Court Opinion

ID: 9371763
Source: CourtListenerOpinion
Date Created: 2023-02-16 19:03:06.666536+00
Date Added: 2024-06-11T17:16:29.993812
License: Public Domain

NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS OR THE PACIFIC REPORTER

                                            Electronically Filed
                                            Intermediate Court of Appeals
                                            CAAP-XX-XXXXXXX
                                            16-FEB-2023
                                            08:10 AM
                                            Dkt. 54 ORD

              NOS. CAAP-XX-XXXXXXX & CAAP-XX-XXXXXXX

               IN THE INTERMEDIATE COURT OF APPEALS

                      OF THE STATE OF HAWAI#I

          MTGLQ INVESTORS, L.P., Plaintiff-Appellee, v.
        WILLIAM HALEMANO FREDERICK, Defendant-Appellant,
                                and
          UNITED GUARANTY RESIDENTIAL INSURANCE COMPANY
          OF NORTH CAROLINA; FEDERAL HOME LOAN MORTGAGE
                CORPORATION, Defendants-Appellees,
                                and
             DOES 1 through 20, Inclusive, Defendants

       APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
                 (CIVIL NO. 17-1-1439-09 (JHC))

                              ORDER
              (By: Wadsworth and McCullen, JJ., and
    Hiraoka, Presiding Judge, concurring in part separately)

          Upon consideration of the February 6, 2023 Notice of
Defendant-Appellant William Halemano Frederick's [(Frederick)]
Chapter 7 Bankruptcy Case (Notice of Bankruptcy Case), filed by
Plaintiff-Appellee MTGLQ Investors, L.P. (MTGLQ), the papers in
support, and the record, it appears that:
          (1) On January 25, 2023, this court entered a Summary
Disposition Order (SDO) in this appeal;
          (2) On February 6, 2023, MTGLQ filed the Notice of
Bankruptcy Case, which notified this court (for the first time)
that Frederick filed a Chapter 7 bankruptcy petition on
October 13, 2022.
          (3) The filing of a bankruptcy petition stays the
"commencement or continuation . . . of a judicial . . .
 NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS OR THE PACIFIC REPORTER

proceeding against the [bankruptcy] debtor" during the pendency
of the bankruptcy case." 11 U.S.C. § 362(a)(1). It also
operates as an automatic stay of "any act to obtain possession of
property of the estate or of property from the estate or to
exercise control over property of the estate[.]" 11 U.S.C.
§ 362(a)(3). The filing of the petition triggers the automatic
stay, notwithstanding the lack of actual notice of commencement
of proceedings. In re Sumpter, 171 B.R. 835, 841-42 (Bankr. N.D.
Ill. 1994).
          (4) The court did not receive notice of Frederick's
bankruptcy until after it entered the SDO in this appeal.
Nevertheless, the SDO is void. See Island Ins. Co. v.
Santos, 86 Hawai#i 363, 366, 949 P.2d 203, 206 (App. 1997)
(holding that actions taken in violation of the automatic stay
are void and without effect, even if the entity that violated the
stay had no knowledge or notice of the filing of the bankruptcy
petition or of the automatic stay, although the bankruptcy court
could retroactively annul the stay and validate actions that
violated the stay); Wagner v. World Botanical Gardens, Inc., 126
Hawai#i 190, 195, 268 P.3d 443, 448 (App. 2011) ("A judgment is
void only if the court that rendered it lacked jurisdiction of
the subject matter, or of the parties, or if it acted in a manner
inconsistent with due process of law." (quoting In re Genesys
Data Techs, Inc., 95 Hawai#i 33, 38, 18 Pl3d 895, 900 (2001))).
           (5) Hawai#i Rules of Appellate Procedure (HRAP) Rule
54(b) states in part: "If any party has knowledge of a
bankruptcy action that stays an appeal, including when a party
files for bankruptcy while an appeal is pending, the party with
knowledge shall immediately file a notice of bankruptcy with the
appellate court." (Emphasis added.) The parties appearing in
this appeal did not fully comply with HRAP 54(b). Frederick
filed no notice of bankruptcy in this court. MTGLQ did not file
the Notice of Bankruptcy Case in this appeal until February 6,
2023, over three months after the Chapter 7 bankruptcy petition
was filed and twelve days after entry of the SDO. The parties
are strongly cautioned that any future failure to fully comply
with HRAP 54(b) may result in sanctions.

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 NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS OR THE PACIFIC REPORTER

          Therefore, IT IS HEREBY ORDERED that the January 25,
2023 Summary Disposition Order is rescinded.

            DATED:   Honolulu, Hawai#i, February 16, 2023.

                                          /s/ Clyde J. Wadsworth
                                          Associate Judge

                                          /s/ Sonja M.P. McCullen
                                          Associate Judge

                     HIRAOKA, J., CONCURRING IN PART

          I concur that our January 25, 2023 Summary Disposition
Order must be rescinded because it violates the automatic
bankruptcy stay even though we had no actual notice that
Frederick had filed a bankruptcy petition on October 13, 2022.
          I write separately because judicial resources that
could have been allocated to disposing of other pending appeals
were wasted because of MTGLQ's failure to immediately file a
notice of Frederick's bankruptcy. Instead of a strong caution, I
would issue an order to show cause why MTGLQ should not be
sanctioned for violating Hawai#i Rules of Appellate Procedure
Rule 54(b).1/

                                          /s/ Keith K. Hiraoka
                                          Presiding Judge

      1/
            The automatic bankruptcy stay would preclude issuance of a similar
order to show cause to Frederick.

                                      3