Court Opinion

ID: 6495969
Source: CourtListenerOpinion
Date Created: 2022-06-28 19:03:48.46613+00
Date Added: 2024-06-11T08:48:25.519109
License: Public Domain

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

                                                  Electronically Filed
                                                  Intermediate Court of Appeals
                                                  CAAP-XX-XXXXXXX
                                                  28-JUN-2022
                                                  07:45 AM
                                                  Dkt. 80 MO

                           NO. CAAP-XX-XXXXXXX

                 IN THE INTERMEDIATE COURT OF APPEALS

                         OF THE STATE OF HAWAI#I

           LAURA SCHICK, Personal Representative of the
         Estate of Robert A. Schick, Plaintiff-Appellant,
                                 v.
        NATIONSTAR MORTGAGE LLC; FEDERAL NATIONAL MORTGAGE
  ASSOCIATION; NENITA JOSE WESTBERG; CENTRAL PACIFIC HOMELOANS,
      INC.; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.,
                       Defendants-Appellees,
                                and
                  DOE DEFENDANTS 1-50, Defendants

         APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUIT
                        (CIVIL NO. 17-1-0039)

                          MEMORANDUM OPINION
         (By: Ginoza, Chief Judge, Leonard and McCullen, JJ.)

            Plaintiff-Appellant Laura Schick (Schick), personal

representative of the Estate of Robert A. Schick (Decedent),

appeals from the Amended Final Judgment entered against her by

the Circuit Court of the Second Circuit (Circuit Court)1 on

December 24, 2018 (Amended Judgment), which entered judgment

     1
            The Honorable Rhonda I.L. Loo presided.
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against Schick and in favor of Defendants-Appellees Nationstar

Mortgage, LLC (Nationstar), Federal National Mortgage Association

(Fannie Mae) (collectively, Nationstar Defendants), and Nenita

Jose Westberg (Westberg), Central Pacific Homeloans, Inc.

(Central Pacific) (collectively, Westberg Defendants).2             In

addition, Schick challenges the Circuit Court's December 12, 2017

Order Granting [Nationstar Defendants'] Motion for Judgment on

the Pleadings (Order Granting Nationstar Motion) and December 14,

2017 Order Granting [Westberg Defendants] Motion for Judgment on

the Pleadings or, Alternatively, Summary Judgment (Order Granting

Westberg Motion).

I.      RELEVANT BACKGROUND

        A.   The Property

             It appears to be undisputed that on March 14, 2008,

Decedent executed a promissory note (Note) secured by a mortgage

(Mortgage) on certain real property located on Kuukama Street in

Kahului, Hawai#i (Property).       The Mortgage identified the

Decedent as the borrower, Herman-Morris Enterprises Inc. (HMEI)

as the lender, and MERS as the beneficiary, solely as nominee for

HMEI and its successors and assigns.          The Mortgage's power of

sale clause granted MERS the right to, inter alia, "foreclose and

sell the Property; and to take any action required of [HMEI]

        2
            Mortgage Electronic Registration Systems ( MERS) was a defendant
until October 4, 2017, when the Circuit Court approved a stipulation for
dismissal without prejudice of Schick's Complaint as to MERS.

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including, but not limited to, releasing and canceling this

Security Instrument."

          On October 26, 2010, an Assignment of Mortgage was

recorded in the State of Hawai#i Bureau of Conveyances (Bureau).

The assignment reflected MERS's transfer of right, title, and

interest in the Property to Nationstar.       It appears that Decedent

subsequently defaulted, and on Novermber 8, 2010, Nationstar

filed a Notice of Mortgagee's Intention to Foreclose Under Power

of Sale (Notice of Sale) with the Bureau.       The Notice of Sale was

posted at the Property on November 11, 2010, and published in the

Honolulu Star-Advertiser on November 16, November 22, and

November 29, 2010.   The Notice of Sale stated that the Property

would be sold at public auction on January 10, 2011.

          On February 10, 2011, Nationstar recorded Mortgagee's

Affidavit of Foreclosure Under Power of Sale executed by

Nationstar attorney Peter Stone (Affidavit of Foreclosure).       The

Affidavit of Foreclosure stated that the Property was sold at

auction on January 31, 2011, rather than January 10, 2011, to

Nationstar, or its nominee.

          On March 29, 2011, Nationstar conveyed the property to

Fannie Mae.   Nationstar recorded a quitclaim deed at the Bureau

on April 4, 2011.    On September 7, 2011, Fannie Mae conveyed the

Property to Westberg and recorded a limited warranty deed with

the Bureau on September 9, 2011.       On August 25, 2011, Westberg

apparently executed a promissory note in favor of MERS, as

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nominee for Central Pacific, secured by a mortgage on the

Property (Westberg Mortgage), which was recorded on September 9,

2011.

     B.   Circuit Court Proceedings

          On January 31, 2017, Schick filed a Complaint

(Complaint), asserting claims of (1) quiet title, ejectment, and

for declaratory relief and/or damages against all defendants; and

(2) wrongful foreclosure against the Nationstar Defendants.

          In Count I, Schick alleged, inter alia, that the

Nationstar Defendants failed to comply with Part I of Hawaii

Revised Statutes (HRS) Chapter 667 (Supp. 2008), that the deed

from Nationstar to Fannie Mae was "void, or at the very least

voidable," and thus, "the deed from Fannie Mae to Westberg was

likewise void or at the very least voidable."     Schick requested

that the Circuit Court award her title and possession of the

Property and quiet any claim of title by the defendants, or in

the alternative, that the Circuit Court "fashion a remedy in

money damages against Nationstar and Fannie Mae that would be

equivalent to having title and possession restored."

          In Count II, Schick alleged, inter alia, that the

Nationstar Defendants' conduct constituted wrongful foreclosure,

and that as a result of the wrongful foreclosure, Decedent lost

possession of and title to the Property, including a loss of the

market value of the Property, as well as a loss of the use and/or

rental value of the Property.    As remedy for the alleged wrongful

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foreclosure, Schick requested that the Circuit Court award actual

and punitive damages.

          The Complaint also asserted that the twenty-year

statute of limitations under HRS § 657-31 (2016)3 applies to the

action, or in the alternative, that the six-year statute of

limitations under HRS § 657-1(4)(2016)4 applied.

          On August 23, 2017, the Nationstar Defendants filed an

Answer to Complaint, asserting, inter alia, various affirmative

defenses, including laches, and requested that the Circuit Court

enter judgment in their favor.

          On September 27, 2017, the Westberg Defendants filed an

Answer to Complaint (Westberg Answer), as well as a Cross-Claim

against the Nationstar Defendants (Westberg Cross-Claim).              The

Westberg Answer asserted several affirmative defenses, including

that the Complaint was barred by the statute of limitations,

undue delay, waiver, laches, estoppel, and unclean hands.              The

     3
          HRS § 657-31 provides:

                § 657-31 Twenty years. No person shall commence an
          action to recover possession of any lands, or make any entry
          thereon, unless within twenty years after the right to bring
          the action first accrued.
     4
          HRS § 657-1 provides, in pertinent part:

                § 657-1 Six years. The following actions shall be
          commenced within six years next after the cause of action
          accrued, and not after:

          . . . .

                (4)   Personal actions of any nature whatsoever not
                      specifically covered by the laws of the State.

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Westberg Cross-Claim was later dismissed without prejudice, by

stipulation.

          On September 28, 2017, the Nationstar Defendants filed

[Nationstar Defendants'] Motion for Judgment on the Pleadings

(Nationstar Motion for JOP), which was supported by a declaration

of counsel and exhibits.   Movants argued that the Complaint was

untimely and that a two-, or at most six-, year statute of

limitations applies to bar Schick's claims.     The Nationstar

Defendants also asserted that, should the Circuit Court find the

Complaint timely, the doctrine of laches applies as a bar to

Schick's claims because Schick had not been vigilant in

safeguarding her rights, and her unreasonable delay resulted in

significant prejudice to the Nationstar Defendants.

          On October 11, 2017, the Westberg Defendants filed

[Westberg Defendants'] Motion for Judgment on the Pleadings or,

Alternatively, Summary Judgment (Westberg Motion), which was

support by a declaration of counsel and exhibits.      The Westberg

Defendants argued that they were innocent purchasers for value,

and that even if the Property was wrongfully foreclosed, the

title was voidable, not void.    They further argued that they did

not have constructive notice of any alleged defects in the

Property's title, and that Schick's argument was inconsistent

with Hawai#i Supreme Court precedent in Santiago v. Tanaka, 137

Hawai#i 137, 366 P.3d 612 (2016), and Mount v. Apao, 139 Hawai#i

167, 384 P.3d 1268 (2016).

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          On November 6, 2017, Schick filed oppositions to the

defendants' motions, which were supported by declarations of

counsel and exhibits.   In response to the Westberg Motion, Schick

argued, inter alia, that the Westberg Defendants' reliance on

Santiago was misplaced because, in that case, the property sale

did not take place until the nonjudicial sale had been approved

by a circuit court judge, and because the new buyer had not been

made a party in Santiago.    Schick also relied on Pelosi v. Wailea

Ranch Estates, 91 Hawai#i 478, 985 P.2d 1045 (1999), arguing that

the Westberg Defendants were not bona fide purchasers because

they had constructive notice of Nationstar's wrongful foreclosure

of the Property.

          In response to the Nationstar Motion for JOP, Schick

argued that at least a six-year statute of limitations should

apply to the Complaint, and that her cause of action did not

accrue at least until the injury occurred – i.e., the recording

of the Affidavit of Foreclosure on February 10, 2011 -- and was

discoverable by Schick.   Schick argued that Silva v. Lopez, 5

Haw. 262, 271 (1884), should be considered in analyzing whether

the deed was void or merely voidable.     Schick also argued that

the equitable defense of laches should not be applied to this

case.

          On November 8, 2017, the Nationstar Defendants filed a

reply memorandum, arguing that Schick's claims accrued on

November 8, 2010 - the date the Notice of Sale was received and

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recorded.    The Nationstar Defendants argued that Schick's claims

were barred by either the two-year or six-year statute of

limitations, and that the 20-year statute of limitations did not

apply because this was not an adverse possession case.             The

Nationstar Defendants reiterated that even if the nonjudicial

foreclosure did not comply with statutory requirements, the deed

was merely voidable, rather than void, under Santiago.             Lastly,

the Nationstar Defendants responded to Schick's claim that laches

was not a viable defense.

            On November 8, 2017, the Westberg Defendants filed a

reply memorandum, arguing that they did not have constructive

notice of any alleged defects in the title to the Property, thus

they were innocent good faith purchasers, and even assuming the

nonjudicial foreclosure was wrongful, Schick's remedy was limited

to monetary damages from the Nationstar Defendants, rather than

possession.

            On November 14, 2017, a hearing was held on the

Westberg Motion.     The Circuit Court did not exclude the exhibits

submitted with the motion and appears to reference facts

supported by them.      The court announced its ruling as follows:
                  The Court, having had an opportunity to review the
            motion, the opposition, the reply, the Court's going to
            grant defendant's motion for judgment on the pleadings.

                  In the wrongful foreclosure action, plaintiff seeks to
            render all subsequent conveyances void or, two, seeks a
            finding that the subsequent buyer had constructive notice of
            the alleged defective foreclosure.

                  The Court finds that defendant has met their burden of
            proof by establishing no material issues of fact that remain

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          to be resolved in either of these issues; thereby,
          entitling them to judgment as a matter of law.

                On the issue of voidability, plaintiffs are mistaken
          on their reliance of the Silva v. Lopez case. Silva has, in
          fact, been impliedly overturned. The Federal Court and the
          Supreme Court of Hawaii [have] specifically addressed the
          issue of voidability and found that improperly conducted
          foreclosure sales are voidable, not void, and that previous
          cases that state the contrary have been overturned,
          including Silva.

                Second, a plain reading of the disputed affidavit of
          foreclosure leads the Court to conclude that the subsequent
          buyers did not have constructive notice. The affidavit of
          foreclosure plainly certifies that the foreclosure auction
          was conducted in compliance with statutory requirements.
          The Court finds that the subsequent buyers acted with common
          reason and prudence in their reading of the affidavit of
          foreclosure and other foreclosure recordings at the Bureau.

                Therefore, the Court's going to grant defendant's
          motion.

          On November 16, 2017, the Circuit Court held a hearing

on the Nationstar Motion for JOP,       The Circuit Court did not

exclude the exhibits submitted with the motion and appears to

reference facts supported by them.       The court ruled as follows:
                The Court, having had an opportunity to review the
          motion, the opposition, the reply, the Court's going to
          grant defendant's motion for judgment on the pleadings.

                The Court finds that the wrongful foreclosure claim
          accrued upon receipt and recording of the November 8th, 2010
          notice of sale. Therefore, plaintiff's wrongful foreclosure
          claim is barred by the two-year statute of limitations for
          torts. But more importantly, plaintiff's wrongful
          foreclosure claim is also barred by the six-year statute of
          limitations as a tort contract claim under HRS Section
          657-1(1).

                The Court also finds that even if plaintiff's claims
          were founded in equity, it would still be barred by the
          doctrine of laches. Plaintiff's delay in bringing in her
          claims is unreasonable. Seven years has passed since the
          November 8, 2010 alleged defective notice of sale, and
          plaintiff's delay has resulted in prejudice to the
          defendant.

                Robert Schick, the mortgagor in this case, has since
          died and is now unavailable to testify. Therefore, the
          doctrine of laches does apply.

                Finally, the Court finds that even if the nonjudicial
          foreclosure was defective, the foreclosure would be voidable

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           and not void. And the Hawaii Supreme Court and Federal
           Courts have held that improperly completed foreclosures are
           merely voidable, and cases stating they are void are
           impliedly overturned.

                 Therefore, the Court is going to grant defendant's
           motion.

           The written orders, which summarily state that the

motions were granted, were entered thereafter.          A judgment, and

subsequently the Amended Judgment, were entered thereafter.              A

notice of appeal was timely filed.

II.   POINTS OF ERROR

           Schick raises one point of error on appeal, contending

that the Circuit Court erred in granting the Nationstar Motion

for JOP and the Westberg Motion.          Within her point of error,

Schick contends that the Circuit Court reached four erroneous

conclusions of law (COLs), as stated at the hearings on the

motions, and argues that the Circuit Court erred in concluding

that:   (1) an improperly conducted nonjudicial foreclosure sale

was merely voidable and not wholly void; (2) Westberg and Central

Pacific were bona fide purchasers (BFPs); (3) the statute of

limitations barred Schick's claim against Nationstar and Fannie

Mae; and (4) laches barred Schick's claim against Nationstar and

Fannie Mae.

III. APPLICABLE STANDARDS OF REVIEW

           Hawai#i Rules of Civil Procedure (HRCP) Rule 12(c)

governs motions for judgment on the pleadings and states:

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                 (c) Motion for judgment on the pleadings. After
           the pleadings are closed but within such time as not
           to delay the trial, any party may move for judgment on
           the pleadings. If, on a motion for judgment on the
           pleadings, 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 Rule 56, and all parties shall be given
           reasonable opportunity to present all material made
           pertinent to such a motion by Rule 56.

           Here, because the Circuit Court did not exclude the

matters outside the pleadings that were presented to the court,

we review the court's orders as rulings on summary judgment.              See

Foytik v. Chandler, 88 Hawai#i 307, 313, 966 P.2d 619, 625

(1998).

           We review the granting or denial of summary judgment de

novo.   See, e.g., First Ins. Co. of Hawai#i, Ltd. v. A & B

Props., Inc., 126 Hawai#i 406, 413, 271 P.3d 1165, 1172 (2012)

(citing Nuuanu Valley Ass'n v. City & Cnty. of Honolulu, 119

Hawai#i 90, 96, 194 P.3d 531, 537 (2008)).         As often stated:
           [S]ummary judgment is appropriate if the pleadings,
           depositions, answers to interrogatories, and admissions on
           file, together with the affidavits, if any, show that there
           is no genuine issue as to any material fact and that the
           moving party is entitled to judgment as a matter of law. A
           fact is material if proof of that fact would have the effect
           of establishing or refuting one of the essential elements of
           a cause of action or defense asserted by the parties. The
           evidence must be viewed in the light most favorable to the
           non-moving party. In other words, we must view all of the
           evidence and inferences drawn therefrom in the light most
           favorable to the party opposing the motion.

Id. at 413–14, 271 P.3d at 1172–73 (citation omitted).

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IV.    DISCUSSION

       A.   Statute of Limitations

            As a threshold issue, we first address the Circuit

Court's ruling that Schick's wrongful foreclosure claim against

the Nationstar Defendants "is barred by the two-year statute of

limitations for torts" and "is barred by the six-year statute of

limiations as a tort contract claim under HRS Section 657-1(1)."

As this court noted in Delapinia, the supreme court has yet to

address the issue of which statute of limitations period applies

to wrongful foreclosure claims.        Delapinia v. Nationstar Mortg.

LLC, 146 Hawai#i 218, 224, 458 P.3d 929, 935 (App. 2020) rev'd on

other grounds, 150 Hawai#i 91, 497 P.3d 106 (2021) (Delapinia

II).   In Delapinia, this court stated:

                   In determining whether the statute of limitations
            under HRS § 657-1 or § 657-7 applies, the question is not
            whether the action is ex contractu or ex delicto, but
            whether or not the plaintiff is suing for damage or injury
            to persons or property. Gomez v. Am. Airlines, Inc., 111
            Hawai#i 67, 69, 137 P.3d 381, 383 (2006). The relevant
            limitations period is determined by the nature of the claim
            or right asserted, which is in turn determined from the
            allegations contained in the pleadings. Au v. Au, 63 Haw.
            210, 214, 626 P.2d 173, 177 (1981).

Id. at 224-25, 458 P.3d at 935-36.

            There, we held that the plaintiff's wrongful

foreclosure claim was subject to the six-year statute of

limitations under HRS § 657-1(4).          Id.   In doing so, we reasoned

that the supreme court has indicated that the two-year statute of

limitations does not apply.       See, e.g., Hungate v. Law Off. of

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David B. Rosen, 139 Hawai#i 394, 400, 391 P.3d 1, 7 (2017)

(recognizing the validity of a wrongful foreclosure claim in a

complaint filed four years after the foreclosure sale at issue).

We further reasoned that the HRS § 657-1(4) six-year statute of

limitations applied because wrongful foreclosure caused the

Delapinia's "non-physical injury to their intangible interests,"

namely, title and right to possession of the property in dispute.

Delapinia, 146 Hawai#i at 225, 458 P.3d at 936.

           Here, Schick similarly contends that Decedent was

deprived of possession, title, use, and occupancy of the

Property, which further deprived him of lost market value and

rental value of the Property.    Accordingly, we conclude that the

HRS § 657-1(4) six-year statute of limitations applied to the

Schick's claim for wrongful foreclosure.

           As this court discussed in Delapinia, under Hawaii's

discovery rule, the statute of limitations begins to run when the

plaintiff "discovers or should have discovered the negligent act,

the damage, and the causal connection between the former and the

latter."   Delapinia, 146 Hawai#i at 226, 458 P.3d at 937 (quoting

Thomas v. Kidani, 126 Hawai#i 125, 132, 267 P.3d 1230, 1237

(2011)).   In concluding that the earliest date of accrual was the

day that the title was transferred, we reasoned that "[s]ince the

actual damage being claimed was the loss of title, the damage

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occurred when title was transferred to someone other than the

Delapinias."   Id. at 226, 458 P.3d at 937.

          Here, Nationstar deeded title to someone other than the

Decedent, namely, Fannie Mae, on March 29, 2011; that quitclaim

deed was recorded with the Bureau on April 4, 2011.          The

Complaint was filed on January 31, 2017, clearly within the six-

year statute of limitations.      See id.   Therefore, the Circuit

Court erred in concluding that Schick's wrongful foreclosure

claim was time-barred and in granting summary judgment in favor

of the Nationstar Defendants on that basis.

     B.   Laches

          Schick challenges the Circuit Court's ruling that "even

if plaintiff's claims were founded in equity, it would still be

barred by the doctrine of laches."       As stated above, as to the

application of the doctrine of laches to bar Schick's claims

against the Nationstar Defendants, the Circuit Court stated in

full:
                The Court also finds that even if plaintiff's claims
          were founded in equity, it would still be barred by the
          doctrine of laches. Plaintiff's delay in bringing in her
          claims is unreasonable. Seven years has passed since the
          November 8, 2010 alleged defective notice of sale, and
          plaintiff's delay has resulted in prejudice to the
          defendant.

                Robert Schick, the mortgagor in this case, has since
          died and is now unavailable to testify. Therefore, the
          doctrine of laches does apply.

          The doctrine of laches is a defense available in all

civil actions, which includes both legal and equitable claims.

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Ass'n of Apartment Owners of Royal Aloha v. Certified Mgmt.,

Inc., 139 Hawai#i 229, 235, 386 P.3d 866, 872 (2016).          Laches

"reflects the equitable maxim that equity aids the vigilant, not

those who slumber on their rights."       Ass'n of Apartment Owners of

Newtown Meadows ex rel. its Bd. of Dir. v. Venture 15, Inc., 115

Hawai#i 232, 284, 167 P.3d 225, 277 (2007) (quoting Adair v.

Hustace, 64 Haw. 314, 320, 640 P.2d 294, 300 (1982)).           The

supreme court has held:
                There are two components to laches, both of which must
          exist before the doctrine will apply. First, there must
          have been a delay by the plaintiff in bringing his claim []
          and that delay must have been unreasonable under the
          circumstances. Delay is reasonable if the claim was brought
          without undue delay after plaintiff knew of the wrong or
          knew of facts and circumstances sufficient to impute such
          knowledge to him. Second, that delay must have resulted in
          prejudice to defendant. Common but by no means exclusive
          examples of such prejudice are loss of evidence with which
          to contest plaintiff's claims, including the fading memories
          or deaths of material witnesses, changes in the value of the
          subject matter, changes in defendant's position, and
          intervening rights of third parties.

Id. (citation omitted).

          Here, the Circuit Court's ruling on the first component

to laches – a delay by plaintiff that is unreasonable under the

circumstances – was grounded solely in the Circuit Court's

erroneous finding that the wrongful foreclosure claim accrued

upon the filing of the Notice of Sale, and that seven years had

passed since the accrual of Schick's action.         As there are no

other findings or undisputed facts supporting the Circuit Court's

conclusion that, under the circumstances, Schick's delay in

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filing suit was unreasonable, we conclude that the Circuit Court

erred in applying laches to Schick's claims on this basis.

          In addition, the only undisputed fact identified in

support of the Circuit Court's conclusion that the Nationstar

Defendants were prejudiced by Schick's delay was that the

Decedent was dead.   However, the Nationstar Defendants did not

identify what testimony they were prevented from seeking from

Decedent with respect to Schick's claims in this case.      Moreover,

there are no findings or evidence identified by the Nationstar

Defendants as to the date of Decedent's death, whether his death

may have contributed to Schick's delay in filing suit, and

whether that delay might have been reasonable under the

circumstances.   Thus, it appears that the Circuit Court erred in

concluding, in effect, that there were no genuine issues of

material fact as to the second prong of the laches analysis.

     C.   An Improper Nonjudicial Foreclosure is Voidable

          Having determined that the Circuit Court erred in

granting summary judgment on Schick's claims against the

Nationstar Defendants on the grounds that they are time-barred,

we turn to the question of whether the Circuit Court erred in

determining that an improperly-conducted non-judicial foreclosure

sale is merely voidable and not wholly void.     Schick argues that

Silva is binding precedent, and that because the power of sale

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was violated by improper publication of notice of sale, the sale

is void and not merely voidable.

            In Delapinia II, the supreme court explained:
            If void, the sale is "invalid" and "unenforceable," and a
            subsequent purchaser "is entitled only to return of [their]
            down [] payment plus accrued interest. If voidable, the
            sale can be invalidated at the timely election of the
            mortgagor, but "where the property has passed into the hands
            of an innocent purchaser for value, rendering the voiding of
            a foreclosure sale impracticable, an action at law for
            damages is generally the appropriate remedy."

150 Hawai#i at 101, 497 P.3d at 116 (2021) (internal citations

omitted).

            In Delapinia II, the supreme court held that "Silva is

inconsonant with the direction of our recent precedent, and we

clarify today that a wrongful foreclosure that violates the power

of sale is voidable, not void."        Id.   Accordingly, we conclude

that wrongful foreclosure in this case renders the sale voidable,

rather than void.

     D.     The BFP Issue

            Schick contends that the Westberg Defendants' claimed

status as BFPs - that is, innocent purchasers for value – is an

affirmative defense that is not apparent from the face of the

Complaint, and therefore, the Circuit Court erred in granting the

Westberg Motion.     This issue stems from the established principle

that a plaintiff is not entitled to possession or return of title

to a defectively foreclosed property if it was subsequently sold

to a BFP.    Mount, 139 Hawai#i at 180, 384 P.3d at 1281 (citing

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Santiago, 137 Hawai#i at 158, 366 P.3d at 633).     When a property

has passed to an innocent purchaser for value, thereby rendering

the voiding of a foreclosure sale impracticable, "an action at

law for damages is generally the appropriate remedy."      Id.

          "An innocent purchaser is 'one who, by an honest

contract or agreement, purchases property or acquires an interest

therein, without knowledge, or means of knowledge sufficient to

charge him in law with knowledge, of any infirmity in the title

of the seller.'"   Ka'u Agribusiness Co., Inc. v. Heirs or Assigns

of Ahulau, 105 Hawai#i 182, 193, 95 P.3d 613, 624 (2004) (quoting

Pelosi, 91 Hawai#i at 489, 985 P.2d at 1056).     The supreme court

has defined a BFP as a purchaser "who acquires an interest in a

property for valuable consideration, in good faith, and without

notice of any outstanding claims which are held against the

property by third parties."    Kondaur Cap. Corp. v. Matsuyoshi,

136 Hawai#i 227, 240 n.27, 361 P.3d 454, 467 n.27 (2015)

(citation omitted).   Conversely, "[a] non-bona fide purchaser is

one who does not pay adequate consideration, 'takes with

knowledge that his transferor acquired title by fraud, or buys

registered land with full notice of the fact that it is in

litigation between the transferor and a third party."      Id.

(brackets, citation, and ellipsis omitted)).

          Purchasers who have constructive notice of another's

interest in a property "cannot accurately be referred to as

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'innocent purchasers.'"      Pelosi, 91 Hawai#i at 489, 985 P.2d at

1056.   "Constructive notice arises as a legal inference, where

'circumstances are such that a reasonably prudent person should

make inquiries, [and therefore] the law charges a person with

notice of facts which inquiry would have disclosed.'"            In re

Henshaw, 585 B.R. 605, 615 (D. Haw. 2018) (quoting SGM P'ship v.

Nelson, 5 Haw. App. 526, 529, 705 P.2d 49, 52 (1985)).

           Schick alleged that the Westberg Defendants are not

BFPs because, based on the public record, there was plainly an

infirmity in the seller's title.          In particular, Schick points to

the Complaint's allegations that:
                 48. Prior to accepting and recording the deed from
           Fannie Mae, Westberg, Central Pacific and MERS had
           constructive notice of the recorded Foreclosure Affidavit,
           the terms of sale in the recorded Notice of Sale and,
           further, had constructive if not actual notice that Fannie
           Mae had acquired its putative title from Nationstar, which
           had purported to purchase the Property at its own
           foreclosure sale. They knew or reasonably should have known
           that there was a break in the chain of title since the last
           owner of record was Schick but Westberg's deed was from
           Fannie Mae, meaning that they knew Westberg's title was only
           valid if the foreclosure was valid.

                 . . . .

                 54. Because Nationstar and Fannie Mae failed to
           strictly comply with HRS §§ 667-5 et seq. ([Supp.] 2008) and
           the power of sale in the Mortgage as set forth above, the
           non-judicial foreclosure sale and transfer of the Property
           to Fannie Mae was void as a matter of law, or at least
           voidable, and hence all subsequent transfers were likewise
           void or at least voidable as to non-bona fide purchasers.

(Underlined emphasis added).

           We reject Schick's contention that notice from the

chain of title that a foreclosure sale has occurred constitutes

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actual notice of a break in title that constitutes notice of an

outstanding claim against a property and precludes subsequent

purchasers from being BFPs.    We agree with the proposition cited

above that "[c]onstructive notice arises as a legal inference,

where circumstances are such that a reasonably prudent person

should make inquiries."   In re Henshaw, 585 B.R. at 615 (internal

quotation marks omitted).    There is nothing on the face of the

Affidavit of Foreclosure, the Notice of Sale, or the Mortgage

that would have provided the Westberg Defendants with

constructive notice that the foreclosure was defective.      We also

reject Schick's contention that Decano v. Hutchinson Sugar Co.,

45 Haw. 505, 371 P.2d 217 (1962) should be interpreted as

concluding that notice that there has been a foreclosure is

sufficient to provide notice to a subsequent purchaser for value

that a foreclosure was defective.      See Tilley v. Bank of N.Y.

Mellon, No. 17-00524 HG-RLP, 2018 WL 1415171, at *13 (D. Haw.

Mar. 21, 2018); Lynch v. Bank of N.Y. Mellon, No. 17-00195 LEK-

RLP, 2017 WL 3568667, at *4-5 (D. Haw. Aug. 15, 2017).

          Thus, we conclude that the Circuit Court did not err in

refusing to make a legal inference that, based on the public

record, the Westberg Defendants could be found to have had

constructive notice of an alleged defect in title, i.e.,

constructive notice that Nationstar's foreclosure was improperly

conducted.   We further conclude that the Circuit Court did not

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err in granting summary judgment on Schick's claims against the

Westberg Defendants.

V.      CONCLUSION

             For the foregoing reasons, the Circuit Court's December

24, 2018 Amended Judgment is affirmed in part and vacated in

part.     The Amended Judgment is affirmed to the extent that it

enters judgment in favor of the Westberg Defendants and against

Schick.     The Amended Judgment is vacated to the extent that it

enters judgment in favor of the Nationstar Defendants and against

Schick.     This case is remanded to the Circuit Court for further

proceedings consistent with this Memorandum Opinion.

             DATED: Honolulu, Hawai#i, June 28, 2022.

On the briefs:                            /s/ Lisa M. Ginoza
                                          Chief Judge
James J. Bickerton,
Stanley H. Roehrig (Of Counsel),          /s/ Katherine G. Leonard
Bridget G. Morgan,                        Associate Judge
(Bickerton Dang, LLLP),
     and                                  /s/ Sonja M.P. McCullen
John F. Perkin,                           Associate Judge
(Perkin & Faria LLLC),
     and
Van-Alan H. Shima,
(Affinity Law Group),
for Plaintiff-Appellant.

Charles A. Price,
(Koshiba Price & Gruebner),
for Defendants-Appellees
 NENITA JOSE WESTBERG and
 CENTRAL PACIFIC HOMELOANS, INC.

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Andrew J. Lautenbach,
Kukui Claydon,
(Starn O'Toole Marcus & Fisher),
for Defendants-Appellees
 NATIONSTAR MORTGAGE LLC and
 FEDERAL NATIONAL MORTGAGE
 ASSOCIATION.

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