Court Opinion

ID: 9371227
Source: CourtListenerOpinion
Date Created: 2023-02-15 19:02:59.191829+00
Date Added: 2024-06-11T17:16:26.157245
License: Public Domain

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                                                               Electronically Filed
                                                               Supreme Court
                                                               SCWC-XX-XXXXXXX
                                                               15-FEB-2023
                                                               07:56 AM
                                                               Dkt. 25 MO

                 SCWC-XX-XXXXXXX and SCWC-XX-XXXXXXX

            IN THE SUPREME COURT OF THE STATE OF HAWAII

               WILMINGTON SAVINGS FUND SOCIETY, FSB,
                 DOING BUSINESS AS CHRISTINA TRUST,
                  NOT IN ITS INDIVIDUAL CAPACITY,
             BUT SOLELY AS TRUSTEE FOR BCAT 2015-14BTT,
                   Respondent/Plaintiff-Appellee,

                                     vs.

         ISABELO PACPACO DOMINGO; MICHELE ELANOR DOMINGO,
                Petitioners/Defendants-Appellants,

                                     and

   BANK OF AMERICA, N.A.; HALEWILI PLACE COMMUNITY ASSOCIATION,
                Respondents/Defendants-Appellees.

         CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
      (CAAP-XX-XXXXXXX; CAAP-XX-XXXXXXX; CIV. NO. 13-1-202K)

                         MEMORANDUM OPINION
(By: Recktenwald, C.J., Nakayama, McKenna, Wilson, and Eddins, JJ.)

                            I.    INTRODUCTION

           This case arises from a foreclosure proceeding.             On

 October 7, 2022, Petitioners/Defendants-Appellants Isabelo

 Pacpaco Domingo and Michele Elanor Domingo (the Domingos) filed
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an application for writ of certiorari, challenging the

Intermediate Court of Appeals’ (ICA) August 26, 2022 amended

summary disposition order (Amended SDO).         The ICA dismissed the

Domingos’ appeal as moot.

          On March 13, 2013, Bank of America, N.A. (Bank of

America) filed a complaint in the Circuit Court of the Third

Circuit (circuit court) against the Domingos, alleging that Bank

of America was entitled to foreclosure of the mortgage executed

by the Domingos.    Bank of America subsequently assigned its

interest in the note to Respondent/Plaintiff-Appellee Wilmington

Savings Fund Society, FSB, Doing Business as Christina Trust,

Not in its Individual Capacity, But Solely as Trustee for BCAT

2015-14BTT (Wilmington).      Wilmington was then substituted as the

plaintiff in the foreclosure proceeding.

          After the circuit court denied Wilmington’s initial

motion for summary judgment, Wilmington filed a renewed motion

for summary judgment, which the circuit court granted.

Wilmington then purchased the property at the foreclosure

auction and, while the Domingos’ appeal was pending, sold the

Property to BBNY REO LLC, a Florida Limited Liability Company

(BBNY).   The Domingos did not post a supersedeas bond or

otherwise obtain a stay, but the Domingos did file a separate

complaint for wrongful foreclosure.

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           During the pendency of the Domingos’ appeal,

Wilmington filed a motion to dismiss in the ICA, arguing that

the Domingos’ appeal was moot because the property was sold to

BBNY, a third-party, good-faith purchaser.         The Domingos

disputed that BBNY was a third-party, good-faith purchaser.             The

ICA agreed with Wilmington, determined that BBNY was a third-

party, good-faith purchaser, and dismissed the Domingos’ appeal

as moot.

           On certiorari, the Domingos raise three arguments.

First, the Domingos argue that the ICA erroneously determined

the property was conveyed to a third-party, good-faith purchaser

because of the Domingos’ pending wrongful foreclosure action.

Second, the Domingos contend that the ICA mistakenly determined

no effective relief can be granted to the Domingos because of

the Domingos’ pending wrongful foreclosure action.           Third, the

Domingos assert that the ICA erroneously relied on new evidence

to determine BBNY was a third-party, good-faith purchaser.

           The Domingos’ third argument has merit.          The ICA

improperly relied on new evidence submitted with Wilmington’s

motion to dismiss to determine that BBNY was a third-party,

good-faith purchaser, which was a disputed factual issue.

Instead of making a factual determination that BBNY was a third-

party, good-faith purchaser, the ICA should have temporarily

remanded the case to the circuit court to make such a
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determination.    Accordingly, we vacate the ICA’s August 26, 2022

Amended SDO, which dismissed the Domingos’ appeal as moot,

because the ICA should have temporarily remanded the case to the

circuit court for an evidentiary hearing to determine whether

BBNY was a third-party, good-faith purchaser.

                            II.   BACKGROUND

A.   Relevant Circuit Court Proceedings

          On March 13, 2013, Bank of America filed a “Complaint

for Foreclosure” (Complaint) in the circuit court.           The

Complaint alleged as follows.       The Domingos owned property in

Kailua-Kona, Hawaiʻi (the Property).        On or about February 15,

2007, Isabelo Pacpaco Domingo executed and delivered a

promissory note in the amount of $625,500.00 (the Note) to

SecurityNational Mortgage Company (Security National).             In

addition, Michele Elanor Domingo executed and delivered a

mortgage (the Mortgage) to Mortgage Electronic Registration

Systems, Inc., solely as nominee for Security National.             On

March 12, 2012, the mortgagee’s interest in the Mortgage was

assigned to Bank of America.

          On November 3, 2016, Bank of America filed a “Non-

Hearing Motion for Order Substituting [Wilmington] as Plaintiff

and Real Party in Interest Herein” (Motion to Substitute).               In a

declaration attached to the motion, Bank of America’s counsel

noted that the Mortgage was assigned from Bank of America to
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Wilmington on July 11, 2016.         The circuit court issued an order

granting the Motion to Substitute on November 25, 2016.1

             On July 17, 2017, Wilmington filed a “Motion for

Summary Judgment and for Interlocutory Decree of Foreclosure”

(Motion for Summary Judgment), which the Domingos opposed.                 In

its Motion for Summary Judgment, Wilmington admitted that Bank

of America lost the original Note and “executed a Lost Note

Affidavit establishing [Bank of America] was entitled to enforce

the Note at the time it was lost.”2            The circuit court held a

hearing on the Motion for Summary Judgment on August 8, 2017.

The circuit court denied Wilmington’s Motion for Summary

Judgment because genuine issues of fact existed with respect to

the lost note.3

             On December 1, 2017, Wilmington filed a “Renewed

Motion for Summary Judgment and for Interlocutory Decree of

Foreclosure” (Renewed Motion for Summary Judgment), which the

Domingos opposed.       That same day, the Domingos filed their own

motion for summary judgment, which Wilmington opposed.

1      The Honorable Ronald Ibarra presided.

2     Although the lost note raises several issues, those issues are not
relevant to the disposition of the Domingos’ application for writ of
certiorari.

3      The Honorable Henry T. Nakamoto presided.

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              The circuit court conducted a hearing on Wilmington’s

Renewed Motion for Summary Judgment and the Domingos’ motion for

summary judgment on December 27, 2017.            Then, after Wilmington

and the Domingos filed proposed Findings of Fact and Conclusions

of Law, the circuit court issued “Findings of Fact and

Conclusions of Law; Order Granting Plaintiff’s Renewed Motion

for Summary Judgment and for Interlocutory Decree of Foreclosure

Filed December 1, 2017” on January 29, 2018.4             The circuit court

concluded that Wilmington owned and was entitled to foreclose

the Mortgage, and ordered the Property to be sold at a public

auction.

              Wilmington then purchased the Property at the

foreclosure sale, which the circuit court confirmed.              While the

Domingos’ appeals were pending, Wilmington sold the Property to

BBNY.       The Domingos did not post a supersedeas bond or otherwise

obtain a stay.       The Domingos filed a complaint for wrongful

foreclosure and quiet title on October 1, 2018.

B.     ICA Proceedings

       1.     Opening Brief

              On February 20, 2018, the Domingos filed a notice of

appeal in CAAP-XX-XXXXXXX.5         The Domingos filed an opening brief

4      The Honorable Robert D.S. Kim presided.

5     On September 14, 2018, the Domingos filed a notice of appeal in CAAP-
XX-XXXXXXX. The appeals were consolidated. After the appeals were
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on June 4, 2018.       The Domingos asserted one point of error,

contending that the circuit court erroneously denied “the

Domingos’ motion for summary judgment, and [erred] in granting

summary judgment in favor of [Wilmington] -- who admitted that

it was never in possession of the original promissory note -- in

violation of the clear and unambiguous language of [Hawaiʻi

Revised Statutes (HRS) §] 490:3-309.”

             The Domingos argued that Wilmington admitted it was

not the holder of the Note and that Bank of America lost the

Note before Wilmington purchased the loan.            The Domingos

therefore asserted that Wilmington “could not prove the

existence of the promissory note” or “that it was entitled to

enforce the promissory note.”6

             The Domingos maintained that Wilmington “did not

establish it was entitled to enforce the note” pursuant to HRS

§§ 490:3-301 and 490:3-309.         The Domingos pointed out that

Wilmington alleged that prior-plaintiff Bank of America assigned

the mortgage to Wilmington on June 16, 2016, and the circuit

court subsequently entered an order allowing Wilmington to

substitute as plaintiff.         The Domingos asserted that Wilmington

consolidated, the parties were ordered to “file all documents related to
[both] appeals in CAAP-XX-XXXXXXX.”

6     The Domingos noted that the circuit court denied Wilmington’s earlier
motion for summary judgment filed on July 17, 2017, because Wilmington
admitted Bank of America lost the Note before Wilmington acquired the loan.
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conceded “that Bank of America was never able to transfer the

note to it.”

             According to the Domingos, Wilmington was not entitled

to enforce the Note under HRS § 490:3-301 because Wilmington was

not in possession of the original note when it was lost.                 The

Domingos also contended that Wilmington was not “the holder of

the note, or a nonholder in possession of the note who has the

rights of a holder under [HRS §] 490:3-301.”             Citing to Bank of

Am., N.A. v. Reyes-Toledo, 139 Hawaiʻi 361, 371 n.17, 390 P.3d

1248, 1258 n.17 (2017), the Domingos reiterated that Wilmington

was not entitled to foreclose the mortgage because Wilmington

was not entitled to enforce the Note.7           The Domingos therefore

asserted that the circuit court improperly granted Wilmington’s

Renewed Motion for Summary, and that the Domingos’ motion for

summary judgment should have been granted.

       2.    Answering Brief

             Wilmington filed an answering brief on August 15,

2018.     Wilmington disagreed with the Domingos’ arguments for the

following two reasons.        First, Wilmington argued that “HRS

§ 490:3-309 permits the enforcement of a lost note by an

assignee of the entity who lost the note . . . .”              Second,

7     The Domingos presented other arguments, which are not relevant to
disposition of the Domingos’ application for writ of certiorari, regarding
why Wilmington was not entitled to enforce the lost note and why the circuit
court improperly granted summary judgment in favor of Wilmington.
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Wilmington argued that it was “entitled to enforce the note in

this case pursuant to the doctrine of equitable subrogation, in

equity, and based upon breach of contract.”

       3.    Wilmington’s Motion to Dismiss

             On April 1, 2022, Wilmington filed a “Motion to

Dismiss Defendant-Appellants Isabelo Pacpaco Domingo and Michele

Elanor Domingo’s Appeal Filed February 21, 2018” (Motion to

Dismiss) pursuant to Hawaiʻi Rules of Appellate Procedure Rule 27

(2016).8     Wilmington argued that “the Domingos’ appeal is moot”

because the Property’s title was transferred to a third-party,

good-faith purchaser.

             Citing to Bank of N.Y. Mellon v. R. Onaga, Inc., 140

Hawaiʻi 358, 370, 400 P.3d 559, 367 (2017), Wilmington maintained

that “[a]n Appellant challenging a foreclosure must post a

supersedeas bond or otherwise obtain a stay” and “[a]n Appellant

‘who has failed to obtain a stay by posting a bond, may not

attack a good-faith purchaser’s title to the property purchased

at a judicial sale and confirmed by court order.’”              Wilmington

noted that the Domingos did not post a supersedeas bond or

obtain a stay and that Wilmington purchased the Property at a

judicially supervised sale.         Wilmington then “sold its interest

8     Attached to the Motion to Dismiss were a “Declaration of Selene
Finance, LP,” a “Declaration of BBNY,” a “Declaration of David B. Rosen,” and
“Exhibits A-E.”

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in the Property to” BBNY.         According to Wilmington, BBNY was a

third-party, good-faith purchaser and the Domingos could not

contest “BBNY’s title to the Property.”9

             Wilmington further noted that the Property’s

Certificate of Title was certified in favor of Wilmington before

it sold the property to BBNY, which demonstrated the Domingos

had no interest in the Property and Wilmington was entitled to

sell the Property to BBNY.         According to Wilmington, the fact

that it purchased the Property at the foreclosure sale and

subsequently sold the Property to BBNY further demonstrated that

the Domingos’ appeal was moot.          Wilmington thus reiterated that

there was no effective remedy and the Domingos’ appeal was moot.

             On April 6, 2022, the Domingos filed an opposition to

Wilmington’s Motion to Dismiss.          The Domingos argued that, inter

alia, the ICA “is not a court where evidence can be taken,” and

the case must be remanded to the circuit court for an

evidentiary hearing to determine whether BBNY was a third-party,

good-faith purchaser.        The Domingos further contended that the

ICA’s review on appeal should be based only on the record, and

the sale of the Property to BBNY is not in the record.

9     Wilmington maintained that “title to the Property was recorded in
BBNY’s name on January 4, 2022, in the Land Court.”
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        4.    ICA Amended Summary Disposition Order

              On August 26, 2022, the ICA issued an Amended SDO.10

The ICA dismissed the Domingos’ appeal as moot.              The ICA noted

that the Domingos did not “obtain a supersedeas bond and thus

failed to obtain a stay pending this appeal.”              The ICA also

noted that “it is the appellant’s burden to seek a stay if post-

appeal transactions could render the appeal moot.”

              Citing to City Bank v. Saje Ventures II, 7 Haw. App.

130, 133, 748 P.2d 812, 814 (1988),11 the ICA pointed out that

“[t]he general rule is that the right of a good faith purchaser

to receive property acquired at a judicial sale cannot be

affected by the reversal of an order ratifying the sale where a

supersedeas bond has not been filed” unless “the reversal is

based on jurisdiction grounds or where the purchaser is the

mortgagee [because] he ‘does not free himself from the

underlying dispute to which he is a party.’”12

10    The ICA issued a summary disposition order (SDO) on July 14, 2022,
which dismissed the Domingos’ appeal as moot. On July 25, 2022, the Domingos
filed a motion for reconsideration. On August 26, 2022, the ICA issued an
“Order Granting in Part and Denying in Part Motion for Reconsideration.” The
ICA granted the Domingos’ motion for reconsideration with respect to section
II.B of the SDO. Section II.B of the SDO is not relevant to the Domingos’
application for writ of certiorari.
      The ICA’s SDO and Amended SDO both concluded that the Domingos’ appeal
should be dismissed as moot.

11    Citing to Bank of N.Y. Mellon v. R. Onaga, Inc., 140 Hawaiʻi 358, 367,
400 P.3d 559, 568 (2017), the ICA noted that this court adopted the rule from
City Bank v. Saje Ventures II, 7 Haw. App. 130, 748 P.2d 812 (1988).

12    In City Bank, the ICA “noted there was nothing to indicate the third-
party purchaser was not a good-faith purchaser and there was no stay of the
confirmation order, and thus the appeal was deemed to be moot.”
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           The ICA acknowledged that the instant case was

distinguishable from Onaga because the third-party, good-faith

purchasers in Onaga “obtained the property directly from the

foreclosure sale.”      However, citing to DB Private Wealth Mortg.,

Ltd. v. Bouley, 138 Hawaiʻi 141, 377 P.3d 1059 (App. 2016), the

ICA noted that Wilmington purchased the Property at the

foreclosure sale and subsequently sold it to BBNY, and concluded

that BBNY is a third-party, good-faith purchaser.

           The ICA pointed out the Domingos argued that

Wilmington did not explain how BBNY is a third-party, good-faith

purchaser.    The ICA disagreed and stated:

                 Wilmington has provided, inter alia, a declaration by
           William J. Bymel, manager of BBNY (Bymel Declaration).
           Bymel attests that BBNY entered into an agreement to
           purchase and did purchase the subject property from
           Wilmington. Bymel further attests that BBNY is not
           affiliated with or otherwise related to or connected to
           Wilmington or its loan servicer, Selene Finance, LP, and
           that the price and terms of the purchase were negotiated at
           “arms-length.” The Bymel Declaration indicates that BBNY
           is a good-faith purchaser and the Domingos fail to show
           otherwise. See City Bank, 7 Haw. App. At 133, 748 P.2d at
           814-15 (noting that the purchaser of the property was a
           third-party not involved in the case and “[t]here is
           nothing in the record to indicate that [the third-party
           purchaser] was not a good faith purchaser”); see also
           [Lathrop v. Sakatani, 111 Hawaiʻi 307, 313-14, 141 P.3d 480,
           486-87 (2006)] (noting in an appeal from an order expunging
           a lis pendens that “it is appellant’s burden to seek a stay
           if post-appeal transactions could render the appeal moot”

      The ICA correctly pointed out that “[t]he general rule is that the
right of a good faith purchaser to receive property acquired at a judicial
sale cannot be affected by the reversal of an order ratifying the sale where
a supersedeas bond has not been filed.” However, the Domingos’ failure to
post a supersedeas bond is not relevant on certiorari because mortgagee
Wilmington purchased the Property from the foreclosure sale, which is an
exception to the general rule. In addition, the Domingos explicitly argue
that BBNY was not a third-party, good-faith purchaser. Thus, the ICA should
have temporarily remanded the case to the circuit court to determine whether
BBNY was a third-party, good-faith purchaser.
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              and holding that a completed sale of the subject property
              rendered the appeal moot).

              Citing to Onaga, 140 Hawaiʻi at 367 n.13, 400 P.3d at

568 n.13, the ICA noted that this court stated:

              [w]hen the Ferraras purchased the Property, the circuit
              court had already determined in the consolidated
              proceedings that BONY had a first priority lien on the
              Property. Thus, at the time of the purchase, there would
              not have been an “infirmity in the title” based on Onaga’s
              mortgage.

The ICA pointed out that “[h]ere, when BBNY purchased the

subject property, the Circuit Court had already issued its

foreclosure decree via its Foreclosure Order and Foreclosure

Judgment, and confirmed the foreclosure sale via the

Confirmation Order and Confirmation Judgment.”              The ICA

determined that “at the time BBNY purchased the property from

Wilmington, there was no ‘infirmity in the title’ based on the

Domingos’ mortgage to bar BBNY from purchasing the property in

good-faith.”       The ICA thus concluded that no effective relief

could be granted to the Domingos and dismissed the Domingos’

appeal as moot.13

C.      Application for Writ of Certiorari

              The Domingos filed a timely application for writ of

certiorari on October 7, 2022.           As relevant here,14 the Domingos

13    The Amended SDO was actually an order of dismissal because the ICA
dismissed the Domingos’ appeal after Wilmington filed the Motion to Dismiss,
and because the ICA expressly stated the “appeal is dismissed as moot.”
(Emphasis added.) Thus, the ICA was not required to issue a judgment on
appeal. See Hawaiʻi Rules of Appellate Procedure Rule 36(b)(1) (2016).

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argue that the ICA erroneously “adjudicate[ed] a contested

factual issue based upon new evidence not contained within the

record on appeal.”        The Domingos note that “in dismissing these

appeals, the ICA relied upon its unpublished decision in

[Bouley] as justification for considering Wilmington’s

evidence.”       The Domingos contend that “Bouley is entirely

distinguishable.”        According to the Domingos, “Bouley did not

involve a motion to dismiss an appeal based upon new evidence

presented for the first time in an appellate court.”               The

Domingos argue that “the appellants in Bouley did not challenge

whether the purchaser of the property was a good faith

purchaser.”       The Domingos maintain that “[u]nlike here, the

adjudicative facts in Bouley were contained within the record on

appeal.”

              In addition, citing to HRS § 641-2(b), the Domingos

maintain that new evidence cannot be introduced in an appellate

court and an appeal must be taken on the record.               The Domingos

further contend that “allowing appellate courts to review

evidence submitted after summary judgment has been granted would

overturn well-settled Hawaiʻi law.”           Thus, the Domingos assert

that “the ICA committed grave error” by “dismissing the

14    Because the Domingos correctly argue that the ICA should have
temporarily remanded the case to the circuit court for an evidentiary hearing
to determine if BBNY was a third-party, good-faith purchaser, this memorandum
opinion does not address the Domingos’ additional arguments on certiorari.
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Domingos’ appeals after adjudicating evidence outside the record

introduced for the first time on appeal and finding that BBNY is

a good faith purchaser . . . .”

          On November 14, 2022, Wilmington filed a response to

the Domingos’ application for writ of certiorari.           As relevant

here, Wilmington notes that the Domingos maintain “that the ICA

could not make a determination on whether BBNY was a third-

party, good-faith purchaser, as [the Domingos] assert that this

evidentiary determination must be remanded to the Circuit

Court.”   According to Wilmington, the ICA correctly noted that

“this issue was addressed in Onaga.”        Wilmington contends that

“[t]herein, the third-party good-faith purchasers intervened

while the appeal was pending and moved to dismiss based upon

mootness, and the Hawaii Supreme Court made the determination

that the appeal was moot without a remand to the circuit court.”

          The Domingos filed a reply on November 21, 2022.

                            III.   DISCUSSION

A.   The Domingos correctly argue that the ICA should have
     temporarily remanded the case to the circuit court to
     determine whether BBNY is a third-party, good-faith
     purchaser.

          On certiorari, the Domingos argue that the ICA

improperly adjudicated a disputed “factual issue based upon new

evidence not contained within the record on appeal.”            As

discussed below, HRS § 641-2(b) limits an appellate court’s

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review of a case to the record and thus prohibits new evidence

from being introduced in an appellate court in order to resolve

a disputed issue of fact.          In addition, this court’s decision in

Onaga does not stand for the proposition that an appellate court

can make a factual finding that a party is a third-party, good-

faith purchaser.

        1.    HRS § 641-2(b)

              The Domingos argue that, pursuant to HRS § 641-2(b),

the ICA was not permitted to accept and consider new evidence on

appeal in order to resolve a disputed issue of fact.                HRS § 641-

2(b) (2016) provides:

                    [(b)] Every appeal shall be taken on the record, and
              no new evidence shall be introduced in the supreme court.
              The appellate court may correct any error appearing on the
              record, but need not consider a point that was not
              presented in the trial court in an appropriate manner. No
              judgment, order, or decree shall be reversed, amended, or
              modified for any error or defect, unless the court is of
              the opinion that it has injuriously affected the
              substantial rights of the appellant.

(Emphasis added.)        The plain language of HRS § 641-2(b)

prohibits an appellate court from accepting and considering new

evidence.15      Here, Wilmington filed a Motion to Dismiss and

exhibits before the ICA, which the ICA accepted and considered.

In particular, the ICA noted that “Wilmington submit[ted]

15    Although Hawaiʻi Revised Statutes § 641-2(b) states that “no new
evidence shall be taken in the supreme court,” this court has previously
noted that “no new evidence shall be taken in the [appellate] court.”
Weinberg v. Dickson-Weinberg, 123 Hawaiʻi 68, 79 n.8, 229 P.3d 1133, 1144 n.8
(2010)); see also Garcia v. Fernandez, 146 Hawaiʻi 627, 463 P.3d 1284 at *1
n.4 (App. 2020).
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declarations and exhibits with its motion [to dismiss] to show

that it sold and conveyed the property to BBNY, that a Special

Warranty Deed was recorded on January 4, 2022, and a Corrective

Special Warranty Deed was recorded on March 7, 2022, both in the

Land Court.”       However, the attachments to Wilmington’s Motion to

Dismiss were never presented to the circuit court and were not

part of the record on appeal because Wilmington sold the

Property to BBNY after the Domingos filed the notices of

appeal.16      Thus, the ICA improperly resolved a disputed issue of

fact and dismissed the Domingos’ appeal based on new evidence

not contained within the record on appeal.             Instead, the ICA

should have temporarily remanded the case to the circuit court

for an evidentiary hearing to determine whether BBNY was a

third-party, good-faith purchaser.

        2.    Hawaiʻi case law

              As Wilmington points out,17 the ICA relied on Onaga to

conclude that a remand was not necessary to determine whether

16    The Domingos filed both notices of appeal in 2018, and Wilmington did
not sell the Property to BBNY until around December 2021. Thus, evidence
that BBNY purchased the Property was not part of the record in the instant
case until Wilmington filed the Motion to Dismiss in the ICA.

17    It appears that the Domingos mistakenly note that the ICA relied on DB
Private Wealth Mortg., Ltd. v. Bouley, 138 Hawaiʻi 141, 377 P.3d 1059 (App.
2016) in considering Wilmington’s new evidence on appeal and determining that
BBNY was a third-party, good-faith purchaser. Instead, the ICA relied on
Bouley to determine that BBNY was a third-party, good-faith purchaser despite
purchasing the Property from Wilmington instead of directly from the
foreclosure sale.
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BBNY was a third-party, good-faith purchaser.          In a footnote,

the ICA stated

                The Domingos also argue that the matter must be
          remanded to the Circuit Court for an evidentiary hearing to
          determine whether BBNY is a good-faith purchaser because
          “[t]his Court is not a court where evidence can be taken.”
          However, in Onaga, the Ferraras intervened while the case
          was on appeal and moved to dismiss, asserting the appeal
          was moot because they had purchased the property. 140
          Hawaiʻi at 360, 400 P.3d at 561. The Hawaiʻi Supreme Court
          determined the appeal was moot without remanding to the
          circuit court for fact finding. Id.

However, the ICA’s reliance on Onaga was misplaced.

          In Onaga, the Circuit Court of the First Circuit

granted Bank of New York Mellon’s (BONY) motion for summary

judgment for foreclosure against Onaga.         140 Hawaiʻi at 360-62,

400 P.3d at 560-63.     Onaga filed an initial appeal (CAAP-13-

2287), “challenging the circuit court’s order granting BONY’s

motion for summary judgment.”       Id. at 362, 400 P.3d at 563.        The

Ferraras, who were initially not a party to the foreclosure

action, purchased the property at a public auction, which the

circuit court confirmed.      Id.   Onaga then appealed from the

circuit court’s order confirming the sale of the property to the

Ferraras (CAAP-14-426, the second appeal).         Id.   While the

second appeal was pending, the ICA issued an SDO in Onaga’s

first appeal vacating the circuit court’s order granting BONY’s

motion for summary judgment.        Id. at 363, 400 P.3d at 564.

          The Ferraras then intervened in the second appeal and

filed a motion to dismiss, noting that Onaga failed to obtain a

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stay or post a supersedeas bond pending appeal.          Id.    The ICA

denied that motion and the Ferraras filed a second motion to

dismiss, attaching a certificate of title, commissioner’s deed,

and mortgage executed by the Ferraras and recorded in land

court.   Id.   The ICA took judicial notice of the three

attachments to the Ferraras’ second motion to dismiss, but

concluded Onaga’s appeal was not moot.         Id. at 364, 400 P.3d at

565.

          On certiorari, this court did not directly address the

issue of whether an appellate court can consider new evidence on

appeal to determine if a party is a third-party, good-faith

purchaser, as no party raised that issue.         Id. at 364-70, 400

P.3d at 565-70.    Rather, this court determined that Onaga’s

appeal was moot because the Ferraras’ certificate of title

“conclusively established [their] title to the property.”             Id.

at 368, 400 P.3d at 569.      In addition, this court stated in a

footnote: “[w]hen the Ferraras purchased the Property, the

circuit court had already determined in the consolidated

proceedings that BONY had a first priority lien on the Property.

Thus, at the time of the purchase, there would not have been an

‘infirmity in the title’ based on Onaga’s mortgage.”            Id. at 367

n.13, 400 P.3d at 568 n.13.

          Here, although Wilmington correctly points out that

the Onaga court determined that an appeal was moot without a
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remand to the circuit court, Onaga is distinguishable from this

case for two reasons.

           First, the Ferraras purchased the property at issue in

Onaga from a public auction and the circuit court confirmed the

Ferraras’ purchase of the property.        Id. at 362, 400 P.3d at

563.   It thus appears that the Ferraras’ purchase of the

property was contained within the record on appeal, and no party

contested that the Ferraras purchased the property in good

faith.   See id.   Here, Wilmington purchased the property from

the foreclosure auction and later sold it to BBNY while the

Domingos’ appeal was pending.       In addition, the Domingos

explicitly argued that BBNY did not purchase the property in

good faith.   Thus, in contrast to Onaga, evidence that a third-

party had purchased the property in good faith was presented for

the first time in the ICA when Wilmington filed its Motion to

Dismiss.   Moreover, the Ferraras were the third-party in Onaga

and purchased the property at a foreclosure auction, while

mortgagee Wilmington purchased the property at the foreclosure

auction in the instant case.

           Second, the Ferraras had a certificate of title

demonstrating that they owned the property, which this court

focused on to determine that Onaga’s appeal was moot.            Id. at

364-69, 400 P.3d at 566-70.      Here, the certificate of title

Wilmington presented with its Motion to Dismiss states that
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Wilmington was the owner of the Property.         In contrast to Onaga,

Wilmington did not provide a certificate of title that

conclusively established BBNY had title to the property.            Id. at

368, 400 P.3d at 569.     Thus, the instant case is distinguishable

from Onaga and the ICA mistakenly relied on Onaga to dismiss the

Domingos’ appeal as moot.

                            IV.   CONCLUSION

          For the foregoing reasons, the ICA’s August 26, 2022

Amended SDO is vacated and the case is remanded to the ICA with

instructions to temporarily remand the case to the circuit court

for an evidentiary hearing to determine whether BBNY is a third-

party, good-faith purchaser.

          DATED:    Honolulu, Hawaiʻi, February 15, 2023.

Frederick J. Arensmeyer                   /s/ Mark E. Recktenwald
for petitioners
                                          /s/ Paula A. Nakayama
David B. Rosen
for respondent                            /s/ Sabrina S. McKenna

                                          /s/ Michael D. Wilson

                                          /s/ Todd W. Eddins

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