430 P.3d 892 (Hawai’i App. 2018), CAAP-17-0000145, Malabe v. Association of Apartment Owners of Executive Center

Docket Nº:CAAP-17-0000145
Citation:430 P.3d 892, 143 Hawai‘i 331
Party Name:Gilbert V. MALABE and Daisy D. Malabe, Plaintiffs-Appellants, v. ASSOCIATION OF APARTMENT OWNERS OF EXECUTIVE CENTRE, BY AND THROUGH its BOARD OF DIRECTORS, Defendant-Appellee, and Doe Defendants 1-10, Defendants
Attorney:Steven K.S. Chung, Michael L. Iosua, Li Li, (Imanaka Asato, LLLC), Honolulu, for Plaintiffs-Appellants. David R. Major, James G. Diehl, (Bays Lung Rose & Holma), Honolulu, for Defendant-Appellee.
Judge Panel:By: Fujise, Presiding Judge, Leonard and Reifurth, JJ.
Case Date:November 29, 2018
Court:Court of Appeals of Hawai'i, Intermediate
 
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Page 892

430 P.3d 892 (Hawai’i App. 2018)

143 Hawai‘i 331

Gilbert V. MALABE and Daisy D. Malabe, Plaintiffs-Appellants,

v.

ASSOCIATION OF APARTMENT OWNERS OF EXECUTIVE CENTRE, BY AND THROUGH its BOARD OF DIRECTORS, Defendant-Appellee, and Doe Defendants 1-10, Defendants

No. CAAP-17-0000145

Intermediate Court of Appeals of Hawai‘i

November 29, 2018

Editorial Note:

This decision has been designated as "Unpublished disposition." in the Pacific Reporter. See HI R RAP RULE 35

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT (CIVIL NO. 16-1-2256).

On the briefs:

Steven K.S. Chung, Michael L. Iosua, Li Li, (Imanaka Asato, LLLC), Honolulu, for Plaintiffs-Appellants.

David R. Major, James G. Diehl, (Bays Lung Rose & Holma), Honolulu, for Defendant-Appellee.

By: Fujise, Presiding Judge, Leonard and Reifurth, JJ.

SUMMARY DISPOSITION ORDER

Plaintiffs-Appellants, Gilbert and Daisy Malabe (the Malabes) appeal from the Final Judgment (Judgment) entered by the Circuit Court of the First Circuit (Circuit Court),1 on February 17, 2017, in favor of Defendant-Appellee the Association of Apartment Owners of Executive Centre (the AOAO). The Malabes also challenge the Circuit Court’s Order Granting Defendant AOAO’s Motion to Dismiss Complaint, filed December 13, 2016 (Order Granting the AOAO’s Motion).

On appeal, the Malabes assert eight points of error,2 contending that the Circuit Court erred in granting the motion to dismiss (1) as to the wrongful foreclosure claim, by failing to rule against the AOAO for various violations of statutory and procedural requirements in the 2010 Foreclosure Act, and (2) as to the Malabes’ claims for unfair or deceptive acts or practices (UDAP), by failing to recognize the Malabes’s standing to bring the action as well as their compliance with the statute of limitations.

Upon careful review of the record and the briefs submitted by the parties, and having given due consideration to the arguments advanced and the issues raised by the parties, we resolve the Malabes’ points of error as follows:

(1) The Malabes assert that the Circuit Court erred in failing to recognize the validity of their claim that the AOAO unlawfully invoked Hawaii Revised Statutes (HRS) § 667-5 (Supp. 2010) (repealed 2012)3 in conducting a nonjudicial foreclosure on their unit (the Apartment) at the Executive Centre in Honolulu for which the AOAO is the apartment owners’ association. In the Complaint, the Malabes asserted that the "AOAO was not authorized or entitled to conduct a nonjudicial foreclosure or power of sale under Part I and the sale that occurred was unlawful and constituted a wrongful foreclosure." On appeal, the Malabes contend that HRS § 667-5 may be used only when a power of sale is contained in a mortgage or other governing document, and that because such a power of sale was not present in this case, the foreclosure was not permitted by Hawai‘i law.

The Hawai‘i Supreme Court has held that "[p]rior to its repeal in 2012, HRS § 667-5 authorized the non-judicial foreclosure of mortgaged property only ‘[w]hen a power of sale is contained in a mortgage.’ " Santiago v. Tanaka, 137 Hawai‘i 137, 154, 366 P.3d 612, 629 (2016) (emphasis added; footnote omitted) (citing HRS § 667-5 (a) (repealed 2012) ). In Santiago, the supreme court reiterated its prior holding that HRS § 667-5 "[did] not independently provide for a power of sale." Id. at 155, 366 P.3d at 630. Moreover, " ‘no state statute creates a right in mortgagees to proceed by non-judicial foreclosure; the right is created by contract.’ " Id. (quoting Lee v. HSBC Bank USA, 121 Hawai‘i 287, 292, 218 P.3d 775, 780 (2009) ).

We recently recognized this holding, specifically in the context of apartment owner associations, in our analysis of the amended Chapter 667 and concluded that "[a] search of the legislative history, as well as the text, of HRS chapter 667 from the time [§ 667-5] was enacted in 1998 ... reveals no legislative purpose or intent to grant any class of persons or entities with a power of sale over the property of others." Sakai v. Ass’n of Apartment Owners of Hawaii an Monarch, 143 Hawai‘i 219, 225, 426 P.3d 443, 449 (App. 2018). Instead, HRS § 667-5 merely "authorize[d] a sale," where such a power is independently provided by an agreement between the parties. Santiago, 137 Hawai‘i at 155, 366 P.3d at 630; see also Sakal, 143 Hawai‘i at 225, 426 P.3d at 449 ("The Hawaii Foreclosures...

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