Court Opinion

ID: 9297616
Source: CourtListenerOpinion
Date Created: 2022-11-30 21:03:12.429405+00
Date Added: 2024-06-11T17:13:28.141148
License: Public Domain

NOT FOR PUBLICATION IN WEST'S HAWAI‘I REPORTS AND PACIFIC REPORTER

                                             Electronically Filed
                                             Intermediate Court of Appeals
                                             CAAP-XX-XXXXXXX
                                             30-NOV-2022
                                             08:53 AM
                                             Dkt. 96 SO

                          NO. CAAP-XX-XXXXXXX

                 IN THE INTERMEDIATE COURT OF APPEALS
                        OF THE STATE OF HAWAI‘I

         MARGARET LOUISE ROYCE and STEVEN MICHAEL ROYCE,
                       Plaintiffs-Appellants,
                                  v.
           PLAZA HOME MORTGAGE, INC., COUNTRYWIDE HOME
              LOANS, INC., FEDERAL NATIONAL MORTGAGE
               ASSOCIATION, BOFA MERRILL LYNCH ASSET
              HOLDINGS, INC., BANK OF AMERICA, N.A.,
                        Defendants-Appellees,
                                 and
                       DOES 1-100, Defendants

       APPEAL FROM THE CIRCUIT COURT OF THE THIRD CIRCUIT
                   (CIVIL NO. 3CC16-1-0045K)

                      SUMMARY DISPOSITION ORDER
      (By:    Ginoza, Chief Judge, Hiraoka and Nakasone, JJ.)

             Plaintiffs-Appellants Margaret Louise Royce and Steven
Michael Royce (collectively, the Royces), self-represented,
appeal from (1) the June 8, 2017 "Order Denying Plaintiff's
Motion [for] Reconsideration or New Trial (Motion for
Reconsideration) of October 11, 2016 Order Granting Defendants
Bank of America, N.A. (BANA) and Countrywide Home Loans,

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Inc[.]'s (Countrywide) Motion to Dismiss Plaintiff Amended
Verified Complaint to Quite [sic] Title Filed March 4, 2016
[Filed October 21, 2016] (Order Granting Motion to Dismiss)",
and (2) the September 30, 2019 Final Judgment (Final Judgment),
filed and entered by the Circuit Court of the Third Circuit
(Circuit Court).1
            On appeal,2 the Royces generally contend3 that the
Circuit Court erred in granting Defendants-Appellees BANA and

      1     The Honorable Ronald Ibarra presided and signed the Order Denying
Motion for Reconsideration. The Honorable Robert D.S. Kim signed the Final
Judgment.

      2     The Royces' Opening Brief does not comply with Hawai‘i Rules of
Appellate Procedure (HRAP) Rule 28(b). The points of error do not contain
references to where in the record the alleged error by the Circuit Court
occurred, nor where in the record the error was objected to or brought to the
attention of the Circuit Court. See HRAP Rule 28(b)(4) ("Points not
presented in accordance with this section will be disregarded[.]"). The
brief also lacks an argument section. See HRAP Rule 28(b)(7) (specifying
requirements for the argument section and that "[p]oints not argued may be
deemed waived."). While noncompliance with HRAP Rule 28(b)(4) can alone be
sufficient to affirm the lower court's judgment, we endeavor to afford
"litigants the opportunity to have their cases heard on the merits, where
possible." Marvin v. Pflueger, 127 Hawai‘i 490, 496, 280 P.3d 88, 94 (2012)
(citation and internal quotation marks omitted). We address the Royces'
arguments to the extent that we can discern them from their Opening Brief.
See Erum v. Llego, 147 Hawai‘i 368, 380-81, 465 P.3d 815, 827-28 (2020)
(applying liberal interpretation to pleadings prepared by self-represented
litigants and not foreclosing them from appellate review for failure to
comply with court rules).
      3      We have consolidated and restated the Royces' five "[q]uestions
presented on appeal," into a single contention for clarity. The five
questions presented are that the Circuit Court erred by: (1) ruling that the
Amended Verified Complaint did not sufficiently plead a claim to quiet title
pursuant to Hawaii Revised Statutes (HRS) § 669-1(a); (2) "misappl[ying]
Hawai‘i's Quiet Title pleading-specific requirements, ignor[ing] Hawai‘i's
well-established Quiet Title laws, [and] overlook[ing] Hawai‘i's Quiet Title
legal precedents" when the Circuit Court referenced judicial and non-judicial
foreclosure statutes under HRS § 667 instead of the Quiet Title statute HRS §
669-1(a); (3) granting BANA and Countrywide's Motion to Dismiss under Hawai‘i
Rules of Civil Procedure (HRCP) Rule 12(b)(6) for "failure to state ultimate
facts sufficient to constitute a Quiet Title Civil Action Claim in Hawai‘i";
(4) denying the Royces' Motion for Reconsideration; and (5) ruling that the
interest in the Subject Property at issue arose from a companion foreclosure
case and not derived from a warranty deed.

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Countrywide's Motion to Dismiss,4 denying the Royces' Motion for
Reconsideration, and finding that the Royces' Amended Verified
Complaint "did not meet the requirements to initiate a
sufficiently plead [sic] Quiet Title Civil action . . . ."
           Upon careful review of the record and the briefs
submitted by the parties and having given due consideration to
the arguments advanced and the issues raised, we affirm.
           As to BANA and Countrywide, the record reflects that
the Circuit Court granted the Motion to Dismiss on grounds that
a final judgment of foreclosure in a related case, Bank of
America, N.A. v. Louise Royce et. al., Civil No. 3CC14100112K
(Foreclosure Proceeding),5 that had not been appealed, had
divested the Royces of any right, title, or interest in the
contested property; and that as a result, the Royces failed to
state a claim and res judicata applied.         The Royces contend that
the Circuit Court erred in granting BANA and Countrywide's
Motion to Dismiss, and the only discernable argument they appear
to advance is that their pleading was "sufficient to state a
Hawaii common law Quiet Title claim or a Hawaii statutory law
Quiet Title Claim."
           In their Answering Brief, BANA and Countrywide argue
that the Royces' quiet title claim was barred by res judicata
because the Foreclosure Proceeding "already resolved any dispute
about the ownership of the secured property."             The Royces did

      4     While the Royces appeal from the September 30, 2019 Final
Judgment, which encompassed orders relating to the remaining Defendants-
Appellees Plaza Home Mortgage, Inc. (Plaza Home Mortgage), Bank of America
Merrill Lynch Asset Holdings, Inc. (Merrill Lynch), and Federal National
Mortgage Association (Fannie Mae), the Opening Brief does not contain any
discernable argument as to these orders, or any reference to Merrill Lynch,
Plaza Home Mortgage, or Fannie Mae. Thus, any challenge pertaining to these
Defendants-Appellees is waived. See HRAP Rule 28(b)(7).
     5     The Honorable Elizabeth A. Strance presided.

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not address this argument in their Reply Brief.      BANA and
Countrywide's argument has merit.
            A circuit court's ruling on a motion to dismiss is
reviewed de novo.   Flores v. Logan, 151 Hawai‘i 357, 366, 513
P.3d 423, 432 (2022) (quoting Civ. Beat Law Ctr. for the Pub.
Int., Inc. v. City & Cnty. of Honolulu, 144 Hawai‘i 466, 474, 445

P.3d 47, 55 (2019)).   A court must accept a complaint's
allegations as true, but it "is not required to accept
conclusory allegations on the legal effect of the events
alleged."   Marsland v. Pang, 5 Haw.App. 463, 474, 701 P.2d 175,
186 (1985) (citation omitted).    Additionally, a court can take
judicial notice of prior proceedings alluded to in a complaint
to dismiss the complaint under HRCP 12(b)(6).     Ellis v.
Crockett, 51 Haw. 45, 55, 451 P.2d 814, 821 (1969).      Here, the
Motion to Dismiss attached the decree and judgment from the
Foreclosure Proceeding.   In an HRCP Rule 12(b)(6) motion to
dismiss when "matters outside the pleadings are presented to and
not excluded by the court the motion shall be treated as one for
summary judgment and disposed of as provided in [HRCP] Rule 56 .
. . ."   Flores, 151 Hawai‘i at 367, 513 P.3d at 433 (quoting HRCP
Rule 12(b)).   "Summary judgment is appropriate if the pleadings,
depositions, answer to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no
genuine issue of material fact and the moving party is entitled
to a judgment as a matter of law."    Id. (citation and internal
quotation marks omitted).   We apply the summary judgment
standard of review under HRCP Rule 56 to this case.
            We may take judicial notice of court records that are
not part of the record on appeal.     See State v. Kwong, 149
Hawai‘i 106, 117, 482 P.3d 1067, 1078 (2021) (quoting Eli v.

State, 63 Haw. 474, 478, 630 P.2d 113, 116 (1981)).      In the

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Foreclosure Proceeding, BANA initiated a foreclosure action
after the Royces defaulted on their mortgage for the same
property involved in this case.    On March 17, 2015, the Circuit
Court filed its Findings of Fact, Conclusions of Law and Order
Granting Plaintiff's Motion for Summary Judgment and Decree of
Foreclosure Against All Defendants on Complaint Filed March 19,
2014 (Foreclosure Decree), and entered its judgment (Foreclosure
Judgment).    The Royces did not appeal the Foreclosure
Proceeding.
          Under the doctrine of res judicata, "'the judgment of
a court of competent jurisdiction is a bar to a new action in
any court between the same parties or their privies concerning
the same subject matter.'"    PennyMac Corp. v. Godinez, 148
Hawai‘i 323, 327, 474 P.3d 264, 268 (2020) (internal brackets

omitted) (quoting Kauhane v. Acutron Co., 71 Haw. 458, 463, 795
P.2d 276, 278 (1990)).   A party asserting res judicata has the
burden of establishing that: "'(1) there was a final judgment on
the merits, (2) both parties are the same or in privity with the
parties in the original suit, and (3) the claim decided in the
original suit is identical with the one presented in the action
in question.'"   Id. (quoting Bremer v. Weeks, 104 Hawai‘i 43, 54,
85 P.3d 150, 161 (2004)).    "Res judicata prohibits the
relitigation of all grounds and defenses which might have been
properly litigated in the prior action, even if the issues were
not litigated or decided in the earlier adjudication of the
subject claim or cause of action."    Smallwood v. City and Cnty.
of Honolulu, 118 Hawai‘i 139, 147, 185 P.3d 887, 895 (App. 2008)

(citing Bremer, 104 Hawai‘i at 53, 85 P.3d at 160).
          The record here and from the Foreclosure Proceeding
reflect that a Foreclosure Decree and Foreclosure Judgment
related to the same property were previously entered against the

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Royces from which they did not appeal, and thus, there was a
"final judgment on the merits" for res judicata purposes.
PennyMac Corp., 148 Hawai‘i at 327, 474 P.3d at 268.      A judgment
of foreclosure "finally determines the merits of the
controversy."   Mortg. Elec. Registration Sys., Inc. v. Wise, 130
Hawai‘i 11, 16, 304 P.3d 1192, 1197 (2013).     "[F]oreclosure has

the legal effect of terminating a mortgagor's interest in the
subject property, and therefore, a foreclosure judgment
constitutes a final judgment."    Eastern Savings Bank, FSB v.
Esteban, 129 Hawai‘i 154, 160 n.10, 296 P.3d 1062, 1068 n.10
(2013) (citation omitted).    Thus, the first element for res
judicata is met.
          As to the second res judicata element, the parties are
the same or in privity with the parties in the original suit.
The Royces' Amended Complaint named BANA and Countrywide as
defendants.   The Foreclosure Decree and Foreclosure Judgment
named BANA as plaintiff and the Royces as defendants in the
Foreclosure Proceeding.   The Foreclosure Decree included a
finding that Countrywide had an interest in the subject
property, but endorsed the promissory note in blank; BANA then
became the holder of the promissory note.     Thus, the parties
here are the same as, or were in privity with, the parties in
the original Foreclosure Proceeding.     See PennyMac Corp., 148
Hawai‘i at 327, 474 P.3d at 268; In re Dowsett Trust, 7 Haw.App.

640, 646, 791 P.2d 398, 402 (1990) ("The concept of privity has
moved from the conventional and narrowly defined meaning of
'mutual or successive relationships to the same rights of
property' to 'merely a word used to say that the relationship
between the one who is a party of record and another is close
enough to include that other within the res adjudicata.'")
(citation, internal quotation marks and brackets omitted).

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          As to the third res judicata element, whether the
claim decided in the original suit is identical to the one
presented in the action in question, the Royces claimed in the
Amended Complaint that "[a] controversy has arisen and now
exists between Plaintiff and Defendants" and sought "a
determination that Plaintiff owns and holds the Property free
and clear of any interests or adverse claim asserted herein by
any Defendant."   The Foreclosure Decree and the Foreclosure
Judgment, however, terminated the Royces' interest in the
subject property.   See Esteban, 129 Hawai‘i at 160 n.10, 296 P.3d

at 1068 n.10; Wise, 130 Hawai‘i at 16, 304 P.3d at 1197.      Thus,

the record reflects that the Royces' claim in their Amended
Complaint was already determined in the Foreclosure Proceeding.
See Esteban, 129 Hawai‘i at 160 n.10, 296 P.3d at 1068 n.10;

Wise, 130 Hawai‘i at 16, 304 P.3d at 1197.
          We conclude that the Circuit Court did not err in
dismissing the Amended Complaint on grounds that the Royces'
quiet title claim is barred by res judicata, as a matter of law.
See Flores, 151 Hawai‘i at 366, 513 P.3d at 432; PennyMac Corp.,

148 Hawai‘i at 327, 474 P.3d at 268.    Regarding the Order Denying

Motion for Reconsideration, the Royces do not provide any
additional discernable argument beyond the contention that we
have already addressed, and thus have failed to show any error.
See HRAP Rule 28(b)(7).
          For the foregoing reasons, we affirm the (1) the June
8, 2017 "Order Denying Plaintiff's Motion for Reconsideration or
New Trial of October 11, 2016 Order Granting Defendants Bank of
America, N.A. and Countrywide Home Loans, Inc[.]'s Motion to
Dismiss Plaintiff Amended Verified Complaint to Quite [sic]
Title Filed March 4, 2016 [Filed October 21, 2016]," and (2) the

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September 30, 2019 Final Judgment, filed and entered by the
Circuit Court of the Third Circuit.
          DATED:   Honolulu, Hawai‘i, November 30, 2022.

On the briefs:

Margaret Louise Royce and             /s/ Lisa M. Ginoza
Steven Michael Royce,                 Chief Judge
Plaintiffs-Appellants.
                                      /s/ Keith K. Hiraoka
Jenny J.N.A. Nakamoto,                Associate Judge
(Dentons US LLP)
for Plaza Home Mortgage, Inc.         /s/ Karen T. Nakasone
                                      Associate Judge
Patricia J. McHenry,
(Cades Schutte)
for Bank of America, N.A.,
Countrywide Home Loans, Inc.
and BOFA Merrill Lynch Asset
Holdings, Inc.

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