Opinion ID: 3166181
Heading Depth: 2
Heading Rank: 1

Heading: Arguments to the ICA

Text: The Santiagos appealed to the ICA.23 The Santiagos argued that the trial court erred in entering judgment for Tanaka on their claims of nondisclosure and negligent misrepresentation. Specifically, the Santiagos claimed that Tanaka failed to disclose material facts during the course of the negotiations for the sale of the Tavern, including the $1,160.94 monthly sewer maintenance fees and the $1,160.94 bi- 23 The Santiagos appealed from the Trial Order; the circuit court’s Judgment, filed June 28, 2011; the Writ of Ejectment, filed June 28, 2011 (Writ of Ejectment); Order Denying “Plaintiffs’ Ex Parte Motion for a Temporary Stay Pending the July 19, 2011 Hearing on Plaintiffs’ ‘Emergency Motion for a Temporary Stay of Enforcement of the Court’s Writ of Ejectment Pending Disposition of Plaintiffs’ Motion to Reconsider, Alter, or Amend the Judgment and Pending Disposition of Plaintiff’s Motion for Stay Pending Appeal,’” filed July 14, 2011 (Order Denying the Santiagos’ Motion for a Stay); Order Denying Plaintiffs’ Emergency Motion for a Temporary Stay of Enforcement of the Court’s Writ of Ejectment Pending Disposition of Plaintiffs’ Motion to Reconsider, Alter, or Amend the Judgment and Pending Disposition of Plaintiffs’ Motion for Stay Pending Appeal, filed August 4, 2011 (Order Denying the Santiagos’ Motion to Stay Ejectment); Order Denying Plaintiffs’ Motion for a Stay Pending Appeal, filed August 4, 2011; Order Denying Plaintiffs’ Motion to Reconsider, Alter, and/or Amend the Court’s Findings of Fact, Conclusions of Law and Order, and Judgment Thereon, filed August 4, 2011 (Order Denying the Santiagos’ Motion for Reconsideration); and Order Granting in Part and Denying in Part Defendant/Counter-Plaintiff Ruth Tanaka’s Motion for Fees and Costs, filed August 22, 2011 (Order Granting Tanaka’s Fees). The Santiagos also challenged the circuit court’s judgment on Tanaka’s counterclaims of breach of note, breach of mortgage, and ejectment, and in denying the Motion for Reconsideration. Tanaka filed a cross appeal, which is not before this court and, thus, will not be discussed. 23 FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER monthly sewer cleanout charges that Tanaka had been required to pay. Alternatively, the Santiagos contended that Tanaka failed to disclose that, if the Santiagos were to buy the Tavern, they would be required either to negotiate with Jasper for future sewer service or to build their own sewage disposal system necessary to operate the Tavern. According to the Santiagos, they were misled by the documents, included in Tanaka’s Agreement of Sale Addendum to the DROA, that represented $150 monthly sewer fee and assessment. Additionally, the Santiagos asserted that the trial court erred in entering judgment in favor of Tanaka on her counterclaims of breach of note, breach of mortgage, and ejectment, and in denying the Motion for Reconsideration. The Santiagos maintained that the Mortgage did not accord Tanaka the power of non-judicial foreclosure of the Tavern because the Mortgage allowed such power only as “now or then provided by law.” Hawaiʻi law, according to the Santiagos, does not independently provide the power of non-judicial foreclosure, and the Mortgage did not contain a power of sale. Further, the Santiagos argued that the circuit court erred because “the Santiagos cured the alleged default under the note and [Mortgage] pursuant to” HRS § 667-5(c) over six months 24 FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER before the foreclosure auction. The Santiagos also contended that the right to cure exists as an “equitable right” in Hawaiʻi. Finally, the Santiagos maintained that the trial court “erroneously awarded Tanaka an additional $152,246.61 in attorneys’ fees and costs, even though any award of attorneys’ fees and costs should have been offset by the Santiagos’ forfeiture of over $1.4 million paid by them to Tanaka.” In her Answering Brief, Tanaka first addressed the Santiagos’ claim for nondisclosure and misrepresentation. Tanaka argued that she provided adequate disclosure of the Wastewater Agreement and that the Santiagos had “all the information they needed to make further inquiry” but ultimately failed to exercise due diligence. Tanaka contended that the Santiagos “hang their case on a one-line entry of the County fees (as opposed to the Jasper charges) on a pre-printed Agreement of Sale form that was rejected and that never became part of the contract.” Additionally, Tanaka argued that the Santiagos’ claims were moot because the Tavern had since been sold to a third party.24 Tanaka also maintained that she did not act in bad 24 Tanaka moved to dismiss the Santiagos’ second point of error as moot because according to Tanaka’s declaration in support of her dismissal motion, the Tavern had been resold to a third party on May 1, 2012, after the circuit court rendered its Judgment. On May 24, 2012, the Santiagos filed a (continued. . .) 25 FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER faith by exercising her contractual right to accelerate the Mortgage and foreclose upon the Santiagos’ default. Finally, Tanaka argued that Hawaiʻi law does not provide for the “right to cure” and maintained that she never consented to allow the Santiagos the ability to cure their default. In their reply, the Santiagos stated that while they received a copy of the Wastewater Agreement, the agreement “clearly did not establish such high payments.” The Santiagos also reiterated that the Wastewater Agreement did not apprise them that “they would . . . have to negotiate for sewer service[] or construct their own sewage disposal system in order to operate the [Tavern].” The Santiagos further argued that the “plain reading of [the Wastewater Agreement] establishes fees in the amount of $150, and allowed only for an increase of the $300 ‘deposit.’” In conclusion, the Santiagos maintained that the Judgment “resulted in a forfeiture of the entire $1,412,790.79” that they paid. (. . .continued) memorandum in opposition to the motion. Subsequently, on June 6, 2012, the ICA issued an order denying the motion. 26 FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER