Wells Fargo Bank, N.A. v. Omiya.

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Electronically Filed
Supreme Court
SCWC-13-0000133
15-JUN-2018
09:16 AM
IN THE SUPREME COURT OF THE STATE OF HAWAIʻI
---o0o---
WELLS FARGO BANK, N.A. AS TRUSTEE FOR OPTION ONE MORTGAGE LOAN
TRUST 2007-4 ASSET-BACKED CERTIFICATES, SERIES 2007-4,
Petitioner/Plaintiff-Appellant,
vs.
DANIEL TSUKASA OMIYA,
Respondent/Defendant-Cross-Claimant-Appellee,
and
ASSOCIATION OF APARTMENT OWNERS OF ILIKAI APARTMENT BUILDING,
Defendant/Cross-Claim Defendant-Appellee.
SCWC-13-0000133
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-13-0000133; CIVIL NO. 10-1-2345)
JUNE 15, 2018
RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.
OPINION OF THE COURT BY POLLACK, J.
Under Hawaii law, in the case of non-judicial
foreclosure of real property registered with the Land Court, the
mortgagor or other person in interest may directly impeach the
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foreclosure proceedings affecting the property prior to the
entry of a new certificate of title. However, after a new
certificate of title has been entered, no judgment recovered on
the mortgage note for any balance due shall operate to open the
foreclosure or affect the title to the registered property (with
some exceptions for fraud).
This case concerns whether a certificate of title is
entered when a deed is accepted by the Office of the Assistant
Registrar of the Land Court and stamped with a new certificate
of title number. Because we conclude that assignment of a new
certificate of title number is not the statutory equivalent of
an entry of a certificate of title, we hold that the evidence
did not establish that a certificate of title had been entered.
Accordingly, the plaintiff in this case was not barred from
maintaining an action against the purchaser-defendant for
recovery of the foreclosed property. Additionally, because the
evidence presents an issue of material fact as to whether the
foreclosure sale was conducted through reasonable means to
secure an adequate purchase price, we vacate the grant of
summary judgment and remand the case for further proceedings.
I. BACKGROUND
Wells Fargo, N.A. (Wells Fargo) foreclosed via a non-
judicial foreclosure sale on its mortgage lien against apartment
unit 1731 (Property), located in the Ilikai Apartment Building
2
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in Honolulu, Hawaii. Wells Fargo paid $318,750.00 for the
Property, and a mortgagee quitclaim deed was recorded in the
Office of the Assistant Registrar of the Land Court in favor of
Wells Fargo on March 30, 2009.
Thereafter, another non-judicial foreclosure sale was
held on August 18, 2010 by the Association of Apartment Owners
of Ilikai Apartment Building (AOAO) at which Daniel Tsukasa
Omiya purchased the Property for $15,000.1 According to the
filings, the AOAO foreclosed on the Property to recover
maintenance fees the AOAO claimed it was owed.2 The AOAO
executed a quitclaim deed to Omiya which was accepted in the
Office of the Assistant Registrar on September 15, 2010 and
bears a stamp that reads in relevant part as follows:
STATE OF HAWAII
OFFICE OF ASSISTANT REGISTRAR
RECORDED
SEP 15, 2010 08:01 AM
Doc No(s) 3999421
on Cert(s) 940,974
1
The record does not indicate if there were competing bids to
purchase the Property.
2
The quitclaim deed that the AOAO executed to Omiya after the
foreclosure sale states that the AOAO had exercised foreclosure rights under
a power of sale based, in part, on Hawaii Revised Statutes (HRS) § 514B-146.
That section provides in relevant part that “[a]ll sums assessed by the
association but unpaid for the share of the common expenses chargeable to any
unit shall constitute a lien on the unit with priority over all other liens”
with some enumerated exceptions. HRS § 514B-146(a) (Supp. 2016). The
statute further specifies that “[t]he lien of the association may be
foreclosed by action or by nonjudicial or power of sale foreclosure
procedures set forth in chapter 667.” Id.
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Issuance of Cert(s) 996,234
A. Circuit Court Proceedings
1. Wells Fargo’s Complaint
On November 3, 2010, Wells Fargo filed a complaint
against Omiya and the AOAO in the Circuit Court of the First
Circuit (circuit court), alleging that the sale of the Property
to Omiya was not conducted in accordance with applicable Hawaii
law because, inter alia, Omiya did not pay reasonable value for
the Property.3 The complaint also stated that Omiya
claims to the be owner of the Property by virtue of that
certain Quitclaim Deed filed on September 15, 2010 . . . in
the Office of the Assistant Registrar of the Land Court,
State of Hawaii which resulted in the issuance of Transfer
Certificate of Title No. 996,234 registering title in the
name of Defendant Omiya.
In addition to other relief, Wells Fargo asked that the
Assistant Registrar of the Land Court be directed to take such
action as necessary to restore legal title to Wells Fargo,
including but not limited to, cancellation of Transfer
Certificate of Title (TCT)4 No. 996,234. Omiya answered and
filed a cross-claim against the AOAO.
3
The Honorable Edwin C. Nacino presided.
4
HRS Chapter 501 refers to the initial certificate of title issued
pursuant to the Land Court’s decree of registration as an “original
certificate of title,” see, e.g., HRS § 501-75 (2006), and refers to a
subsequent certificate of title issued to a new owner following the
conveyance of previously registered property as a “new certificate of title.”
See, e.g., HRS § 501-108 (2006 & Supp. 2016). Although the terms do not
appear in HRS Chapter 501, the Rules of the Land Court refer in some
instances to a new certificate of title as a “transfer certificate of title”
or TCT. See Rules of the Land Court (RLC) Rules 14, 26 (1989).
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2. Omiya’s Summary Judgment Motion
On December 21, 2011, Omiya filed a motion for summary
judgment asserting that the quitclaim deed to Omiya was recorded
and the Land Court had issued TCT No. 996,234. Thus, according
to Omiya, Wells Fargo’s arguments to invalidate the AOAO’s
foreclosure sale were untimely because they were not raised
before the issuance of the new certificate of title, which was
final and binding. (Citing Aames Funding Corp. v. Mores, 107
Hawaii 95, 103, 110 P.3d 1042, 1050 (2005).) As a result, Omiya
argued, no relief could be obtained against him or the Property
because he was statutorily protected as a subsequent purchaser
for value.5 (Citing Hawaii Revised Statutes (HRS) § 501-82
(Supp. 2016).)6
In its opposition to the summary judgment motion,
Wells Fargo asserted that there was a genuine issue of material
fact as to whether a new certificate of title had issued. Wells
Fargo pointed to the declaration of its counsel Anya Perez
5
In the alternative, Omiya argued that Wells Fargo should be
barred from opposing the motion for summary judgment or that the court should
dismiss Wells Fargo’s complaint based on its failure to comply with its
discovery obligations.
6
HRS § 501-82(a) provides in relevant part as follows: “Every
applicant receiving a certificate of title in pursuance of a decree of
registration, and every subsequent purchaser of registered land who takes a
certificate of title for value and in good faith, hold the same free from all
encumbrances except those noted on the certificate” subject only to
enumerated exceptions that are not relevant here.
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(Perez Declaration), which stated that she went to the Office of
the Assistant Registrar of the Land Court and, after searching
its computer records, was able to see that the new certificate
of title was only partially prepared. The certificate of title
was not complete and not certified, Perez averred, because the
legal description was missing. Perez further declared that a
staff person at the office initially told her that a new TCT No.
996,234 had been issued, “because it is certified by [the
quitclaim deed].” The staff member went on to explain, Perez
averred, that the certificate of title had not been checked and
signed by an assistant registrar, which was required for the
certificate of title to be certified.
Wells Fargo also asserted that there was a genuine
issue of material fact as to whether the sale price was
adequate. Wells Fargo again pointed to the Perez Declaration,
which stated that, based on a 2012 tax assessment found in an
online search of the City and County of Honolulu’s Real Property
Assessment and tax billing information website, the assessed
value of the Property as of October 1, 2011 was $308,300.00. A
copy of the search results was attached to the Perez
Declaration.7
7
Wells Fargo additionally submitted that there were genuine issues
of material fact as to the following: whether Wells Fargo was paying fees for
the Property; whether the AOAO gave proper notice of foreclosure; whether
(continued . . .)
6
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Omiya countered that the tax assessed value of the
Property found on the internet was inadmissible hearsay and an
unqualified expert opinion. As to whether a new certificate of
title was issued, Omiya maintained that the complaint admitted
that the filing of the quitclaim deed in the Office of the
Assistant Registrar resulted in the issuance of TCT No. 996,234,
registering title in Omiya’s name. Additionally, Omiya asserted
that the lack of a physical hard copy of a certificate of title
was merely the result of clerical or bureaucratic delay and that
“treating an issued certificate of title as ineffective” would
result in arbitrary and inconsistent Land Court protections,
which was contrary to the intent of the Land Court statute.8
Omiya submitted a supplemental declaration by Sandra
Furukawa, a title insurance provider who formerly served as
Registrar of the Bureau of Conveyances and Assistant Registrar
(. . . continued)
Omiya was the highest bidder; whether the auction took place in a manner as
required by law; and whether the sale was commercially reasonable.
8
The hearing on the motion was scheduled for January 19, 2012. At
the hearing, the court questioned Wells Fargo regarding its position as to
whether there was a judicial admission in the complaint. Wells Fargo
acknowledged the language in the complaint cited by the court and orally
requested leave to amend the complaint, arguing that the record was clear
that a new certificate of title had not been issued. The court stated that
it was not going to allow Wells Fargo to amend the complaint for the purpose
of the summary judgment motion because the motion to amend was not before the
court. The court continued the hearing to allow additional briefing. Wells
Fargo then filed a non-hearing motion for leave to amend its complaint on
January 23, 2012, so as to remove the language referring to the issuance of a
TCT number. On February 1, 2012, the court denied the motion.
7
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of the Land Court (Furukawa Declaration). Furukawa stated that
the Office of the Assistant Registrar of the Land Court at that
time was nearly four years behind in physically producing and
certifying new certificates of title for properties registered
in the Land Court system.
Wells Fargo filed a supplemental memorandum, asserting
that the rule that the certificate of title is conclusive is
predicated on the ability of an interested person to inspect the
actual, physical document at will. Wells Fargo argued that
Omiya had not presented a certificate of title as defined by the
Rules of the Land Court (RLC) Rule 52 (1989), which provides
that a “[c]ertificate means a certificate of title showing the
owner’s name, a description of the land and a summary of
encumbrances affecting the land, if any.” Because a certificate
of title had not been issued, Wells Fargo contended, it was not
prevented from challenging the non-judicial foreclosure.
Following a further hearing on the summary judgment
motion, the circuit court framed the dispositive issue as
whether “the issuance of the TCT number is sufficient” to
provide Omiya with statutory protection. The court concluded
that “there’s no genuine issue of material fact regarding”
whether Omiya was protected and thus granted the summary
judgment motion in favor of Omiya.
8
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The court issued an order granting summary judgment
and an amended partial final judgment. Wells Fargo filed a
timely notice of appeal to the Intermediate Court of Appeals
(ICA).
B. ICA Proceedings
On appeal, Wells Fargo contended that the circuit
court erred in (1) concluding that because a certificate number
had been issued, this court’s precedent prevented Wells Fargo
from challenging the AOAO’s foreclosure of the Property and (2)
granting the summary judgment motion because the sale price of
the Property shocked the conscience.9
In a memorandum opinion, the ICA held that the circuit
court did not err in granting summary judgment because there was
no genuine issue of material fact as to Omiya’s ownership of the
Property.10 The ICA cited RLC Rule 59(d) (1989), which provides
that in recording a deed, “the purchaser presents the deed which
contains the proper number of the certificate of the land
affected and also contains or has endorsed upon it a full
9
Wells Fargo also contended that the circuit court erred in
granting the summary judgment motion as Wells Fargo provided evidence that it
had been current in its payment to the AOAO for the condominium association
fees at the time of the foreclosure. This point of error is not raised in
the application for a writ of certiorari and is therefore not further
addressed.
10
The ICA’s memorandum opinion can be found at Wells Fargo Bank,
N.A. v. Omiya, No. CAAP-13-0000133, 2017 WL 3140895 (Haw. App. July 24,
2017).
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memorandum of all encumbrances affecting the land, if any.” The
ICA noted that Omiya followed this procedure by presenting the
quitclaim deed to the Land Court. Pursuant to HRS § 501-107
(Supp. 2016), the ICA stated, the instrument is stamped with the
date, hour, and minute of reception, and, with that, the
instrument is regarded as registered from the date and time
noted.
The ICA then pointed to HRS § 501-118 (2006), which
precludes a mortgagor or other person in interest from
impeaching foreclosure proceedings after the entry of a new
certificate of title. The ICA concluded that Omiya was required
only to show a TCT number stamped on the quitclaim deed record
at the Land Court and not a physical certificate of title.
The ICA acknowledged that Wells Fargo’s argument that
issuance of a TCT number does not have the same effect as
issuance of a physical TCT was not unreasonable. However, the
ICA determined that, “under the circumstances of the Land
Court’s current operations” and in view of Wells Fargo’s
judicial admission that issuance of the TCT number had the
effect of registering title in Omiya’s name, any challenge to
Omiya’s title should have been initiated before the TCT number
was issued to Omiya. The ICA accordingly held that Wells
Fargo’s purchase price argument was untimely because title
10
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became conclusive and unimpeachable when the TCT number was
issued.
Judge Ginoza dissented, arguing that there was
conflicting evidence as to whether the transfer had been
certified by the Land Court process, including (1) the quitclaim
deed with a notation of the “Issuance of Cert(s) 996,234”; (2)
the Perez Declaration attesting that Perez retrieved the
certificate of title on a computer screen and that it was only
partially prepared and not complete or certified because the
legal description was missing; and (3) the Furukawa Declaration
averring that the Office of the Assistant Registrar of the Land
Court was nearly four years behind in physically producing and
certifying new certificates of title. As to any judicial
admission, the dissent reasoned that the statement in the
complaint was not dispositive as the pertinent question under
HRS § 501-118 is whether there has been entry of a new
certificate of title. Thus, the dissent contended that there
was a genuine issue of material fact that precluded summary
judgment on this issue.
The dissent further concluded that there was a genuine
issue of material fact as to whether the price was grossly
inadequate. The dissent explained that mortgagees must
“exercise their right to non-judicial foreclosure under a power
of sale in a manner that is fair, reasonably diligent, and in
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good faith, and to demonstrate that an adequate price was
procured for the property.” (Quoting Kondaur Capital Corp. v.
Matsuyoshi, 136 Hawaiʻi 227, 240, 361 P.3d 454, 467 (2015).) In
this case, the dissent contended, the quitclaim deed submitted
by Omiya included an attachment indicating that in 2010 the
assessed net value of the Property was $281,100. Based on this
evidence, the dissent concluded there was a genuine issue of
material fact as to the adequacy of the purchase price.11
II. STANDARD OF REVIEW
This court reviews a court’s grant or denial of
summary judgment de novo. Querubin v. Thronas, 107 Hawaiʻi 48,
56, 109 P.3d 689, 697 (2005).
III. DISCUSSION
Wells Fargo presents two questions in its application
for a writ of certiorari. The first question concerns whether
the ICA gravely erred in affirming summary judgment when a new
certificate of title had not been entered prior to Wells Fargo
initiating this case. The second question involves whether the
ICA gravely erred in affirming summary judgment as to the
adequacy of the price paid by Omiya for the Property at the
11
The ICA majority responded that the 2010 tax assessment was not
argued by Wells Fargo as a basis for establishing that the foreclosure price
was inadequate, and that the value of the Property in the separate 2012 tax
assessment relied upon by Wells Fargo had “no bearing on the value of the
Property at the time of Omiya’s purchase in 2010.”
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foreclosure sale. To address these questions, we first consider
the framework of the Land Court system.
A. Certificate of Title
1. The Land Court System
Hawaii has two systems for recording title to real
property, the Bureau of Conveyances and the Land Court.
GGS (HI), Inc. v. N.Y. Diamond, Inc. (In re 2003 Ala Wai Blvd.),
85 Hawaii 398, 405, 944 P.2d 1341, 1348 (App. 1997), overruled
on other grounds, Knauer v. Foote, 101 Hawai‘i 81, 63 P.3d 389(2003). The legislature created the Land Court with the passage
of the Torrens Land Act (Act) in 1903, which is today codified
in HRS Chapter 501 as amended. 1903 Haw. Sess. Laws Act 56, § 2
at 279. The purpose of the system created by the Act “is to
conclusively establish title to land through the issuance of a
certificate of title.” Aames Funding Corp. v. Mores, 107 Hawai‘i
95, 101, 110 P.3d 1042, 1048 (2005). The holder of a
certificate of title holds it “free from all encumbrances except
those noted on the certificate in the order of priority of
recordation” and other statutorily enumerated encumbrances. HRS
§ 501-82(a) (Supp. 2016). Thus, “a land court certificate of
title is ‘conclusive and unimpeachable’ with regard to ‘all
matters contained therein,’” which is “[t]he fundamental
difference between a certificate of title issued by the land
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court and a recordation of title at the bureau of conveyances.”
In re 2003 Ala Wai Blvd., 85 Hawai‘i at 405, 944 P.2d at 1348.
Initial registration of property in Land Court “is not
a simple matter” and “has often been compared to an action to
quiet title.” 11 Thompson on Real Property, § 92.10(c) (David
A. Thomas ed., 3d ed. 2015); 3 Patton and Palomar on Land
Titles, § 682 (3d ed. 2003). A party first files an application
with the registrar. HRS § 501-22 (2006); see HRS § 501-21
(2006) (specifying who may file an application); HRS § 501-23
(2006) (listing requirements of contents of application). After
an application is filed, the court enters an order referring the
application to an examiner of title who searches records,
investigates facts, and files a report, “concluding with a
certificate of the examiner’s opinion upon the title.” HRS
§ 501-32 (2006). If the opinion of the examiner is adverse to
the applicant, the applicant may elect to proceed further or
withdraw the application. Id. If, in the examiner’s opinion,
the applicant has good title or if the applicant elects to
proceed notwithstanding an adverse opinion, the registrar
publishes notice of the application by order of the court in a
newspaper of general circulation; the notice must include the
names of all persons known to have an adverse interest in the
property and the adjoining owners and occupants, so far as
known. HRS § 501-41 (2006). The notice is also mailed to any
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person named in the notice and is posted in a conspicuous place
on the property. HRS § 501-42 (2006). Those claiming an
interest in the property may appear and file an answer. HRS
§ 501-45 (2006). If no person answers within the time allowed,
the court may order a default to be recorded, enter a decree
confirming the title of the applicant, and order registration of
the title. HRS § 501-46 (2006).
If an answer is filed, the case is set for hearing on
motion of a party, HRS § 501-51 (2006), at which time a judge of
the Land Court decides whether the applicant has proper title
for registration. HRS § 501-71 (Supp. 2016). If the court
finds proper title, the court issues a decree of confirmation
and registration subject to any encumbrances or interests found.
HRS § 501-71(a)-(b). Decrees of registration of absolute title
bind the property and quiet title to it, and they are thus
conclusive upon and against all persons.12 HRS § 501-71(d); see
also HRS § 501-73 (2006) (“The court may remove clouds on titles
and may find and decree in whom the title or any interest, legal
or equitable, in land is vested, whether in the applicant or in
any other person.”). The decree must contain certain
12
Types of non-absolute title are possessory title and qualified
title. HRS § 501-72 (2006).
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information, including any known encumbrances. HRS § 501-74
(2006).
After entry of the court decree, the registrar sends a
certified copy of the decree to the assistant registrar. HRS
§ 501-75 (2006); RLC Rule 55 (1989). The assistant registrar
then “transcribes the decree in a book to be called the
registration book, in which a leaf or leaves in consecutive
order shall be devoted exclusively to each title.” HRS § 501-
75. “The entry made by the assistant registrar in this book in
each case shall be the original certificate of title, and shall
be signed by the assistant registrar and sealed with the seal of
the court.” HRS § 501-75; RLC Rule 55. The certified copy of
the decree of registration is “filed and numbered by the
assistant registrar with a reference noted on it to the place of
record of the original certificate of title.” HRS § 501-75.
“The certificate first registered in pursuance of a
decree of registration in regard to any parcel of land” is
“entitled in the registration book ‘original certificate of
title, entered pursuant to decree of the land court, dated at’
(stating time and place of entry of decree and the number of the
case).” HRS § 501-83 (2006). The certificate “shall take
effect from the date of the transcription of the decree.” HRS
§ 501-83. Decrees of registration and the entry of certificates
are agreements running with the land and are binding upon the
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applicant and his or her successors, and the property “shall be
and forever remain registered land,” HRS § 501-86 (Supp. 2016),
unless deregistered by the owner of record. See HRS § 501-261.5
(Supp. 2016).
Owners of registered land “may convey, mortgage,
lease, charge, or otherwise deal with the same as fully as if it
had not been registered.” HRS § 501-101 (2006). An owner of
registered land who wants to convey it in fee executes a deed of
conveyance, which the grantor or grantee presents to the
assistant registrar.13 HRS § 501-108(a) (Supp. 2016); see also
HRS § 501-105 (Supp. 2016) (listing requirements of voluntary
instruments). If the instrument contains the requisite
information, then the assistant registrar shall record the deed,
mortgage, or other voluntary instrument.14 RLC Rule 58 (1989);
HRS § 501-108(a). “The act of registration shall be the
operative act to convey or affect the land.” HRS § 501-101.
Following tender of the deed of conveyance, “in
accordance with the rules and instructions of the court,” the
assistant registrar “shall make out in the registration book a
13
Conveyance of land less than fee simple are addressed in HRS
§ 501-103 (2006).
14
Instruments are “stamped with the date, hour, and minute of
reception[,]” and the instruments are “regarded as registered from the date
and time so noted” and are “numbered and indexed, and indorsed with a
reference to the proper certificate of title.” HRS § 501-107 (Supp. 2016).
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new certificate of title to the grantee,” note the date of
transfer on the original certificate, and stamp “canceled” on
the original certificate. HRS § 501-108(a); RLC Rule 59 (1989)
(after recording the instrument of transfer, “[t]he assistant
registrar shall thereupon, in accordance with the rules and
instructions of the court, enter a new certificate in the name
of the grantee”); see also HRS § 501-83 (prescribing that
“[s]ubsequent certificates relating to the same land shall be in
like form” as that of the certificate first registered pursuant
to a decree of registration). At the “time of any transfer,” if
there are encumbrances or claims adverse to the title of the
registered owner upon the registration book, “they shall be
stated in the new certificate or certificates, except as far as
they may be simultaneously released or discharged.” HRS § 501-
110 (2006). The “new certificate . . . shall be binding upon
the registered owner and upon all persons claiming under the
registered owner, in favor of every purchaser for value and in
good faith.”15 HRS § 501-106(b) (2006).
Owners of registered land may also mortgage the
property. HRS § 501-116 (Supp. 2016). With some exceptions for
15
In “cases of registration procured by fraud the owner may pursue
all the owner’s remedies against the parties to the fraud, without prejudice
however to the rights of any innocent holder for value of a certificate of
title.” HRS § 501-106(b) (2006).
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land deregistered pursuant to HRS Chapter 501, part II, all
instruments dealing with the mortgage must be registered and
“take effect upon the title of the mortgaged property only from
the time of registration.” HRS § 501-116; see also HRS § 501-
117 (2006) (prescribing procedure to register a mortgage).
“Mortgages of registered land may be foreclosed like mortgages
of unregistered land[,]” and nothing in HRS Chapter 501 “shall
be construed to prevent the mortgagor or other person in
interest from directly impeaching by action or otherwise, any
foreclosure proceedings affecting registered land, prior to the
entry of a new certificate of title.” HRS § 501-118 (2006).
“After a new certificate of title has been entered, no judgment
recovered on the mortgage note for any balance due thereon shall
operate to open the foreclosure or affect the title to
registered land.” HRS § 501-118.
With some exceptions,16 HRS § 501-212 provides a
statutory remedy to any person who, without negligence on the
person’s part, sustains loss as a result of the registration of
any other person as owner of such land through fraud, “or in
consequence of any error, omission, mistake, or misdescription
in any certificate of title . . . in the registration book.”
16
The State shall not be liable for a wrongful non-judicial
foreclosure or for loss caused by a breach of trust by a registered owner
trustee. HRS § 501-216 (2006).
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HRS § 501-212 (2006). The claim may be brought as a contract
claim “for the recovery of compensation for such loss or damage
or for such land or estate, or interest therein.” HRS § 501-
212.17
If the harm arises “wholly through fraud, negligence,
omission, mistake, or misfeasance of the registrar, assistant
registrar, or of any of the examiners of title . . . , or of any
of the assistants or clerks” in the performance of their
respective duties, the action shall be brought against the state
director of finance, as sole defendant. HRS § 501-213 (2006).
If the harm arises solely through misfeasance of some person
other than the officers and assistants, or arises jointly, “then
the action shall be brought against both the director and such
other person as joint defendants.” HRS § 501-213. If judgment
is in favor of the plaintiff and if damages cannot be recovered
from other defendants, then any amount due is to be paid out of
the general fund. See HRS § 501-214 (2006).
Thus, in many instances the statutory framework
essentially renders the State as a guarantor of the certificate
of title issued by the Land Court.
17
When the person who has been deprived of land or of any estate,
or interest therein, from conduct described in HRS § 501-212, has a remedy to
recover the land or interest, the person shall exhaust this remedy before
resorting to the statutory contract claim. HRS § 501-212.
20
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2. Defining “Entry of a Certificate of Title”
Omiya presented the quitclaim deed for registration to
the assistant registrar on September 15, 2010, according to the
stamp on the deed, and Wells Fargo filed its complaint on
November 3, 2010. Omiya contends that HRS § 501-118 and Aames
Funding Corp. v. Mores, 107 Hawaii 95, 110 P.3d 1042 (2005), bar
Wells Fargo from impeaching the foreclosure proceedings because
Wells Fargo filed its complaint after he presented the quitclaim
deed for registration. Wells Fargo argues that the statute and
Aames do not bar its claims because no certificate of title was
issued to Omiya.
HRS § 501-118 provides in relevant part as follows:
In case of foreclosure by exercising the power of
sale without a previous judgment, the affidavit required by
chapter 667 shall be recorded with the assistant registrar.
The purchaser or the purchaser’s assigns at the foreclosure
sale may thereupon at any time present the deed under the
power of sale to the assistant registrar for recording and
obtain a new certificate. Nothing in this chapter shall be
construed to prevent the mortgagor or other person in
interest from directly impeaching by action or otherwise,
any foreclosure proceedings affecting registered land,
prior to the entry of a new certificate of title.
After a new certificate of title has been entered, no
judgment recovered on the mortgage note for any balance due
thereon shall operate to open the foreclosure or affect the
title to registered land.
HRS § 501-118 (emphases added). Under this section, a
mortgagor’s right to directly impeach a foreclosure proceeding
is “expressly limited to the period before entry of a new
certificate of title.” Aames, 107 Hawaii at 101, 110 P.3d at
1048.
21
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HRS § 501-118 specifies “entry of a new certificate of
title” as the determinative point when foreclosure proceedings
may no longer be impeached. To determine what constitutes a new
certificate of title and entry thereof, we consider principles
of statutory construction, the legislative history of the
provision, and the structure of the statutes.
a. Statutory Construction
“The fundamental starting point of statutory
interpretation is the language of the statute itself,” and
“where the statutory language is unambiguous, our duty is to
give effect to its plain and obvious meaning.” State v.
Alangcas, 134 Hawai‘i 515, 525, 345 P.3d 181, 191 (2015). To
effectuate a statute’s plain language, its words “must ‘be taken
in their ordinary and familiar signification, and regard is to
be had to their general and popular use.’” See State v. Guyton,
135 Hawai‘i 372, 378, 351 P.3d 1138, 1144 (2015) (quoting In re
Taxes of Johnson, 44 Haw. 519, 530, 356 P.2d 1028, 1034 (1960));
see also HRS § 1–14 (2009). “In conducting a plain meaning
analysis, ‘this court may resort to legal or other well accepted
dictionaries as one way to determine the ordinary meaning of
certain terms not statutorily defined.’” Guyton, 135 Hawai‘i at
378, 351 P.3d at 1144 (quoting State v. Pali, 129 Hawaiʻi 363,
370, 300 P.3d 1022, 1029 (2013)).
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It is also “a canon of construction that statutes that
are in pari materia may be construed together.” State v.
Kamanaʻo, 118 Hawai‘i 210, 218, 188 P.3d 724, 732 (2008) (quoting
Black’s Law Dictionary 806 (8th ed. 2004)). “Thus, ‘[l]aws in
pari materia, or upon the same subject matter, shall be
construed with reference to each other. What is clear in one
statute may be called upon in aid to explain what is doubtful in
another.’” Id. (alteration in original) (quoting Barnett v.
State, 91 Hawaiʻi 20, 31, 979 P.2d 1046, 1057 (1999)); see also
HRS § 1-16 (2009).
The plain meaning of “prior to the entry of a new
certificate of title” clearly contemplates the transcription of
information into some common repository, and not merely the
acceptance or stamping of an existing document. See Entry,
Black’s Law Dictionary (10th ed. 2014) (“An item written in a
record; a notation.” (emphasis added)). This plain meaning
reading of HRS § 501-118 is underscored by other statutes
pertaining to the same subject matter in HRS Chapter 501.
Following the Land Court’s decision to grant an
application to register property in Land Court, the Land Court
issues a decree.18 HRS 501-71(a)-(b). A copy of that decree is
18
The required contents of a decree include information as to the
names of the owner and spouse, if married, a description of the land, and a
description of “the estate of the owner, and also, in such manner as to show
(continued . . .)
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then sent to the assistant registrar. HRS § 501-75. The
assistant registrar “transcribe[s] the decree” in the
registration book “in which a leaf or leaves in consecutive
order shall be devoted exclusively to each title.” Id. “The
entry made by the assistant registrar in this book in each case
shall be the original certificate of title,” id., and the
certificate “take[s] effect from the date of the
transcription[,]” HRS § 501-83. Thus, the act of transcribing
the decree into the registration book results in creation of the
original certificate of title, which is retained in the
registration book with all other certificates. The original
certificate in the registration book is entitled “original
certificate of title, entered pursuant to decree of the land
court, dated at,” followed by the “time and place of entry of
decree and the number of the case.” HRS § 501-83.
An owner desiring to convey in fee registered land, or
any portion thereof, executes a deed of conveyance, which is
then presented to the assistant registrar. HRS § 501-108(a).
If the instrument contains the requisite information, then the
(. . . continued)
their relative priority, all particular estates, mortgages, easements, liens,
attachments, and other encumbrances.” HRS § 501-74; cf. HRS § 501-82 (Supp.
2016) (providing that holder of certificate of title holds “free from all
encumbrances except those noted on the certificate” and statutorily
enumerated encumbrances).
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assistant registrar records it. RLC Rule 58; HRS § 501-108(a).
Following recording and in accordance with prescribed procedures
involving a review and certifying process, the assistant
registrar “make[s] out in the registration book a new
certificate of title to the grantee,” and the original
certificate of title is stamped “canceled.”19 HRS § 501-
108(a)(1); see RLC Rule 59 (“The assistant registrar shall
thereupon, in accordance with the rules and instructions of the
court, enter a new certificate in the name of the grantee.”).
The assistant registrar also lists any encumbrances or claims
adverse to the title of the owner on the new certificate of
title, unless they can be simultaneously released or discharged.
HRS § 501-110.
Thus, provisions of HRS Chapter 501 provide the
original and new certificates of title as being within the
registration book--the decree is “transcribe[d] in the
[registration] book,” which “shall be the original certificate
of title,” and new certificates of title are “ma[d]e out in the
registration book.” HRS §§ 501-75, 501-108(a); see HRS § 501-
196 (2006) (disallowing, with some exceptions, erasures,
alterations, or amendments “upon the registration book after the
19
It is not clear if certificates that follow the original are also
stamped “canceled.” See HRS § 501-108(a)(2).
25
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entry of a certificate of title . . . thereon”). Original
certificates of title are therefore created when they are
transcribed in the registration book and do not exist prior to
this transcription, and similarly, new certificates of title are
created when they are made out in the registration book.
Additionally, HRS § 501-83 provides that certificates
of title subsequent to the original certificate--i.e., new
certificates--“shall be in like form” to the original
certificate. HRS § 501-83. RLC Rule 52 (1989) defines
“certificate” as “a certificate of title showing the owner’s
name, a description of the land and a summary of encumbrances
affecting the land, if any.” Thus, a new certificate of title
has information referencing the original registration, the
owner’s name, a description of the property, and a summary of
encumbrances.20 None of this information is contained in a TCT
number.
Further, when statutory provisions in HRS Chapter 501
refer to a certificate of title, that is precisely what is
20
It appears that, as the name implies, a certificate of title must
also be certified with the signature or initials of the assistant registrar.
HRS § 501-75 expressly provides that an original certificate of title “shall
be signed by the assistant registrar and sealed with the seal of the court,”
and, as stated, new certificates of title “shall be in like form” to the
original certificate. HRS § 501-83. Perez, in her declaration, averred that
the new certificate of title in this case had not yet been signed by an
assistant registrar and that for the new certificate “to be certified, it
would have to be signed by an assistant registrar” according to a staff
person at the Office of the Assistant Registrar. See infra note 31 and
accompanying text.
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meant;21 when provisions in HRS Chapter 501 reference the number
of the certificate of title, that is also what is meant.22 If
the legislature intended for the issuance of the number of the
certificate of title to be the determinative point for when
parties could no longer impeach foreclosure proceedings, the
legislature would have so provided. Cf. Hyland v. Gonzales, 139
Hawai‘i 386, 391, 390 P.3d 1273, 1278 (2017) (“If the legislature
21
See, e.g., HRS § 501-83.5 (2006) (“[T]he assistant registrar
shall accept for filing any deed or other voluntary instruments without
requiring the presentation of the outstanding duplicate certificate.”); HRS
§ 501-84 (2006) (“Any conveyance of fee simple interest in registered land
shall be recorded with the assistant registrar, who shall note the same on
the certificate . . . [and] cancel all the certificates affecting the whole
land . . . .”); HRS § 501-88 (2006) (“The original certificate in the
registration book . . . shall be received as evidence in all the courts of
the State and shall be conclusive as to all matters contained therein.”); HRS
§ 501-108(a)(3) (“The original certificate shall be stamped
‘canceled’ . . . .”); HRS § 501-144 (2006) (“Every new certificate entered
under this section shall contain a memorandum of the nature of the proceeding
on which it is based . . . .”); HRS § 501-156 (2006) (“[A]ny new certificate
entered in pursuance of partition proceedings . . . shall contain a reference
to the final judgment of partition . . . .”).
22
See, e.g., HRS § 501-102(a) (2006) (“Every conveyance, lien,
attachment, order, decree, instrument, or entry affecting registered
land . . . shall . . . contain a reference to the number of the certificate
of title . . . .”); HRS § 501-108(a) (“[N]o deed, mortgage, lease, or other
voluntary instrument shall be accepted by the assistant registrar for
registration unless a reference to the number of the certificate of title of
the land affected by such instrument is incorporated in the body of the
instrument . . . .”); HRS § 501-131 (2006) (“The assistant registrar shall
note upon the original instrument creating or declaring the trust or other
equitable interest a reference by number of the certificate of title to which
it relates.”); HRS § 501-136 (2006) (“In addition to any particulars required
in such papers for recording with records of deeds, it shall also contain a
reference to the number of the certificate of title of the land to be
affected . . . .”); HRS § 501-151 (Supp. 2016) (“No writ of entry, action for
partition, or any action affecting the title to real property . . . and no
judgment, nor any appeal or other proceeding to vacate or reverse any
judgment, shall have any effect upon registered land as against persons other
than the parties thereto, unless a full memorandum thereof, containing also a
reference to the number of the certificate of title of the land affected is
filed or recorded and registered.”).
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intended that local boards of registration’s jurisdiction would
be so limited, then the legislature would have used language to
indicate that delivery was required.”).
Accordingly, the plain language of HRS § 501-118,
statutes in pari materia, and other principles of statutory
construction underscore that the issuance of a new certificate
of title number is not the statutory equivalent of an entry of a
new certificate of title under HRS § 501-118.23
b. Legislative History
“The legislative history of a statute remains relevant
‘even when the language appears clear upon perfunctory review.’”
State v. Alangcas, 134 Hawaii 515, 526, 345 P.3d 181, 192 (2015)
(quoting Richardson v. City & Cty. of Honolulu, 76 Hawaii 46,
68–69, 868 P.2d 1193, 1215–16 (1994) (Klein, J., dissenting));
23
We note that, although a certificate of title is created upon
transcription in the “registration book,” HRS §§ 501-75, 501-108(a)(1), the
statutory scheme indicates “registration” is a distinct act occurring prior
to the entry of a certificate of title. In the context of newly registered
land, registration occurs when the land court enters a “decree of
confirmation and registration.” HRS § 501-71(a). Entry of an original
certificate of title occurs later, when the assistant registrar transcribes
the decree into the registration book, HRS § 501-75, with the certificate
taking effect upon transcription. HRS § 501-83. Subsequent registrations of
conveyances and other instruments affecting registered land occur “during
office hours,” HRS § 501-101, and are effective from the time the instrument
is received by the assistant registrar. HRS § 501-107. Thus, registration
of a subsequent instrument occurs when the instrument is received by the
assistant registrar, and this delivery acts to transfer the applicable
interest. See HRS § 501-101 (“The act of registration shall be the operative
act to convey or affect the land . . . .”). The transfer is not made
unimpeachable under HRS § 501-118, however, until a new certificate of title
is issued.
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see State v. Entrekin, 98 Hawaii 221, 227, 47 P.3d 336, 342
(2002) (using legislative history to confirm interpretation of
statute). “Were this not the case, a court may be unable to
adequately discern the underlying policy which the legislature
seeks to promulgate and, thus, would be unable to determine if a
literal construction would produce an absurd or unjust result,
inconsistent with the policies of the statute.” Survivors of
Medeiros v. Maui Land & Pineapple Co., 66 Haw. 290, 297, 660
P.2d 1316, 1321 (1983).
According to the Furukawa Declaration, there was a
backlog of nearly four years at the Land Court in certifying new
certificates of title for properties registered in Land Court.
Over time, there have been legislative efforts to alleviate the
backlog. As early as 1985, there was a backlog at the Land
Court of which the legislature was aware. See, e.g., S.C. Rep.
No. 38, in 1985 Senate Journal, at 921 (“Testimony by the
Department of Land and Natural Resources and confirmation from
practitioners in this area indicate that there is currently a
seven month delay in processing land court documents.”). The
following year, the legislature appropriated funds to
computerize the Land Court in an effort to reduce the backlog.
See 1986 Haw. Sess. Laws Act 246, §§ 26-28 at 441-42; S.C. Rep.
No. 38, in 1985 Senate Journal, at 921.
29
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More recently, the legislature passed a pair of acts
aimed to alleviate the backlog, one in 2009 and the other in
2012. The first act’s stated purpose was to “ease the backlog”
in Land Court by, inter alia, allowing an owner of a fee
interest in registered land to transfer it to the regular
system, allowing electronic recording of instruments, and
transferring fee simple timeshare interests from the Land Court
to the regular system. 2009 Haw. Sess. Laws Act 120, § 1 at
304. The stated purpose of the second act was also to “ease the
backlog” by requiring that fee timeshare interests be recorded
in the regular system rather than Land Court and “streamlining
the procedure for deregistering” remaining fee timeshare
interests. See 2012 Haw. Sess. Laws Act 121, § 1 at 426. This
change was a result of the legislature finding that the process
required to transfer fee timeshare interests to the regular
system had “exceeded the capacity of the land court,
particularly in light of the approximately three year backlog of
land court recordings and registration.” See 2012 Haw. Sess.
Laws Act 121, § 1 at 425-26; see also HRS § 501-261 (Supp.
2016).
Other changes made to Land Court procedures have
included eliminating the issuance of duplicates of certificates
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of title to mortgagees and lessees,24 making issuance of a new
certificate discretionary upon the appointment of a new trustee
of registered land,25 eliminating the need for a duplicate
owner’s certificate of title,26 eliminating the requirement that
leasehold timeshare interests be registered with the Land
Court,27 and allowing money judgments recorded in the Bureau of
Conveyances to encumber registered property.28
The act creating Land Court and enacting the precursor
to HRS § 501-118 was passed in 1903. 1903 Haw. Sess. Laws Act
56. The statute read in relevant part as follows: “[N]othing
contained in this Act shall be construed to prevent the
mortgagor or other person in interest from directly impeaching,
by bill in equity or otherwise, any foreclosure proceedings
affecting registered land, prior to the entry of a new
certificate of title.” 1903 Haw. Sess. Laws Act 56, § 63 at
307. This provision is virtually identical to the current
iteration of HRS § 501-118 and has remained unchanged in
24
Stand. Comm. Rep. No. 432, in 1951 Senate Journal, at 933; see
1951 Haw. Sess. Laws Act 142.
25
S.C. Rep. No. 38, in 1985 Senate Journal, at 921; see 1986 Haw.
Sess. Laws Act 246, § 13 at 436.
26
S.C. Rep. No. 2258, in 1988 Senate Journal, at 965; see 1988 Haw.
Sess. Laws Act 346.
27
S.C. Rep. No. 2619, in 1998 Senate Journal, at 1060; see 1998
Haw. Sess. Laws Act 219, § 1 at 753.
28
See 2014 Haw. Sess. Laws Act 19, §§ 1-3 at 40-42.
31
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substance from the inception of the Land Court. Compare id.,
with HRS § 501-118. Indeed, in 1998, the legislature
specifically “[r]etain[ed] the original statutory language in
[HRS § 501-118], which refers to the ability for the mortgagor
to directly impeach any foreclosure proceeding affecting
registered land, prior to the entry of a new certificate of
title.” Conf. Comm. Rep. No. 75, in 1998 Senate Journal, at
774; see also Aames Funding Corp., 107 Hawai‘i at 102, 110 P.3d
at 1049 (noting that amendments were made to HRS § 501-118, but
that the cutoff to impeach foreclosure proceedings was retained
(quoting Conf. Comm. Rep. No. 75, in 1998 House Journal, at
980)).
Throughout the many legislative amendments to HRS
Chapter 501, including those made for the express purpose of
reducing the backlog, the legislature has consistently
maintained the entry of a new certificate of title as the
deadline for impeaching foreclosure proceedings. Omiya contends
that “the Land Court’s practice is to hold that a new TCT is
‘entered’ when the new TCT number is stamped on the recorded
deed.”29 The legislature, however, has not enacted the multiple
amendments throughout HRS Chapter 501 necessary to adopt this
29
Omiya cites Gary W.B. Chang, Land Court: Demystifying an Enigma,
Haw. B. J. 4 (Sept. 2017), which states that the Land Court’s practice was
the result of “a pragmatic decision.”
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practice. Instead, the legislature has sought to alleviate the
backlog by increasing resources, streamlining certain
procedures, and reducing the need to issue certificates and
duplicate certificates.
Thus, despite various statutory changes made to HRS
Chapter 501 since its enactment, HRS § 501-118 has remained
virtually identical, evincing the legislature’s intent to
maintain the entry of a new certificate as the pivotal juncture
after which foreclosure proceedings may no longer be impeached.
This conclusion is underscored by the legislature’s response to
the Land Court backlog. The legislature enacted the amendments
discussed above for the express purpose of addressing the Land
Court’s workload, but at no point did the legislature amend HRS
§ 501-118 to prohibit foreclosure proceedings from being
directly impeached prior to the entry of a new certificate.30
Any change in Land Court practice that implemented such a bar
was clearly inconsistent with the legislative history and
statutory provisions of HRS Chapter 501.
c. Structural Considerations
As stated, the primary purpose of the Torrens Land
Act, codified in HRS Chapter 501, “is to conclusively establish
30
HRS § 501-118 has not been amended since 1998. See 1998 Haw.
Sess. Laws Act 122, § 3 at 477.
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title to land through the issuance of a certificate of title.”
Aames Funding Corp., 107 Hawai‘i at 101, 110 P.3d at 1048(emphasis added). Thus, a land court certificate of title is
“conclusive and unimpeachable” with regard to “all matters
contained therein.” In re Bishop Tr. Co., 35 Haw. 816, 825
(Haw. Terr. 1941). The circuit court and ICA decisions,
however, make a recorded deed stamped with an assigned TCT
number the equivalent of a new certificate of title.
Preparation of a new certificate of title involves a
verification process as the document is intended to be a
conclusive, comprehensive listing of every interest in the
property.31 See id. The certifying process is key to the
issuance of a new certificate of title both to maintain the
integrity of the Land Court system by ensuring the registration
31
In the article cited by Omiya, Judge Chang explains that the
current Land Court practice is to subject registered conveyances to a
“secondary review” prior to “the final act of certifying the new TCT as being
recognized by the assistant registrar.” Chang, supra note 29, at 13 n.18.
During this review, “the document and the content of the superseded TCT can
be studied and examined to determine whether the new transaction meets the
requirements of land court” and to verify that there are no typographical
errors in the document. Id.
Judge Chang states that “TCT numbers are assigned on a random,
chronological order depending upon when a document is recorded,” and a single
mistyped digit in a seven digit TCT number can result in the document
applying “to a completely different parcel of property.” Id. at 18 n.35.
The article also notes that complex mortgage and lending documents may
contain drafting errors that preclude issuance of a certificate of title.
Id. at 10 n.16. Judge Chang indicates that a registered conveyance may be
pending secondary review if the corresponding entry in the registration book
“is not initialed by the assistant registrar, or . . . the list of
encumbrances/memorials . . . are left totally blank.” Id. at 13 n.18.
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book is completely accurate and to avoid the potential adverse
consequences that can result if the information entered on a
certificate is incorrect. Aames Funding Corp., 107 Hawai‘i at
101, 110 P.3d at 1048 (explaining that the purpose of the
registration “is to conclusively establish title to land through
the issuance of a certificate of title”).
In many circumstances, the State is statutorily liable
to any non-negligent person who sustains loss or damage, or is
deprived of land or of any estate or interest therein, “in
consequence of any error, omission, mistake, or misdescription
in any certificate of title,” by Land Court personnel in the
performance of their duties.32 HRS § 501-212. This liability
even extends to situations in which the misfeasance is wholly
the result of some person other than Land Court personnel, or
arises from joint misfeasance, and the judgment shall be paid by
the State when amounts due by other defendants are not
satisfied. HRS § 501-213. The State is not liable, however,
when the aggrieved person is able to recover the property. HRS
§ 501-212.
32
Although “[t]he State shall not be liable to pay for any loss,
damage, or deprivation occasioned . . . by the improper exercise of any power
of sale in a mortgage,” HRS § 501-216, the effect of an entry of a
certificate of title with respect to the State’s role as guarantor has
implications in other contexts involving registered land.
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Treating a stamped deed with an assigned TCT number as
a certificate of title that precludes an aggrieved person from
recovering property would thus pose a significantly increased
liability risk for the State. See Legis. Reference Bureau, Two
Land Recording Systems, H.R. 47-7, at 20 (1987) (“[T]he single
claim of $110,000 paid in 1986 by the State, pursuant to the
provisions of [HRS § 501-212] has nearly depleted the total
amount of fees estimated to have been collected for the
fund . . . .”). If the statutory determinative point when title
becomes unimpeachable is to be made effective prior to the
issuance of a certificate of title, it must be the result of
legislative amendments to HRS Chapter 501, and not of a change
in practice of the Land Court.
3. Wells Fargo’s Admission
Omiya asserts that Wells Fargo admitted in the
complaint that a new certificate number was issued in favor of
Omiya. The ICA, after concluding that a TCT number has the same
effect as issuance of an actual certificate of title, then
determined that Wells Fargo’s complaint contained a judicial
admission that issuance of the TCT number in this case had the
effect of registering title in Omiya’s name.
A judicial admission is a formal statement, either by
a party or his or her attorney, in the course of a judicial
proceeding that removes an admitted fact from the field of
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controversy. Lee v. Puamana Cmty. Ass’n, 109 Hawai‘i 561, 573,
128 P.3d 874, 886 (2006). “It is a voluntary concession of fact
by a party or a party’s attorney during judicial proceedings.”
Id. Omiya points to two paragraphs in the complaint that he
argues contains judicial admissions. The first reads as
follows:
[Plaintiff] . . . alleges and avers, as follows: . . . .
3. That Defendant DANIEL TSUKASA OMIYA (“Omiya”),
husband of Sandra Sachiko Omiya, whose address is 1314
South King Street, Suite 1052, Honolulu, 96814 also claims
to the be owner of the Property by virtue of that certain
Quitclaim Deed filed on September 15, 2010 as Document No.
3999421 in the Office of the Assistant Registrar of the
Land Court, State of Hawaii which resulted in the issuance
of Transfer Certificate of Title No. 996,234 registering
title in the name of Defendant Omiya.
(Emphasis added.) The other paragraph Omiya points to states
the following:
WHEREFORE, Plaintiff prays, as follows:
1. As to Count One, the Court declare the
foreclosure sale of the Property conducted by Defendant
Ilikai null and void; that all parties claiming by, through
or under said foreclosure sale, including but not limited
to Defendant Omiya, have no legal interest in the Property;
that Plaintiff be declared the legal owner of the Property;
and the Assistant Registrar of the Land Court, State of
Hawaii, be directed to take such action as necessary to
restore legal title to Plaintiff, including but not limited
to, cancellation of TCT No. 996,234 issued to Defendant
Omiya.
(Emphasis added.) Omiya specifically references the underscored
language in both paragraphs as constituting judicial admissions.
HRS § 501-118 allows impeachment of non-judicial
foreclosure proceedings of registered land “prior to the entry
of a new certificate of title.” HRS § 501-118. The first
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purported admission states that the filed quitclaim deed
“resulted in the issuance of Transfer Certificate of Title No.
996,234 registering title in the name of Defendant Omiya.” The
statement does not admit that a new certificate of title was
issued and then entered; rather, it admits only that a new
certificate number was issued.33 The second contended admission
requests that the circuit court cancel the TCT number that was
issued. It does not request that a certificate of title be
cancelled. Neither of Wells Fargo’s statements in the complaint
admits that a new certificate of title was issued.
4. Erroneous Grant of Summary Judgment
In this case, Omiya presented a quitclaim deed to the
assistant registrar, who stamped it with the date and time.
That stamp registered the quitclaim deed, making it effective as
a conveyance. See HRS §§ 501-101, 501-107 (Supp. 2016); supra
note 23. For the reasons discussed, registering a quitclaim
deed is not equivalent to the creation or entry of a new
certificate of title. As Wells Fargo argued, the evidence does
not show that a new certificate of title was entered; had one
been created, a certified and sealed copy of the certificate
would have been admissible as evidence. See HRS § 501-88 (2006)
33
Judge Ginoza’s dissent aptly observed that the complaint was not
dispositive: “Rather, the pertinent question under HRS § 501-118 is whether
there has been ‘entry of a new certificate of title.’”
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(certified and sealed copies of certificates “shall be received
as evidence in all the courts of the State”); cf. Aames Funding
Corp. v. Mores, 107 Hawaiʻi 95, 97, 110 P.3d 1042, 1044 (2005)
(“Trial began with both parties stipulating to the authenticity
of . . . a certified copy of TCT No. 587,098,” which was
accepted into evidence).
In addition, the stamp on the quitclaim deed in this
case reads “Issuance of Cert(s) 996,234.” Based on this stamp,
Omiya argued that a new certificate had been issued. But, as
explained, assignment of a new TCT number does not demonstrate
that a new certificate of title has been duly prepared and
entered. Thus, the record in this case does not show that “a
new certificate of title has been entered,” which is required to
invoke the statutory protection provided by HRS § 501-118.34
In affirming the circuit court’s grant of summary
judgment, the ICA adopted the circuit court’s interpretation
that the assignment of a TCT number has the same effect as a new
certificate of title. As explained, this conclusion is
contradicted by the plain language of HRS § 501-118, statutes
and rules that are in pari materia, the legislative history of
HRS Chapter 501, and the statutory scheme underlying the Land
34
Wells Fargo argued that Omiya did not present a certificate of
title meeting the definition of RLC Rule 52. Omiya does not contend that he
presented such a document.
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Court system. Accordingly, equating a TCT number to issuance
and entry of a new certificate of title was error, and the grant
of summary judgment in favor of Omiya on this ground was
improper.
B. Adequacy of Purchase Price
Wells Fargo also contends that the circuit court
erroneously granted summary judgment in favor of Omiya because
there was a genuine issue of material fact as to whether the
AOAO used reasonable means to obtain the best price for the
Property. Omiya counters that Wells Fargo’s challenge is barred
by HRS § 501-118 and that, even if it were not, Wells Fargo did
not submit admissible evidence of the value of the Property.
Because we have concluded that Wells Fargo’s complaint is not
barred by HRS § 501-118, its contention as to the adequacy of
the price for the Property may be considered.
Mortgagees exercising their right to non-judicial
foreclosure under a power of sale must do so “in a manner that
is fair, reasonably diligent, and in good faith, and to
demonstrate that an adequate price was procured for the
property.” Kondaur Capital Corp. v. Matsuyoshi, 136 Hawai‘i 227,
240, 361 P.3d 454, 467 (2015) (citing Ulrich v. Sec. Inv. Co.,
35 Haw. 158, 168 (Haw. Terr. 1939)); see also id. at 239–40, 361
P.3d at 466–67 (holding that duties under Ulrich apply to non-
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judicial foreclosures of real property).35 Although “the
mortgagee’s duty to seek the best price under the circumstances
does not require the mortgagee to obtain the fair market value
of the property[,]” “the mortgagee nonetheless has a duty to use
fair and reasonable means to conduct the foreclosure sale in a
manner that is conducive to obtaining the best price under the
circumstances.” Hungate v. Law Office of David B. Rosen, 139
Hawai‘i 394, 408–09, 391 P.3d 1, 15–16 (2017).
“[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.” Kondaur, 136
Hawai‘i at 240, 361 P.3d at 467 (quoting Price v. AIG Haw. Ins.
Co., 107 Hawaii 106, 110, 111 P.3d 1, 5 (2005)). All evidence
and inferences therefrom are to be viewed in the light most
favorable to the non-moving party. Id.35
The foreclosure by the AOAO was conducted under power of sale
pursuant to, inter alia, HRS §§ 667-5 to 667-10. The AOAO was therefore
subject to the requirements of Ulrich and Kondaur. See Hungate v. Law Office
of David B. Rosen, 139 Hawaii 394, 408, 391 P.3d 1, 15 (2017); see also
Kondaur, 136 Hawaii at 230 n.3, 361 P.3d at 457 n.3 (“HRS §§ 667–5 to 667–10
governed the process of foreclosure by power of sale (i.e., non-judicial
foreclosure) and were within Part I of HRS Chapter 667. HRS §§ 667–5 to 667–
8 were repealed by the legislature in 2012.” (citing 2012 Haw. Sess. Laws Act
182, § 50 at 684)).
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Before this court, Wells Fargo cites the 2010 tax-
assessed value that was included with the quitclaim deed
submitted by Omiya to support its contention that summary
judgment was improperly granted. Omiya contends that we should
not consider the 2010 tax-assessed value because Wells Fargo did
not make that argument or specifically point to that evidence
before the circuit court, therefore waiving use of that
evidence.
Omiya cites in support of its argument Munoz v. Yuen,
which noted that “in reviewing a summary judgment, this court
will not examine evidentiary documents, such as depositions and
admissions, not specifically called to the attention of the
trial court, even though they may be on file in the case.” 66
Haw. 603, 606, 670 P.2d 825, 827 (1983). In Munoz, none of the
documents filed in support of and in opposition to the motion
for summary judgment cited the depositions that the appellant
sought to rely upon on appeal to establish a genuine issue of
material fact. Id. Nor were the depositions referenced during
the hearing. Id. In contrast, Omiya included the quitclaim
deed and the 2010 tax-assessed value as an exhibit to his
summary judgment motion. Accordingly, the 2010 tax-assessed
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value would have been within the circuit court’s attention
during the summary judgment proceedings.36
The 2010 tax-assessed value as of June 22, 2010,
before the August 18, 2010 foreclosure sale, was $281,100.
Omiya paid $15,000 at the foreclosure sale. The difference
between the assessed value and the purchase price, viewed in the
light most favorable to Wells Fargo as the non-moving party,
creates a genuine issue of material fact as to whether the AOAO
used reasonable means to obtain the best price for the Property.
Therefore, the grant of summary judgment as to the adequacy of
the bid price for the Property was erroneous.37
36
Additionally, Omiya argues that the internet printout showing a
2012 tax assessment that Wells Fargo submitted with the Perez Declaration was
inadmissible hearsay and not relevant, as the tax-assessed value was for a
time period after the foreclosure took place. In light of our conclusion
with regard to the evidence of the 2010 tax-assessed value of the Property
before the circuit court, this argument is not addressed.
37
Omiya raises other arguments that are unavailing. Omiya contends
that because Wells Fargo stipulated to receiving foreclosure-related notice,
Wells Fargo “waiv[ed] any challenge to the underlying foreclosure notice,
process, or conduct that resulted in the foreclosure sale price.” Aside from
the fact that Omiya raises this argument for the first time in his response
to the application for a writ of certiorari, it is without merit. Hungate,
which Omiya relies upon for its contention, does not indicate that
stipulating to notice precludes any challenge to a foreclosure sale. After
discussing the common-law duty addressed in Kondaur and Ulrich, this court
held that what had to be proven was “that the sale was fairly conducted and
resulted in an adequate price under the circumstances.” Hungate, 139 Hawaii
at 408-09, 391 P.3d at 15-16 (citing Kondaur, 136 Hawaii at 240-42, 361 P.3d
at 467-69).
Omiya also argues for the first time before this court that “a
defective non-judicial foreclosure process results in merely voidable title,
not void,” and, accordingly, “Wells Fargo’s remedy is limited to monetary
damages against the alleged wrongful foreclosing party, [the AOAO,] not the
foreclosure buyer,” because “an innocent purchaser like [himself] is
protected.” (Citing Mount v. Apao, 139 Hawaii 167, 169, 384 P.3d 1268, 1270
(continued . . .)
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IV. CONCLUSION
For the foregoing reasons, we vacate the ICA’s August
29, 2017 Judgment on Appeal; the circuit court’s Order Granting
Defendant Daniel Tsukasa Omiya’s Motion for Summary Judgment or,
Alternatively, to Dismiss for Failure to Comply with Discovery
Order, Filed December 21, 2011, filed March 29, 2012; the Order
Granting Defendant Daniel Tsukasa Omiya’s Motion for Entry
of Rule 54(b) Final Judgment, Filed April 18, 2012, filed June
6, 2012; and the Amended Partial Final Judgment In Favor of
Defendant Daniel Tsukasa Omiya, filed February 5, 2013. The
case is remanded to the circuit court for further proceedings
consistent with this opinion.
Gary Y. Okuda /s/ Mark E. Recktenwald
for petitioner
/s/ Paula A. Nakayama
Charles A. Price
for respondent /s/ Sabrina S. McKenna
/s/ Richard W. Pollack
/s/ Michael D. Wilson
(. . . continued)
(2016); Santiago v. Tanaka, 137 Hawaii 137, 158, 366 P.3d 612, 633 (2016).)
In his motion for summary judgment, Omiya argued only that he was statutorily
protected because a certificate of title had issued, and this was the sole
basis of the circuit court’s ruling. The circuit court did not consider
whether an innocent purchaser of property registered in the Land Court system
is protected when a certificate of title has not issued, nor did the court
make any finding that Omiya was in fact an innocent purchaser. Accordingly,
we do not address these issues.
44