CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS. CAAP-12-0000867; CIVIL NO. 12-1-0185.
James J. Bickerton, Bridget G. Morgan and, Joe Moss, for petitioner.
Michael C. Bird and Thomas J. Berger, for respondent.
RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.
[136 Hawai'i 229] Richard W. Pollack,
">In Ulrich v. Security Investment Co., 35 Haw. 158 (Haw. Terr. 1939), we held that a personal property mortgagee seeking to enforce a non-judicial foreclosure sale bears the burden of establishing that the sale was conducted in a manner that is fair, reasonably diligent, and in good faith and that an adequate price was procured for the property. In the years after Ulrich was decided, the legislature made several amendments to the non-judicial foreclosure statute, and the viability of Ulrich in light of these amendments, as well as Ulrich's applicability to real property non-judicial foreclosures, has recently been questioned, with federal courts in Hawai'i reaching conflicting results.
We hold that the duties set forth in Ulrich remain viable law and are applicable to non-judicial foreclosures of real property mortgages. Additionally, in situations where a mortgagee acts as both the seller and the purchaser of the subject property at a non-judicial foreclosure sale, that mortgagee, or its quitclaim transferee or non-bona fide successor, bears the burden of proving compliance with the requirements of Ulrich.
[136 Hawai'i 230]
I. FACTUAL BACKGROUND/PROCEDURAL HISTORY
A. The Underlying Mortgage and Related Proceedings
In February 2007, Jun Matsuyoshi and others conveyed a residential property located in Lī hu'e, Kaua'i (Property) by warranty deed to Leigh Matsuyoshi (Matsuyoshi). The following month, Matsuyoshi signed a mortgage on the Property (Mortgage) and a promissory note (Note) promising to pay $500,000 to Resmae Mortgage Corporation (Resmae) in return for a loan that Matsuyoshi had received.
Resmae recorded the Mortgage with the Bureau of Conveyances (Bureau). The Mortgage listed Matsuyoshi as the borrower of $500,000, and it included an acceleration and power of sale clause, which provided, among other things, that Matsuyoshi would be given at least 30 days to cure a default of payment.
In May 2008, Lester K.M. Leu (Leu), an attorney authorized to act on behalf of Resmae Liquidation Properties LLC (RLP), sent a Notice of Intent to Foreclose to Matsuyoshi (notice of default). The notice of default stated that Matsuyoshi's loan was in default because scheduled payments had not been made since April 1, 2008, and that the amount due was $9,704.34. The notice of default stated further that Matsuyoshi must pay this amount by June 20, 2008, or the loan would be accelerated and the Property referred for foreclosure action.
In August 2008, an assignment of the Mortgage from Resmae to RLP was recorded. Matsuyoshi was personally served with a Notice of Mortgagee's Non-Judicial Foreclosure Under Power of Sale (Notice of Sale). The Notice of Sale stated that RLP intended to sell the Property at an auction to be held in Honolulu on November 13, 2008. The Notice of Sale also stated that the Property would be sold " AS IS" and " WHERE IS."
Thereafter, the Property was auctioned off at a foreclosure sale in Honolulu. In the Mortgagee's Affidavit of Foreclosure Under Power of Sale (Affidavit of Sale), Leu certified that in compliance with Hawai'i Revised Statutes (HRS) § § 667-5 through 667-10 and the Note and Mortgage, Mortgagee or its representative, or Affiant, conducted the public auction sale on November 13, 2008, " at the date, time, and place set forth in the Notice and under the conditions stated therein, and Affiant, or her representative, declared the Property sold to [RLP] for $416,900.20, which was the highest bid at said sale." Leu stated that the default remained uncured at the time of sale. On November 17, 2008, the Affidavit of Sale was recorded in the Bureau.
In January 2009, RLP executed a quitclaim deed, which was subsequently recorded, conveying the Property to itself. In July 2010, a quitclaim deed was executed by RLP conveying the Property to Kondaur Capital Corporation (Kondaur). The quitclaim deed expressly stated that " [n]otwithstanding anything in this deed to the contrary, [RLP] makes no representations, warranties or promises regarding any claims by LEIGH MATSUYOSHI, her heirs, successors or assigns." Kondaur recorded its quitclaim deed the following year, in February 2011. Thereafter, Kondaur gave Matsuyoshi notice to
[136 Hawai'i 231] vacate; Matsuyoshi did not leave the Property.
B. Kondaur's Ejectment Action Against Matsuyoshi
On June 5, 2012, Kondaur filed a complaint for possession of the Property against Matsuyoshi in the Circuit Court of the Fifth Circuit (circuit court). The complaint 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."
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 against Matsuyoshi, issue a Writ of Possession, enter the judgment as final, and set a time and date for a trial on damages. A declaration by Ann Pham (Pham) attached to the MSJ 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 Kondaur's quitclaim deed. 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." Also attached to the MSJ were several exhibits.
In its memorandum in support of the MSJ, Kondaur asserted that it had undisputed title to the Property and that Matsuyoshi was residing on the Property as a trespasser. Kondaur argued that its quitclaim deed was prima facie evidence of the conveyance to it from RLP, and that, therefore, it was the owner of the Property and entitled to immediate and exclusive possession.
Kondaur also contended that the Affidavit of Sale was evidence that the power of sale was duly executed. Kondaur maintained that the foreclosure sale extinguished Matsuyoshi's interest in the Property and that RLP " subsequently conveyed the Property to Kondaur by virtue of the Quitclaim Deed dated July 14, 2010."
Kondaur asserted 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 [RLP] and the superior title to the Property subsequently acquired by Kondaur." Kondaur concluded that Matsuyoshi had no interest in the Property, Matsuyoshi must vacate it immediately, and a judgment for possession and writ of ejectment should be issued.
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. Default was entered by the clerk of the circuit court on the same day.
On August 15, 2012, Matsuyoshi filed, through counsel, her opposition to the MSJ, which was later amended on August 21, 2012. Matsuyoshi acknowledged that she " fell behind on her mortgage payments," but she maintained that technical violations of HRS § 667-5 voided the foreclosure sale. Matsuyoshi argued " that all notices and acts required by the power contained in the [M]ortgage shall be complied with." According to Matsuyoshi, RLP's foreclosure against her was void because RLP did not comply with
[136 Hawai'i 232] the notice requirement under the Mortgage and because the auction sale was conducted on O'ahu rather than on Kaua'i, the county where the Property is located. Finally, Matsuyoshi noted that Kondaur stood in privity of contract with RLP based on the quitclaim deed that Kondaur received from RLP.
In its reply, Kondaur contended that Matsuyoshi's " failure . . . to establish by admissible evidence that the Note and Mortgage were not in default at the time of the non-judicial foreclosure is dispositive." Kondaur maintained that Matsuyoshi presented no admissible evidence showing that she did not receive notice of her default under the terms of the Mortgage.
At the hearing on the MSJ, Matsuyoshi argued that the foreclosure sale violated the foreclosure statute because it was carried out on O'ahu when the Property was on Kaua'i. Matsuyoshi contended that the sale on O'ahu precluded her from exercising her right to redeem the Property. Matsuyoshi also emphasized that RLP " was the only bidder" at the foreclosure sale.
Kondaur replied that, in 2008, " there was no prohibition in . . . [HRS] Chapter 667 . . . that prohibited a lender from doing a foreclosure sale [for a property located on Kaua'i] on the island of Oahu." According to Kondaur, there was no prejudice because the purpose of a judicial sale is to get the highest price possible, and " the market on Oahu is obviously much bigger than the market on Kauai in terms of prospective purchasers." 
At the conclusion of the hearing, the circuit court granted Kondaur's MSJ. On September 18, 2012, the circuit court entered its " Order Granting [Kondaur's] [MSJ]" (MSJ Order), which included an order for a writ of possession to issue. The circuit court also issued its judgment (MSJ Judgment). On September 20, 2012, the circuit court issued a writ of possession.
After the MSJ Judgment was rendered, Matsuyoshi submitted a declaration averring that she was " absolutely positive that the [M]ortgage . . . was not signed by [her] before a notary public" and that the notarization on the Mortgage is false. Further, Matsuyoshi claimed that the mortgage documents were not explained to her, nor was she given copies of the documents that she signed. Finally, Matsuyoshi declared that she did not sign the mortgage application and that the amounts listed as her income in the application are false. Matsuyoshi filed post-judgment motions, including a Motion to Set Aside the MSJ Judgment and a Motion to Set Aside Entry of Default pursuant to HRCP Rule 55(c). Matsuyoshi contended that the entry of default should be set aside because her post-judgment declaration presented a meritorious defense to Kondaur's action. The circuit court denied the Motion to Set Aside Entry of Default.
Matsuyoshi timely filed a Notice of Appeal from the MSJ Judgment, but she did not appeal from the circuit court's order denying her post-judgment motions.
A. Initial Disposition of the Intermediate Court of Appeals
Matsuyoshi's Opening Brief maintained that the circuit court erred in granting Kondaur's MSJ. Matsuyoshi argued that where the mortgagee is also the purchaser of a foreclosed property, the mortgagee should be held to the strictest standard of good faith and diligence. Consistent with these requirements, Matsuyoshi reasoned that the mortgagee has a duty " to obtain for the [P]roperty as large a price as possible." Matsuyoshi contended that " [t]he sale of property located on Kaua'i at the front entrance to the First Circuit Courthouse did not show reasonable diligence and good faith in an endeavor to obtain the best possible
[136 Hawai'i 233] prices [sic] consistent with such diligence and good faith."
In its Answering Brief, Kondaur argued that, because " Matsuyoshi never set aside the default that was entered against her," she was " barred" from challenging Kondaur's MSJ or defending the complaint. Kondaur recognized that Matsuyoshi did eventually file a motion to set aside the default, but argued that Matsuyoshi " failed to present any discernible argument to the [circuit court] that her default should be set aside" and that, therefore, the Intermediate Court of Appeals (ICA) should not consider her untimely arguments.
Kondaur further contended that the circuit court properly granted its MSJ because it presented undisputed evidence of title to the Property and that Matsuyoshi was thus residing there unlawfully and without permission. Kondaur maintained that Matsuyoshi's contention that the foreclosure sale was void because it occurred on O'ahu must fail because at the time of the sale, Hawaii's foreclosure statute did not prohibit the sale of the Property on O'ahu, the power of sale contained in the Mortgage did not prohibit the lender from conducting the auction on O'ahu, and " the decision to have the public auction on O'ahu was consistent with the stated purposes of the . . . foreclosure statute." Kondaur additionally contended that conducting the auction on O'ahu was reasonable because O'ahu was a larger market, Matsuyoshi failed to establish that she was prejudiced by the occurrence of the foreclosure sale on O'ahu, and Matsuyoshi presented no evidence that she intended to or could have bid at the auction.
In her Reply Brief, Matsuyoshi maintained that, regardless of the effect of the entry of default, " the MSJ should not have been granted because the material facts did not show that Kondaur was entitled to judgment as a matter of law." Matsuyoshi argued that she was not bound by the recitations in Kondaur's quitclaim deed because she was not a party to the conveyance. Further, Matsuyoshi contended that Kondaur's quitclaim deed " establishes only that Kondaur obtained whatever interest, if any, that [RLP] . . . had in the [P]roperty."
Concerning the sale on O'ahu, Matsuyoshi asserted that merely following the foreclosure statute was not sufficient and that the sale on O'ahu was unreasonable. Matsuyoshi argued that she did not need to demonstrate that she was prejudiced by the sale on O'ahu and contended that this would be impossible to prove without a comparable sale occurring on Kaua'i.
On March 7, 2014, the ICA issued its Memorandum Opinion (Opinion). The ICA concluded that because Matsuyoshi " raise[d] genuine issues as to the validity of the Mortgage" in her post-judgment declaration, summary judgment for Kondaur was erroneously granted. The ICA also held that as a consequence of the default, it could consider whether the factual allegations in Kondaur's complaint were " well-pled," and the ICA concluded that they were not. The ICA declined " to reach further issues raised by the parties," vacated the MSJ Judgment, and remanded the case for proceedings consistent with its Opinion.
Kondaur filed an application for writ of certiorari to this court on May 15, 2014, challenging the ICA's decision. This court granted certiorari, and in an opinion published on October 23, 2014, we held that the ICA erred in treating the entry of default as if it were a default judgment and then evaluating whether the allegations in the complaint were well-pled. Kondaur Capital Corp. v. Matsuyoshi,134 Hawai'i 342, 351-52, 341 P.3d 548 (2014). This court additionally held that " [w]hen reviewing a summary judgment, an appellate court's consideration of the record is limited to those materials that were considered by the trial court in ruling on the
[136 Hawai'i 234] motion." Id. at 350, 341 P.3d at 556. Because the ICA relied on " the post-judgment Matsuyoshi Declaration as a basis to find disputed material facts" that would preclude summary judgment, we concluded that the ICA erred, vacated the ICA's Judgment on Appeal, and " remand[ed] the case to the ICA to consider the further issues that it 'decline[d] to reach' that were 'raised by the parties' on appeal." Id. at 352, 341 P.3d at 558.
B. The ICA's Post-Remand Summary Disposition Order
On November 19, 2014, the ICA issued its post-remand summary disposition order (SDO), which affirmed the MSJ Judgment. In particular, the ICA held that summary judgment in favor of Kondaur was properly granted, explaining that Kondaur met its initial burden of demonstrating a prima facie case of ejectment by submitting " admissible evidence of ownership and title to the [Property] in the form of exhibits attached to its MSJ, which included a certified copy of its quitclaim deed and Ann Pham's affidavit."
The ICA rejected Matsuyoshi's arguments concerning the alleged invalidity of Kondaur's title as a result of the foreclosure sale being conducted in a different county than where the Property is located. The ICA reasoned that the applicable version of HRS § 667-5 did not require the " foreclosure sale be held in the county where the subject property is located, and nothing in the record indicates that the mortgagee failed to fulfill its duty to exercise reasonable diligence to secure the best price for the Property" " when it sold the Property for $416,900.20." 
C. Matsuyoshi's Application for Writ of Certiorari
On April 6, 2015, Matsuyoshi filed an application for writ of certiorari seeking review of the ICA's post-remand SDO. Matsuyoshi argues that the ICA misapplied the summary judgment standard by requiring her to present evidence when Kondaur--the movant in this case--had failed to present a prima facie case establishing that the sale of the Property was valid. Relying on Ulrich and analogous authorities setting forth the common law governing fiduciaries and quasi-fiduciaries, Matsuyoshi argues that, because Kondaur has " the ultimate burden of proof both as a plaintiff and as the direct quitclaim privy of [RLP] who carried out the O'ahu-Self-Sale," it " was required to establish in its moving papers that the sale was properly and fairly conducted and that the price was adequate," particularly when the mortgagee is self-dealing in a manner that creates an inherent conflict of interest. Applying this principle, Matsuyoshi contends that Kondaur failed to present any evidence that it acted diligently to secure the best price for the Property.
Matsuyoshi additionally argues that even if Kondaur satisfied its initial burden, genuine issues of material fact existed as to whether RLP violated the foreclosure statute and its duties under the power of sale contained in the Mortgage. Matsuyoshi maintains that the auction sale conducted on O'ahu was itself evidence that RLP did not act diligently, " as potential bidders on Kaua'i necessarily would have had to purchase an airplane ticket and travel to O'ahu for the sale, while potential bidders on O'ahu could not view the [P]roperty unless they traveled to Kaua'i." According to Matsuyoshi, this dilemma was exacerbated by the fact that one of RLP's sale terms was to convey the Property to the winning bidder " AS IS." 
[136 Hawai'i 235] In response, Kondaur argues that the ICA correctly affirmed the circuit court's grant of its MSJ because Kondaur satisfied its initial burden to demonstrate a prima facie case of ejectment, while Matsuyoshi correspondingly failed to raise a genuine issue of material fact. Kondaur contends that requiring a third-party successor-in-interest such as Kondaur to establish a predecessor-in-interest's reasonable diligence is tantamount to requiring such a successor-in-interest to disprove every possible defense to an ejectment action, which a summary judgment movant is not required to do. Further, Kondaur argues that Ulrich is consistent with the view that the mortgagor is the party who must introduce " credible evidence to support [his or] her alleged defense that the sale price at auction was fraudulent" --a burden that Matsuyoshi failed to satisfy in this case.
Finally, Kondaur argues that Matsuyoshi's challenge to the venue of the non-judicial foreclosure auction is without merit because neither the applicable version of the foreclosure statute nor the power of sale contained in the Mortgage required the sale to be conducted in the same county as where the Property is located.
Matsuyoshi asserts in her reply that assigning the burden to Kondaur of proving the validity of the non-judicial foreclosure sale is consistent with the burden-shifting approach employed in a summary judgment analysis, and that Kondaur is not being asked to disprove every possible defense that Matsuyoshi may have. Matsuyoshi maintains " that where the ejectment plaintiff is the mortgagee (or its non-bona fide purchaser transferee standing in its shoes)," this requirement " is not a 'defense' at all, but rather an element of the plaintiff's claim."
A. Ulrich and the Division between Federal Courts in Hawai'i as
to Its Continued Vitality
More than 70 years ago, in Ulrich v. Security Investment Co.,35 Haw. 158 (Haw. Terr. 1939), this court detailed legal principles governing the burden of proof in cases arising from foreclosure sales. At stake in Ulrich was the mortgagor's interest in his law firm and chattels. 35 Haw. at 159-60. Pursuant to the power of sale in the underlying mortgage, and after the mortgagor defaulted on the loan, the mortgagee commenced non-judicial foreclosure proceedings. Id. at 162-64. However, the mortgagee " kept the sale as quiet as possible," did not give adequate personal or public notice to the mortgagor of the impending foreclosure, and acted both as the auctioneer and the purchaser during the auction. Id. at 172, 174. In addition, the description of the property to be sold was such that it failed to " inform the public of the nature of the property to be offered for sale," and prospective buyers were not afforded the opportunity to inspect the property. Id. at 173.
This court held that a mortgagee is required to " use all fair and reasonable means in obtaining the best prices for the property on sale," such that where " the sale [i]s not made in good faith, that the amount received upon the sale was inadequate and that the mortgagee took a wrongful and unfair advantage of the mortgagor, the foreclosure sale must be set aside." Id. at 168. Further, this court declared that " where the mortgagee himself purchases at the sale, the burden is on him to show that the sale was regularly and fairly conducted in every particular, and that an adequate price was paid for the goods sold." Id. (citation omitted) (internal quotation mark omitted). These requirements were promulgated by the court while fully recognizing that their application may sometimes mean obligating a mortgagee to act above and beyond the statutory requirements. See id. at 172-73 (recognizing that the foreclosure statute did not require that the foreclosure sale be publicized, but in any event finding that the mortgagee failed to act reasonably by failing to do so).
Under the facts of Ulrich, the court ultimately determined that the mortgagee " failed to exercise reasonable diligence and good faith in an endeavor to obtain the best possible prices consistent with such diligence and good faith." Id. at 170. Accordingly, the court vacated and set aside the foreclosure sale. Id. at 185-86.
[136 Hawai'i 236] Ulrich has never been overruled by this court. But because HRS § 667-5 has been amended several times since Ulrich was decided in 1939, a federal district court has raised doubts as to the continued vitality of its holding. In Lima v. Deutsche Bank Nat'l Trust Co.,943 F.Supp.2d 1093 (D. Haw. 2013), the U.S. District Court for the District of Hawai'i ruled that Ulrich was not applicable to the facts of that case for two reasons: first, because Ulrich involved a chattel mortgage, while Lima involved a real property mortgage; and, second, because none of the principles laid out in Ulrich were included by the Hawai'i legislature in its amendment to HRS § 667-5 in 2008.Id. at 1099-1100. Hence, although not directly so stating, the district court essentially held that Ulrich had been overruled by the legislature by virtue of its silence--by failing to expressly include any of Ulrich's requirements in the language of HRS § 667-5.
On the other hand, in Field v. Bank of Am., N.A. (In re Gibbs),522 B.R. 282 (Bankr. D. Haw. 2014), the Bankruptcy Court for the District of Hawai'i disagreed with the Lima court, held that Ulrich continued to be good law, and applied its requirement that a mortgagee must use all fair and reasonable means to maximize the sale price of the property sold at a foreclosure sale. Id. at 289-91. The fact that Ulrich concerned a chattel mortgage instead of a real property mortgage was immaterial, according to the bankruptcy court, because the foreclosure statute in effect at that time did not expressly exclude from its provisions chattel mortgages.Id. at 290. Further, the bankruptcy
[136 Hawai'i 237] court was unpersuaded by the reasoning of the district court in Lima concerning the legislative history of HRS § 667-5. In the bankruptcy court's view, the legislature approved of the principles embodied by Ulrich because the subsequent amendments it made to HRS § 667-5 did not expressly overrule Ulrich. Id.
1. The Amendments to the Foreclosure Statute are Not Inconsistent with Ulrich
At the time that Ulrich was decided, the statutory provisions governing non-judicial foreclosures were RLH § § 4724-4728 (1935). Ulrich, 35 Haw. at 163. Subsequent amendments to the foreclosure statute support the view that Ulrich remains viable law. After Ulrich was decided in 1939, RLH § 4724 was not amended until 1967, and that amendment concerned only a requirement that the affidavit and copy of the notice of the foreclosure sale be recorded and indexed. 1967 Haw. Sess. Laws Act 256, § 1 at 383. Both the accompanying House Standing Committee Report and the Senate Standing Committee Report reflected that the purpose of the 1967 amendment was " to standardize the recording procedures in the Bureau of Conveyances," and neither Ulrich nor its holding was referenced.
A substantive amendment was effectuated in 1972, and it was at this time that HRS § 667-5 was made inapplicable to foreclosures of personal property mortgages. 1972 Haw. Sess. Laws Act 90, § 9 at 362. The legislative history related to the 1972 amendment did not touch upon Ulrich, and the committee reports stated only that the amendments were intended " to eliminate inconsistencies with the rules of court; delete outmoded provisions; make improvements of a technical nature; and transfer procedural matters to rules of court."  The Report of Committee on Coordination of Rules and Statutes, referenced by the legislative reports accompanying the 1972 amendment, stated that the addition to HRS § 667-5 of the paragraph excluding personal property foreclosures from the foreclosure statute was meant " to clarify the relationship of this section to the Uniform Commercial Code, 490:9-501(4)." Report of Committee on Coordination of Rules and Statutes Vol. 2, § 667-5 (1971). Thus, the exclusion of personal property foreclosures was not precipitated by the decision in Ulrich, but instead it was intended to conform HRS § 667-5 to the law governing secured transactions of personal property.
The 1984 amendment also did not affect the substance of HRS § 667-5, as it functioned only to authorize the revisor of statutes to " change statutory language by removing gender-specific terminology without altering the sense, meaning, or effect of any [136 Hawai'i 238] act,"
whenever the revisor supplements or replaces volumes of the HRS. The 1989 amendment merely added a requirement that copies of foreclosure sale notices should be filed with the state director of taxation. 1989 Haw. Sess. Laws Act 20, § 5 at 56-57. Again, the underlying legislative history was silent about Ulrich and the requirements that it set forth.
The last amendment to HRS § 667-5 before its repeal was in 2008. 2008 Haw. Sess. Laws Act 138, § 1 at 370-71. That amendment expanded the protections it guaranteed mortgagors by, among other things, requiring mortgagees to retain an attorney who is licensed to practice and physically present in the State. Id. This requirement was meant to " ensure that interested parties have means to obtain information from a person with a local presence and the ability to provide useful information."  This rationale was echoed by the accompanying Senate Standing Committee Report and the House Standing Committee Report. Again, there was no indication that the principles set forth in Ulrich were to be nullified or modified.
The foregoing amendments do not indicate that the legislature explicitly or implicitly disapproved of Ulrich. If the legislature had sought to express disapproval of Ulrich, it could have fashioned, for example, a presumption of validity, conclusive or otherwise, in instances where a foreclosure sale is conducted in accordance with the foreclosure statute and the underlying mortgage, as the legislature did with regard to HRS § 667-34 (Supp. 2008) (" [A]ny foreclosure sale held in accordance with this part shall be conclusively presumed to have been conducted in a legal, fair, and reasonable manner." ).See e.g., Hawai'i Gov't Employees Ass'n, AFSCME Local 152, AFL-CIO v. Lingle,124 Hawai'i 197, 203-04, 239 P.3d 1, 7-8 (2010) (finding that a previous ICA decision, with which the legislature disagreed, was overruled by a statutory amendment); Lee v. United Pub. Workers, AFSCME, Local 646, AFL-CIO, 125 Hawai'i 317, 322-23, 260 P.3d 1135, 1140-41 (App. 2011) (accord). Instead
[136 Hawai'i 239] of prescribing a conclusive presumption or a provision of similar import, HRS § 667-8 (1993) states only that an affidavit averring that the non-judicial foreclosure " has in all respects complied with the requirements of the power of sale and the statute . . . shall be admitted as evidence that the power of sale was duly executed." (Emphasis added). Hence, there is no indication that the legislature intended to overrule Ulrich, circumscribe its application, or otherwise modify its effect in the realm of non-judicial foreclosures.
Cf. Lingle, 124 Hawai'i at 203-04, 239 P.3d at 7-8; Lee, 125 Hawai'i at 322-23, 260 P.3d at 1140-41.
2. The Amendments to HRS § 667-5 Expanded the Rights of Mortgagors, Further Buttressing Ulrich's Vitality
The amendments to HRS § 667-5, through 76 years of Ulrich's existence, have added requirements that mortgagees must fulfill in order to accomplish a valid foreclosure sale. See, e.g., 1967 Haw. Sess. Laws Act 256, § 1 at 383 (requiring mortgagees to record and index the affidavit and copy of the notice of sale); 1989 Haw. Sess. Laws Act 20, § 5 at 56-57 (requiring mortgagees to file copies of foreclosure sale notices with the state director of taxation). The benefits of some of these added statutory requirements, such as those derived from the 2008 amendments, were meant to accrue to mortgagors so as to expand and bolster the protections to which they are entitled. See 2008 Haw. Sess. Laws Act 138, § 1 at 370-71 (amending HRS § 667-5 to require mortgagees to hire local attorneys who could facilitate a greater and more convenient transfer of information about foreclosure to mortgagors, and requiring mortgagees to disclose more particularized information upon a mortgagor's request).
Hence, it is inconsistent to assume that the legislature overruled Ulrich and the rights it promulgated at the same time as when the legislature expanded the rights of mortgagors.
SeeIn re Gibbs, 522 B.R. at 290 (holding that the increase in mortgagors' rights effectuated by the 2008 amendment to HRS § 667-5 was consistent with the view that the legislature approved of Ulrich). The more logical conclusion, consistent with the expansion of the rights of mortgagors in the foreclosure statute, is that the legislature approved of Ulrich and supplemented it with more robust statutory protections.
3. Ulrich is Applicable to Real Property Non-Judicial Foreclosures
When Ulrich was decided, the version of the foreclosure statute then existing was contained in RLH § § 4724-4728. RLH § 4724, the 1935 counterpart of HRS § 667-5, was applicable to all mortgage foreclosure sales regardless of whether the subject matter was real property or chattels. The exclusion of chattels from HRS § 667-5 was not effectuated until its 1972 amendment. See 1972 Haw. Sess. Laws Act 90, § 9 at 362. Even then, there is no indication that the legislature excluded chattels from the application of HRS § 667-5 in order to circumscribe Ulrich's application to chattels only. See Report of Committee on Coordination of Rules and Statutes Vol. 2, § 667-5 (1971). The apparent rationale of the 1972 amendment was merely to conform HRS § 667-5 to UCC article 9, which governs secured transactions of personal property. See id.
Ulrich similarly did not limit its holding to chattel mortgages, although the facts of that case involved chattels only. Restricting it would have been illogical, not only because the foreclosure statute involved in Ulrich did
[136 Hawai'i 240] not differentiate between chattels and real property, RLH § § 4724-4728; see In re Gibbs, 522 B.R. at 290 (reasoning similarly), but also because Ulrich's rationale applies with equivalent, if not greater, force in the foreclosure sale of real property.
The motivation for the requirements set forth in Ulrich is to protect the mortgagor from being wrongfully and unfairly taken advantage of by the mortgagee, Ulrich, 35 Haw. at 168, and this purpose is not rendered irrelevant merely because the subject matter of a foreclosure sale is real property rather than chattels. To the contrary, where, as here, the property at issue is the primary residence of an individual, the rationale underlying Ulrich's requirements is only strengthened. Cf. Ulrich,
35 Haw. at 159-60 n.1 (concerning the foreclosure sale of office property, interest in law practice, share in earned attorneys' fees, and household belongings). Thus, reasoning that Ulrich's application is confined to only chattel mortgages,
see, e.g., Lima, 943 F.Supp.2d at 1099, is not analytically persuasive.
4. The Duties of Mortgagees under Ulrich
To summarize, Ulrich requires mortgagees to exercise their right to non-judicial foreclosure under a power of sale in a manner that is fair, reasonably diligent, and in good faith, and to demonstrate that an adequate price was procured for the property.Ulrich, 35 Haw. at 168. In instances where the mortgagee assumes the role of a purchaser in a self-dealing transaction, the burden is on the mortgagee, or its quitclaim transferee or non-bona fide successor, to establish its compliance with these obligations. Id. Its failure to do so would render the foreclosure sale voidable and could therefore be set aside at the timely election of the mortgagor.
B. Summary Judgment in Favor of Kondaur was Erroneously Granted 1. Summary Judgment and the Elements of Ejectment
Under settled law, " [t]his court reviews a circuit court's grant or denial of summary judgment de novo." Price v. AIG Hawai'i Ins. Co.,107 Hawai'i 106, 110, 11 P.3d 1');">111 P.3d 1, 5 (2005); see Thomas v. Kidani,126 Hawai'i 125, 128, 267 P.3d 1230, 1233 (2011). " [S]ummary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law."
Price, 107 Hawai'i at 110 (quoting Haw. Cmty. Fed. Credit Union v. Keka,94 Hawai'i 213, 221, 11 P.3d 1, 9 (2000)). Further, all evidence and inferences therefrom " must be viewed in the light most favorable to the non-moving party." Id. (quotingKeka, 94 Hawai'i at 221, 11 P.3d at 9).
The moving party has the initial burden of " demonstrating the absence of a genuine issue of material fact." Exotics Hawaii-Kona, Inc. v. E.I. Du Pont De Nemours & Co.,116 Hawai'i 277, 301, 172 P.3d 1021, 1045 (2007) (emphasis omitted) (quoting Young v. Planning Comm'n of the Cnty. of Kaua'i,89 Hawai'i 400, 407, 974 P.2d 40, 47 (1999)). This burden may be discharged " by demonstrating that . . . if the case went to trial[,] there would be no competent evidence to support a judgment for his or her opponent." Id. (alteration in original) (quotingYoung, 89 Hawai'i at 407, 974 P.2d at 47). Only with
[136 Hawai'i 241] the satisfaction of this initial showing does the burden shift to the nonmoving party to respond " by affidavits or as otherwise provided in HRCP Rule 56[,] . . . set[ting] forth specific facts showing that there is a genuine issue for trial." Id. (quotingYoung, 89 Hawai'i at 407, 974 P.2d at 47).
In order to maintain an ejectment action, the plaintiff " must necessarily prove that [he or she] owns the parcel in issue," State v. Magoon,75 Haw. 164, 175, 858 P.2d 712, 718-19 (1993); see State v. Midkiff,49 Haw. 456, 460, 421 P.2d 550, 554 (1966), meaning that he or she must have " the title to and right of possession of" such parcel, Carter v. Kaikainahaole,14 Haw. 515, 516 (Haw. Terr. 1902). Additionally, the plaintiff must establish that " possession is unlawfully withheld by another." Id. In this case, Kondaur submitted a certified copy of its quitclaim deed from RLP as part of its MSJ. The quitclaim deed recited that RLP conveyed the Property to Kondaur but made " no representations, warranties or promises regarding any claims by LEIGH MATSUYOSHI, her heirs, successors or assigns." The certified copy of the quitclaim deed and all of its attachments suffice to establish only that Kondaur has an ownership interest in and right of possession of the Property, subject to Matsuyoshi's title and ownership interest in the same Property. This conditional status of Kondaur's title originates from the language of Kondaur's quitclaim deed, which specifically carves out from Kondaur's interest any claims that Matsuyoshi may still have on the Property. It is therefore clear from the language of the deed that it does not convey a title superior to that of Matsuyoshi's title and interest because it goes so far as acknowledging that Matsuyoshi may have some ownership claim on the Property.
Moreover, the very nature of a quitclaim deed also circumscribes the interest that Kondaur could have in the Property. Because a quitclaim deed is capable of conveying only that which the ...