Aames Funding Corp. v. Mores

• Decision Date: 22 April 2005
• Docket Number: No. 24758.,24758.
• Citation: 107 Haw. 95,110 P.3d 1042
• Parties: AAMES FUNDING CORPORATION, a California corporation, dba Aames Home Loan, Plaintiff-Appellee v. Ponciano Millora MORES and Patricia Rosete Mores, Defendants-Appellants, and John Doe 1-10, Jane Does 1-10, and Doe Partnerships, Corporations and Other Entities 1-20, Defendants.
• Court: Hawaii Supreme Court

110 P.3d 1042

107 Haw. 95

AAMES FUNDING CORPORATION, a California corporation, dba Aames Home Loan, Plaintiff-Appellee v. Ponciano Millora MORES and Patricia Rosete Mores, Defendants-Appellants, and John Doe 1-10, Jane Does 1-10, and Doe Partnerships, Corporations and Other Entities 1-20, Defendants.

No. 24758.

Supreme Court of Hawaii.

April 22, 2005.

As Amended May 11, 2005.

Reconsideration Granted in part and Denied in part, May 11, 2005.

Gary Victor Dubin, on the briefs, Honolulu, for defendants-appellants.

Adelbert Green (Dwyer, Schraff, Meyer, Joseem & Bushnell), on the briefs, Honolulu, for plaintiff-appellee.

MOON, C.J., LEVINSON, NAKAYAMA, ACOBA, and DUFFY, JJ.

Opinion of the Court by ACOBA, J.

Defendants-Appellants Ponciano Millora Mores and Patricia Rosete Mores (the Moreses) appeal from the October 11, 2001 order of the district court of the first circuit (the district court)¹ granting a writ of possession for property located in Aiea, Hawai'i (the Property) in favor of Plaintiff-Appellee Aames Funding Corporation (Aames). The Moreses also challenge the October 11, 2001 findings of fact and conclusions of law, and the October 24, 2001 order of the district court denying the Moreses' motion to dismiss filed on October 3, 2001.

Based on the reasons set forth herein, the district court's October 11, 2001 and October 24, 2001 orders are affirmed.

I.

On July 5, 2000, the Moreses entered into a residential mortgage loan (Mortgage) with Aames in the principal amount of $227,500 for the Property. The Mortgage was filed in the Office of the Registrar of the Land Court of the State of Hawai'i (Land Court) as Document No. 2637478, and was the first mortgage lien on the Property.

The Mortgage expressly states that the Moreses "do[ ] hereby mortgage, grant and convey to [Aames], with power of sale, the [Property]." The Mortgage also contains conditions regarding acceleration of the loan, notice for default and, subsequent forfeiture of the loan, and the curing of default. The Mortgage states in relevant part:

If the default is not cured on or before the date specified in the notice, [Aames], at its option, may require immediate payment in full of all sums secured by this Security Instrument without further demand and may invoke the power of sale and any other remedies permitted by applicable law.

(Emphasis added.)

On August 14, 2000, the Moreses filed a Warranty Deed in the Land Court, executed on July 6, 2000, which conveyed the Property to the Moreses family trust dated April 24, 1995. On November 15, 2000, Aames mailed, inter alia, a "Notice of Default" to the Moreses indicating that the Moreses had breached their financial obligations under the Mortgage and owed $8,685.01 on the Mortgage as of November 15, 2000.

On January 4, 2001, Aames issued a "Notice for Non-Judicial Foreclosure of Sale" to the Moreses. The notice announced the sale of the Property by public auction. On April 10, 2001, a second "Notice of Non-Judicial Foreclosure Sale" was sent to the Moreses. This notice was sent via certified mail, specified the default, detailed the action required to cure said default, indicated the date by which the default must be cured, and stated that non-compliance would result in acceleration of the mortgage sums due and in the sale of the Property.

Apparently, a public auction of the Property was conducted² and on July 17, 2001, Aames filed a Commissioner's Deed in the Land Court denominated as Document No. 2722965. This Deed was executed "in accordance with the terms of that certain Affidavit of Exercise of Power of Sale dated June 15, 2001, recorded in [the Land Court] as Document No. 2714670."

On July 20, 2001, the Land Court issued Aames a Transfer Certificate of Title (TCT) No. 587,098 to the Property. The Moreses refused to surrender possession. On August 15, 2001, Aames filed an action for ejectment against the Moreses in the district court. On August 29, 2001, the Moreses mailed Aames a letter notifying Aames of the Moreses' "right and option to cancel and rescind" the Mortgage "based upon numerous federal Truth-In-Lending Violations ..., none the least of which was [Aames's] failure to deliver... any completed copies of the Notice of Right to Cancel with all requisite dates filled in."

On August 30, 2001, citing the Hawai'i District Court Rules of Civil Procedure (HDCRCP), the Moreses filed a "Rule 12.1 Joint Declaration ... Objecting to Subject Matter Jurisdiction" (declaration). Apparently, on August 31, 2001, the district court conducted a return hearing, in which the Moreses appeared pro se and entered general denials. Aames's ejectment action was set for trial on October 5, 2001.

On October 3, 2001, the Moreses filed a motion to dismiss based on (1) "lack of subject matter jurisdiction" and (2) "lack of admissible evidence." On October 3, 2001, Aames responded with a memorandum in opposition.

On October 5, 2001, trial on Aames's ejectment action was conducted before the district court. Trial began with both parties stipulating to the authenticity of (1) a certified copy of the July 17, 2001 Commissioner's Deed, (2) a certified copy of the 2001 real property tax assessment records for the Property, and (3) a certified copy of TCT No. 587,098. The district court accepted all three documents into evidence.

Aames then requested that the district court "take judicial notice of the general denial that the [Moreses] entered in this case, recognize ... that they dispute possession, [and] our right to possession of the [P]roperty[.]" The Moreses responded to this request by orally moving to "dismiss the case on the basis that [Aames has] not fulfilled their [sic] requirements under law for presenting admissible evidence." In this regard, the Moreses made six "offers of proof."³ The district court accepted the Moreses' offers of proof subject to Aames's objection as to the relevance of said offers. Thereafter, the district court ruled that such offers were not relevant and sustained Aames's objection.

The district court then announced its ruling "in favor of [Aames]" and "grant[ed] judgment for possession and writ of possession... effective ... November 1[, 2001]." On October 11, 2001, the district court entered its written findings of fact, conclusions of law and order. The district court found in relevant part as follows:

1. Aames ... holds title to the [Property];

2. Aames ... is the registered owner of the [Property];

3. [The Moreses] disputed [Aames's] right to possession of the subject property by entering a general denial to the complaint filed by [Aames] for Ejectment.

The district court ordered "Judgment for Possession" and a "Writ of Possession" be entered in favor of Aames. Attorney's fees and costs were awarded to Aames. On October 24, 2001, the district court entered its "Order Denying Mores Defendants' Notice of Motion and Motion to Dismiss Filed October 3, 2001."

On November 9, 2001, the Moreses filed a notice of appeal. As mentioned previously, they appeal from the October 11, 2001 order and dispute the October 11, 2001 findings of fact and conclusions of law and the October 24, 2001 order denying their motion to dismiss the complaint.⁴

II.

On appeal, the Moreses argue that (1) the district court lacked subject matter jurisdiction because their declaration established that Aames's complaint involved a dispute as to title to real property, (2) Aames's complaint failed to state a claim for relief that could be granted by the district court because the complaint did not plead that the Mortgage was in default during the attempted acceleration, non-judicial foreclosure sale, and at the time title was transferred, (3) the "power of sale" clause is an unenforceable "contract of adhesion," rendering Aames's non-judicial transfer of title both unconscionable and void, and (4) the district court had no subject matter jurisdiction to eject the Moreses because the Moreses did not receive the requisite copies of the Truth In Lending Act (TILA) "Notice of Right to Cancel."

Aames, in response, argues that (1) the district court had jurisdiction to decide the ejectment proceeding because Aames's title to the Property was conclusive and unimpeachable following the entry of a certificate of title in favor of Aames, (2) the district court had jurisdiction to decide the ejectment proceeding because the Moreses did not file an affidavit that complied with the "unambiguous" requirements of HDCRCP Rule 12.1, and (3) the Moreses did not raise a timely or proper defense to the ejectment proceeding.

III.

"The existence of [subject matter] jurisdiction is a question of law" that is "review[able] de novo under the right/wrong standard." Lester v. Rapp, 85 Hawai'i 238, 241, 942 P.2d 502, 505 (1997). See also Casumpang v. ILWU, Local 142, 94 Hawai'i 330, 337, 13 P.3d 1235, 1242 (2000)

("A trial court's dismissal for lack of subject matter jurisdiction is a question of law, reviewable de novo.") Additionally, "review of a motion to dismiss ... is based on the contents of the complaint, the allegations of which we accept as true and construe in the light most favorable to the plaintiff." Id. (quoting Norris v. Hawaiian Airlines, Inc., 74 Haw. 235, 239-40, 842 P.2d 634, 637 (1992) (brackets omitted)). The trial court, however, "is not restricted to the face of the pleadings, but may review any evidence, such as affidavits and testimony, to resolve factual disputes concerning the existence of jurisdiction." Id. (quoting Norris, 74 Haw. at 239-40,

842 P.2d at 637 (internal quotation marks, brackets, and citations omitted)).

IV.

With respect to the Moreses' first argument regarding subject matter jurisdiction, Hawai'i Revised Statutes (HRS) § 604-5(d) (Supp.1995) states in relevant part that "the district courts shall not have cognizance of real actions, nor actions in which the title to real estate comes in question[.]" The Moreses argue that their declaration of August 30, 2001 raises an...