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Drake v. Gaspar

Intermediate Court of Appeals of Hawaii

November 12, 2013

DOUGLAS H. DRAKE, Plaintiff-Appellee/Cross-Appellee,
v.
EARL K. GASPAR AND DIANA DANMEYER-GASPAR, Defendants-Appellants/Cross-Appellees, and UNITED STATES OF AMERICA (DEPARTMENT OF THE TREASURY, INTERNAL REVENUE SERVICE), MAKALEI ESTATES COMMUNITY ASSOCIATION, DIANE ELLIS, Defendants-Appellees/Cross-Appellees, FRANKLIN PAUL EMBERNANTE, an EILANI PAULINE EMBERNANTE, Defendants-Appellees/Cross-Appellants and DOUGLAS H. DRAKE, Plaintiff-Appellee,
v.
FRANKLIN PAUL EMBERNANTE, individually and as Trustee of the Franklin Paul Embernante Trust dated February 27, 2006 and LEILANI PAULINE EMBERNANTE, individually and as Trustee of the Leilani Pauline Embernante Trust dated February 27, 2006, Defendants-Appellants and UNITED STATES OF AMERICA (DEPARTMENT OF THE TREASURY, INTERNAL REVENUE SERVICE), EARL K. GASPAR, AND DIANA DANMEYER-GASPAR, MAKALEI ESTATES COMMUNITY ASSOCIATION; DIANE ELLIS, Defendants-Appellees

NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER

APPEAL FROM THE CIRCUIT COURT OF THE THIRD CIRCUIT (CIVIL NO. 10-1-0067K).

Franklin Paul Embernate and Leilani Pauline Embernate, Pro Se Defendants-Appellees/Appellants/Cross-Appellants.

Douglas H. Drake, Pro Se Plaintiff-Appellee/Cross-Appellee.

Nakamura, C.J., Reifurth and Ginoza, JJ.

MEMORANDUM OPINION

This case represents the consolidation of two separately-brought appeals. In appellate case number CAAP-10-0000019, Defendants-Appellants Earl K. Gaspar and Diana Danmeyer-Gaspar ("Gaspars") appealed from the August 17, 2010 Order Granting Plaintiff's Motion for Summary Judgment ("Order"), filed in the Circuit Court of the Third Circuit ("Circuit Court")[1] In appellate case number CAAP-10-0000168, Defendants-Appellants Franklin P. Embernate and Leilani P. Embernate ("Embernates"), who are also parties in their trustee capacities, see infra, appealed from the October 20, 2010 Findings of Fact, Conclusions of Law and Interlocutory Judgment of Foreclosure and Judgment for Specific Performance on Complaint Filed February 22, 2010 ("Judgment"), filed in the Circuit Court.[2]

On January 27, 2011, this court, upon motion by Plaintiff-Appellee Douglas H. Drake ("Drake"), consolidated both cases under appellate case number CAAP-10-0000019, and directed the Embernates to designate themselves as cross-appellants and to file their opening brief as cross-appellants under that case number. On June 20, 2011, this court dismissed the Gaspars' appeal from the Order for want of prosecution, while noting that the Embernates' now designated cross-appeal from the Judgment remained pending.

On cross-appeal, the Embernates contend that the Circuit Court erred (1) "in adjudicating [Drake's] right to a deficiency judgment against [the Embernates, individually] when the trial court entered [its Judgment], " and (2) "in the inclusion of [Finding of Fact paragraph 15]." We vacate that part of the Judgment declaring the Embernates liable for a deficiency judgment and remand to the Circuit Court for proceedings consistent with this opinion.

I. BACKGROUND

A. The Parties' Arrangement

The Embernates, in their capacities as trustees of their respective individual trusts ("Embernates-Trustees"), and the Gaspars sought to obtain financing to construct a home for the purpose of selling it for a profit. Drake provided the financing via a promissory note in the amount of $500, 000 ("Mortgage Note"), backed by a mortgage ("Mortgage") issued by the Embernates-Trustees and the Gaspars ("Mortgagors"), on property located at 72-1147 Ho'opai Way, Kailua-Kona, HI 96740 (the "Property").[3] The Mortgage Note, signed by the Mortgagors, specified that any borrower-trustee personally guaranteed any obligations arising under the note.

The arrangement did not go as planned. The Property was developed and apparently sale-ready but the Embernates could not find a buyer. The Mortgagors defaulted on the Mortgage, and Drake sought to foreclose.

B. The Complaint

On February 22, 2010, Drake filed his complaint to foreclose on the Mortgage ("Complaint") against, among others, the Gaspars, the Embernates, and the Embernates-Trustees. He alleged that the Mortgagors had breached the Mortgage and Mortgage Note, that he was thereby entitled to foreclosure and an order of sale of the Property, and that he should be awarded all sums ...


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