WILLIAM R. HANCOCK, individually and as Trustee of the HANCOCK AND COMPANY, INC. PROFIT SHARING TRUST, under trust instrument April 3, 1983, Plaintiff-Appellee,
KULANA PARTNERS, LLC, a Hawai'i limited liability company; FIDELITY NATIONAL TITLE & ESCROW OF HAWAII, INC., a Hawai'i Corporation, Defendants-Appellants.
CERTIFIED QUESTION FROM THE UNITED STATES DISTRICT COURT FOR
THE DISTRICT OF HAWAI'I (CIVIL NO. 13-00198 DKW-RLP)
Lynne Ching, for appellant Kulana Partners LLC.
H. Engle, Georgia Anton, and Eric B. Levasseur, pro hac vice,
for appellant Fidelity National Title & Escrow of Hawaii,
Timothy Hogan for appellee.
RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON,
federal court lawsuit, a grantor asserts that an escrow
company's alleged deletion of an easement from the
property description attached to a deed he executed renders
the deed a "forged deed" that is void ab initio.
The escrow company and the grantee, on the other hand, assert
that the grantor's claim sounds in fraud and is subject
to, and barred by, a statute of limitations. They assert that
the statute of limitations has run because the grantor is
deemed to have had constructive notice of the allegedly
modified deed upon its recordation.
United States District Court for the District of Hawai'i
("district court") certified the following
questions to this court:
1. Whether a claim relating to a forged deed is subject to
the statute of limitations for fraud?
2. Whether the recording of a deed provides constructive
notice in an action for fraud?
is unclear whether, under Hawai'i law, the underlying
case involves a claim relating to a deed that is void ab
initio or a claim that is subject to a statute of
limitations, we reframe the questions as follows:
1. Under Hawai'i law, when is a deed void ab initio for
fraud, such that a claim challenging the validity of the deed
is not subject to a statute of limitations?
2. Under Hawai'i law, what statute of limitations applies
to a claim that a deed was procured by fraud of the type that
does not render it void ab initio?
3. Under Hawai'i law, when does the statute of
limitations begin to run on a grantor's claim that a deed
was procured by fraud of the type that does not render it
void ab initio: upon recordation of the deed or at some other
point in time?
answer the first modified certified question, we hold that,
under Hawai'i law, a deed is void ab initio for fraud,
such that a claim challenging the validity of the deed is not
subject to a statute of limitations, when (1) a deed is
forged, meaning it has been falsely made, completed,
endorsed, or altered with intent to defraud; or (2) a deed
has been procured by "fraud in the factum," such as
when a person is fraudulently deceived about the nature of a
document that has been signed, as when a document is
surreptitiously substituted for signature.Gonsalves v.
Ikei, 47 Haw. 145, 384 P.2d 300 (1963); Adair v.
Hustace, 64 Haw. 314, 640 P.2d 294 (1982) (abrogated on
other grounds by Ass'n of Apartment Owners of Royal
Aloha v. Certified Mgmt., 139 Hawai'i 229, 386 P.3d
answer the second modified certified question, we hold that,
under Hawai'i law, the six-year "catch-all"
statute of limitations under Hawai'i Revised Statutes
("HRS") § 657-1(4) (2016) applies to a claim
that a deed was procured by fraud of the type that does not
render it void ab initio, e.g., fraud in the inducement and
answer the third modified certified question, we hold that
the statute of limitations begins to run on a grantor's
claim that a deed was procured by fraud of the type that does
not render it void ab initio when the grantor discovers, or
reasonably should have discovered, the existence of the claim
or the identity of the person who is liable for the claim.
District Court Proceedings
case involves a 2002 sale of real property from William R.
Hancock ("Hancock") to Kulana Partners, LLC
("KPL"). Hancock had allegedly agreed to include in
the conveyance documents an easement in favor of his
neighbors, Robert and Esther Grinpas (the
"Grinpases"). The recorded conveyance documents,
however, did not include the easement.
2007, the Grinpases sued Hancock and KPL in the Circuit Court
of the Fifth Circuit ("circuit court"). The circuit
court rendered judgment in favor of the Grinpases and against
Hancock, and the appeal has been before the ICA twice.
Grinpas v. Kapaa 382, CAAP-14-0000870.
2013, in the United States District Court for the District of
Hawai'i ("district court"), Hancock,
individually and as trustee of the Hancock and Company, Inc.
Profit Sharing Trust, sued KPL and the escrow company for the
sale, Fidelity National Title & Escrow of Hawai'i,
Inc. ("Fidelity"). He alleged that, after he
executed the deed, Fidelity fraudulently modified it to
delete the Grinpases' easement, then recorded the deed.
elaborated that, in August 2002, he reviewed two deeds at
Fidelity's Kapa'a office: a warranty deed conveying
the property from Hancock, individually, to Hancock as
trustee, and a trustee's deed conveying the property from
Hancock as trustee to KPL ("Trustee Deed"). Hancock
alleged that he "identified a limitation in the
'Subject To' section of the Trustee Deed in Paragraph
12 that made the conveyance subject to 'Any rights of the
parties in possession of a portion of, or all of, said land,
which rights are not disclosed by the public
record.'" He alleged, "But for the existence of
this in the 'Subject To' section," he
"would not have executed the deed." Hancock went on
to allege that Paragraph 16 of the Trustee Deed described an
easement in the north corner of the property "at or near
the location of the Grinpas Easement." Hancock further
alleged that days later, the two deeds were transmitted from
Fidelity to its attorney.
week later, on August 26, 2002, an internal memorandum
between Fidelity's "Loretta" and
"Jeannette" advised, "WE NEED TO REPLACE THE
SUBJECT TO PAGE ON BOTH OF THE DEEDS . . . THE TOGETHER WITH
PARAGRAPH (ON THE TOP) IS MISSING. I BELIEVE THAT YOU ALREADY
HAVE THE DEED AND I HAVE IT SET UP FOR RECORDING ON
WEDNESDAY." To Hancock, this internal memorandum
reflected Fidelity's "fraudulent"
"intent to alter [Hancock's] executed and notarized
Deeds" to "remove the easement at paragraph 16 and
paragraph 12 regarding unrecorded interests"
"without the knowledge or consent of Mr. Hancock."
According to Hancock, the altered trustee's deed was
recorded in the Bureau of Conveyances on August 28, 2002. Hancock
alleged that "Fidelity is a fiduciary with a duty to
disclose its own malfeasance." He also asserted that, as
a result of "fraudulent concealment by Fidelity and
KPL," he "did not learn of the forged deed until
2013." Relevant to the certified questions before this
court, Count I of Hancock's Complaint sought a
declaration that the Trustee Deed was void as "an
altered instrument and ... a forgery," and to have the
order declaring the deed void recorded in the Bureau of
then filed a motion to dismiss pursuant to Federal Rules of
Civil Procedure ("FRCP") 12(b)(1) and (6), and
Fidelity filed its own motion for judgment on the pleadings
pursuant to FRCP Rule 12(c). Both KPL and Fidelity
characterized Hancock's Complaint as an end-run around
the state court judgment against Hancock in the Grinpas case.
Both argued that the allegedly modified deed was publicly
recorded in the Bureau of Conveyances in 2002; therefore,
Hancock had constructive notice of any fraudulent conduct at
that time. Both KPL and Fidelity further argued that
the applicable statute of limitations was the six- year
statute of limitations found in HRS § 657-1, which began