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Deutsche Bank National Trust Co. v. Kozma

Supreme Court of Hawaii

September 5, 2017

DEUTSCHE BANK NATIONAL TRUST COMPANY AS INDENTURE TRUSTEE FOR AMERICAN HOME MORTGAGE INVESTMENT TRUST 2006-1, MORTGAGE-BACKED NOTES, SERIES 2006-1, Respondent/Plaintiff-Appellee,
v.
PHILIP E. KOZMA, Petitioner/Defendant-Appellant, and E*TRADE BANK; THE ASSOCIATION OF OWNERS OF KAHALA KUA aka KAHALA KUA COMMUNITY ASSOCIATION, Respondents/Defendants-Appellees. (CIVIL NO. 10-1-0686-03) AND THE ASSOCIATION OF OWNERS OF KAHALA KUA aka KAHALA KUA COMMUNITY ASSOCIATION, A HAWAII NONPROFIT CORPORATION, BY AND THROUGH ITS BOARD OF DIRECTORS, Respondent/Plaintiff-Appellee,
v.
PHILIP E. KOZMA, Petitioner/Defendant-Appellant, and AMERICAN HOME MORTGAGE SERVICING, INC.; E*TRADE BANK, Respondents/Defendants-Appellees. (CIVIL NO. 08-1-1850-09)

         CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS (CAAP-16-0000025)

          R. Steven Geshell for petitioner.

          J. Blaine Rogers and Lori King Stibb for respondent/ plaintiff-appellee Deutsche Bank National Trust Company.

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

          OPINION

          McKENNA, J.

         I. Introduction

         Philip E. Kozma ("Kozma") seeks review of the Intermediate Court of Appeals' ("ICA") Order Denying Without Prejudice the March 30, 2017 Request for Attorneys' Fees and Costs ("order"). This appeal is related to a foreclosure action brought by Deutsche Bank National Trust Company As Indenture Trustee For American Home Mortgage Investment Trust 2006-1, Mortgage-Backed Notes, Series 2006-1 ("Deutsche Bank"). On December 22, 2015, the Circuit Court of the First Circuit ("circuit court") granted Deutsche Bank's motion for summary judgment and decree of foreclosure, and Kozma appealed to the ICA. The ICA vacated the circuit court's judgment and remanded for further proceedings after determining Deutsche Bank failed to meet its burden of demonstrating that it was entitled to summary judgment. Kozma then filed a "Request and Declaration of Counsel" ("request") seeking attorney's fees and costs related to his appeal, which the ICA denied after determining Kozma was not a "prevailing party" at this point in the proceeding.

         Since the ICA essentially placed Kozma "back where he started, " there is no "prevailing party" entitled to attorney's fees under Hawaii Revised Statutes ("HRS") § 607-14 (2016). Therefore, the ICA did not err in denying Kozma's request for attorney's fees. With regard to the request for costs, however, the ICA applied an erroneous legal standard, which resulted in the incorrect conclusion that Kozma was not entitled to costs pursuant to Hawai'i Rules of Appellate Procedure ("HRAP") Rule 39 (2016) .

         We accepted certiorari to clarify the law regarding requests for appellate attorney's fees and costs after an appellate decision setting aside a trial court grant of summary judgment and remanding the case for further proceedings. We hold that when an appellate court vacates a circuit court judgment entered in favor of a foreclosing mortgagee seeking summary judgment, the mortgagor is not a "prevailing party" entitled to attorney's fees pursuant to HRS § 607-14. We further clarify that when an appellate court vacates a circuit court judgment entered in favor of a foreclosing mortgagee seeking summary judgment, pursuant to HRAP Rule 39, the appellate court must then use its discretion to determine which party, on balance, prevailed on the appeal for the purpose of an award of costs.

         II. Background

         A. Circuit court proceedings

         On March 31, 2010, Deutsche Bank initiated a foreclosure action against Kozma, alleging in its complaint that (1) it was the owner of the promissory note and mortgage executed by Kozma in December 2005, [1] and (2) it was entitled to foreclosure due to Kozma defaulting on the loan. Deutsche Bank attached a copy of the note and mortgage to the complaint, along with copies of the assignments. In his Answer, Kozma admitted he was in default, but countered that Deutsche Bank was not the real party-in-interest able to initiate foreclosure proceedings because the assignments were not valid.

         Deutsche Bank then filed a "Motion for Summary Judgment As Against All Defendants And For Interlocutory Decree of Foreclosure" ("MSJ"). Kozma filed his memorandum in opposition, arguing numerous genuine issues of material fact existed, such as whether Deutsche Bank possessed the original of the documents of the mortgage, note, and claimed assignments. The circuit court[2] granted summary judgment in favor of Deutsche Bank.

         Kozma then filed a motion for reconsideration. The circuit court granted the motion for reconsideration and denied without prejudice Deutsche Bank's MSJ after determining that it was unclear whether the bankruptcy trustee for AHMAI and ...


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