Court Opinion

ID: 4908338
Source: CourtListenerOpinion
Date Created: 2021-09-03 22:03:01.994872+00
Date Added: 2024-06-11T08:13:14.789371
License: Public Domain

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                                                              Electronically Filed
                                                              Supreme Court
                                                              SCCQ-XX-XXXXXXX
                                                              03-SEP-2021
                                                              11:32 AM
                                                              Dkt. 402 OP

           IN THE SUPREME COURT OF THE STATE OF HAWAIʻI

                                ---o0o---

  LIONEL LIMA, JR., et al., individually and on behalf of all
       others similarly situated, Plaintiffs-Appellees,

                                    vs.

  DEUTSCHE BANK NATIONAL TRUST COMPANY, Defendant-Appellant.
                  (CIV. NO. 12-00509 SOM-WRP)

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  EVELYN JANE GIBO, et al., individually and on behalf of all
       others similarly situated, Plaintiffs-Appellees,

                                    vs.

      U.S. BANK NATIONAL ASSOCIATION, Defendant-Appellant.
                   (CIV. NO. 12-00514 SOM-WRP)

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  DAVID EMORY BALD, et al., individually and on behalf of all
       others similarly situated, Plaintiffs-Appellees,
                              vs.
         WELLS FARGO BANK, N.A., Defendant-Appellant.
                   (CIV. NO. 13-00135 SOM-RT)

                            SCCQ-XX-XXXXXXX
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                  CERTIFIED QUESTION FROM THE
    UNITED STATES DISTRICT COURT FOR THE DISTRICT OF HAWAIʻI

                           SEPTEMBER 3, 2021

     RECKTENWALD, C.J., NAKAYAMA, McKENNA, AND WILSON, JJ.,
     AND CIRCUIT JUDGE TONAKI, ASSIGNED BY REASON OF VACANCY

                OPINION OF THE COURT BY NAKAYAMA, J.

          The United States District Court for the District of

Hawaiʻi (District Court) has asked this court to determine:

          When (a) a borrower has indisputably defaulted on a
          mortgage for real property, (b) a lender has conducted a
          nonjudicial foreclosure sale but has not strictly complied
          with the requirements governing such sales, and (c) the
          borrower sues the lender over that noncompliance after the
          foreclosure sale and, if the property was purchased at
          foreclosure by the lender, after any subsequent sale to a
          third-party purchaser, may the borrower establish the
          requisite harm for liability purposes under the law of
          wrongful foreclosure and/or section 480-2 of Hawaiʻi Revised
          Statutes by demonstrating the loss of title, possession,
          and/or investments in the property without regard to the
          effect of the mortgage on those items?

          Phrased differently, the District Court asks:

          Is the effect of the mortgage considered only as a matter
          of setoff that a lender has the burden of proving after the
          borrower establishes the amount of the borrower’s damages,
          or does a borrower with no preforeclosure rights in
          property except as encumbered by a mortgage bear the burden
          of accounting for the effect of the mortgage in
          establishing the element of harm in the liability case?

          We hold that a borrower bears the burden of accounting

for the effect of a mortgage when establishing the element of

harm in the liability case for a wrongful foreclosure or unfair

or deceptive acts or practices case.

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                              I.    BACKGROUND

A.    Factual Background

            This certified question arises from three putative

class actions: Lionel Lima, Jr., et al. v. Deutsche Bank

National Trust Company, Civ. No. 12-00509 SOM-WRP (D. Haw. filed

Sept. 10, 2012); Evelyn Jane Gibo, et al. v. U.S. Bank National

Association, Civ. No. 12-00514 SOM-WRP (D. Haw. filed Sept. 12,

2012); and David Emory Bald, et al. v. Wells Fargo Bank, N.A.,

Civ. No. 13-00135 SOM-RT (D. Haw. filed Mar. 20, 2013).               This

opinion collectively refers to the plaintiffs in all cases as

“Plaintiff Borrowers,” and the defendants in all cases as

“Defendant Banks.”

            Each case shares roughly the same facts.           Each

Plaintiff Borrower mortgaged real property to one of the

Defendant Banks.      However, Plaintiff Borrowers defaulted on

their mortgages.      The relevant Defendant Bank conducted

nonjudicial foreclosure sales of the mortgaged properties

pursuant to Hawaiʻi Revised Statutes (HRS) § 667-5.1             However,

1     HRS § 667-5 (Supp. 2008) (repealed 2012) provided in relevant part:

                   Foreclosure under power of sale; notice; affidavit
            after sale. (a) When a power of sale is contained in a
            mortgage, and where the mortgagee . . . desires to
            foreclose under power of sale upon breach of a condition of
            the mortgage, the mortgagee . . . shall be represented by
            an attorney who is licensed to practice law in the State
            and is physically located in the State. The attorney
            shall:

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             (1)   Give notice of the mortgagee’s . . . intention
                   to foreclose the mortgage and of the sale of
                   the mortgaged property, by publication of the
                   notice once in each of three successive weeks
                   (three publications), the last publication to
                   be not less than fourteen days before the day
                   of sale, in a newspaper having a general
                   circulation in the county in which the
                   mortgaged property lies; and

             (2)   Give any notices and do all acts as are
                   authorized or required by the power contained
                   in the mortgage.

             (b) Copies of the notice required under subsection
       (a) shall be:

             (1)   Filed with the state director of taxation; and

             (2)   Posted on the premises not less than twenty-one
                   days before the day of sale.

             (c) Upon the request of any person entitled to notice
       pursuant to this section and sections 667-5.5 and 667-6,
       the attorney [or] the mortgagee . . . shall disclose to the
       requestor the following information:

             (1)   The amount to cure the default, together with
                   the estimated amount of the foreclosing
                   mortgagee’s attorneys’ fees and costs, and all
                   other fees and costs estimated to be incurred
                   by the foreclosing mortgagee related to the
                   default prior to the auction within five
                   business days of the request; and

             (2)   The sale price of the mortgaged property once
                   auctioned.

             (d) Any sale, of which notice has been given as
       aforesaid, may be postponed from time to time by public
       announcement made by the mortgagee . . . . Upon request
       made by any person who is entitled to notice pursuant to
       section 667-5.5 or 667-6, or this section, the mortgagee
       . . . shall provide the date and time of a postponed
       auction, or if the auction is canceled, information that
       the auction was cancelled. The mortgagee within thirty
       days after selling the property in pursuance of the power,
       shall file a copy of the notice of sale and the mortgagee’s
       affidavit, setting forth the mortgagee’s acts in the
       premises fully and particularly, in the bureau of
       conveyances.

             (e) The affidavit and copy of the notice shall be
       recorded and indexed by the registrar, in the manner
       provided in chapter 501 or 502, as the case may be.
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Defendant Banks did not strictly comply with the procedural

requirements of HRS § 667-5.        For instance, Defendant Banks

allegedly postponed some of the foreclosure auctions without

publishing a notice.        The properties were then either sold to

third parties during the foreclosure sales or purchased by the

mortgage-holding Defendant Bank and resold to third parties

after the foreclosure sales.

B.    Procedural Background

      1.    Federal District Court Proceedings

            Defendant Banks removed Plaintiff Borrowers’ suits to

federal court.      Plaintiff Borrowers allege that Defendant Banks’

nonjudicial foreclosure sales violated (1) HRS § 667-5 and

(2) HRS § 480-2.2      In particular, Plaintiff Borrowers complained

that Defendant Banks

                  (f) This section is inapplicable if the mortgagee is
            foreclosing on personal property only.

2     HRS § 480-2 (2008) provides in relevant part:

                  Unfair competition, practices, declared unlawful.
            (a) Unfair methods of competition and unfair or deceptive
            acts or practices in the conduct of any trade or commerce
            are unlawful.

                  . . . .

                  (d) No person other than a consumer, the attorney
            general or the director of the office of consumer
            protection may bring an action based upon unfair or
            deceptive acts or practices declared unlawful by this
            section.

                  . . . .

      Additionally, HRS § 480-13 (2008) provides in relevant part:
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       a. Record[ed] and publish[ed] Notices of Sale that did not
       include a “description of the mortgaged property” (a) as
       required by HRS Section 667-7(a)(1) (2008) and (b) which
       was “sufficient to inform the public of the nature of the
       property to be offered for sale” and “calculated to
       interest purchasers,” as required by Ulrich v. Sec. Inv.
       Co., 35 Haw. 158, 172-73 (1939);

       b. Publish[ed] and/or post[ed] the Notice of Sale for less
       time than required by statute;

       c. S[old] the property despite having failed to send the
       borrower a notice of acceleration that gave the notice that
       the standard form mortgage required about the unconditional
       right the borrower had to bring a separate suit to stop the
       sale[;]

       d. Issu[ed] notices of sale that lacked a description of
       the property that would interest prospective buyers and/or
       comply with statute;

       e. Advertis[ed] the auctions of properties by “quitclaim
       deed” and/or without any covenants or warranties of title
       whatsoever;

       f. Postpon[ed] auctions so frequently that the substantial
       majority of sale dates advertised in the Class’s published
       notices of sale were not the actual auction dates;

       g. Postpon[ed] auctions without publishing notices of the
       rescheduled auctions’ new dates and times;

             Suits by persons injured; amount of recovery,
       injunctions. . . . .

             (b) Any consumer who is injured by any unfair or
       deceptive act or practice forbidden or declared unlawful by
       section 480-2:

             (1)   May sue for damages sustained by the consumer,
                   and, if the judgment is for the plaintiff, the
                   plaintiff shall be awarded a sum not less than
                   $1,000 or threefold damages by the plaintiff
                   sustained, whichever sum is the greater, and
                   reasonable attorney’s fees together with the
                   costs of suit . . . ; and

             (2)   May bring proceedings to enjoin the unlawful
                   practices, and if the decree is for the
                   plaintiff, the plaintiff shall be awarded
                   reasonable attorney’s fees together with the
                   costs of suit.

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          h. Chang[ed] the location of the auction without publishing
          the new location; and

          i. Include[ed] as a term of sale that time was of the
          essence and that successful bidders were expected to close
          their sales within thirty days of their auctions, when in
          fact such sales either never, or almost never, closed
          within the specific timeframe.

          In 2019, Defendant Banks moved for summary judgment on

Plaintiff Borrowers’ claims, asserting, inter alia, that

Plaintiff Borrowers could not prevail because they could not

prove the damages, or harm, element of either of their claims.

In particular, Defendant Banks contended that Plaintiff

Borrowers would not be able to show that they were harmed, or

suffered any damages, because Plaintiff Borrowers did not show

that (1) they could have made their loans current, (2) their

properties could have sold at a higher price but for Defendant

Banks’ alleged actions, or (3) their properties were worth more

than their remaining mortgage debts.

          Plaintiff Borrowers opposed Defendant Banks’ motions,

responding that it was sufficient for Plaintiff Borrowers to

show that they lost title, possession, and any investments in

their properties to establish their damages to survive a motion

for summary judgment.     Plaintiff Borrowers asserted they did not

need to factor in their remaining mortgage debts because the

debts were only relevant as a set off Defendant Banks must

prove.

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            On April 30, 2019, the District Court heard argument

on Defendant Banks’ motions for summary judgment.           Following the

hearing, the District Court asked the parties to brief the

question of whether the District Court should certify a question

to this court regarding the damages issue.

            On May 16, 2019, the District Court issued an order

certifying the above question to this court.

    2.      Supreme Court Proceedings

            On June 13, 2019, this court accepted the certified

question without determining whether it would answer the

question.    This court simultaneously ordered briefing on the

certified question from the parties.

            i.   Defendant Banks’ Opening Briefs

            Defendant Banks point out that plaintiffs seeking

relief under a wrongful foreclosure or unfair or deceptive acts

or practices (UDAP) claim bears the burden of proving their

damages.    Defendant Banks argue that Plaintiff Borrowers must

prove their net damages, as opposed to gross damages, in order

to establish Defendant Banks’ liability.         Defendant Banks base

this argument on the premise that the purpose of damages for

wrongful foreclosure and UDAP claims is to restore plaintiffs to

the position they would have been in had they not been injured.

Thus, Defendant Banks claim that Plaintiff Borrowers must factor

in their remaining mortgage debts when proving their damages.
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Defendant Banks additionally note that the remaining mortgage

debts are significant, ranging from $169,000 to $945,000.

           ii.    Plaintiff Borrowers’ Answering Briefs

           Plaintiff Borrowers do not directly address the

District Court’s certified question.         At best, Plaintiff

Borrowers suggest that the extent of their harm is irrelevant.

The represented3 Plaintiff Borrowers assert, in the alternative,

that Defendant Banks bear the burden of proof to demonstrate the

impact of the remaining mortgage debt on Plaintiff Borrowers’

damages.    Plaintiff Borrowers additionally contend that even if

they must prove their net damages and account for their

remaining mortgage debt, their claims will survive summary

judgment because they are entitled to nominal and punitive

damages; as well as recovery of interest, loss of use payments,

and past payments.

           The represented Plaintiff Borrowers focus their

attention instead on two different questions: “(1) what items of

damages are recoverable, either in restitution, tort, or under

the consumer statute, for the unlawful disposition of real

property using a power of sale, and (2) how is each item

3     Plaintiff Borrowers Lionel Lima, Jr. and Barbara Ann Delizo-Lima
(collectively, the Limas) terminated their counsel around November 2019.
This court granted the Limas pro se status.
      Liberally construing the Limas’ separate answering brief, the Limas do
not present any argument responsive to the certified question. This opinion
therefore focuses on the represented Plaintiff Borrowers’ arguments.
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measured?”    Using this framework, Plaintiff Borrowers argue that

they are entitled to restitution based on Defendant Banks’

“unlawfully obtained benefits.”       In particular, Plaintiff

Borrowers argue that the alleged wrongful foreclosures

constituted intentional torts.       They consequently reason that

the fact that they defaulted on their loans is irrelevant.

Plaintiff Borrowers instead aver that they are entitled to

whatever benefits Defendant Banks received from wrongfully

foreclosing on their properties.

          Plaintiff Borrowers further assert that their

restitution damages should include (1) the value for which

Defendant Banks sold or resold the foreclosed properties,

(2) interest for the loss of use of the foreclosed properties,

and (3) any value Plaintiff Borrowers paid on the mortgages.

Moreover, Plaintiff Borrowers argue that Defendant Banks cannot

offset the restitution damages they owe Plaintiff Borrowers by

the remaining mortgage debts because this would merely

incentivize Defendant Banks to wrongfully foreclose other

properties.

          iii. Defendant Banks’ Reply Briefs

          Defendant Banks reply that this court should decline

to address Plaintiff Borrowers’ alternative questions.

Defendant Banks counter that, by raising the alternative

questions, Plaintiff Borrowers ask this court to grant them an
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unjustified and unprecedented windfall.           As an example,

Defendant Bank Wells Fargo, N.A. points out that Plaintiff

Borrowers Mike and Tham Myers (collectively, the Myers) owed

Wells Fargo, N.A. over $100,000 more than their property was

worth at the time of the nonjudicial foreclosure sale.              However,

using Plaintiff Borrowers’ requested restitution formula would

grant the Myers over $1,771,000 in damages simply because Wells

Fargo did not strictly comply with certain procedural

requirements when conducting the nonjudicial foreclosure sales.

            Defendant Banks further respond that, in any event,

they did not realize any unjustified benefit that would entitle

Plaintiff Borrowers to restitution because (1) Defendant Banks

were entitled to foreclose on the properties and (2) Defendant

Banks suffered a loss when they sold or resold the properties

for less than the relevant mortgage’s value.

                          II.   STANDARD OF REVIEW

A.    Certified Question

            “[T]he supreme court shall have jurisdiction and

powers . . . [t]o answer, in its discretion . . . any question

or proposition of law certified to it by a federal district or

appellate court if the supreme court shall so provide by

rule[.]”    HRS § 602-5(a)(2) (2016).

            When a federal district or appellate court certifies to the
            Hawaiʻi Supreme Court that there is involved in any
            proceeding before it a question concerning the law of
            Hawaiʻi that is determinative of the cause and that there is
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            no clear controlling precedent in the Hawaiʻi judicial
            decisions, the Hawaiʻi Supreme Court may answer the
            certified question by written opinion.

Hawaiʻi Rules of Appellate Procedure (HRAP) Rule 13(a) (2000).

            “An issue of law presented by certified question is

reviewed by this court de novo under the right/wrong standard of

review.”    Miller v. Hartford Life Ins. Co., 126 Hawaiʻi 165, 173,

268 P.3d 418, 426 (2011) (citation omitted).

                              III. DISCUSSION

A.    The Certified Question

            As a preliminary matter, this court clarifies the

issue this opinion shall address.          This court may answer a

certified question (1) that concerns the law of Hawaiʻi, (2) that

is determinative of the cause, and (3) for which there is no

clear controlling Hawaiʻi precedent.          See HRAP Rule 13(a).      The

parties do not dispute that the certified question concerns the

law of Hawaiʻi or that there is no clear controlling state

precedent on the matter.        However, Plaintiff Borrowers make a

perfunctory claim that the certified question is not

determinative of the cause, implying that this court should not

answer the certified question.         Nevertheless, Plaintiff

Borrowers ask this court to resolve two alternative questions.

            Thus, this court must first determine whether it may

address either the District Court’s question or Plaintiff

Borrowers’ questions.       See HRAP Rule 13(a).
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          This court concludes it may answer the certified

question because an answer will be determinative of the cause.

The court respectfully declines Plaintiff Borrowers’ invitation

to address additional, non-dispositive issues.

    1.    It is appropriate for the court to resolve the
          question certified by the District Court.

          Again, the District Court asked this court to

determine:

          Is the effect of the mortgage considered only as a matter
          of setoff that a lender has the burden of proving after the
          borrower establishes the amount of the borrower’s damages,
          or does a borrower with no preforeclosure rights in
          property except as encumbered by a mortgage bear the burden
          of accounting for the effect of the mortgage in
          establishing the element of harm in the liability case?

The District Court reasoned that this question is “determinative

of the cause” because it will likely grant summary judgment in

favor of Defendant Banks if Plaintiff Borrowers must account for

their mortgage debts.     The District Court explained that this is

because “Plaintiff Borrowers’ only evidence of harm relates to

the loss of title, possession, and investments in the properties

without regard to any mortgage.”

          Plaintiff Borrowers disagree.         According to Plaintiff

Borrowers, their claims will survive Defendant Banks’ motions

for summary judgment because they are also entitled to nominal

damages; punitive damages; and the recovery of interest, loss of

use payments, and past payments.

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            We agree with the District Court’s assessment.

Plaintiff Borrowers must be able to establish a prima facie case

for compensatory damages, factoring in their pre-nonjudicial

foreclosure positions, to survive Defendant Banks’ motions for

summary judgment.     Thus, the District Court’s question is

determinative of the cause if Plaintiff Borrowers fail to make

such a case.

            It is axiomatic that plaintiffs bear the burden of

establishing all necessary elements for their claims.             Kelly v.

1250 Oceanside Partners, 111 Hawaiʻi 205, 233, 140 P.3d 985, 1013

(2006).     Where, as here, a defendant has moved for summary

judgment,

            summary judgment [in favor of the movant] is proper when
            the [non-movant plaintiff]

                  Fails to make a showing sufficient to establish the
                  existence of an element essential to [the
                  plaintiff’s] case, and on which [the plaintiff] will
                  bear the burden of proof at trial. In such a
                  situation, there can be no genuine issue as to any
                  material fact, since a complete failure of proof
                  concerning an essential element of the [plaintiff’s]
                  case necessarily renders all other facts immaterial.
                  The [defendant] is entitled to judgment as a matter
                  of law because the [plaintiff] has failed to make a
                  sufficient showing on an essential element of her
                  case with respect to which she has the burden of
                  proof.

Exotics Hawaii-Kona, Inc. v. E.I. du Pont de Nemours & Co., 116

Hawaiʻi 277, 302, 172 P.3d 1021, 1046 (2007) (quoting Hall v.

State, 7 Haw. App. 274, 284, 756 P.2d 1048, 1055 (1988))

(emphasis omitted).

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            Plaintiff Borrowers must establish an element of

damages for each of their claims.        Here, Plaintiff Borrowers

raised two claims in the underlying proceedings: a wrongful

foreclosure claim and a UDAP claim.        In order to establish a

prima facie case that Defendant Banks are liable for wrongful

foreclosure, Plaintiff Borrowers must establish “(1) a legal

duty owed to the mortgagor by the foreclosing party; (2) a

breach of that duty; (3) a causal connection between the breach

of that duty and the injury sustained; and (4) damages.”            Bank

of America, N.A. v. Reyes-Toledo, 143 Hawaiʻi 249, 264 n.12, 428

P.3d 761, 776 n.12 (2018).      To establish a prima facie case for

a UDAP claim, Plaintiff Borrowers must establish “(1) either

that the defendant violated the UDAP statute (or that its

actions are deemed to violate the UDAP statute by another

statute), (2) that the consumer was injured as a result of the

violation, and (3) the amount of damages sustained as a result

of the UDAP violation.”     Kawakami v. Kahala Hotel Investors,

LLC, 142 Hawaiʻi 507, 519, 421 P.3d 1277, 1289 (2018) (citations

omitted).    Thus, in order to survive a motion for summary

judgment on their claims, Plaintiff Borrowers must adduce

evidence that they have suffered damages.         See Exotics Hawaii-

Kona, 116 Hawaiʻi at 302, 172 P.3d at 1046.

            Plaintiff Borrowers must make a case for compensatory

damages.    Plaintiff Borrowers acknowledge that their claims
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arise in tort.    Hawaiʻi law recognizes three categories of

damages in tort actions: (1) compensatory damages, (2) punitive

damages, and (3) nominal damages.        Zanakis-Pico v. Cutter Dodge,

Inc., 98 Hawaiʻi 309, 327, 47 P.3d 1222, 1240 (2002) (Acoba, J.,

concurring).     “Compensatory damages seek to ‘compensate the

injured party for the injury sustained,’ in hopes of

‘restor[ing] a plaintiff to his or her position prior to the

tortious act[.]”     Bynum v Magno, 106 Hawaiʻi 81, 85, 101 P.3d

1149, 1153 (2004) (quoting Kuhnert v. Allison, 76 Hawaiʻi 39, 44,

868 P.2d 457, 462 (1994); Zanakis-Pico, 98 Hawaiʻi at 327, 47

P.3d at 1240 (Acoba, J., concurring)).

          In contrast to compensatory damages, nominal damages

are “‘a small and trivial sum awarded for a technical injury due

to a violation of some legal right and as a consequence of which

some damages must be awarded to determine the right.”            Zanakis-

Pico, 98 Hawaiʻi at 327, 47 P.3d at 1240 (Acoba, J., concurring)

(quoting Van Poole v. Nippu Jiji Co., 34 Haw. 354, 360 (1937)).

          Lastly, punitive damages are awarded “to punish the

defendant, rather than to compensate the plaintiff.”            Id. at

330, 47 P.3d at 1243 (Acoba, J., concurring).          However, punitive

damages generally must be supported by an award of nominal or

compensatory damages.     See id. (“nominal damages may be the

basis for punitive damages in . . . tort actions”) (emphasis

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added); Masaki v. General Motors Corp., 71 Haw. 1, 6, 780 P.2d

566, 570 (1989) (“Punitive or exemplary damages are generally

defined as those damages assessed in addition to compensatory

damages for the purpose of punishing the defendant for

aggravated or outrageous misconduct and to deter the defendant

and others from similar conduct in the future.”) (emphasis

added).

          Contrary to Plaintiff Borrowers’ assertion, Plaintiff

Borrowers cannot rely on nominal damages to withstand a motion

for summary judgment.     This court has noted that where a tort

claim requires a plaintiff to “separately establish damages,”

the plaintiff cannot simply infer damages based upon the alleged

tort –– i.e., nominal damages.       Weinberg v. Mauch, 78 Hawaiʻi 40,

50, 890 P.2d 277, 287 (1995).       This is because a crucial

component of such a claim is that “the plaintiff suffer[ed]

damages as a consequence of the defendant’s conduct[.]”            Id.

(quoting Chemawa Country Golf, Inc. v. Wnuk, 402 N.E.2d 1069,

1072-73 (Mass. App. 1980)).      As previously noted, Plaintiff

Borrowers must establish damages as an element of both their

wrongful foreclosure and UDAP claims.        See Reyes-Toledo, 143

Hawaiʻi at 264 n.12, 428 P.3d at 776 n.12; Kawakami, 142 Hawaiʻi

at 519, 421 P.3d at 1289.      Given that these claims require

Plaintiff Borrowers to “suffer damages as a consequence of the

[Defendant Banks’] conduct,” a claim for nominal damages is not
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sufficient to preserve Plaintiff Borrowers’ claims.            See

Weinberg, 78 Hawaiʻi at 50, 890 P.2d at 287.          Plaintiff Borrowers

consequently must establish compensatory damages to salvage

their claims.    See id.

           Nor does Plaintiff Borrowers’ request that the

District Court impose punitive damages alleviate their burden to

prove compensatory damages.       Given that Plaintiff Borrowers may

not rely on a claim for nominal damages to survive summary

judgment, Plaintiff Borrowers must provide an alternative basis

for a punitive damages award.        See Zanakis-Pico, 98 Hawaiʻi at

330, 47 P.3d at 1243 (Acoba, J., concurring); Masaki, 71 Haw. at

6, 780 P.2d at 570.      In other words, Plaintiff Borrowers must

show that they are entitled to compensatory damages –– the only

other independent source of damages –– before they may receive

punitive damages.4

           Finally, Plaintiff Borrowers’ identified items for

recovery –– interest, loss of use payments, and past payments ––

are not sufficient to establish their damages.           Again,

compensatory damages are intended to restore a plaintiff to the

4     This court notes that Plaintiff Borrowers are statutorily precluded
from receiving punitive damages for their UDAP claim. Zanakis-Pico, 98
Hawaiʻi at 319, 47 P.3d at 1232 (“HRS § 480-13(b) enumerates the specific
damages that a consumer may recover under this chapter . . . and makes no
provision for punitive damages.”).
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position they would have been in prior to the alleged tortious

act.    Bynum, 106 Hawaiʻi at 85, 101 P.3d at 1153.

             The law divides such “damages into two broad categories–
             general and special.” Ellis v. Crockett, 51 Haw. 45, 50,
             451 P.2d 814, 819 (1969). General damages “encompass all
             the damages which naturally and necessarily result from a
             legal wrong done[,]” id., and include such items as “pain
             and suffering, inconvenience, and loss of enjoyment which
             cannot be measured definitively in monetary terms.” Dunbar
             v. Thompson, 79 Hawaiʻi 306, 315, 901 P.2d 1285, 1294 (App.
             1995) (citation omitted). Special damages are “the natural
             but not the necessary result of an alleged wrong[,]” Ellis,
             51 Haw. at 50, 451 P.2d at 819, and are “often considered
             to be synonymous with pecuniary loss and include such items
             as medical and hospital expenses, loss of earnings, and
             diminished capacity.” Dunbar, 79 Hawaiʻi at 315, 901 P.2d
             at 1294.

Id.    In light of the purpose of compensatory damages, Plaintiff

Borrowers must make a prima facie case that their requested

damages will restore them to their pre-tort position to survive

summary judgment.       See id.; Exotics Hawaii-Kona, 116 Hawaiʻi at

302, 172 P.3d at 1046.        In this context, the items that

Plaintiff Borrowers identified constitute, at best, pecuniary

losses that form a mere component of their compensatory damages.

See Bynum, 106 Hawaiʻi at 85, 101 P.3d at 1153.             As discussed in

greater detail below, Plaintiff Borrowers consequently must

still factor in their pre-nonjudicial foreclosure statuses to

demonstrate their compensatory damages.            Infra at 22-24.

             An answer requiring Plaintiff Borrowers to account for

their remaining mortgage debts would be “dispositive of the

cause.”     Given that Plaintiff Borrowers must establish

compensatory damages that will restore them to their pre-tort
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positions to survive summary judgment, Plaintiff Borrowers’

failure to account for their pre-tort positions precludes the

satisfaction of the damages elements of their claims.            See

Bynum, 106 Hawaiʻi at 85, 101 P.3d at 1153.         Consequently, an

answer to the question certified by the District Court would be

“dispositive of the cause” when Plaintiff Borrowers have only

provided evidence of a portion of their compensatory damages.

Exotics Hawaii-Kona, 116 Hawaiʻi at 302, 172 P.3d at 1046; see

also HRAP Rule 13(a).

           This court may therefore address the question

certified by the District Court.

     2.    This court declines to address Plaintiff Borrowers’
           alternative questions.

           In contrast, this court notes that it would be

inappropriate to resolve Plaintiff Borrowers’ alternative

questions.    Plaintiff Borrowers ask this court to address

“(1) what items of damages are recoverable, either in

restitution, tort, or under the consumer statute, for the

unlawful disposition of real property using a power of sale, and

(2) how is each item measured[.]”        However, Plaintiff Borrowers

do not contend that a resolution to either of their alternative

questions would be “determinative of the cause.”           See HRAP Rule

13(a).    In fact, Plaintiff Borrowers’ second question

acknowledges that any resolution this court could provide would

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require further fact-finding.         Specifically, Plaintiff Borrowers

would leave for the District Court the actual measurement of any

recoverable damages.       Accordingly, this court declines to

reformulate the certified question to conform to Plaintiff

Borrowers’ request and to answer Plaintiff Borrowers’

alternative questions.       Matsuura v. E.I. du Pont de Nemours &

Co., 102 Hawaiʻi 149, 168, 73 P.3d 687, 706 (2003).

B.    Plaintiff Borrowers must account for their mortgage debts
      when establishing harm.

            Having determined that this court may address the

question certified by the District Court, we turn to the

question’s merits.

            For the following reasons, this court concludes that

Plaintiff Borrowers may not establish the damages elements of

their wrongful foreclosure or UDAP claims without accounting for

their remaining mortgage debts.

      1.    Plaintiff Borrowers bear the burden of establishing
            their damages.

            Plaintiffs bear the burden of establishing all

necessary elements for their claims.          Kelly, 111 Hawaiʻi at 233,

140 P.3d at 1013.      This remains the case when a plaintiff

opposes a motion for summary judgment.           Exotics Hawaii-Kona, 116

Hawaiʻi at 302, 172 P.3d at 1046.         In these cases, the common

element between Plaintiff Borrowers’ wrongful foreclosure and

UDAP claims is compensatory damages.          Reyes Toledo, 143 Hawaiʻi
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at 264 n.12, 428 P.3d at 776 n.12; Kawakami, 142 Hawaiʻi at 519,

421 P.3d at 1289.       Moreover, “[i]t is well-settled that all tort

claims require that damages be proven with reasonable

certainty.”    Exotics Hawaii-Kona, 116 Hawaiʻi at 292, 172 P.3d at

1036.     Consequently, Plaintiff Borrowers –– not Defendant Banks

–– bear the burden of establishing their damages with reasonable

certainty.    See id.

     2.     In establishing damages, Plaintiff Borrowers must
            account for the value of their mortgages.

            The fact that Plaintiff Borrowers must show

compensatory damages places the onus on Plaintiff Borrowers to

account for their mortgage debts.        As detailed above, Plaintiff

Borrowers must establish compensatory damages to satisfy the

damages elements of their wrongful foreclosure and UDAP claims.

Supra at 14-18.     The purpose of compensatory damages is “‘to

recompense a tort victim for the value of the loss

sustained[.]’”    Zanakis-Pico, 98 Hawaiʻi at 327, 47 P.3d at 1240

(Acoba, J., concurring) (quoting 1 Minzer, et al., Damages in

Tort Actions, § 3.01 (Matthew Bender 1996)).          Therefore, “‘the

general rule in measuring damages is to give a sum of money to

the person wronged which as nearly as possible, will restore him

[or her] to the position he [or she] would be in if the wrong

had not been committed.’”       Tabieros v. Clark Equip. Co., 85

Hawaiʻi 336, 389, 944 P.2d 1279, 1332 (1997) (quoting Nobriga v.

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Raybestos-Manhattan, Inc., 67 Haw. 157, 162, 683 P.2d 389, 393

(1984)) (alterations in Tabieros).        In light of the purpose of

compensatory damages, Plaintiff Borrowers must show that the

damages they seek “will restore [them] to the position [they]

would be in if the wrong had not been committed.”           See id.

           In these cases, the tortious acts Plaintiff Borrowers

challenge are Defendant Banks’ nonjudicial foreclosure sales of

their properties.    Plaintiff Borrowers concede that, prior to

the nonjudicial foreclosure sales, their property interests were

encumbered by “standard-form mortgages” that they “could not

repay.”    Under such circumstances, Plaintiff Borrowers’ mortgage

debts are a key factor in determining their damages because the

debts constitute a portion of their pre-tort positions.            See

Tabieros, 85 Hawaiʻi at 389, 944 P.2d at 1332.

           Moreover, Plaintiff Borrowers’ burden to prove their

damages with “reasonable certainty” militates in favor of

requiring Plaintiff Borrowers to account for their remaining

mortgage debts.    Plaintiff Borrowers do not dispute that the

mortgage debts at issue ranged from approximately $169,000 to

nearly $1,000,000 at the time of the nonjudicial foreclosure

sales.    These are not insignificant sums.       Plaintiff Borrowers’

failure to account for such sums makes it impossible for the

trier of fact to determine what damages would restore Plaintiff

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Borrowers to their pre-foreclosure positions.           Contra Tabieros,

85 Hawaiʻi at 389, 944 P.2d at 1332.

            Using the Myers as an example, the Myers owed

$944,759.00 on their mortgage at the time of the applicable

nonjudicial foreclosure sale.        Wells Fargo then sold the Myers’

property for $815,000.00.       Thus, the Myers must at least

subtract $815,000.00 from the total amount of damages they seek

in order to account for their mortgage debt.5

            Plaintiff Borrowers nevertheless assert that Defendant

Banks should bear the burden of proving “deductions” during the

damages phase.     Specifically, Plaintiff Borrowers contend that

they should be allowed to disregard their remaining mortgage

debts, and that it is instead up to Defendant Banks to prove any

amounts that should be “deducted” from Plaintiff Borrowers’

damages.    Plaintiff Borrowers base this “deductions” response on

a restitution theory that Defendant Banks should not be unjustly

enriched.    Plaintiff Borrowers additionally cite Beneficial

Hawaii, Inc. v. Kida, 96 Hawaiʻi 289, 30 P.3d 895 (2001), as

5     This court uses the lesser amount based on the assumption that Wells
Fargo sought a deficiency judgment. In this scenario, the Myers would have
received a value of $815,000.00 from the foreclosure sale in the form of
forgiven mortgage debt. However, the Myers would still owe Wells Fargo
$129,759.00 through a deficiency judgment.

      In the event that Wells Fargo did not seek a deficiency judgment, the
Myers would have received the full value of their remaining mortgage debt in
the form of forgiven debt. In such a case, the Myers would be required to
offset their requested costs by their full mortgage debt of $944,759.00.
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evidence that Defendant Banks bear the burden for accounting for

Plaintiff Borrowers’ mortgage debts.

           This contention is unavailing.        First, Plaintiff

Borrowers concede that their claims arise in tort.           Plaintiff

Borrowers’ reliance on restitution theory is therefore

inapposite when tort damages are generally intended to make

plaintiffs whole.    See Zanakis-Pico, 98 Hawaiʻi at 327, 47 P.3d

at 1240 (Acoba, J., concurring) (discussing the damages

available in tort actions).

           Second, Kida arose in a distinguishable procedural

posture.   In that case, plaintiff Beneficial Hawaii, Inc. sought

to foreclose on property owned by defendant Donald Muneo Kida.

96 Hawaiʻi at 295-96, 30 P.3d at 901-02.        In addressing whether

Beneficial Hawaii, Inc. could seek equitable remedies, this

court explained that Beneficial Hawaii, Inc. was not entitled to

any relief when it failed to satisfy its burden of proving that

it could enforce the note and mortgage.         See Kida, 96 Hawaii at

315-16, 30 P.3d at 921-22.      Kida therefore reinforces the

longstanding precedent that a plaintiff must provide sufficient

evidence to establish all necessary elements of their claims.

See Kelly, 111 Hawaiʻi at 233, 140 P.3d at 1013.

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    3.      Santiago confirms that Plaintiff Borrowers must
            account for their mortgage debts when establishing
            their compensatory damages.

            This court’s holding in Santiago v. Tanaka, 137 Hawaiʻi

137, 366 P.3d 612 (2016), does not change this analysis.            The

District Court identifies its “conundrum” as “how, if at all,

the ‘out-of-pocket losses’ restitution analysis bears on whether

a borrower can prove the harm element in the liability portion

of a wrongful foreclosure claim.”        In particular, the District

Court reasons that “Santiago may suggest that any remaining

mortgage debt be disregarded, and the investment value in the

property be returned to borrowers without setoff.”

            Santiago does not support this proposition.          There,

Louis Santiago and Yong Santiago (together, the Santiagos)

purchased a tavern from Ruth Tanaka (Tanaka) for $1.3 million.

Id. at 140, 366 P.3d at 615.      The Santiagos paid $800,000 in

cash, and executed a mortgage to Tanaka for the remaining

$500,000.    Id.   During a dispute over sewer maintenance fees,

the Santiagos temporarily withheld a mortgage payment.            Id. at

144, 366 P.3d at 619.     In response, Tanaka accelerated the

mortgage and initiated nonjudicial foreclosure proceedings.               Id.

The Santiagos subsequently resumed their mortgage payments and

ultimately paid Tanaka some $585,161.60 on the mortgage.            Id. at

144, 146 n.22, 366 P.3d at 619, 621 n.22.         Nevertheless, Tanaka

completed the foreclosure sale, resold the tavern to a third
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party, and kept the approximately $1.4 million in payments from

the Santiagos.    Id. at 146, 366 P.3d at 621.        Thus, in contrast

to Plaintiff Borrowers who owed significant sums they could not

repay on their mortgages, the Santiagos had effectively paid off

their mortgage debt.     See id. at 158, 366 P.3d at 634.         In other

words, the Santiagos had no remaining mortgage debt to

disregard.   See id.

           In fact, Santiago makes clear that courts must apply a

set off in determining Plaintiff Borrowers’ injuries and

damages.   This court applied the out-of-pocket rule to calculate

the Santiagos’ damages.     Id. at 158-59, 366 P.3d at 633-34.          In

doing so, we explained that, “[u]nder the out-of-pocket rule,

‘the damages are the difference between the actual value of the

property received and the price paid for the property, along

with any special damages naturally and proximately caused . . .

, including expenses incurred in mitigating the damages.”             Id.

at 159, 366 P.3d at 634 (quoting B.F. Goodrich Co. v. Mesabi

Tire Co., 430 N.W.2d 180, 182 (Minn. 1988); citing 37 Am. Jur.

2d Fraud and Deceit § 434 (2013)).

           Notably, when determining out-of-pocket losses, the

party seeking damages “is precluded from any recovery if the

value of the property that he or she received in exchange equals

or exceeds the value of the property parted with by him or her.”

37 Am. Jur. 2d Fraud and Deceit § 434.         Courts have long
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recognized that this is because the party does not sustain any

injury in such an equivalent or beneficial exchange.             See, e.g.,

Stratton’s Independence v. Dines, 135 F. 449, 460 (8th Cir.

1905).   Thus, Santiago demonstrates that Plaintiff Borrowers’

“price paid” must be set off by the “actual value of the

property received” when calculating damages.           See 137 Hawaiʻi at

159, 366 P.3d at 634.

           Applying these rules to the present circumstances

shows that Plaintiff Borrowers must account for their remaining

mortgage debts when they establish their damages.            Although

Plaintiff Borrowers did not receive any actual property, they

nevertheless received significant value in the form of forgiven

mortgage debts.6     This constitutes the “actual value of the

property received” by Plaintiff Borrowers.          Meanwhile, Plaintiff

Borrowers’ “price paid for the property” consists of whatever

mortgage payments they had made before the nonjudicial

foreclosures as well as any other special damages they can

prove.   Under these circumstances, Santiago establishes that

Plaintiff Borrowers’ investments and special damages must be

6     As previously noted, the actual value received depends on whether the
relevant Defendant Bank sought a deficiency judgment. Supra at n.5. If so,
the applicable offset is limited to the amount by which the Plaintiff
Borrower’s mortgage debt is reduced. If not, the applicable offset would be
equal to the full amount of the Plaintiff Borrower’s mortgage debt.
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offset by their mortgage debts.       See 137 Hawaiʻi at 159, 366 P.3d

at 634.

                            IV.   CONCLUSION

          For the foregoing reasons, we answer the District

Court’s certified question as follows: Under Hawaiʻi law, a

borrower with no pre-foreclosure rights in property except as

encumbered by a mortgage bears the burden of accounting for the

effect of the mortgage in establishing the element of harm.

Edmund K. Saffery, Deirdre                 /s/ Mark E. Recktenwald
Marie-Iha, Lauren K. Chun, and
Loren W. Coe*, Mark D. Lonergan*           /s/ Paula A. Nakayama
and Erik Kemp*, for Defendant-
Appellant Wells Fargo Bank, N.A.           /s/ Sabrina S. McKenna

Megan A. Suehiro, Andrew V.                /s/ Michael D. Wilson
Beaman, Leroy E. Colombe,
and Bernard J. Garbutt III*, for           /s/ John M. Tonaki
Defendant-Appellant U.S. Bank
National Association, as Trustee
and Deutsche Bank National Trust
Company, as Trustee

James J. Bickerton, Bridget G.
Morgan-Bickerton, John F. Perkin,
Stanley H. Roehrig, and
Van-Alan H. Shima for Plaintiffs-
Appellees Calvin Jon Kirby II,
Deirdre-Dawn K. Cabison, James C.
Clay, Scott A. Coryea, Katheryn
Coryea, Richard H. Farnham,
Nancy L. Farnham, Timothy Ryan,
Donna Ryan, Kaniala Salis, and
Brian S. Weatherly, Individually
and on behalf of all others
similarly situated in Civil No.
12-00509; for Plaintiffs-Appellees
Evelyn Jane Gibo, Patrick Stephen
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Hemmens, Deanne Davidson Hemmens,
Vincent Labasan and Jennifer Stike
in Civil No. 12-00514; and
for Plaintiffs-Appellees
David Emory Bald, James L. K.
Dahlberg, Michael John Myers, Jr.,
Tham Nguyen Myers, David Levy, and
Thomas T. Au, individually and on
behalf of all others similarly
situated in Civil No. 13-00135

Lionel N. Lima, Jr., and
Barbara Ann Delizo-Lima,
Plaintiffs-Appellees pro se

*admitted pro hac vice

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