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Kondaur Capital Corp. v. Matsuyoshi

Supreme Court of Hawai'i

October 23, 2014

KONDAUR CAPITAL CORPORATION, Petitioner/Plaintiff-Appellee,
v.
LEIGH MATSUYOSHI, Respondent/Defendant-Appellant

CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS. CAAP-12-0000867; CIV. NO. 12-1-0185.

Michael C. Bird and Thomas J. Berger for petitioner.

Joe P. Moss for respondent.

RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK AND WILSON, JJ.

OPINION

POLLACK, J.

Kondaur Capital Corporation (Kondaur) seeks review of the Intermediate Court of Appeals' (ICA) Judgment on Appeal, filed April 4, 2014, which vacated the Circuit Court of the Fifth Circuit's (circuit court) order granting Kondaur's motion for summary judgment, and remanded the case to the circuit court for further proceedings. We conclude that the ICA erred in relying upon a post-judgment motion as a basis to find disputed facts with regard to a motion for summary judgment. We therefore vacate the ICA's Judgment on Appeal, and remand the case to the ICA for a review of the other issues raised by the parties that were not considered by the ICA in its resolution of the appeal in this case.

I. Background

A.

This action arose out of a property title dispute between Leigh Matsuyoshi, who purchased the property in Lihu'e, Kaua'i (Property) in June of 2007 and Kondaur, which later acquired a quitclaim deed to the Property following a judicial foreclosure.

Matsuyoshi bought the Property using a home loan she obtained from Resmae Mortgage Corporation. The Mortgage included an acceleration clause, which provided Matsuyoshi would be given at least 30 days to cure a default of payment. The notary section of the Mortgage states that Matsuyoshi personally appeared before a notary public of the State of Hawai'i, on March 26, 2007, in the City and County of Honolulu.

Page 549

[134 Hawai'i 343] Six weeks prior to Matsuyoshi buying the property, RMC Mortgage Holdings LLC[1] filed a voluntary petition for Chapter 11 bankruptcy in the United States Bankruptcy Court of the District of Delaware (Bankruptcy Court). On June 5, 2007, the Bankruptcy Court issued an Order confirming the second amended plan of reorganization (Bankruptcy Order). The Bankruptcy Order affirmed that the " Reorganized ResMAE" could continue to exist " as a corporation [and] may operate its business and may use, acquire, and dispose of property . . . without supervision or approval of the Bankruptcy Court." The Bankruptcy Order further affirmed that all transfers of the property to the reorganized Resmae Mortgage Corporation were " legal, valid, and effective," and " shall vest Reorganized ResMAE" with " good title to such property, free and clear of all Claims, liens, charges other encumbrances, and interest[.]"

In May 2008, an attorney representing Resmae Liquidation Properties (Resmae) sent Matsuyoshi a Notice of Intent to Foreclose stating Matsuyoshi's loan was in default and that failure to pay the amount due by June 20, 2008 would result in the loan being accelerated and the Property being referred for foreclosure action. Subsequently, in October 2008, Matuyoshi received personal service of a Notice of Mortgagee's Non-Judicial Foreclosure Under Power of Sale stating that Resmae Liquidation Services would sell the Property at an auction held in Honolulu on November 13, 2008.

The sale proceeded as scheduled in Honolulu, and the Mortgagee's Affidavit of Foreclosure Under Power of Sale (Affidavit of Sale) was certified by Resmae's attorney and recorded on November 17, 2008. The Affidavit of Sale stated that Resmae was the highest bidder at the sale for the purchase price of $416,900.20. The Affidavit of Sale further stated that the default remained uncured at the time of sale.

On January 14, 2009, Resmae executed a quitclaim deed conveying the Property to itself (Resmae's quitclaim deed), and Resmae subsequently recorded the deed on January 22, 2009. Resmae then sought possession of the property from Matsuyoshi through an action for ejectment in the circuit court filed on February 3, 2009. On October 15, 2009, the action for ejectment was dismissed pursuant to " Rule 12(q)" and no final judgment was entered in the record.

On July 14, 2010, Resmae conveyed the Property to Kondaur by a quitclaim deed (Quitclaim Deed).[2] Kondaur did not record its Quitclaim Deed until February 24, 2011, and in the period of time between executing and recording the Quitclaim Deed, on January 14, 2011, Resmae filed an action for ejectment against Matsuyoshi in the United States District Court for the District of Hawai'i, which was later dismissed by stipulation of the parties on February 12, 2011. Following the February 24, 2011 recording, Kondaur gave Matsuyoshi notice to vacate. After Matsuyoshi refused to leave, Kondaur filed the underlying action in this case in the circuit court.

B.

Kondaur's complaint (Complaint), filed on June 5, 2012, against Matsuyoshi, requested a judgment for immediate and exclusive possession of the Property and a writ of possession. The Complaint stated that Kondaur had " acquired title and current ownership of the Property through a Quitclaim Deed recorded on February 24, 2011." The Complaint was served on Matsuyoshi on June 9, 2012.

On June 27, 2012, Kondaur filed a Motion for Summary Judgment Against All Defendants on Complaint filed June 5, 2012 (MSJ). Kondaur requested that the circuit court grant the MSJ and enter a judgment for possession of the Property for Kondaur and

Page 550

[134 Hawai'i 344] against Matsuyoshi, issue a writ of possession, enter the judgment as final, and set a time and date for a trial on damages. The MSJ was supported by a declaration of Ann Pham, who stated that she was an asset manager for Kondaur and a custodian of Kondaur's records. Pham declared that according to regular business records maintained by Kondaur, Kondaur owned the Property pursuant to its Quitclaim Deed, a true and accurate copy of which was attached to the MSJ. Pham also declared that Kondaur had given Matsuyoshi notice to vacate, and Matsuyoshi " has so far continued to reside at the Property and has otherwise failed or refused to leave." Attached to the MSJ were Exhibits A to G.[3]

In its memorandum in support of the MSJ, Kondaur asserted it had undisputed title to the Property and Matsuyoshi was residing on the property as a trespasser. Kondaur argued that the Quitclaim Deed was prima facie evidence of Resmae's conveyance of the property to Kondaur, and thus Kondaur contended it was the owner of the Property and was entitled to immediate and exclusive possession.

Kondaur maintained any challenge to its title was meritless because the Bankruptcy Order " sets forth that the property of Resmae, as a debtor-in-possession, was conveyed to the Liquidating Trust[.]" Kondaur argued the Bankruptcy Order " sets forth a Permanent Injunction that bars any claims against the Property that is based on factual allegations arising prior to June 15, 2007." Kondaur also contended the Affidavit of Sale was evidence that the power of sale was duly executed. Kondaur maintained the foreclosure sale extinguished Matsuyoshi's interest in the property, and " Resmae subsequently conveyed the Property to Kondaur by virtue of the Quitclaim Deed dated July 14, 2010."

Kondaur argued further that any challenges to the foreclosure or subsequent transfers of the case should have been brought in the Bankruptcy Court. Kondaur maintained that because Matsuyoshi failed to cure her default in payments prior to the sale, " she is without standing to contest the validity of the foreclosure conducted by Resmae and the superior title to the Property subsequently acquired by Kondaur." Kondaur concluded Matsuyoshi had no interest in the Property, she was required to vacate the Property immediately, and the court should issue a judgment for possession and writ of ejectment.

On July 6, 2012, Kondaur requested an entry of default against Matsuyoshi pursuant to Hawai'i Rules of Civil Procedure (HRCP) Rule 55(a) " for her failure to answer or otherwise respond to [Kondaur's] Complaint." On the same day, an entry of default against Matsuyoshi was filed in the circuit court by the clerk of the court pursuant to HRCP Rule 55(a).

Page 551

[134 Hawai'i 345] On July 26, 2012, at the first hearing scheduled for the MSJ, Matsuyoshi requested a continuance to seek legal counsel. Kondaur argued that Matsuyoshi was in fact represented by counsel until May or June of 2012. Matsuyoshi responded that she " had an attorney up until last week" but that he " informed [her] last week that he was not able to take the case."

Kondaur also argued that Matsuyoshi could not oppose the MSJ until she moved to set aside the default against her. Kondaur requested that the court rule on the MSJ that day. The court considered Kondaur's argument as an objection to the request for continuance. The court continued the hearing over Kondaur's objection in order to give Matsuyoshi time to seek counsel.

On August 16, 2012, Matsuyoshi filed, through counsel, her opposition to the MSJ, which was supported by a memorandum, declaration of counsel, and Exhibits 1-4 (Opposition).[4] Matsuyoshi acknowledged that she " fell behind on her mortgage payments." Concerning the transfer from Resmae to Kondaur, Matsuyoshi stated that the executives who signed the Quitclaim Deed on behalf of Resmae were not authorized to execute the instrument. Matsuyoshi noted that the limited power of attorney attached to the Quitclaim Deed designated an executive who did not in fact sign the Quitclaim Deed. Matsuyoshi noted that Resmae filed another ejectment action in federal district court, which was dismissed. Matsuyoshi argued that she did not answer the Complaint out of confusion due to the prior two actions filed against her.

Matsuyoshi maintained that technical violations of the foreclosure statutes also voided the foreclosure sale. Matsuyoshi argued HRS § 667-5 required " that all notices and acts required by the power contained in the mortgage shall be complied with." She maintained that Resmae's foreclosure against her was void for several reasons related to the adequacy of the notice.

Additionally, Matsuyoshi contended that " only the person who actually conducted the foreclosure can make [an] affidavit" of foreclosure, and it was " unclear [from the affidavit of Resmae's attorney] whether it was [their attorney] or 'her' designated representative [that] held the foreclosure." Matsuyoshi noted that Kondaur stood in privity of contract with Resmae based on the alleged Quitclaim Deed from Resmae to Kondaur. Matsuyoshi further argued that Resmae's assignment of rights to Kondaur was invalid because the Quitclaim Deed only attached a limited power of attorney for an executive who did not in fact sign the deed. ...


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