ Note to cmt. a.

17 The exact terminology used varies by jurisdiction and includes, 

for example, “fair market value,” “true market value,” “actual value,” 

“reasonable value,” “fair value,” and “true value.” See Restatement (Third) 

of Property: Mortgages § 8.4 Reporters’ Note to cmt. a. This opinion treats 

these terms interchangeably with “fair market value” and defines “fair market 

value” as “the price which would result from negotiation and mutual 

agreement, after ample time to find a purchaser, between a vendor who is 

willing, but not compelled to sell, and a purchaser who is willing to buy, 

but not compelled to take a particular piece of real estate.” Id. § 8.4 

cmt. c (defining “fair market value”).
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Marshall, 766 S.E.2d 396, 400 (W.Va. 2014) (footnote omitted) 

(quoting Restatement (Third) of Property: Mortgages § 8.4 cmt. 

a). 

Scholars of foreclosure law have observed that the 

price obtained at a foreclosure sale is often far below the fair 

market value of the property as a result of the forced nature of 

a foreclosure sale. Robert M. Washburn, The Judicial and 

Legislative Response to Price Inadequacy in Mortgage Foreclosure 

Sales, 53 S. Cal. L. Rev. 843, 848 (1980); Nelson & Whitman, 

supra. In times of economic depression a foreclosed property is 

likely to bring an even lower price. Nelson & Whitman, supra. 

Measuring the deficiency judgment based on the foreclosure sale 

price therefore may result in a double-loss to the deficiency 

debtor: the debtor has lost the foreclosed property, and the 

debtor has not been credited the actual value of the property 

against the outstanding mortgage debt. See Restatement (Third) 

of Property: Mortgages § 8.4 cmt. a; Washburn, supra, at 850. 

Conversely, these conditions may allow a mortgagee to 

potentially recover more than the original mortgage debt owed to 

it. This situation occurs, for example, when a mortgagee 

purchases the property during a foreclosure sale at a price 

below its fair market value, obtains a deficiency judgment for 

the difference between the foreclosure price and the outstanding 

mortgage debt, and then resells the property at or above its 
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fair market value. Restatement (Third) of Property: Mortgages 

§ 8.4 cmt. a; Nelson & Whitman, supra; Washburn, supra, at 849. 

The traditional approach to calculating a deficiency judgment 

thus may produce inequity between mortgagors and mortgagees by 

holding a mortgagor liable for more than what is owed and 

granting mortgagees a windfall they are not due. This has 

prompted several state legislatures since the 1930s to abandon 

the traditional approach and instead mandate the use of a 

property’s fair market value as the minimum measure for 

determining a deficiency judgment.18 Nelson & Whitman, supra. 

In addition to the states that have adopted the 

majority view through legislation, several state courts have 

adopted the majority view through judicial decision. In 

Trustees of Washington-Idaho-Montana-Carpenters Employers 

Retirement Trust Fund v. Galleria Partnership, for example, the 

Supreme Court of Montana was called upon to review a 

$1,308,193.35 deficiency judgment against the defendants, whose

foreclosed property had been valued at $1,100,000 two years 

prior to a sheriff’s sale but was sold for $565,000. 780 P.2d 

608, 609, 611 (Mont. 1989). The court determined that its own 

 18 At least 23 states statutorily define a deficiency using the 

“fair value” of the foreclosed property. See Restatement (Third) of 

Property: Mortgages § 8.4 Reporters’ Note to cmt. a; Sostaric, 766 S.E.2d at 

400 n.11. Of those that have not, many prohibit deficiency judgments 

entirely or with respect to purchase money mortgages. See Restatement 

(Third) of Property: Mortgages § 8.4 Reporters’ Note to cmt. a.
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statutes were silent as to the duty of the court to determine 

whether the sheriff’s sale reflected the fair market value of 

the foreclosed property. Id. at 616-17. The court observed, 

however, that the majority of the neighboring states had 

statutes that “limited [a deficiency judgment] to the difference 

between the fair market value of the secured property at the 

time of the foreclosure sale, regardless of a lesser amount 

realized at the sale, and the outstanding debt for which the 

property was secured.” Id. at 616-17. The Ninth Circuit had 

recognized that the purpose of two of those states’ statutes was 

to prevent the injustice that befalls the judgment debtor whose 

foreclosed property brings a price significantly less than its 

fair market value, the Montana court noted. Id. at 617 (citing 

U.S. v. MacKenzie, 510 F.2d 39, 41 (9th Cir. 1975)). In the 

exercise of its equity jurisdiction, the court deemed it proper 

to remand the case for determination of the property’s fair 

market value as of the time of the sheriff’s sale, which would 

then be used to calculate the deficiency judgment. Id.

The Supreme Court of West Virginia has similarly 

adopted the majority view through judicial decision. In 

Sostaric v. Marshall, the court noted that, while the governing 

state statute was silent as to whether the value of real 

property could be challenged at a deficiency judgment 

proceeding, the court had previously applied common law 
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principles of equity to set aside foreclosure sales. 766 S.E.2d 

at 403. Concluding that adoption of the majority view would, 

inter alia, prevent a creditor from receiving a windfall at the 

expense of a deficiency defendant, the court overruled its 

previous precedent in favor of adopting the majority view. Id.

at 405. Thus, state supreme courts have not shied from using 

their inherent equity powers to adopt the majority view to 

create fairness between the parties in foreclosure proceedings.

See also Wansley v. First Nat. Bank of Vicksburg, 566 So.2d 

1218, 1223-25 (Miss. 1990) (holding that every aspect of the 

foreclosure sale must be “commercially reasonable”); Vantium 

Capital, Inc. v. Hobson, 137 So.3d 497, 499 (Fla. Ct. App. 2014) 

(utilizing the “fair market value” as the measure for awarding a 

deficiency decree); Licursi v. Sweeney, 594 A.2d 396, 398-99

(Vt. 1991) (using the “value” of the property as the measure to 

determine whether a deficiency existed).

In 1997, the American Law Institute also adopted the

majority approach in the Restatement (Third) of Property: 

Mortgages § 8.4. As set forth in the Restatement, the 

deficiency judgment debtor may request a determination of the 

“fair market value” of foreclosed property as of the date of the 

foreclosure sale. Restatement (Third) of Property: Mortgages

§ 8.4(c). If the fair market value is greater than the 

foreclosure price, the deficiency judgment debtor is entitled to 
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offset the deficiency against the fair market value. Id.

§ 8.4(d). Determination of a property’s fair market value is 

not automatic and must be requested by a deficiency judgment 

debtor. Id. § 8.4 cmt. b. Thus, the Restatement “adopts the 

position of the substantial number of states that, by 

legislation or judicial decision,” allow for the calculation of 

the deficiency award using the greater of the fair market value 

or foreclosure price. Id. § 8.4 cmt. a. 

In adopting the majority view, the Restatement’s 

approach is aimed at making the mortgagee whole while 

simultaneously preventing the unjust enrichment that could 

result from the traditional approach: 

This approach enables the mortgagee to be made whole where 

the mortgaged real estate is insufficient to satisfy the 

mortgage obligation, but at the same time protects against 

the mortgagee purchasing the property at a deflated price, 

obtaining a deficiency judgment and, by reselling the real 

estate at a profit, achieving a recovery that exceeds the 

obligation.

Id. Logically, the majority rule protects a mortgagee against 

any loss that would occur from a sale of the property at less 

than its fair market value because the mortgagee retains the 

option of tendering a credit bid for the amount of the 

outstanding mortgage debt and obtaining the property without 

additional monetary payment if there are no greater bids. The 

dissent disagrees, arguing that “the mortgagee will still not be 

made whole if the outstanding mortgage debt exceeds the fair 
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market value of the property.” Dissent at 22. But this focus

on cases in which the outstanding mortgage debt exceeds the fair

market value of the property “deflects consideration of the risk 

management techniques available to lenders when the loan is 

made.”19 See Sostaric, 766 S.E.2d at 404 n.17 (quoting First 

Bank v. Fischer & Frichtel, Inc., 364 S.W.3d 216, 227 n.5 (Mo. 

2012) (Teitelman, C.J., dissenting)). Further, by allowing the 

deficiency judgment debtor to request a determination of the 

fair market value, the Restatement’s approach protects the 

mortgagor from the danger of double-loss that would result from 

“a deficiency judgment that does not fairly recognize the value” 

of the foreclosed property. Restatement (Third) of Property: 

Mortgages § 8.4 cmt. a; see also CSA 13-101 Loop, LLC v. Loop 

101, LLC, 341 P.3d 452, 456 (Ariz. 2014) (“Restatement § 8.4 

seeks to protect against artificially increased deficiencies.”).

 19 As stated by the Sostaric court:

A lender compensates for risk by charging an interest rate 

that is set both by the financial markets and by the 

lender’s assessment of the borrower’s creditworthiness. 

The lender also manages risk by appraising the fair market 

value of the property to ensure that the loan is adequately 

secured. Changing to a fair market value approach 

certainly would lessen the lender’s chance of a large 

windfall and would mean only that [the mortgagee], like the 

borrower, is losing or gaining money based on fair market 

value of property. The risk of loss is part of the risk of 

lending. That risk of loss should not be borne solely by 

the borrower and then amplified by measuring the deficiency 

by reference to the foreclosure sale price.

Sostaric, 766 S.E.2d at 404 n.17 (quoting First Bank v. Fischer & Frichtel, 

Inc., 364 S.W.3d 216, 227 n.5 (Mo. 2012) (Teitelman, C.J., dissenting)).
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Thus, section 8.4 of the Restatement provides a 

greater balance of the equities between mortgagor and mortgagee 

in the foreclosure process than the traditional approach.

D. We Adopt the Majority Approach Because It Is Consistent 

with Principles of Equity and Hawai‘i Law.

In Hawai‘i, HRS § 667-1.5 (Supp. 2015) authorizes 

foreclosure by action and provides as follows:

The circuit court may assess the amount due upon a 

mortgage, whether of real or personal property, without the 

intervention of a jury, and shall render judgment for the 

amount awarded, and the foreclosure of the mortgage. 

Execution may be issued on the judgment, as ordered by the 

court.

Our interpretation of statutes is guided by the following wellsettled principles:

First, the fundamental starting point for statutoryinterpretation is the language of the statute itself. 

Second, where the statutory language is plain and 

unambiguous, our sole duty is to give effect to its plain 

and obvious meaning. Third, implicit in the task of 

statutory construction is our foremost obligation to 

ascertain and give effect to the intention of the 

legislature, which is to be obtained primarily from the 

language contained in the statute itself. Fourth, when 

there is doubt, doubleness of meaning, or indistinctiveness 

or uncertainty of an expression used in a statute, an 

ambiguity exists.

State v. Castillon, 144 Hawai‘i 406, 411, 443 P.3d 98, 103 (2019)

(quoting Panado v. Bd. of Trs., Emps.’ Ret. Sys., 134 Hawai‘i 1, 

11, 332 P.3d 144, 154 (2014)). Therefore, our interpretation of 

HRS § 667-1.5 must begin with the language of the statute 

itself. HRS § 667-1.5 plainly states that the circuit court 

“may assess the amount due upon a mortgage . . . and shall 

render judgment for the amount awarded.” By its use of the word 
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“may” the legislature has permitted courts to exercise 

discretion in assessing the amount due on a mortgage, “without 

the intervention of a jury.” HRS § 667-1.5. Further, the 

statute confers on the court “specific authority to render a 

deficiency judgment, as an incident to the foreclosure.” Bank 

of Honolulu, N.A. v. Anderson, 3 Haw. App. 545, 549, 654 P.2d 

1370, 1374 (1982) (emphasis omitted) (citing 2 Committee on 

Coordination of Rules and Statutes, Report of Committee on 

Coordination of Rules and Statutes (1971)). Under its plain 

language, Chapter 667 (governing foreclosures) does not mandate 

either the traditional or majority approach to calculating 

deficiency judgments. Instead, the legislature has left the 

determination of the amount due in a deficiency judgment and 

thereby the method for its calculation to the discretion of the 

courts. 

The Monalims contend that courts in Hawai‘i currently 

determine a deficiency judgment by mechanically subtracting the 

price obtained at a foreclosure sale from the outstanding 

mortgage debt. They ask that this court follow the approach of 

the majority of states and the Restatement by requiring lower 

courts to conduct an evidentiary hearing to determine the fair 

market value of a foreclosed property when calculating a 

deficiency judgment. Citing Wodehouse v. Hawaiian Trust Co., 32 

Haw. 835, 854 (Haw. Terr. 1933), HawaiiUSA argues that no such 
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inquiry is required under Hawai‘i law and contends that our 

caselaw requires the mortgagor to bear the burden of any loss 

unless the foreclosure price “is so grossly inadequate as to 

shock the conscience.” 

In Wodehouse, the trial court ordered the foreclosure 

and sale of property at a public auction with an upset price of 

$82,000. Id. at 840. After the property twice failed to receive 

any bids, the court gave the mortgagees a choice between taking 

possession of the mortgaged property as credit for $82,000 of 

the debt or postponing the sale to a later date. Id. The 

mortgagees declined both options, but the court nonetheless 

ordered the conveyance of the property to the mortgagees and 

credited the mortgagor $82,000 toward their outstanding debt. 

Id. 

On appeal, the Supreme Court of the Territory of 

Hawai‘i concluded that while a court may refuse to confirm a sale 

where “the highest bid offered is so grossly inadequate as to 

shock the conscience,” the trial court could not compel the 

mortgagee to purchase the property at a price set by the court 

because the mortgagee had a contractual right to foreclose on 

the property. Id. at 852-54. The court therefore set aside the 

trial court’s decree and remanded the case to the lower court

with instructions to have the property offered at public auction 

under foreclosure. Id. at 854.
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Wodehouse thus dealt with the court’s discretion with 

regard to the sale and confirmation of sale of a foreclosed 

property and not with the separate question of whether and for 

what amount a deficiency judgment is due. See Wansley, 566 

So.2d at 1224 (holding that the rule that “a foreclosure sale 

may not be set aside unless the sales price is so inadequate as 

to shock the conscience . . . . has nothing whatsoever to do 

with the separate and distinct question of what, if any, 

deficiency judgment may be allowed” (citations omitted)).

Wodehouse is therefore not controlling with regard to the

question presently before the court.

“Mortgage foreclosure is a proceeding equitable in 

nature and is thus governed by the rules of equity.” Beneficial 

Hawaii, Inc. v. Kida, 96 Hawai‘i 289, 312, 30 P.3d 895, 918

(2001). A court sitting in equity has the power to mold its 

decrees to conserve the equities of the parties under the 

circumstances. Peak Capital Grp., LLC v. Perez, 141 Hawai‘i 160, 

179, 407 P.3d 116, 135 (2017). When considering the equities in 

a foreclosure case, “all of the equities must be considered” 

including “[t]he equities affecting the mortgagees . . . as well 

as those affecting the mortgagors.” Wodehouse, 32 Haw. at 842. 

The equitable discretion provided to our courts by HRS § 667-1.5

is therefore governed by principles of equity and fairness.
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As observed in the commentary to the Restatement, the 

majority rule “enables the mortgagee to be made whole” and “also 

protects the mortgagor from the harsh consequences of suffering 

both the loss of the real estate and the burden of a deficiency 

judgment that does not fairly recognize the value of that real 

estate.” Restatement (Third) of Property: Mortgages § 8.4 

cmt. a. By contrast, the traditional approach is susceptible to 

abuse, potentially permitting a mortgagee to reap an undue 

windfall at a mortgagor’s expense. Id. The commentary goes on 

to note that “[t]he approach of this section is embodied in 

statutes in many jurisdictions, but the principles of this 

section are applicable whether a statute requires it or not.” 

Id. (emphasis added). Because the equities clearly weigh in 

favor of the majority approach, we now adopt section 8.4 of the 

Restatement (Third) of Property as Hawai‘i law. We thus hold 

that a deficiency defendant “may request . . . a determination

of the fair market value of the real estate as of the date of 

the foreclosure sale.” Id. § 8.4(c).20

 20 Pursuant to HRS § 667-1.5, the court may determine the fair 

market value of the property “without the intervention of a jury.” Section 

8.4 of the Restatement (Third) of Property, which we expressly adopt, gives 

guidance on how the fair market value may be calculated. Comment c to 

section 8.4 provides as follows: 

The determination of fair market value may appropriately 

utilize a variety of approaches including (1) the “market 

data” approach indicated by recent sales of comparable 

properties; (2) the “income approach,” or the value which 

the real estate’s net earning power will support based upon 

(continued . . .) 
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The dissent asserts that by adopting section 8.4 of 

the Restatement (Third) of Property, which accords with the rule 

in the majority of jurisdictions and the modern trend, this 

court usurps the legislature’s role. Dissent at 10, 13, 13 n.4, 

22-23. The dissent’s contention is groundless in light of the 

fact that the legislature, through HRS § 667-1.5, has expressly 

provided that the determination of the amount due in a 

deficiency judgment, and thereby the method for its calculation, 

is entrusted to the discretion of the courts. HRS § 667-1.5

(“The circuit court may assess the amount due upon a mortgage 

. . . and shall render judgment for the amount awarded, and the 

foreclosure of the mortgage.”). By not specifying a method of 

calculation, the legislature authorized the courts to exercise

discretion in determining how to calculate deficiency judgments. 

Nothing in the language of HRS § 667-1.5 suggests that the 

legislature sought to circumscribe a court’s discretion in this 

regard by precluding consideration of the fair market value of 

 

(. . . continued)

a capitalization of net income; and (3) the current cost of 

reproducing the property less depreciation.

Additionally, we adopt section 8.4’s prohibition on the advance 

waiver of the right to a determination of the fair market value because “[i]f 

such waiver were permitted, most mortgage forms would routinely incorporate 

waiver language and the impact of this section would be significantly 

weakened.” Id. § 8.4 Reporters’ Note to cmt. b.
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the foreclosed property.21 The dissent’s assertion reflects a

core misunderstanding of the legal principle at the foundation 

of this opinion--the application of a statute to the facts of a 

case. It is axiomatic that it is “the province and duty of the 

judicial department to say what the law is.” Marbury v. 

Madison, 5 U.S. 137, 177 (1803). And accordingly, “[t]hose who 

apply the rule to particular cases, must of necessity expound 

and interpret that rule.” Id.

Despite the clear language of the statute, the dissent 

claims that our interpretation of HRS § 667-1.5 is “misguided.” 

Dissent at 18. Specifically, the dissent first posits that a 

court’s assessment of “the amount due upon a mortgage” under HRS 

§ 667-1.5 is not related to the amount of a subsequent 

deficiency judgment, but instead refers to a determination of 

the amount due on the mortgage before a foreclosure sale has 

taken place. Dissent at 15. However, the dissent’s 

interpretation is directly contrary to longstanding precedent. 

See Anderson, 3 Haw. App. at 549, 654 P.2d at 1374 (“[HRS § 667-

1.5] does not require the determination of a sum certain before

foreclosure is decreed since a deficiency judgment is rendered 

only after the sale of the mortgaged property.”) (emphases 

 21 Indeed, at oral argument HawaiiUSA’s counsel acknowledged that 

the circuit court could, under the right procedural circumstances, consider 

the fair market value of a foreclosed property. Oral Argument at 00:59:45-

01:00:10, HawaiiUSA v. Monalim, (No. SCWC-16-0000807), http://oaoa.hawaii.gov

/jud/oa/19/SCOA_011119_SCWC_16_807.mp3 [https://perma.cc/TBK2-9K9G].
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41

added) (citing Indep. Mortg. Tr. v. Glenn Constr. Corp., 57 Haw. 

554, 555 n.1, 560 P.2d 488, 489 n.1 (1977)).22 

Second, the dissent maintains that HRS § 667-1.5 does 

not vest any discretion in the courts to determine the method by 

which deficiency judgments are calculated. Particularly, the 

dissent relies on the fact that HRS § 667-1.5 does not contain 

language that “expressly permit[s] the court to consider fair 

market value.” Dissent at 16. But it is this very absence of 

 22 The dissent criticizes our citation to Anderson because, the 

dissent asserts, it is a decision of the ICA that “this court has never 

referenced or adopted.” Dissent at 15 n.5. Respectfully, this is a 

misstatement of our jurisprudence. See Bank of America, N.A. v. ReyesToledo, 139 Hawai‘i 361, 367, 390 P.3d 1248, 1254 (2017) (citing Anderson for 

the rule that a foreclosing party must prove the existence of an agreement, 

the terms of the agreement, a default by the mortgagor under the terms of the 

agreement, and the giving of the cancellation notice in order to prove 

entitlement to foreclose); Bank of N.Y. Mellon v. R. Onaga, Inc., 140 Hawai‘i 

358, 361, 370, 400 P.3d 559, 562, 571 (2017) (affirming circuit court’s 

judgment confirming the sale of foreclosed property after the foreclosing 

party proved it was entitled to foreclosure under the “[Anderson] 

requirements”).

The dissent then asserts that its interpretation of HRS § 667-1.5 

is in fact consistent with the interpretation of the statute in Anderson. To 

reiterate, the dissent interprets HRS 667-1.5’s statement that “[t]he circuit 

court may assess the amount due upon a mortgage” as referring to the 

determination of the amount due upon the mortgage before a foreclosure sale 

takes place. Dissent at 15. In Anderson, the ICA rejected a foreclosure 

defendant’s contention that the decree of foreclosure, which entitled the 

foreclosing party to a foreclosure sale, was invalid because it failed to 

specify the actual amount due on the mortgage. The rule set out by the ICA 

in Anderson, which we adopted in Reyes-Toledo, is that the foreclosing party 

need only prove the existence of an agreement, the terms of the agreement, a 

default by the mortgagor under the terms of the agreement, and the giving of 

the cancellation notice in order to prove entitlement to foreclose. 

Anderson, 3 Haw. App. at 549, 654 P.2d at 1374; Reyes-Toledo, 139 Hawai‘i at 

367, 390 P.3d at 1254. Our law does not burden the foreclosing party with 

the obligation to prove the amount due on the mortgage before the foreclosure 

sale because “a deficiency judgment is rendered only after the sale of the 

mortgaged property.” Anderson, 3 Haw. App. at 549, 654 P.2d at 1374. This 

process does not require a court to determine the amount due on the mortgage 

before granting a decree of foreclosure to the mortgagee.
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an express directive on the method of calculation that enables a

court to exercise discretion in determining the deficiency 

judgment, including applying, or not applying, the traditional 

method that the dissent appears to favor. 

The dissent next relies upon 2012 “legislative 

history” to HRS § 667-1.5, a statute that the dissent 

acknowledges has essentially remained unchanged since its 

enactment in 1859.23 Dissent at 16-17. Even if the legislative 

“history” cited by the dissent had been contemporaneous with the 

enactment of the 1859 version of the statute, resort to 

legislative history in this manner would only be appropriate if 

the word “may” in the statute were ambiguous. Castillon, 144 

Hawai‘i at 411, 443 P.3d at 103 (“[W]here the statutory language 

is plain and unambiguous, our sole duty is to give effect to its 

plain and obvious meaning.” (quoting Panado, 134 Hawai‘i at 11, 

332 P.3d at 154)). And assuming arguendo that the word “may” in 

HRS § 667-1.5 is ambiguous, reliance on a subsequent legislative 

committee report written 153 years after enactment of the 

statute underscores the criticism this approach has repeatedly 

garnered from the United States Supreme Court. United States v. 

Texas, 507 U.S. 529, 535 n.4 (1993) (“[S]ubsequent legislative 

 23 The dissent describes the 2012 legislature as “the Legislature 

which most recently amended HRS § 667-1.5[.]” Dissent at 18. We observe 

that the only changes to HRS § 667-1.5 effected by the 2012 amendments were 

to the section number and title. 2012 Haw. Sess. Laws Act 182, § 3 at 648.
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history is a ‘hazardous basis for inferring the intent of an 

earlier’ Congress.” (quoting Pension Benefit Guar. Corp. v. LTV 

Corp., 496 U.S. 633, 650 (1990))); United States v. Price, 361 

U.S. 304, 313 (1960).24

The dissent’s accusation of usurpation and judicial 

activism is therefore without any validity in light of our 

statutory law vesting such discretion in the circuit court and

the equitable nature of foreclosure proceedings.25

Additionally, the dissent disagrees with our adoption 

of the Restatement’s approach because “the new rule will 

not . . . protect both parties to the mortgage.” Dissent at 10. 

However, the dissent’s view has been overwhelmingly rejected by 

 24 Additionally, the committee report in fact acknowledges the 

inequity of the traditional method of calculating deficiency judgments. See

S. Stand. Comm. Rep. No. 3325, in 2012 Senate Journal, at 1075 (“Your 

Committee further notes that owner-occupants who lose their primary 

residences to foreclosure suffer harsh personal losses that leave them

particularly susceptible in cases where the lender may pursue a deficiency 

judgment . . . . As such, owner-occupants should be provided with greater 

relief from deficiency judgments.”). As the committee report noted, the 

tendency of the traditional method to produce inequitable results merited 

further discussion. Id. It is not surprising that the majority rule, which 

we adopt today, is cognizant of the concern articulated in the committee 

report and provides an equitable means to calculate the deficiency judgment 

in such cases. 

The dissent argues to the contrary, stating that the legislature 

“expressed concern about limiting lenders’ ability to pursue deficiency 

judgments, even in the case of a displaced owner-occupant, due to the 

prevalence of borrowers refinancing their mortgages for more than the value 

of their home.” Dissent at 17-18 (footnote omitted). Respectfully, the 

dissent misconstrues the legislature’s apprehension, which pertained solely 

to “prohibiting” deficiency judgments, and not at all to consideration of a 

more equitable means to determine their amount.

25 Indeed, in the Missouri case that the dissent relies upon, the 

court declined to reconsider the manner in which deficiency judgments are 

calculated substantially because Missouri lacked a statutory equivalent to 

HRS § 667-1.5. Dissent at 18-19; First Bank, 364 S.W.3d at 223. 
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the majority of jurisdictions, legal scholars, and the American 

Law Institute. See Washburn, supra, at 939 (“Fairness in the 

mortgage foreclosure process can be achieved only by balancing 

the rights of the mortgagee with the need to protect the 

mortgagor. The fulcrum of this balance is the market value of 

the foreclosed property.”); Restatement (Third) of Property: 

Mortgages § 8.4 cmt. a (adopting position of the substantial 

number of jurisdictions providing the deficiency defendant with 

the right to have “the greater of the fair market value of the 

real estate or the foreclosure sale price be used in calculating 

the deficiency”).

The dissent also posits that our adoption of the 

majority rule “will unnecessarily burden parties to a 

foreclosure action,” and that tasking the trial court with 

assessing the fair market value of real property is unduly 

burdensome because it will “require[] additional time and 

force[] all parties to incur additional costs.” Dissent at 20-

21. Despite the dissent’s speculative concerns, the experience 

of jurisdictions following the majority rule is quite the 

contrary:

[W]e find no authority or data demonstrating that our 

trustee foreclosure laws would be unsettled were we to 

allow a trust deed grantor to challenge the value of real 

property at a deficiency judgment proceeding. A majority 

of states allow grantors to challenge the value of real 

property at a deficiency judgment proceeding. We have 

found no authority suggesting that the states that follow 

the majority rule suffer from unsettled foreclosure laws, 
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nor have we found any data demonstrating that the banking 

institutions in those states have been negatively affected

as a result of their jurisdictions adhering to the majority 

rule.

Sostaric, 766 S.E.2d at 404 (emphases added). Moreover, any 

administrative concerns entailed by our adoption of section 8.4 

are more than offset by the equity and fairness gained in 

determining a deficiency judgment based on the fair market value 

of the property, as manifestly demonstrated by the widespread 

adoption of the majority approach.26

The dissent further contends that our adoption of the 

majority rule in this case is unwarranted because, “[t]he record 

 26 Further, our courts are already called upon to make financial 

determinations similar to assessing the fair market value of real property in 

many other contexts. See, e.g., State v. Nelson, 140 Hawai‘i 123, 134 n.14, 

398 P.3d 712, 723 n.14 (2017) (deeds of real property used to secure a bail 

bond must have a market value at least twice the amount of the bail); Gordon 

v. Gordon, 135 Hawai‘i 340, 349, 350 P.3d 1008, 1017 (2015) (division of real 

property for divorce); City & Cty. of Honolulu v. Steiner, 73 Haw. 449, 459, 

834 P.2d 1302, 1308 (1992) (tax appeals); Burgess v. Arita, 5 Haw. App. 581, 

589, 704 P.2d 930, 936-37 (1985) (damages for breach of land sale contract). 

Parties may adduce evidence of the fair market value of the foreclosed-upon 

property in a variety of ways that do not entail significant additional 

expenditure. See City & Cty. of Honolulu v. Int’l Air Serv. Co., 63 Haw. 

322, 332, 628 P.2d 192, 200 (1981) (“Most courts presume an owner is familiar 

with his land and the market therefor and thus is competent to state an 

opinion of its value.”); State v. Kunimoto, 62 Haw. 502, 507, 617 P.2d 93, 97 

(1980) (“[R]ecent sales of similar real estate are admissible as evidence in 

condemnation cases, either as substantive proof of value of property taken or 

in support of an expert’s opinion as to value.”); Krog v. Koahou, No. SCWC12-0000315, 2014 WL 813038 (Feb. 28, 2014) (mem.) (holding that a declaration 

of a real estate broker was properly admitted to prove the rental value of 

real property). 

In response to the many authorities cited above, the dissent 

criticizes our citation to International Air Services Co. because “[n]either 

the mortgagee nor the mortgagor would be a disinterested party who could 

proffer an impartial opinion.” Dissent at 21 n.9. But assessing the 

credibility of interested witnesses and the weight to be given to testimony 

is a core function of a trial court. Additionally, this critique is equally 

applicable to any case in which parties retain expert witnesses. 
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shows that the deficiency judgment will not unjustly enrich the 

credit union.” Dissent at 11.27 In support of this contention, 

the dissent focuses on the fact that HawaiiUSA did not purchase 

the Property at the foreclosure auction. Id. The Restatement, 

however, rejects the requirement that the fair value 

determination be restricted to mortgagee purchasers. Section 

8.4 instructs that 

limiting the application of the fair value determination to 

mortgagee purchasers may discourage mortgagees who 

contemplate obtaining deficiency judgments from taking part 

in the foreclosure bidding and hence may remove a 

significant impetus to higher bidding by third parties. In 

addition, even when a third party is the purchaser, the 

mortgagor may still suffer the unjustifiable double burden 

imposed by the loss of his or her real estate and an 

unfairly measured deficiency judgment. Consequently, under 

this section foreclosing mortgagees are subject to the fair 

value limitation on deficiency judgments irrespective of 

who purchases at the sale.

Restatement (Third) of Property: Mortgages § 8.4 Reporters’ Note 

to cmt. b (emphases added). Thus, while section 8.4’s primary 

purpose is “preventing the unjust enrichment of the mortgagee . 

. . . [section 8.4] also protects the mortgagor from the harsh 

consequences of suffering both the loss of the real estate and 

the burden of a deficiency judgment that does not fairly 

recognize the value of that real estate.” Restatement (Third) 

of Property: Mortgages § 8.4 cmt. a. This second purpose is 

served even when a third party is the purchaser because the fair 

value determination protects the mortgagor from a deficiency 

 27 HawaiiUSA also argues that it did not secure a windfall profit 

over what was actually owed because it was not the purchaser of the Property.
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judgment that does not fairly recognize the value of the lost

real estate.28

We observe that both the dissent and HawaiiUSA argue

that the deficiency judgment awarded against the Monalims fairly 

recognizes the value of the Property because the sale price at 

the foreclosure auction exceeded the City and County’s valuation 

of the Property for purposes of tax assessment. Dissent at 11. 

The reliance by HawaiiUSA and the dissent on the tax-assessed 

value of the Property to demonstrate market value does not 

recognize the longstanding and “overwhelming weight of authority 

that assessed value is not competent direct evidence of value 

for purposes other than taxation.” C. C. Marvel, Annotation, 

Valuation for Taxation Purposes as Admissible to Show Value for 

Other Purposes 39 A.L.R.2d 209 §4[a] (1955); see also Mettee v. 

Urban Renewal Agency, 518 P.2d 555, 557 (Kan. 1974) (“Although 

the assessor is required to appraise the value of the property, 

 28 The dissent claims incredulity of our adoption of the majority 

rule in this case. Dissent at 10, 14, 22-23. The dissent acknowledges, 

however, that in instances where, for example, (1) the lender is the 

purchaser, (2) the borrower alleges that the sale terms were unconscionable, 

or (3) the borrower alleges that the sale was conducted fraudulently, a court 

could be required to make a fair value determination when there are 

suggestions of inequity to ensure fairness to the borrower. Dissent at 20

n.7. But waiting for a case in which the mortgagee is unjustly enriched 

before adopting the majority rule is imprudent. Our adoption of the majority 

rule shall be prospective only--as it would be in any subsequent case. See

infra pp. 49-51. It would thus result in a greater injustice if we were to 

await a case in which the mortgagee receives an undue windfall and the 

borrower suffers the “harsh consequences” of “a deficiency judgment that does 

not fairly recognize the value of that real estate.” Restatement (Third) of 

Property: Mortgages § 8.4 cmt a.
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it is an open secret that the assessment rarely approaches the 

true market value.” (quoting 5 Nichols on Eminent Domain § 22.1

(3d ed.))). For over a century, courts in this country have 

recognized that tax assessments of real estate are not always 

aimed at estimating fair market value, and even when that is the 

case it is well understood that the custom of assessors is to

assess property in comparison with the surrounding land. Wray 

v. Knoxville, L.F. & J.R. Co., 82 S.W. 471, 475 (Tenn. 1904) 

(“This court knows judicially and as a part of the financial 

history of the State that land is never assessed for purposes of 

taxation at its real cash market value, though that may be the 

law, but only in comparison with other lands around it[.]”); see 

also McClure v. Delguzzi, 767 P.2d 146, 148 (Wash. Ct. App. 

1989) (“[N]otwithstanding statutory requirements, assessor’s 

values were relative, not actual.”).29 As such, the reliance by 

the dissent and HawaiiUSA on the tax-assessed valuation of the 

Property is misguided. In fact, examination of the facts in 

this very case disabuses one of the notion that tax assessments 

accurately reflect market value. The Monalims purchased the 

Property in 2008. The mortgages the Monalims executed on the 

property at the time of sale were for the total amount of 

 29 Assessed values may also exceed market values. See, e.g, Kuiters 

v. Cty. of Freeborn, 430 N.W.2d 461, 462 (Minn. 1988) (agricultural property 

in the county was assessed, on average, at 115% of its market value).
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$1,025,100. The tax-assessed value of the Property in 2008 was 

$322,600. 

In any event we need not resolve whether the 

deficiency judgment awarded against the Monalims fairly 

accounted for the value of the Property. Of more fundamental

importance, there is little disagreement that the equitable 

considerations of foreclosure proceedings warrant affording the 

mortgagee the right to apply the fair market value of mortgaged 

property towards the amount due on the mortgage, as section 8.4 

provides. The majority of jurisdictions and the growing 

consensus regarding a mortgagor’s right to a fair market value 

determination firmly establishes that, by adopting section 8.4, 

we advance the fundamental fairness of foreclosure proceedings 

in Hawai‘i, protect mortgagors from the double burden of losing 

their land and suffering an unfairly measured deficiency 

judgment, and enable mortgagees to be made whole. 

Because our adoption of section 8.4 “announce[s] a new 

rule . . . we are free to apply this new rule with or without 

retroactivity.”30 Lewi v. State, 145 Hawai‘i 333, 349 n.21, 452 

P.3d 330, 346 n.21 (2019) (internal quotations and alterations 

omitted) (quoting State v. Jess, 117 Hawai‘i 381, 401, 184 P.3d 

 30 We reject the Monalims’ contention that procedural and 

substantive due process was violated in determining the amount of the 

deficiency judgment in light of the circumstances of this case. 
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133, 153 (2008)). Regarding the retroactive effect of our 

holdings, we have adopted the following approach: 

This court has generally considered three primary 

alternatives in deciding to what degree a new rule is to 

have retroactive effect. First, this court may give a new 

rule purely prospective effect, which means that the rule 

is applied neither to the parties in the law-making 

decision nor to those others against or by whom it might be 

applied to conduct or events occurring before that 

decision. Second, this court may give a new rule limited 

or “pipeline” retroactive effect, under which the rule 

applies to the parties in the decision and all cases that 

are on direct review or not yet final as of the date of the 

decision. Third, this court may give a new rule full 

retroactive effect, under which the rule applies both to 

the parties before the court and to all others by and 

against whom claims may be pressed. . . . 

In exercising our discretion in deciding the effect of a 

new rule, we weigh the merits and demerits of retroactive 

application of the particular rule in light of (a) the 

purpose of the newly announced rule, (b) the extent of 

reliance . . . on the old standards, and (c) the effect on 

the administration of justice of a retroactive application 

of the new standards.

Id. (internal citations and quotations omitted). Here, we adopt 

the majority approach to calculating deficiency judgments in 

order to properly balance the equities between mortgagors and 

mortgagees, protect mortgagors from double-loss by not fairly 

recognizing the value of the foreclosed property, and prevent 

undue windfalls at mortgagors’ expense. However, parties have 

relied on the finality of the many deficiency judgments that 

have occurred within this state over the years, and allowing 

petitions to reopen finalized deficiency judgments would impose 
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a significant effect on the administration of justice.31 See

id.; see also HRCP Rule 60(b)(6) (permitting courts to upon 

motion relieve a party of final judgment for any “reason 

justifying relief from the operation of the judgment”). 

Therefore, our adoption of the majority rule is prospective in 

effect and applies only to foreclosure cases in which a 

 31 Citing federal caselaw, the dissent counsels that “we do not 

promulgate new rules to be applied prospectively only[.]” Dissent at 13 n.4

(quoting James B. Beam Distilling Co. v. Georgia, 501 U.S. 529, 547 (1991) 

(Blackmun, J., concurring)). Respectfully, the citation is simply inapposite 

because that case concerned “a newly declared constitutional rule,” James B. 

Beam Distilling Co., 501 U.S. at 547 (Blackmun, J. concurring), and more 

significantly, the courts of this state are not subject to the limitations of 

the federal case and controversy requirement cited by Justice Blackmun. 

Additionally, Justice Blackmun was not advocating against the prospective 

application of a new rule, instead he was arguing that the Court’s decision 

was required to be applied both prospectively and retroactively. It is also 

well settled that “[w]hen questions of state law are at issue, state courts 

generally have the authority to determine the retroactivity of their own 

decisions.” Garcia, 96 Hawai‘i at 211, 29 P.3d at 930; State v. Yong Shik 

Won, 137 Hawai‘i 330, 355 n.49, 372 P.3d 1065, 1090 n.49 (2015); Schwartz v. 

State, 136 Hawai‘i 258, 272, 361 P.3d 1161, 1175 (2015). Our decision to 

apply the holding in this case only prospectively is based on the application 

of the factors set forth in our precedent. We note, at oral argument, 

HawaiiUSA’s counsel specifically stated that if this court were “inclined to 

adopt the majority view and to adopt a new rule for calculating deficiency 

judgments . . . it should be prospective in application.” Oral Argument at

00:59:07-19, HawaiiUSA v. Monalim, (No. SCWC-16-0000807), 

http://oaoa.hawaii.gov/jud/oa/19/SCOA_011119_SCWC_16_807.mp3

[https://perma.cc/TBK2-9K9G]. 

In addition, this course of applying our decisions prospectively 

is one we have frequently followed when doing so is in the interests of 

justice. See, e.g., Chen v. Mah, 146 Hawaiʻi 157, 177, 457 P.3d 796, 816 

(2020) (applying a holding prospectively); State v. Torres, 144 Hawai‘i 282, 

295, 439 P.3d 234, 247 (2019) (same); State by Office of Consumer Prot. v. 

Joshua, 141 Hawaiʻi 91, 98-99, 405 P.3d 527, 534-35 (2017) (same); State v. 

Auld, 136 Hawai‘i 244, 255-56, 361 P.3d 471, 482-83 (2015) (same); In re T.M., 

131 Hawai‘i 419, 319 P.3d 338 (2014) (same); State v. Hussein, 122 Hawai‘i 

495, 229 P.3d 313 (2010) (same); Jess, 117 Hawai‘i at 404, 184 P.3d at 156 

(same); Kahale v. City & Cty. of Honolulu, 104 Hawai‘i 341, 348, 90 P.3d 233, 

240 (2004) (same); Lindinha v. Hilo Coast Processing Co., 104 Hawai‘i 164, 

170, 86 P.3d 973, 979 (2004) (same); Tachibana v. State, 79 Hawai‘i 226, 238, 

900 P.2d 1293, 1305 (1995) (same); State v. Stanley, 60 Haw. 527, 533, 592 

P.2d 422, 426 (1979) (same). 
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deficiency judgment is first entered after the date of this 

opinion.32 

IV. CONCLUSION

Based on the foregoing, we vacate the ICA’s August 16, 

2018 Judgment on Appeal, the circuit court’s Order Granting 

Deficiency Judgment, and the Deficiency Judgment, and the case 

is remanded to the circuit court for proceedings consistent with 

this opinion.

 32 In the event a deficiency judgment is entered on remand, our 

adoption of the majority rule will not be applicable to the Monalims as the 

Deficiency Judgment was initially entered before the date of this decision. 

Gary Victor Dubin

(Frederick J. Arensmeyer

with him on the briefs, 

application, and reply)

for petitioners

Thomas J. Berger

(Jonathan W.Y. Lai and

Tracey L. Ohta with him 

on the briefs and response)

for respondent

/s/ Sabrina S. McKenna

/s/ Richard W. Pollack

/s/ Michael D. Wilson