Source: http://titleinsurancecenter.com/Title%20Insurance%20Pages/Cases/HawaiiCases.htm
Timestamp: 2019-04-18 12:49:01+00:00

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FORECLOSURE: The court held that a wrongful foreclosure counterclaim may be brought in a judicial foreclosure case when no foreclosure or sale of the property has yet occurred.
HOA FORECLOSURE: A homeowners association may non-judicially foreclose an assessment lien only if the CC&R's, bylaws or another enforceable agreement with unit owners provides for non-judicial foreclosure.
DEDICATION: The court held that the ICA correctly affirmed the circuit court's grant of summary judgment on Kaiawe's statutory dedication claim, and correctly determined that Kaiawe was not entitled to relief under HRS Chapter 669. However, the ICA erred in holding that the circuit court correctly granted summary judgment in favor of Ibbetson on Kaiawe's common law dedication claim.
FORECLOSURE: The court vacated the trial court's sustaining of a demurrer in an action to foreclose a mortgage, holding: 1) HSBC did not establish that it possessed the note at the time the action was filed, even though it alleged that it possessed the note at the time the demurrer was heard and 2) the employee who signed the declaration establishing HSBC's ownership of the note did not specifically state that he was familiar with the record-keeping system used by HSBC.
FORECLOSURE: The court held that a purchaser of property that is subject to a mortgage to which the purchaser is not a party may challenge a foreclosing plaintiff's entitlement to enforce the note. Because the requirement -- that a party seeking to foreclose must be entitled to enforce the note at the inception of the foreclosure action -- is based on principles of standing and statutory construction rather than contractual rights, the purchaser may assert such a challenge. Because the evidence Wells Fargo presented regarding its entitlement to foreclose at the time the complaint was filed was not admissible, the court vacated an order granting summary judgment and remanded the case for further proceedings.
CONSTRUCTIVE TRUST: A certificate of title registered in the Land Court is generally conclusive, but there is an exception in HRS 501-106 providing that in case of a registration procured by fraud, an owner may pursue all the owner's remedies against the parties to the fraud. Here the court held that defendant properly alleged a constructive trust where he alleged that he conveyed title to accommodate a refinance, but did not intend to give up his claim to the property. The court pointed out that a constructive trust arises where a person holding title is subject to an equitable duty to convey to another on the ground that the person in title would be unjustly enriched if he were permitted to retain it and where the transfer of the land was obtained in an abuse of a confidential relationship.
DEDICATION: The court held that the public's use for 65 years of a seawall that crosses 21 properties created an easement by implied dedication in favor of the State. However, the State did not acquire title to the seawall or underlying real property pursuant to the "surrender statute" (HRS 264-1(c)(2)), because the statute requires that the property must be subject to a preexisting express easement in favor of the State. Accordingly, because the State has only a dedicated easement and the underlying owners have fee title, both the State and the underlying owners must share in the maintenance cost of the easement.
Bank of New York Mellon v. Onaga, Inc.
FORECLOSURE: The court held that an appeal of an order confirming a judicial foreclosure sale is moot when the appellant does not post a supersedeas bond to obtain a stay of the proceedings prior to the sale of the property to a bona fide purchaser.
1. A bank employee's declaration was insufficient to establish that he was a "qualified witness" as to U.S. Bank's records and, therefore, U.S. Bank was not entitled to summary judgment because the promissory note and assignments were not properly authenticated.
2. Conclusory assertions of "robo-signing" failed to state a plausible claim where defendants failed to assert facts or law explaining how the alleged "robo-signing" caused them harm or damages. However, it is not necessary to address the legal effect of the "robo-signing" at this time, so the ICA's holding on this issue was set aside because it was not necessary to the determination of this case.
3. In a judicial foreclosure, a third party to a pooling and servicing agreement ("PSA") lacks standing to challenge assignments in alleged violation of its terms unless the violation would render the assignment void. Since the PSA was not in evidence, the court did not decide whether any of its terms were violated and, if so, whether any such violation renders an assignment void or voidable.
FORECLOSURE: The court held that a foreclosing lender must prove that it possessed the note at the time it brought the foreclosure action, and it is not sufficient to merely prove that it possessed the note at the time the summary judgment was brought. Since the endorsement on the note in favor of plaintiff did not contain a date, plaintiff did not prove that it had possessed the note when the action was brought. Accordingly, the court reversed the granting of summary judgment in favor of plaintiff.
1. Former HRS 667-5 (now repealed) required that the foreclosure sale could be held any time after four weeks from the date the sale was first advertised, and the lender conducted the sale one day too soon because under HRS 1-29, time periods are calculated by by excluding the first day and including the last. This meant that the sale was conducted on the last day of the four-week period and not after the four weeks had expired.
2. HRS 667-5 did not provide that notices of postponement of a sale must be published, but the deed of trust itself imposed that requirement by providing that the property could be sold "at the time and place and under the terms specified in the notice of sale".
3. HRS 667-5 required that the foreclosing lender be represented by an attorney, but did not require that the attorney personally prepare and sign the notice of sale.
4. Under HRS 667-5 and 667-7, there was no private right of action against a foreclosing mortgagee's attorney.
5. Under HRS 667-5, the lender had to use reasonable means to obtain the best price for a foreclosed property.
6. Under HRS 667-5, the lender had to demonstrate a regular and fair sale and an adequate sale price.
FORECLOSURE: Plaintiff nonjudicially foreclosed on a lien for unpaid assessments, purchased at the foreclosure sale and sought to evict defendant. Defendant was in possession pursuant to an agreement of sale recorded in the Land Court, but a new certificate of title had not yet been entered, and she had entered into a settlement plan with the management company to cure various delinquencies. Defendant made a motion to dismiss on the basis that title was at issue, based on her equitable interest under the agreement of sale, and that she was current on payments under the settlement plan. The court ruled in favor of defendant, holding that under HRS 667-92(c), nonjudicial foreclosure proceedings were stayed during the term of the payment plan.
1. A nonjudicial mortgage foreclosure conducted pursuant to former HRS 667-5 was not a "proceeding to enforce a mortgage" under HRS 560-3-803(d)(1), so a nonjudicial foreclosure conducted pursuant to HRS 667-5 was not exempt from the time limits under HRS 560:3-803 for presentation of claims against a decedent's estate.
2. The foreclosing lender's failure to provide reinstatement figures to a deceased borrower's personal representative violated former HRS 667-5(c)(1)'s requirement that "[u]pon the request of any person entitled to notice, the attorney [or] the mortgagee . . . shall disclose to the requestor . . . information . . . [regarding] the amount to cure the default. . . ."
3. This failure rendered the nonjudicial foreclosure sale voidable at the Estate's election, unless the trustee's sale purchasers were innocent purchasers for value. On remand, the trial court must determine if the purchasers are innocent purchasers for value and if so, then the court must determine an appropriate remedy, which generally would be an award of damages.
ADVERSE POSSESSION: The court held that the statutory 20-year period for adverse possession tolls for a named party to the litigation but continues to accrue for unnamed claimants. The court further held that the facts of this case satisfy the evidentiary burden on summary judgment of demonstrating compliance with the good faith requirement prescribed by statute and under the common law in cases involving adverse possession against cotenants.
FORECLOSURE: The court reversed the trial court's grant of a motion for summary judgment in favor of plaintiff. This was an for ejectment after plaintiff conducted a non-judicial foreclosure of a mortgage in which plaintiff purchased the subject property at the foreclosure sale. Under former HRS Section 667-5, a lender conducting a non-judicial foreclosure sale bears the burden of establishing that the sale was conducted in a manner that is fair, reasonably diligent, and in good faith and that an adequate price was procured for the property. Here, the Affidavit of Sale did not attest to anything concerning the adequacy of the purchase price, so plaintiff did not satisfy its initial burden for summary judgment.
1. Conclusory assertions of "robo-signing" failed to state a plausible claim where defendants failed to assert facts or law explaining how the alleged "robo-signing" caused them harm or damages.
2. The court rejected defendants claim that U.S. Bank lacked standing to foreclose on the mortgage because assignments of the mortgage to a securitized trust violated the securitized trust's Pooling and Servicing Agreement. Typically, borrowers do not have standing to challenge the validity of an assignment of their loans because they are not parties to the agreement and because noncompliance with a trust's governing document is irrelevant to the assignee's standing to foreclose, although Hawaii courts may recognize exceptions when a challenge would deem the assignment void, and not voidable. This court, however, has held that the non-compliance with a Pooling and Servicing Agreement does not render an assignment void, so defendants do not have standing to challenge the assignments.
3. Defendants argued that U.S. Bank could not foreclose because the chain of assignments of the mortgage was not complete. The court rejected this argument because U.S. Bank was the holder of the note and, therefore, was entitled to foreclose the mortgage as a matter of law.
1. Where defendant's claims attorney acted as both a claims adjuster and legal counsel, portions of the attorney's communications may have been subject to the attorney-client privilege, but the trial court improperly applied the privilege to the entirety of several communications.
2. The title insurance policy contains broad provisions allowing defendant to defend against claims, but for summary judgment purposes it cannot be said that defendant acted reasonably where plaintiff alleged that defendant acted unreasonably in continuing to defend and failing to pay damages after it became apparent that a deed was forged.
3. Where an insurer is required to provide a defense for its insured, it would be a breach of the duty of good faith to induce retained counsel to provide a defense which did not meet the professional standard set forth by the Hawaii Rules of Professional Conduct. Here the evidence is sufficient to raise a genuine question as to whether counsel allowed Fidelity to direct or regulate her professional judgment.
FORECLOSURE: Former HRS Section 667-5 authorized a non-judicial foreclosure where the mortgage contains a power of sale clause. Here, a non-judicial sale was not authorized because the mortgage did not contain such a clause.
FORECLOSURE: Under former HRS Section 667-5, a lender conducting a non-judicial foreclosure sale bears the burden of establishing that the sale was conducted in a manner that is fair, reasonably diligent, and in good faith and that an adequate price was procured for the property. Additionally, in situations where a mortgagee acts as both the seller and the purchaser of the subject property at a non-judicial foreclosure sale, that mortgagee, or its quitclaim transferee or non-bona fide successor, bears the burden of proving compliance with these requirements. In particular, while former section 667-5 did not specify the county in which the sale is to be conducted, the lender still needs to show that conducting the sale in a county other than where the property is located (and on a different island) was reasonable.
1. Copies of the endorsed note, mortgage and assignment of the mortgage, were admissible.
2. Since the note was endorsed in blank, the bank's possession of the note was sufficient to overcome defendant's challenge to the chain of endorsements.
3. MERS had the authority to transfer the note and mortgage even if the original lender had ceased to exist as a corporate entity.
4. Bare allegations of "robo-signing" did not raise a genuine issue as to whether the assignment of the note was proper.
5. The mortgage and note were not void if the original lender was not a licensed mortgage broker pursuant to HRS 454-8 (now repealed) because there was no evidence that the original lender acted as a broker in the loan transaction.
ADVERSE POSSESSION: Plaintiffs and defendants would be cotenants based on the chain of title from the heirs of a common grantor. However, plaintiff asserted that the common grantor had conveyed title prior to his death, so the parties are not cotenants and plaintiff had subsequently acquired title by adverse possession. The court held that there was insufficient evidence of a prior conveyance, so the parties are tenants in common, and plaintiff cannot establish adverse possession against a cotenant because that would require actual notice to the cotenant.
FRAUDULENT CONVEYANCE: The court held that punitive damages are available in fraudulent conveyance actions when appropriate, and that an punitive damage award of 4-times the amount of compensatory damages was appropriate where defendant's conduct was egregious.
1. There was no genuine issue of material fact as to whether fraud was committed because the actions of plaintiff's mortgage broker cannot be imputed to defendant so as to invalidate a note and mortgage.
2. There is no genuine issue of material fact as to whether defendant engaged in unfair and deceptive practices in violation of HRS Section 480-2 so as to invalidate the note and mortgage. Plaintiff's mistaken belief that she could afford payments that were larger than her gross monthly income was not the result of defendant's actions but, instead, were the result of her investment agreement with the mortgage broker.
3. There is no genuine issue of material fact as to defendant's standing to foreclose on the mortgage because a borrower does not have standing to challenge a securitized trust's chain of ownership of a mortgage by alleging that defendant did not have the authority to accept new assets into a securitized trust.
Compton v. Countrywide Financial Corp.
PREDATORY LENDING: The panel held that when a district court evaluates whether a borrower's complaint states a claim under Hawaii's Unfair or Deceptive Acts or Practices law (HRS Section 480-2 and 480-13) against a lender, the district court need only address whether the complaint adequately alleged that the lender used unfair or deceptive acts in its relationship with the borrower, without looking to negligence law to determine whether the lender breached a common law duty of care. The panel held that the district court erred in dismissing the borrower's claim solely on the ground that the borrower failed to allege that the lender exceeded its role as a lender and owed an independent duty of care to the borrower. The panel held that the complaint adequately alleged under under Hawaii law unfair and deceptive acts by Bank of America, and injury resulting in damage to the borrower, to withstand a motion to dismiss.
IMPLIED EASEMENTS: 1. The "unity of ownership" requirement for implying an easement can be satisfied by prior government ownership of the dominant and servient parcels when the question is whether the government impliedly granted an easement.
2. The 20-year statute of limitations in HRS 657-31 to recover possession of land does not apply to an action to establish an implied easement of necessity.
SHORELINE BOUNDARY: In making a shoreline determination pursuant to HRS Section 205A-42, the Board of Land and Natural Resources must consider the historical evidence of the upper reaches of the wash of the waves, and not just the current year's evidence. Accordingly, where there was evidence of prior years' "wash of the waves," the agency must consider the evidence from those years when making the shoreline determination.
EASEMENTS: Where a right of way is created by grant, deed or reservation, it may be terminated where the owner of the dominant tenement intends to abandon the easement, but mere nonuser, even for the prescriptive period, will not terminate it. Also, an easement may be lost by prescription.
FORECLOSURE: Defendants were precluded from raising the standing of plaintiff at the hearing confirming a judicial foreclosure sale because they failed to raise the issue by appealing from the judgment of foreclosure, which had become final, and so were barred from raising the issue under the doctrine of res judicata. The court pointed out that foreclosure cases are bifurcated into two appealable parts. Due to their bifurcated nature, mortgage foreclosure proceedings may be treated as analogous to two separate proceedings for res judicata purposes.
FRAUDULENT CONVEYANCE: This case involves the application of HRS Section 651C-4(a)(1), providing that a transfer is fraudulent if it is made with actual intent to hinder, delay, or defraud a creditor of the debtor, and HRS Section 651C-4(a)(2), providing that a transfer is fraudulent if it is made without "receiving a reasonably equivalent value in exchange for the transfer" and the debtor (A) Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or (B) Intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtor's ability to pay as they became due.
EASEMENTS: 1. An easement by necessity cannot be established where the dominant and servient estates were not under common ownership at some time in the past.
2. An agreement granting an easement to defendant that is executed by only one co-tenant is voidable by the non-assenting tenants in common only to the extent that the conveyance may impair or vary their rights. The court remanded for the trial court to determine whether defendant impaired the co-tenants' rights by blocking their access to the easement area.
TITLE INSURANCE: Plaintiffs filed a Land Court petition to consolidate their two lots which were insured under a title insurance policy issued by Ticor. The State's answer included the following "defense": "The State reserves any interests in the property that may have escheated to the State." Ticor denied plaintiffs' tender of defense on the basis that the State was not asserting a present claim against title and, instead, the escheat reservation was but one of many standard reservations that the State asserts in every Land Court case. The court held that there was a duty to defend because the language of the State's answer plausibly asserted a present claim of escheat. Also, the fact that the State ultimately clarified that it was not pursuing any claim of escheat did not excuse Ticor from its initial duty to defend.
FORECLOSURE: The court held that a foreclosure sale was void where the lender's agent failed to make a public announcement of a postponement, which violated Hawaii's nonjudicial foreclosure statute (HRS §667-5), and that this defect was a "deceptive practice" under HRS §480-2. However, the bankruptcy court improperly awarded damages based on the debtor's loss of equity in the property. The court pointed out that there was no question that the debtor was in default, so the debtor's losses appeared to arise from the debtor's default, rather from the lender's failure to shout out the postponement of the foreclosure. The court stated that on remand the bankruptcy court must determine the difference, if any, between Debtor's situation had the lender properly postponed the foreclosure sale and debtor's actual situation, given that the sale was improperly postponed.
1. A provision in a Deposit Receipt Offer and Acceptance (DROA) requiring approval by the buyer of an easement is not sufficient to create an easement. The plaintiff needed to show that an easement was intended and granted.
2. There were issues of fact, so that a summary judgment was inappropriate, as to whether a landowner intended to create an easement by signing a "consent and joinder" in connection with the recordation of a condominium map that showed easements in favor of plaintiffs and, similarly, as to the landowner's intent regarding a subsequent withdrawal of the subject property from the map.
FORECLOSURE / EJECTMENT: In an ejectment proceeding filed in district court, where the defendant seeks to raise a defense to the court's jurisdiction on the ground that the action is one in which title to real estate will come into question, the defendant must set forth in an affidavit the source, nature, and extent of the title claimed by defendant with sufficient detail or specificity to fully apprise the court of the nature of its claim to title of the property in question, and may include any other particulars that would enable the court to be fully apprised of the defendant's claim. Here the district court properly exercised jurisdiction because defendant's affidavit simply asserted that defendant claimed to have title to the property, but neither included specificity or detail regarding the source, nature, and extent of title claimed nor other particulars that would fully apprise the court of his claim to title.
FORECLOSURE: A non-judicial foreclosure sale was valid where the mortgagee, who was the successful bidder, made a credit bid rather than a downpayment.
QUIET TITLE: It is proper for a quiet title plaintiff to seek partial summary judgment on the issue of whether a particular defendant has an interest in the subject property without the plaintiff first establishing its prima facie claim to title. But the defendant did not have to show perfect title, and defendant's title presented a question of fact worthy of trial. At trial plaintiff will have to prove that it has superior title.
The court held that the owner of a kuleana has appurtenant access and water rights over other property in the ahupua`a, of which the kuleana is a part. The court did not address the issue of Native Hawaiian Rights.
TENANCY IN COMMON: Where people own property as tenants in common, mere occupation of the property by one co-tenant does not render him liable to pay rent to his co-tenant in the absence of an agreement to pay rent. But the co-tenant out of possession is entitled to rental reimbursement as an offset when the co-tenant in possession affirmatively seeks contribution for improvement or maintenance expenditures.
KULEANA TITLE: Owners of a landlocked kuleana have a right of access over, and a right to water in a creek on, another parcel that is part of the same ahupua`a.
ESCROW: An escrow company did not breach its contractual duty by delivering stock certificates in care of a party's attorney when the only address provided to the escrow company was in care of the party's attorney and the party executed a document that identified the address in care of the attorney as the party's address.
WATER RIGHTS: The court considered the constitutionality of Act 73, which amended HRS Sections 501-33 and 669-1(e) to provide that owners of oceanfront lands could no longer register or quiet title to accreted lands unless the accretion restored previously eroded land.
The court first summarized Hawaii Supreme Court precedent as follows: (1) The "highest reach of the highest wash of the waves" delineates the boundary between private oceanfront property and public property. It is usually evidenced by the edge of vegetarian growth, or the upper limit of debris left by the wash of the waves. (2) land added to oceanfront property through avulsive lava extension belongs to the State; and (3) land added to oceanfront property through accretion belongs to the oceanfront property owner.
Holding 1: Plaintiffs have no vested right to future accretions that may never materialize and, therefore, Act 73 did not effectuate a taking of future accretions without just compensation.
Holding 2: Act 73 permanently divested a littoral owner of his or her ownership rights to any existing accretions to oceanfront property that were unregistered or unrecorded as of the effective date of Act 73 or for which no application for registration or petition to quiet title was pending. Therefore, Act 73 effectuated a taking of such accretions and plaintiffs are entitled to damages, to be determined by the trial court upon remand.
NOTE: This case contains an excellent discussion of Hawaii water rights law.
FORECLOSURE: A bank’s foreclosure counsel conducted a non-judicial foreclosure sale without realizing that the debtor had cured the default a few days previously. The court held the foreclosure sale was void for failure to comply with the statute and the subsequent contract between the high bidder and the bank was likewise void. The bidder is entitled only to return of his or her downpayment plus accrued interest, and not to lost profits.
LIS PENDENS: An action for a constructive trust does not support a lis pendens because it is not an action directly seeking to obtain title to or possession of real property. Instead, a constructive trust is a remedy to secure payment of damages.
1. Property held as tenants by the entirety is converted to tenancy in common upon a divorce.
2. Property held as tenants by the entirety is not subject to the claims of creditors of one spouse. Where a divorce decree awards the property to the non-debtor spouse, the non-debtor spouse takes the property free of the creditor's judgment lien.
3. A court having jurisdiction of the parties may adjudicate their rights to land located in another state regardless of whether the decree orders execution of a conveyance. Although the decree itself cannot change title and although a subsequent action for that purpose must be brought in the situs state, the decree is entitled to full faith and credit in an action brought in the situs state.
ADVERSE POSSESSION: The court granted a motion for summary judgment where declarations established that predecessors-in-interest had openly used the land for pasture, erected fences around the perimeter of the property, bred and ran cattle, installed water dispensers, and maintained and cleaned the property. These actions demonstrate actual, open, and notorious possession. Successive possessions of land may be tacked together where there is privity of estate so that subsequent possessions are related to the original possession.
1. The lender had standing because even though the assignment was dated prior to the mortgage, it recorded in the Land Court after the mortgage and under HRS 501-101, the time of recordation is the effective date.
2. An assignee whose assignment of mortgage was not recorded at the time of commencing an action for foreclosure may cure the defect by recording the assignment after the action commences.
3. The mortgage was not invalid due to the lender being unlicensed mortgage broker because the lender acted only in the capacity of a lender and the company that acted in the capacity of mortgage broker was licensed. This distinguishes this case from Beneficial Hawaii, Inc. v. Kida in which the unlicensed broker acted as both lender and broker.
4. Appellant's Truth in Lending claim was resolved by a decision of the Ninth Circuit and could not be relitigated based on a subsequent decision by the Federal Reserve Board.
5. Foreclosure cases are bifurcated into two separately appealable parts: (a) the decree of foreclosure and the order of sale, if the order of sale is incorporated within the decree; and (b) all other orders. Appeals of foreclosure decrees and their accompanying orders are allowed, even though additional proceedings remain in the circuit court.
6. The material inquiry relevant to a foreclosure decree is whether a default occurred, not the amount owed. Therefore, lender's admission into evidence of a general ledger that did not accurately reflect all payments was sufficient for the foreclosure cause of action because there was no claim that it did not demonstrate that a default had occurred.
EMINENT DOMAIN: In 2005 the City and County of Honolulu repealed its 1991 ordinance that had created a mechanism allowing owners of leasehold interests in condominium units to convert their leasehold interests into fee interests by using the City’s power of eminent domain. Plaintiffs entered into contracts with the City that required each party to use its best efforts to effectuate the condemnation and transfer of fee interests, but the City refused to honor the contracts after passage of the new ordinance. The District Court granted a summary judgment in favor of the City, holding that the contracts were void under the "reserved powers doctrine" because they purported to limit the City's discretion over the use of its eminent domain power. The 9th Circuit reversed and remanded to allow the District Court to consider whether the City's conduct satisfied the very high level of scrutiny necessary to overcome a challenge under the Contracts Clause of the United States Constitution.
QUIET TITLE: This is a very long, complicated case in which the court affirms the lower court's holding that grants given at the time of the Great Mahele were of two separate ahupua`as and did not create a cotenancy in a single ahupua`a.
Where one is shown to have been for the statutory period in actual, open, notorious, continuous and exclusive possession, apparently as owner, and such possession is unexplained, either by showing that it was under a lease from, or other contract with or otherwise by permission of the true owner, the presumption is that such possession was hostile.
However, where a cotenancy exists there is a special burden in proving hostile possession that requires the cotenants making a claim of adverse possession to show that they had acted in good faith in relation to their cotenants. In most cases the tenant claiming adversely must actually notify his or her cotenants that he or she is claiming against them. However, where the tenant in possession has no reason to suspect that a cotenancy exists; or where the tenant in possession makes a good faith reasonable effort to notify the cotenants but is unable to locate them; or where the tenants out of possession already have actual knowledge that the tenant in possession is claiming adversely to their interests, the notice requirement will be satisfied by constructive notice and open and notorious possession.
The Supreme Court reversed the grant of summary judgment as to one parcel because there was a question of fact as to whether the records of the Bureau of Conveyances would have put a reasonable person on notice that a cotenant existed. Summary judgment granting adverse possession as to the second parcel was granted because the recorded documents clearly gave no indication of the possible existence of a cotenant.
HAWAIIAN HOME COMMISSIONS ACT: The court held that plaintiffs lack standing to challenge state programs that preferentially treat persons of Hawaiian ancestry. NOTE: This case is included on this site because it contains a good historical discussion of the Hawaiian Homes Commission Act and a good explanation of how land was ceded by the U.S. to Hawaii in the Hawaii Admissions Act.
LIS PENDENS: An action for trespass and perpetual support does not support a lis pendens because plaintiff does not claim title to, possession of or a right of possession to defendant's property. Instead plaintiff merely seeks to encumber defendant's property to effectuate an equitable remedy for damages.
1. Where the owners of two adjoining Land Court properties orally agree to the construction of walls partially on both properties and the agreement is not recorded on the transfer certificates of either property, a subsequent owner of one property cannot force a subsequent owner of the other property to remove the encroachment. The reason is that each owner owns his portion of the walls.
2. This is a motion for summary judgment and it is a question of fact whether each owner can remove his portion of the walls and what rights and liabilities each owner has to the other. So these questions must be presented to and answered by the Land Court.
CC&R's: Even where the Condominium Declaration of Restrictions did not refer to the power of a homeowner's association to levy assessments, there was an implied obligation to pay assessments because 1) the HOA's services benefit the development, 2) the defendant was aware at the time he purchased his property that the HOA collected assessments, 3) a partial assignment was recorded transferring the developer's rights to the HOA and 4) the HOA's charter provided that it had the power to levy assessments.
LIS PENDENS: An appeal from an order expunging a lis pendens must be dismissed as moot where the property is sold while the appeal is pending and the plaintiff failed to obtain a stay pending appeal.
MECHANICS' LIENS: A contractor cannot obtain a mechanic's lien when he fails to comply with HRS 444-25.5, which requires notice of bond and mechanic's lien rights to be given to a homeowner both verbally and in the construction agreement. This applies to any owner of residential real property, even where the owner is sophisticated and knowledgeable. This case pertained to the construction of a luxury single family house.
Intermediate Court of Appeals 8/1//06 Reversed in part and Affirmed in part (See Hawaii Supreme Court case above).
ADVERSE POSSESSION: As a general rule, in order to adversely possess against a cotenant, the tenant claiming possession must actually notify the cotenants that title is being claimed against them. However, an exception to that requirement applies where the adverse possessor has no reason to suspect that a co-tenancy exists because the adverse possessor held title pursuant to a deed from a cotenant that purported to convey the entire estate. Accordingly, the Court held in favor of the adverse possessor. NOTE: This case contains a good explanation of adverse possession.
QUIET TITLE / ADVERSE POSSESSION: In an action to quiet title, the plaintiff must prove either that he has paper title to the property or that he holds title by adverse possession. The complaint alleged title by both methods, but plaintiff made a motion for summary judgment based only on the paper title claim. The Court overruled the District Court's grant of summary judgment because there were issues of material fact concerning whether the person who first deeded the property was the only son and heir of the person who received the original Land Commission award in 1857. NOTE: The case contains a good explanation of Hawaii real property law starting with the Mahele of 1848.
EMINENT DOMAIN: This case concerns Honolulu's lease-to-fee condemnation ordinance under which the fee interests of condominium owners are condemned for the purpose of transferring the fee to lessees of condominium units. 1) Condemnation proceedings must be terminated if the minimum number of 25 qualifying units is not maintained at the time an application if filed and throughout the legal proceedings to convert the leaseholds to fee simple. 2) The ordinance applies to mixed-use buildings. 3) The federal Religious Land Use and Institutionalized Persons Act does not provide a defense to a Church that owns the fee interest.
EMINENT DOMAIN: This case contains a detailed discussion of Honolulu's lease-to-fee condemnation ordinance allowing the City to acquire the fee interest of a residential condominium in order to convey fee simple title to owners of leasehold interests. The Court makes numerous determinations. Two that I find particularly interesting are: 1) It is O.K. for an owner to quitclaim other property to relatives for no consideration in order to satisfy the requirement that an applicant not own other residential real property in Honolulu and 2) An applicant is considered to own other residential real property in Honolulu even if the property he owns is uninhabitable.
LAND COURT: A Certificate of Title issued by the Land Court is conclusive as to all matters contained therein, so a foreclosing lender's title could not be challenged after the certificate was issued.
CONDEMNATION: The Hawaii Supreme Court upheld the constitutionality of an ordinance providing for the condemnation of the underlying fee interest of a leasehold condominium, and sale of the fee interest to the leasehold condominium owners. Condemnation is only constitutional if it is for a public purpose. Here the Court held that the public purpose requirement was satisfied, which was to increase the supply of residential housing, to reduce land prices, and to benefit the state economy and general public welfare.
EASEMENT BY NECESSITY: This case discusses the requirements for establishing, for the benefit of a kuleana, an easement under HRS Section 7-1 by necessity and/or based on ancient or historical use.
FORECLOSURE: Non-judicial foreclosure under HRS Section 667-5 is constitutional. The statute does not violate the due process clause of the 14th Amendment because no state action is involved.
JUDGMENT LIENS: A creditor executed on property that the debtor held in joint tenancy with Dirks. Dirks, who had paid the entire price of the property, sought a declaratory judgment reforming the deed to reflect sole ownership in Dirks. The court refused to reform the deed, holding that while Dirks may not have realized all the legal ramifications of co-ownership, there was no mistake and she intended to hold title jointly.
1. A Circuit Court, not just the Land Court, can expunge a lis pendens recorded in Land Court.
2. A lis pendens is properly expunged where the action does not attempt to obtain title to or possession of the real property at issue.
ENCROACHMENTS: The trial court required that an encroachment be removed, involving substantial demolition and reconstruction of a portion of the residential structure that was encroaching. The court also ordered that, due to the equities involved, both parties were to split the construction cost. This resulted in an incredibly complex series of hearings since the parties could not agree on anything. It would have been much simpler and made much more sense to relocate the boundary line to the location both parties initially thought the boundary was located. I cannot tell whether the trial court judge was lacking in legal theories (e.g. a grant or easement by prescription or implication) to accomplish this or simply lacking in intelligence. The appeal was based on procedural grounds and the appellate court affirmed.
FORECLOSURE: The detailed notice of default required by HRS §667-22 applies only to nonjudicial foreclosures. Judicial foreclosures require only a general demand for payment. Note that with a judicial foreclosure the borrower also has the benefit of the procedures that must be followed in any civil action.
ASSIGNMENT OF RENTS: Assignment of rents clauses are not construed as absolute assignments unless there is a clear indication that the parties intended to create one. Therefore, where a lessor has an implied assignment of subtenant rents, it is construed as an assignment of a security interest. Because the lessor's right to subtenant rents is not self-executing, some action is necessary before the right is perfected. For example, the lessor may obtain either actual or constructive possession of the property or secure the appointment of a receiver. Until the lessor takes action to activate the assignment, an intervening creditor with a perfected assignment of rents will be entitled to collect the rents, even though the rents were subject to the lessor's assignment at the time the creditor obtained its assignment.
SUBDIVISIONS / IMPLIED EASEMENTS: A lease violates the Hawaii County Subdivision Code and is void where it purports to lease 16.7 acres of a 17.7 acre parcel without approval of a final plat map by the County. The court also held that an implied easement was not established. The opinion contains a good discussion of implied easements, including a listing of the following requirements regarding the pre-existing quasi-easement on which an implied easement is based: 1) apparent; 2) permanent; and 3) either a) important for the enjoyment of the dominant parcel or b) strictly necessary for the enjoyment of the dominant parcel.
NEGOTIABLE INSTRUMENTS: This is a complex case that boils down to the following: The holder of notes secured by mortgages assigned the notes, and the assignee collaterally assigned the notes and mortgages back to the holder to secure payment of the purchase price. The owner attempted to pay off the loans by making payment to the assignee. The court held that since the original holder retained possession of the notes, it was a "holder" entitled to payment, and payment to the assignee did not satisfy the loans.
ADVERSE POSSESSION: This case contains a very good discussion of adverse possession. It is particularly useful because the court held that part of the disputed property was acquired by adverse possession and part was not, and thoroughly discussed both situations. The Court held that Plaintiff acquired one parcel by adverse possession that had been cultivated and planted with coconut trees. The plaintiff failed to show sufficient open and notorious possession of the other parcel that was only used only for a crude path and to repair a fence separating the plaintiff's and defendant's properties.
FORECLOSURE: The court upheld a judgment for judicial foreclosure and a judgment for a deficiency. The case is not significant from a title insurance standpoint, but contains a useful discussion of the procedural aspects of judicial foreclosure actions and appeals. Note that foreclosure cases are bifurcated into two separately appealable parts: (a) the decree of foreclosure and the order of sale, if the order of sale is incorporated within the decree; and (b) all other orders.
FEDERAL TAX LIENS: A federal tax lien against one spouse attaches to the taxpayers interest in property held as tenants by the entirety. This is dramatically different than a state judgment lien, which in most states does not attach to tenants by the entirety property if the judgment is against only one spouse.
The case also contains a useful discussion even in states that do not recognize tenants by the entirety. The court, citing other cases, explained that the federal tax lien statute itself creates no property rights but merely attaches consequences, federally defined, to rights created under state law. Accordingly, we look initially to state law to determine what rights the taxpayer has in the property the Government seeks to reach, then to federal law to determine whether the taxpayer's state-delineated rights qualify as “property” or “rights to property” within the compass of the federal tax lien legislation.
A residential leaseholder may not assert a prescriptive easement over adjoining property which the lessee's landlord owns in fee simple. Also, in calculating whether he meets the statutory prescriptive period, a lessee who subsequently becomes the fee simple owner of the leased property may not tack on the time that he, as a tenant, claimed to have adversely used his neighbor's property.
DEEDS: This is a long case, with one particularly significant issue for our purposes. The Court discusses the effect of a seller's death upon the validity of a deed delivered to escrow prior to death.
In order to be effective, a deed must be delivered. The intention of the parties is the controlling element of delivery. Where a grantor delivers a deed without any reservation of the right to recall it, the delivery effects a complete transfer of title. Where a deed is delivered to a third person to be delivered to the grantee upon the happening of an event or performance of a condition, e.g., the payment of the purchase price, the delivery is conditional. If the grantee satisfies the conditions prior to the grantor's death, the deed is effective. If the conditions are not satisfied by the time of the grantor's death, the deed is not effective.
MORTGAGES: The Court held that a mortgage arranged by an unlicensed mortgage broker is void. The Supreme Court was unmoved by the fact that this created an incredible windfall for the property owner and an unfair loss for the assignee of the mortgage.
However, the Court indicates a solution in the future for assignees of mortgages in this unfortunate situation. The Court acknowledged that an assignee may have an equitable lien to the extent the assignee paid value for the mortgage and the owner received a benefit from the loan. In this case the plaintiff was unable to establish an equitable lien because the record, strangely, did not show that it paid value in acquiring the loan.
EASEMENTS: The most equitable location of an easement by necessity is over a recently created County Road because it is already in existence and currently serves the public. This case contains a good discussion of prescriptive easements and easements by necessity.
FORECLOSURE: A cause of action for a violation of the Truth in Lending Act is barred by res judicata if it is not raised as an affirmative defense in a foreclosure action.
FORECLOSURE: Foreclosure sale is valid where bidders were not misled by the Commissioner conducting the sale, and where the bid is not so grossly inadequate as to shock the conscience.
WATER RIGHTS: Good explanation of the Public Trust Doctrine pertaining to water rights.
FORECLOSURE: The mortgagors/owners must be named in a foreclosure action, but it is not necessary to name additional co-borrowers or guarantors.
1. Follows Hiner v. Hoffman, 977 P.2d 878 (1999) holding that a “two-story in height” restriction is ambiguous and therefore unenforceable.
2. There was no common scheme or plan to support an equitable servitude in favor of the plaintiffs.
3. A vendor under a land sale contract does not retain sufficient interest in the property to create a restrictive covenant benefiting the property, even though the interest is sufficient to enforce a previously existing restriction.
4. A restriction must describe the benefited parcel.

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