Court Opinion

ID: 9897185
Source: CourtListenerOpinion
Date Created: 2023-11-14 19:08:05.895092+00
Date Added: 2024-06-11T09:16:35.364141
License: Public Domain

NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS OR THE PACIFIC REPORTER

                                                   Electronically Filed
                                                   Intermediate Court of Appeals
                                                   CAAP-XX-XXXXXXX
                                                   27-OCT-2023
                                                   07:53 AM
                                                   Dkt. 83 SO

                            NO. CAAP-XX-XXXXXXX

                  IN THE INTERMEDIATE COURT OF APPEALS

                          OF THE STATE OF HAWAI#I

           US BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR
       CITIGROUP MORTGAGE LOAN TRUST INC., MORTGAGE-BACKED
            NOTES, SERIES 2005-11, Plaintiff-Appellee,
                                  v.
             HOWARD E. GREENBERG; DENISE C. GREENBERG,
                       Defendants-Appellants,
                                 and
     WELLS FARGO BANK, N.A.; KE ALI#I KAI ASSOCIATION, INC.,
                        Defendants-Appellees,
                                 and
            JOHN and MARY DOES 1-20, DOE PARTNERSHIPS,
         CORPORATIONS or OTHER ENTITIES 1-20, Defendants

          APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUIT
                        (CIVIL NO. 16-1-0554(1))

                    SUMMARY DISPOSITION ORDER
 (By: Hiraoka, Presiding Judge, and Wadsworth and McCullen, JJ.)

          This appeal arises out of a foreclosure action brought
by Plaintiff-Appellee US Bank National Association, as Trustee
for Citigroup Mortgage Loan Trust Inc., Mortgage-Backed Notes,
Series 2005-11 (US Bank) against Defendants-Appellants Howard E.
Greenberg (Howard) and Denise C. Greenberg (Denise)
(collectively, the Greenbergs) and other defendants.              The
Greenbergs appeal from the February 20, 2019 Judgment
(Foreclosure Judgment), entered in favor of US Bank and against
all defendants by the Circuit Court of the Second Circuit
(Circuit Court).1/ The Greenbergs also challenge the Circuit

     1/
             The Honorable Rhonda I.L. Loo presided.
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Court's February 20, 2019 "Findings of Fact; Conclusions of Law;
Order Granting [US Bank's] Motion for Summary Judgment, and for
Interlocutory Decree of Foreclosure Against All Parties Filed
August 29, 2018" (Foreclosure Decree).
          For the reasons discussed below, we conclude that this
appeal must be dismissed as moot.

                               I. Background

          On October 24, 2016, US Bank filed a complaint for
mortgage foreclosure against the Greenbergs and others. On
February 20, 2019, the Circuit Court entered the Foreclosure
Decree and the Foreclosure Judgment, having announced the court's
intention to do so on November 20, 2018. On January 29, 2019,
the Greenbergs filed a notice of appeal from the Foreclosure
Decree and the Foreclosure Judgment, which is considered timely
under Hawai#i Rules of Appellate Procedure (HRAP) Rule 4(a)(2).
The Greenbergs did not post a supersedeas bond or otherwise
obtain a stay pending appeal.2/
          On March 16, 2023, US Bank filed a motion to dismiss
the appeal as moot (Motion to Dismiss), because the Greenbergs
failed to obtain a stay and the property at issue (Property) was
sold to a third-party, good-faith purchaser, Robert Wuthrich
(Wuthrich), at the May 7, 2021 foreclosure sale. US Bank
contended that the Circuit Court confirmed the sale to Wuthridge
in an August 13, 2021 "Order Granting [U.S. Bank's] Motion for
Confirmation of Sale, Distribution of Proceeds, and for Writ of
Ejectment Filed May 25, 2021" (Confirmation Order) and an
August 12, 2021 Judgment (Confirmation Judgment).3/           The Motion to
Dismiss was supported by a Declaration of Counsel, which attached

      2/
            The Greenbergs filed a motion to stay US Bank's foreclosure
proceeding, and the Circuit Court ordered the Greenbergs to post a supersedeas
bond, among other requirements, in order to stay the proceedings. The
Greenbergs did not post a bond.
      3/
            We take judicial notice of the fact that on March 3, 2023, US Bank
filed a notice of appeal from the Confirmation Judgment and certain post-
judgment orders, initiating case no. CAAP-XX-XXXXXXX. That appeal appears to
concern alleged errors in the Confirmation Order in stating amounts owed to US
Bank. In any event, the outcome of that appeal could not affect the closed
sale of the Property to a third-party, good-faith purchaser. See City Bank v.
Saje Ventures II, 7 Haw. App. 130, 133, 748 P.2d 812, 814-15 (1988).

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a "true and correct copy" of a Commissioner's Deed, which appears
to have conveyed the Property to Wuthrich and to have been
recorded in the Bureau of Conveyances of the State of Hawai#i on
September 17, 2021 (Commissioner's Deed).
           Howard filed no response to the Motion to Dismiss.
           On June 13, 2023, Denise filed a memorandum in
opposition to the Motion to Dismiss. Denise argued, among other
things, that "the Purchaser [of the Property] is not an 'innocent
or good faith purchaser[,]" (quoting Bank of New York Mellon v.
R. Onaga, Inc., 140 Hawai#i 358, 367 n.13, 400 P.3d 559, 568 n.13
(2017)), and is instead a "non-bona fide purchaser" (emphasis
omitted), as described in Kondaur Capital Corp. v. Matsuyoshi,
136 Hawai#i 227, 240 n.27, 361 P.3d 454, 467 n.27 (2015).
           On June 30, 2023, this court entered an Order for
Temporary Remand, under which this case was temporarily remanded
to the Circuit Court for an evidentiary hearing to determine
whether Wuthrich is a third-party, good-faith purchaser of the
Property. See Wilmington Sav. Fund Soc'y, FSB v. Domingo, Nos.
SCWC-XX-XXXXXXX and SCWC-XX-XXXXXXX, 2023 WL 2017392 (Haw.
Feb. 15, 2023) (Mem. Op.).
           After an evidentiary hearing on July 25, 2023, the
Circuit Court entered its "Findings of Fact; Conclusions of Law;
Order" on August 4, 2023 (August 4, 2023 FOFs/COLs/Order). The
Circuit Court found and concluded, inter alia, that Wuthrich is a
third-party, good-faith purchaser of the Property; Wuthrich is
not related to or did not conspire with any of the named parties
and is a third party; Wuthrich did not have knowledge or means of
knowledge sufficient to charge him in law with knowledge of any
infirmity in the title of the seller; Wuthrich was the highest
bidder at the foreclosure auction; on August 13, 2021, the
Circuit Court entered the Confirmation Order, confirming the sale
to third-party purchaser Wuthrich; and the Commissioner's Deed
was recorded with the Bureau of Conveyances on September 17,
2021, conveying the Property to Wuthrich.
          On August 10, 2023, the supplemental record on appeal
(SRA) was filed. The SRA includes the August 4, 2023
FOFs/COLs/Order.   Pursuant to the Order for Temporary Remand,

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jurisdiction automatically reverted to this court upon the filing
of the SRA.
          In light of the Greenbergs' failure to obtain a stay
and the Circuit Court's determination that Wuthrich is a
good-faith, third-party purchaser of the Property, on
September 18, 2023, this court issued an Order to Show Cause
(OSC) why this appeal should not be dismissed as moot.
          On October 2, 2023, the Greenbergs filed a response to
the OSC. The Greenbergs "agree with the Circuit Court's findings
entered in its August 4, 2023 [FOFs/COLs/Order ,]" and
acknowledge that "based upon the standard set forth in In re Marn
Family Litig., 136 Hawai#[i] 374, 362 P.3d 807 (Haw. App. 2015),
. . . Wuthrich was a 'good faith purchaser'" of the Property.
The Greenbergs argue, however, that this appeal should not be
dismissed because the public interest exception to the mootness
doctrine applies.

                            II. Discussion

           Under Hawai#i law, mootness is an issue of
justiciability. See State v. Hewitt, 153 Hawai#i 33, 42, 526
P.3d 558, 567 (2023). The mootness doctrine applies "where
events subsequent to the judgment of the trial court have so
affected the relations between the parties that the two
conditions for justiciability relevant on appeal — adverse
interest and effective remedy — have been compromised." Hamilton
ex rel. Lethem v. Lethem, 119 Hawai#i 1, 5, 193 P.3d 839, 843
(2008) (quoting Lathrop v. Sakatani, 111 Hawai#i 307, 312-13, 141
P.3d 480, 485-86 (2006)). In short, "a case is moot if the
reviewing court can no longer grant effective relief."
Kaho#ohanohano v. State, 114 Hawai#i 302, 332, 162 P.3d 696, 726
(2007) (emphasis and brackets omitted) (quoting Kemp v. State of
Hawai#i Child Support Enf't Agency, 111 Hawai#i 367, 385, 141 P.3d
1014, 1032 (2006)).
           In City Bank, this court stated:

                The 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." Leisure

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          Campground & Country Club Ltd. Partnership v. Leisure
          Estates, 280 Md. 220, 223, 372 A.2d 595, 598 (1977). See
          also Citibank, N.A. v. Data Lease Fin. Corp., 645 F.2d 333,
          336 (5th Cir. 1981). The purpose of the rule is to advance
          "the stability and productiveness of judicial sales." 47
          Am. Jur. 2d Judicial Sales § 55 (1969). An exception to the
          rule is where the reversal is based on jurisdictional
          grounds. Id. at § 54. The second exception is where the
          purchaser is the mortgagee since he "does not free himself
          from the underlying dispute to which he is a party." Leisure
          Campground, 280 Md. at 223, 372 A.2d at 598. See also 47
          Am. Jur. 2d Judicial Sales §§ 59–61.

7 Haw. App. at 133, 748 P.2d at 814 (brackets omitted); see also
Lathrop, 111 Hawai#i at 313, 141 P.3d at 486 ("[T]he sale of the
property prevents the appellate court from granting any effective
relief.").
           In Onaga, the Hawai#i Supreme Court expressly adopted
the City Bank rule "for application to Land Court properties as
well as properties administered pursuant to HRS Chapter 502
(Regular System)[,]" and held that "an appellant challenging a
foreclosure must post a supersedeas bond or otherwise obtain a
stay pursuant to [Hawai#i Rules of Civil Procedure (HRCP)] Rule
62 or [HRAP] Rule 8."    Onaga, 140 Hawai#i at 367, 400 P.3d at
568. In sum:

          A party who wishes to stay an order confirming a foreclosure
          sale pending appeal must post a supersedeas bond or
          otherwise obtain a stay pursuant to HRCP Rule 62 or HRAP
          Rule 8. If a stay is not obtained and the property is sold
          to a [good-faith] purchaser, the appeal should be dismissed
          as moot because no effective relief can be granted.

Id. at 370, 400 P.3d at 571. "An innocent or good faith
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."
Id. at 367 n.13, 400 P.3d at 568 n.13 (quoting Ka#u Agribusiness
Co. v. Heirs or Assigns of Ahulau, 105 Hawai#i 182, 193, 95 P.3d
613, 624 (2004)) (internal quotation marks omitted).
          Here, the Circuit Court determined – and the Greenbergs
do not dispute – that Wuthrich was the highest bidder at the
foreclosure auction; the Confirmation Order confirmed the sale to
Wuthrich; the Commissioner's Deed conveyed the Property to
Wuthrich; and Wuthrich is a third-party, good-faith purchaser of

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the Property.4/ Because the August 4, 2023 FOFs are uncontested,
they are binding on appeal. See State v. Rodrigues, 145 Hawai#i
487, 494, 454 P.3d 428, 435 (2019). Indeed, the Greenbergs
expressly acknowledge that Wuthrich is a good-faith purchaser of
the Property.
           In addition, the Greenbergs have not shown that either
exception to the City Bank rule applies. As to the jurisdiction
exception, we take judicial notice that the Greenbergs did not
appeal from the Confirmation Judgment (see supra note 3), and in
this appeal, they have not shown that the Circuit Court lacked
jurisdiction to enter the Confirmation Order or the Confirmation
Judgment.5/ As to the mortgagee purchaser exception, the
Greenbergs do not dispute that Wuthrich is a third-party
purchaser of the Property unrelated to US Bank. Accordingly, the
exceptions to the City Bank rule do not apply, and this appeal
appears to be moot.
          The Hawai#i appellate courts have recognized three
exceptions to the mootness doctrine: (1) capable of repetition,
yet evading review (CRER); (2) public interest; and (3)
collateral consequences. See Lethem, 119 Hawai#i at 5–10, 193
P.3d at 843–48; see also Carmichael v. Bd. of Land & Nat. Res.,
150 Hawai#i 547, 560, 506 P.3d 211, 224 (2022) (noting that the
supreme court "has explicitly recognized" the CRER and public
interest exceptions). In their response to the OSC, the
Greenbergs contend that the public interest exception applies

      4/
            We take judicial notice of the Commissioner's Deed, attached as
"Appendix 'A'" to the March 16, 2023 Declaration of Counsel, as well as the
Confirmation Order, entered in the underlying case. Both the Commissioner's
Deed and the Confirmation Order are referenced in the August 4, 2023
FOFs/COLs/Order, and the Greenbergs do not dispute either document. See HRE
Rule 201; State v. Abdon, 137 Hawai#i 19, 26, 364 P.3d 917, 924 (2016) ("The
most frequent use of judicial notice of ascertainable facts is in noticing the
content of court records." (quoting State v. Akana, 68 Haw. 164, 165, 706 P.2d
1300, 1302 (1985))); In re Thomas H. Gentry Revocable Tr., 138 Hawai #i 158,
171 n.8, 378 P.3d 874, 887 n.8 (2016) (taking judicial notice of a warranty
deed transferring property because the deed was a matter of public record and
easily verifiable); U.S. Bank Trust, N.A. as Trustee for LSF9 Master
Participation Trust v. Ass'n of Apartment Owners of Waikoloa Hills Condominium
Phase I, 150 Hawai#i 573, 584 n.12, 506 P.3d 869, 880 n.12 (App. 2022) (taking
judicial notice of commissioner's apartment deed recorded in the Bureau of
Conveyances).
      5/
            Nor have the Greenbergs shown that the Circuit Court lacked
jurisdiction to enter the Foreclosure Decree or the Foreclosure Judgment.

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here. They argue that "[e]ven though this is a private mortgage
foreclosure, . . . the issue presented in . . . this appeal[,]"
i.e., "whether . . . US Bank . . . provided documentary evidence
that [it] possessed the Note at the time the Complaint was
filed[,] is an issue that will recur in the future" following the
supreme court's decision in Deutsche Bank National Trust Co. v.
Yata, 152 Hawai#i 322, 526 P.3d 299 (2023).
          In determining whether the public interest exception
applies, the court considers: "(1) the public or private nature
of the question presented, (2) the desirability of an
authoritative determination for future guidance of public
officers, and (3) the likelihood of future recurrence of the
question." Carmichael, 150 Hawai#i at 561, 506 P.3d at 225
(quoting Kaleikini v. Thielen, 124 Hawai#i 1, 12–13, 237 P.3d
1067, 1078–79 (2010)). Here, we conclude that the public
interest exception does not apply to this dispute arising out of
a private mortgage contract that does not involve the government,
does not seek an authoritative determination for future guidance
of public officers, and does not raise issues that are likely to
recur unless an appellant in this situation fails to obtain a
supersedeas bond or stay of the appeal. See Central Pacific Bank
v. Aikona Maui Prop., LLC, No. CAAP-XX-XXXXXXX, 2013 WL 6231719,
at *2 (Haw. App. Nov. 29, 2013) (Ord.); Central Pacific Bank v.
Ancheta, No. CAAP-XX-XXXXXXX, 2016 WL 765083, at *3 (Haw. App.
Feb. 25, 2016) (SDO).6/
          It is undisputed that the Greenbergs failed to post a
supersedeas bond or otherwise obtain a stay, and Wuthrich
lawfully purchased the Property in good faith. In these
circumstances, no effective relief can be granted to the
Greenbergs with respect to their appeal from the Foreclosure
Judgment. Accordingly, this appeal must be dismissed as moot.
See Onaga, 140 Hawai#i at 370, 400 P.3d at 571.

       6/
            We further note that the CRER and collateral consequences
exceptions do not apply here, because this case would not have evaded review,
and mootness could have been avoided, by the timely posting of a supersedeas
bond. See Aikona Maui Prop., 2013 WL 6231719, at *2; Ancheta, 2016 WL 765083,
at *3.

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                           III. Conclusion

           For the reasons discussed above, we dismiss this appeal
as moot.

           DATED:   Honolulu, Hawai#i, October 27, 2023.

On the briefs:
                                      /s/ Keith K. Hiraoka
Matthew K. Yoshida                    Presiding Judge
for Defendants-Appellants.

Daniel K. Kikawa                      /s/ Clyde J. Wadsworth
(Leu Okuda & Doi)                     Associate Judge
for Plaintiff-Appellee.

                                      /s/ Sonja M.P. McCullen
                                      Associate Judge

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