Guyer v. Nationstar Mortgage LLC ( 2022 )

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
30-NOV-2022
10:08 AM
Dkt. 49 SO
NO. CAAP-XX-XXXXXXX
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI#I
NELSON BARRY GUYER, Plaintiff-Appellant,
v.
NATIONSTAR MORTGAGE LLC; FEDERAL NATIONAL
MORTGAGE ASSOCIATION, Defendants-Appellees,
and
DOE DEFENDANTS 1-50, Defendants
APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUIT
(CIVIL NO. 16-1-0631(1))
SUMMARY DISPOSITION ORDER
(By: Ginoza, Chief Judge, Leonard and McCullen, JJ.)
In an appeal arising out of an action for return of
title and possession and wrongful foreclosure, concerning the
nonjudicial foreclosure sale of the leasehold interest in an
apartment, Plaintiff-Appellant Nelson Barry Guyer (Guyer) appeals
from the (1) "Final Judgment" entered on March 21, 2018 and (2)
"Order Granting Defendants Nationstar Mortgage LLC's and Federal
National Mortgage Association's Motion for Summary Judgment"
entered November 1, 2017 (Order Granting MSJ), entered by the
Circuit Court of the Second Circuit (Circuit Court).1
On appeal, Guyer asserts the Circuit Court erroneously
granted summary judgment for Defendants-Appellees Nationstar
1
The Honorable Rhonda I.L. Loo presided.
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Mortgage LLC (Nationstar) and Federal National Mortgage
Association (Fannie Mae): 1) by concluding the wrongful
foreclosure claim was barred by either the two-year statute of
limitations under Hawaii Revised Statutes (HRS) § 657-7 (2016)2
or the six-year statute of limitations under HRS § 657-1(4)
(2016);3 2) by concluding that the time for Guyer to file the
wrongful foreclosure claim was triggered on September 28, 2010
or, at the latest, on November 29, 2010; and 3) because a twenty-
year statute of limitations under HRS § 657-31 (2016)4 applied to
his claim to recover possession of the property at issue or
equitable damages.
I. Brief Background
After Guyer was assigned a leasehold interest in an
apartment located in Lahaina, Maui (Property), he executed a note
and mortgage (Mortgage) in connection with the Property, granting
the mortgagee a power of sale. The Mortgage was later assigned
to Nationstar. In 2010, Nationstar exercised its power of sale
and purchased the Property at public auction. The parties do not
dispute that on March 30, 2011, Nationstar assigned the leasehold
interest in the Property to Fannie Mae, and that nearly a year
later, Fannie Mae assigned the leasehold interest to Travis
Bontorin (Bontorin).
2
HRS § 657-7 provides that: "[a]ctions for the recovery of
compensation for damage or injury to persons or property shall be instituted
within two years after the cause of action accrued, and not after, except as
provided in section 657-13."
3
HRS § 657-1 provides, in pertinent part:
§ 657-1 Six years. The following actions shall be commenced within
six years next after the cause of action accrued, and not after:
. . . .
(4) Personal actions of any nature whatsoever not specifically
covered by the laws of the State.
4
HRS § 657-31 provides: "No person shall commence an action to recover
possession of any lands, or make any entry thereon, unless within twenty years
after the right to bring the action first accrued."
2
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On December 28, 2016, Guyer initiated this action in
the Circuit Court. Guyer asserted two counts against both
Nationstar and Fannie Mae: 1) return of title and possession of
property (Count I) and 2) wrongful foreclosure (Count II).
In Count I, Guyer alleged, inter alia, that the
assignment by Nationstar to Fannie Mae "unlawfully deprived [him]
of the title, possession, and use" of the Property and was void
under prior cases, not simply voidable, because Nationstar, as
the foreclosing mortgagee, violated multiple provisions of the
power of sale in the Mortgage and nonjudicial foreclosure statute
regarding notice. Guyer also asserted he had twenty years to
bring a claim of title to or possession of the Property under HRS
§ 657-31. Further, Guyer alleged that because the assignment
from Nationstar to Fannie Mae was void, the assignment from
Fannie Mae to Bontorin was likewise void and if title could not
be restored to Guyer then he would be entitled to damages.
In Count II, Guyer alleged, inter alia, that the
improper foreclosure and further assignment of the Property to
Bontorin were part of a continuing tort against Guyer and fell
within the six-year statute of limitations under HRS § 657-1(4)
as measured from the date title or possession of the Property was
lost; thus, Nationstar and Fannie Mae were liable to him for
damages.
Nationstar and Fannie Mae asserted several defenses in
response to the Complaint, including that the Complaint was
barred by the applicable statute of limitations.
On July 25, 2017, Nationstar and Fannie Mae jointly
filed a motion for summary judgment (MSJ), supported by a
declaration of counsel and exhibits. Nationstar and Fannie Mae
argued that for an actionable claim, a plaintiff only needs
factual knowledge of the necessary elements. Thus, Guyer's
claims accrued on September 28, 2010, when Nationstar recorded
the "Notice of Mortgagee's Intention to Foreclose Under Power of
Sale" (Notice of Sale) or, at the latest, on November 29, 2010,
the date the Notice of Sale stated the foreclosure sale would
take place but which actually occurred on December 28, 2010.
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The MSJ further argued that the two-year statute of
limitations applied to tort claims and thus the wrongful
foreclosure claim was barred. The MSJ also argued Guyer's claims
were barred by the six-year statute of limitations when
calculating accrual from either September 28, 2010, or November
29, 2010.
Regarding Guyer's complaint allegation that a twenty-
year statute of limitations applies to his claim for recovery of
title and possession, Nationstar and Fannie Mae argue the twenty-
year statute of limitations under HRS § 657-31 only applies to
adverse possession cases, and not wrongful foreclosure cases.
In opposition to Nationstar and Fannie Mae's MSJ, Guyer
argued that: 1) his claim for wrongful foreclosure was subject to
at least the six-year statute of limitations because it pertained
to an intangible and nonphysical injury to property; 2) the
wrongful foreclosure claim accrued at earliest on January 10,
2011, when the "Mortgagee's Affidavit of Foreclosure Under Power
of Sale" (Foreclosure Affidavit) was recorded; and 3) the twenty-
year statute of limitations applies to real actions against the
land, including foreclosures claiming recovery of title and
possession.
On August 17, 2017, the Circuit Court held a hearing on
the MSJ. In the hearing, the Circuit Court ruled as follows:
THE COURT: . . . The Court having had an
opportunity to review the motion, the opposition, and the
reply, the Court's going to grant Defendants' motion for
summary judgment.
The wrongful foreclosure claim accrued, at
the latest, at the time of the auction on December 28, 2010
but more likely September 28, 2010, the notice of sale. The
complaint was filed six years after the alleged improper
foreclosure sale.
As pled, Plaintiff's claim sounds solely in
tort; therefore, Plaintiff's wrongful foreclosure claim is
barred by the two-year statute of limitations pursuant to
HRS 657-7.
Even if the two-year limitations does not
apply, the six-year statute of limitations under HRS 657-11
[sic] would bar Plaintiff's claims as well.
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Therefore, the Court's going to grant
Defendants' motion for summary judgment, ask Ms. Ching to
prepare the order on the matter.
MS. CHING: Thank you, Judge.
Could I have a clarification? Our argument
was notice of sale, which was - - I just want to make sure I
have the dates correct for accrual - - September 28th, 2010
or, at the latest, the date of the auction that did not
occur, which was November 29, 2010.
THE COURT: Correct. Sorry. Thank you for
clarifying that for me.
The Order Granting MSJ and Final Judgment were entered
thereafter.
II. Standard of Review
We review the grant or denial of summary judgment de
novo. See First Ins. Co. of Hawaii, Ltd. v. A & B Props., Inc.,
126 Hawai#i 406, 413, 271 P.3d 1165, 1172 (2012) (citation
omitted). It is well-established that:
[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. A
fact is material if proof of that fact would have the effect
of establishing or refuting one of the essential elements of
a cause of action or defense asserted by the parties. The
evidence must be viewed in the light most favorable to the
non-moving party. In other words, we must view all of the
evidence and inferences drawn therefrom in the light most
favorable to the party opposing the motion.
Id. at 413-14, 271 P.3d at 1172-73 (citation omitted) (brackets
in original).
III. Discussion
A. Applicable Statute of Limitations
Guyer first contends the Circuit Court erred in
granting Nationstar and Fannie Mae's MSJ by concluding that the
wrongful foreclosure claim was barred by either the two-year
statute of limitations under HRS § 657-7 or the six-year statute
of limitations under HRS § 657-1(4).
Guyer argues that his wrongful foreclosure claim is
subject to at least a six-year statute of limitations under HRS
§ 657-1(4) rather than the two-year statute of limitations under
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HRS § 657-7, because HRS § 657-7 does not govern a claim for
wrongful foreclosure.
Nationstar and Fannie Mae argue that the two-year
statute of limitations under HRS § 657-7 applies here because it
concerns compensation for "injury to persons or property" and
Guyer "seeks to recover monetary damages resulting from his loss
of possession and use of the Property."
In Delapinia v. Nationstar Mortgage LLC, 146 Hawai#i
218, 224, 458 P.3d 929, 935 (App. 2020), affirmed in part,
vacated in part, 150 Hawai#i 91, 497 P.3d 106 (2021) (Delapinia
II), this court observed that:
[t]he supreme court has interpreted HRS § 657-7 "to apply to
'claims for damages resulting from physical injury to
persons or physical injury to tangible interests in
property.'" Gomez[ v. Am. Airlines, Inc., 111 Hawai #i 67,
70, 137 P.3d 381, 384 (2006)] (emphasis in original)
(quoting Au[ v. Au, 63 Haw. 210, 216, 626 P.2d 173, 178
(1981)]). On the other hand, the supreme court has applied
HRS § 657-1 to claims concerning a non-physical injury to an
intangible interest of the plaintiff. Higa v. Mirikitani, 55
Haw. 167, 170-73, 517 P.2d 1, 4-6 (1973) (applying the
six-year statute of limitations of HRS § 657-1(1) to a legal
malpractice claim involving non-physical injury to an
intangible interest).
Id. at 225, 458 P.3d at 936 (footnote omitted) (emphasis in
original). There, plaintiffs did not allege any physical harm to
the subject property and instead asserted that the defendants had
wrongfully deprived them of title to and possession of the
subject property. Id. (citations omitted). Therefore, as a
nonphysical injury to their intangible interests, this court
concluded that the plaintiffs' wrongful foreclosure claim was
subject to the six-year statute of limitations under HRS § 657-
1(4). Id.
Here, as in Delapinia, Guyer did not allege any
physical harm to the Property. Instead, Guyer claims Nationstar
and Fannie Mae caused a nonphysical injury to his intangible
interest by wrongfully "depriv[ing him] of his possession, record
title, and use of the Property[.]" Thus, the six-year statute of
limitations under HRS § 657-1(4) governs Guyer's claim for
wrongful foreclosure.
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B. Trigger for Limitations Period
Guyer next contends the Circuit Court erred in
determining that the limitations period to file the wrongful
foreclosure claim was triggered on September 28, 2010 or, at the
latest, on November 29, 2010. Guyer contends that for wrongful
foreclosure claims, the statute of limitations is triggered when
a plaintiff has a cause of action for damages, i.e., when the
foreclosure occurs "causing either a loss of title or possession
or both." According to Guyer, this does not occur until both a
foreclosure affidavit and a deed are recorded. Guyer further
argues that because the discovery rule applies to wrongful
foreclosure claims, the statute of limitations began to run at
the earliest when the Foreclosure Affidavit was recorded on
January 10, 2011, giving him notice of the foreclosure.
Nationstar and Fannie Mae argue that instead of the
discovery rule, the relevant inquiry "is what the plaintiff might
'have known by the use of the means of information within his
reach, with the vigilance the law requires of him[.]'" (Citing
Ass'n of Apartment Owners of Newtown Meadows ex rel. Bd. of Dirs.
v. Venture 15, Inc., 115 Hawai#i 232, 277-78, 167 P.3d 225,
270-71 (2007), as corrected (Sept. 20, 2007)). Thus, Nationstar
and Fannie Mae argue the Circuit Court did not err because
Guyer's claim for money damages accrued when the Notice of Sale
was recorded and served on Guyer on September 28, 2010,
considering the Notice of Sale provided him with the "information
necessary to assert a claim of wrongful foreclosure."
As discussed in Delapinia, "[u]nder Hawaii's discovery
rule, the statute of limitations begins to run when the plaintiff
'discovers or should have discovered the negligent act, the
damage, and the causal connection between the former and the
latter.'" 146 Hawai#i at 226, 458 P.3d at 937 (quoting Thomas v.
Kidani, 126 Hawai#i 125, 132, 267 P.3d 1230, 1237 (2011)).
There, because the "actual damage being claimed was the loss of
title," the earliest date of accrual was when title was deeded by
the mortgagee, i.e., "when title was transferred to someone other
than the Delapinias." Id.7
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In Schick v. Nationstar Mortgage LLC, No. CAAP-18-
0000103, 2022 WL 2315570, at *6 (Haw. App. June 28, 2022) (mem.),
this court similarly determined that where the appellant alleged
"depriv[ation] of possession, title, use, and occupancy of the
[p]roperty," the date of accrual was when title to the subject
property was deeded to a party other than the appellant-
mortgagor.
Here, it is undisputed that Nationstar transferred
title to someone other than Guyer, namely, Fannie Mae, on March
30, 2011. The Complaint was filed on December 28, 2016, within
the six-year statute of limitations. See id. Therefore, the
Circuit Court erred in granting summary judgment for Nationstar
and Fannie Mae on grounds that Guyer's wrongful foreclosure claim
was time-barred by the statute of limitations.
C. Twenty-Year Statute of Limitations
The remedy for a wrongful nonjudicial foreclosure
governed by the six-year statute of limitations is that the
transfer of property is voidable. Delapinia II, 150 Hawai#i at
104, 497 P.3d at 119 ("Hawai#i law has moved unmistakably towards
the conclusion that sales pursuant to a wrongful foreclosure are
voidable, regardless of whether the violation was statutory or
contractual, substantial or a mere irregularity."). Further,
"where the property has passed into the hands of an innocent
purchaser for value, rendering the voiding of a foreclosure sale
impracticable, an action at law for damages is generally the
appropriate remedy." Id. (citations omitted).
Given our ruling above, that Guyer's wrongful
foreclosure claim was not time-barred, we need not reach Guyer's
third argument that a twenty-year statute of limitations applies
under HRS § 657-31.
IV. Conclusion
Based on the foregoing, we vacate the (1) "Final
Judgment" entered on March 21, 2018 and (2) "Order Granting
Defendants Nationstar Mortgage LLC's and Federal National
Mortgage Association's Motion for Summary Judgment" entered on
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November 1, 2017. We remand this matter to the Circuit Court of
the Second Circuit for further proceedings consistent with this
decision.
DATED: Honolulu, Hawai#i, November 30, 2022.
On the briefs: /s/ Lisa M. Ginoza
Chief Judge
James J. Bickerton,
Bridget G. Morgan, /s/ Katherine G. Leonard
(Bickerton Dang, LLLP), Associate Judge
and
John F. Perkin, /s/ Sonja M.P. McCullen
(Perkin & Faria LLLC), Associate Judge
and
Van-Alan H. Shima,
(Affinity Law Group),
Attorneys for
Plaintiff-Appellant
Andrew J. Lautenbach,
Kukui Claydon,
(Starn O'Toole Marcus
& Fisher),
Attorneys for
Defendants-Appellees
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