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State of Hawaii v. Mauna Ziona Church

August 31, 2012

STATE OF HAWAII, BY ITS ATTORNEY GENERAL DAVID M. LOUIE,
PLAINTIFF-APPELLEE,
v.
MAUNA ZIONA CHURCH, A HAWAII NON-PROFIT CORPORATION,
DEFENDANT-APPELLANT



APPEAL FROM THE DISTRICT COURT OF THE THIRD CIRCUIT (Kona Division) (CIVIL NO. 3RC11-1-112K)

NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER

SUMMARY DISPOSITION ORDER

(By: Nakamura, Chief Judge, and Fujise and Leonard, JJ.)

Defendant-Appellant Mauna Ziona Church (MZC), a Hawaii non-profit corporation, appeals from the "Final Judgment" filed on September 30, 2011, in the District Court of the Third Circuit (District Court).*fn1 Plaintiff-Appellee State of Hawaii (State) filed a summary possession action in District Court against MZC. The District Court entered default on the pleadings against MZC, based on MZC's failure to secure legal counsel to represent it, and issued a Writ of Possession and Judgment for Possession in favor of the State. After MZC obtained legal counsel, the District Court denied MZC's request to set aside the entry of default and MZC's motion to dismiss for lack of jurisdiction.

On appeal, MZC argues: (1) the District Court erred in denying its request to set aside the entry of default; and (2) the District Court lacked subject matter jurisdiction under HRS § 604-5 (Supp. 2011) because MZC raised a question of title regarding the subject property. As explained below, we conclude that the District Court abused its discretion in denying MZC's request to set aside the entry of default and that MZC raised a sufficient question of title to divest the District Court of jurisdiction. Accordingly, we vacate the Final Judgment and remand the case with instructions that it be dismissed for lack of jurisdiction.

I.

On February 6, 2011, the State filed a "Complaint for

Summary Possession" (Complaint), in which it sought possession of the premises described as the "Former Kalaoa School Lot" (subject property). The Complaint alleged, among other things, that: (1) the State was the lessor under a thirty-five year lease issued to Mauna Ziona Congregational Church in 1978; (2) MZC, a different entity, had occupied the subject property and paid the required nominal annual rent of $100 since 1978; (3) in 2008, the State discovered that MZC was not in compliance with the lease provision requiring the lessee to maintain liability insurance; (4) the lease was cancelled effective October 24, 2008, based on MZC's failure to cure this default; (5) MZC violated other provisions of the lease by failing to maintain fire insurance, using the subject property as a residence, and subletting the subject property without permission by the State. On the return date for the Complaint, the Reverend Kahu Norman A. Keanaaina (Reverend Keanaaina) appeared on behalf of MZC. The District Court informed Reverend Keanaaina that because MZC was a corporation, it needed to obtain counsel to appear in the case. After several continuances, the District Court entered a default on the pleadings against MZC based on its failure to secure counsel. Prior to the State's execution of the Writ of

Possession, MZC secured counsel and filed motions requesting that the default be set aside and the case be dismissed for lack of subject matter jurisdiction. The District Court denied these motions and entered its Final Judgment. After MZC filed a notice of appeal, it requested that the District Court issue findings of fact and conclusions of law. On December 9, 2011, the District Court entered its "Findings of Facts [(FsOF)]; Conclusions of Law [(CsOL)]; Judgment and Order."

II.

We resolve the issues raised by MZC on appeal as follows:

A.

MZC argues that the District Court erred in denying its request to set aside the entry of default. We agree. 1.

The appellate courts review the denial of a motion to set aside default for abuse of discretion. County of Hawaii v. Ala Loop Homeowners, 123 Hawaii 391, 423, 235 P.3d 1103, 1135 (2010). Defaults and default judgments are disfavored and "any doubt should be resolved in favor of the party seeking relief, so that, in the interests of justice, there can be a full ...


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