Opinion ID: 2596174
Heading Depth: 3
Heading Rank: 3

Heading: Plaintiffs' Remaining Arguments Are Inapposite

Text: Plaintiffs make several other arguments in support of their position that they are entitled to lost profits from their contract with defendant. [7] These arguments, however, are inapposite because they fail to discuss the enforceability of land sale contracts conducted pursuant to Hawai`i's nonjudicial foreclosure statutes. For example, Plaintiffs' cite Territory of Hawai`i v. Branco, 42 Haw. 304, 316 (Haw. Terr.1958), for the proposition that [i]t is elementary in the law of contracts that at an auction an enforceable contract is formed upon the fall of the hammer. The auction in question was not conducted under HRS section 667-5. Further, the court found that the auction was conducted pursuant to legal authority. Id. at 312-16. Plaintiffs cite Warner v. Denis, 84 Hawai`i 338, 347-48, 933 P.2d 1372, 1381-82 (App. 1997) and Farrow v. Sunra Coffee, LLC, Civil No. 05-00715, 2006 WL 2884086, -9 (D.Haw. Oct.6, 2006), for the proposition that the defense of impossibility does not excuse performance of a land sale contract and does not shield the seller from damages. Neither case dealt with a nonjudicial foreclosure sale that must be conducted pursuant to the requirements of HRS section 667-5. Cf. State v. Kahua Ranch, Ltd., 47 Haw. 28, 36, 384 P.2d 581, 586 (1963) (where a statute forbade any agreement between the State and a prospective bidder for a lease of State land inconsistent with the terms of the notice of sale as published, we held that [a]ny such agreement contrary to the terms of the published notice of sale would be illegal and unenforceable. Otherwise, the statutory requirements become meaningless.). Plaintiffs contend that in Burgess v. Arita, 5 Haw.App. 581, 589-90, 704 P.2d 930, 937 (1985), Hawai`i adopted the American Rule, under which the buyer of land is entitled to recover ordinary contract damages, measured by the difference between the contract price and the market value of the land, when the seller breaches the land sale contract. While true, this proposition does not answer the question of whether Plaintiffs are entitled to damages from a contract arising out of an invalid nonjudicial foreclosure sale. For instance, in Residential Capital, 108 Cal. App.4th at 822-24, 134 Cal.Rptr.2d 162, the California Court of Appeal found that a disappointed purchaser in a sale which was invalid under California's nonjudicial foreclosure statutes was entitled only to a return of the purchase price plus interest, despite the fact that California is an American Rule jurisdiction. See Cal. Civ.Code § 3306; see also Burgess, 5 Haw.App. at 590 n. 11, 704 P.2d 930 (listing California as an American Rule jurisdiction). Plaintiffs also argue that the District of Columbia Court of Appeals in Basiliko held that the American Rule applied in nonjudicial foreclosure sales. For reasons discussed earlier herein, Basiliko is distinguishable from the present case and unpersuasive.