Knaefler v. Mack, s. 81-4047
| Decision Date | 02 July 1982 |
| Docket Number | 81-4048 and 81-4164,Nos. 81-4047,s. 81-4047 |
| Citation | 680 F.2d 671 |
| Parties | James KNAEFLER, Court-Appointed Receiver for the Pacific Prince Hotel, Plaintiff v. Charles MACK and Janice Mack, dba Ancestral Arts, Defendants/Third-Party Plaintiffs-Appellants, v. Lester O. IRISH, Fred M. Packard, Petrous Industries, Inc., and Petrous Hotels, Inc., Third-Party Defendants-Appellees PETROUS HOTELS, INC., a Hawaii corporation, Plaintiff-Appellee, v. Charles MACK and Janice Mack dba Ancestral Arts, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Wesley H. Sakai, Jr., Honolulu, Hawaii, for defendants/third-party plaintiffs-appellants.
T. Irving Chang, Honolulu, Hawaii, for plaintiff.
Appeals from the United States District Court for the District of hawaii.
Before FARRIS, FERGUSON and NELSON, Circuit Judges.
The claims underlying these appeals arose in the Hawaii state courts when appellees Petrous Industries and Petrous Hotels 1, who had purchased at a foreclosure sale a leasehold interest in the Pacific Prince Hotel in Honolulu, sought a writ of ejectment against appellants Charles and Janice Mack, who operate a business in one of the hotel's shops. The Macks removed the Hawaii ejectment proceedings to district court. Applying Hawaii law in this diversity case, the district court found that the Macks' alleged fifteen year sublease of the shop did not entitle them to possession of the shop because that subleasehold interest was not recorded on the Torrens title registration certificate when Petrous purchased the hotel. Summary judgment was granted in favor of Petrous.
The Macks have appealed on several grounds. Specifically, the Macks argue that the district court lacked subject matter jurisdiction because the Hawaii Supreme Court acquired jurisdiction of several appeals concerning the foreclosure sale at which Petrous had purchased its interest in the hotel, before the district court acquired jurisdiction over the removed ejectment claims. The Macks argue that both the foreclosure and the ejectment actions are in rem or quasi in rem proceedings concerning the same property, and thus, the federal court should have stayed its proceedings while the Hawaii courts had control over the property.
The Macks also argue that the district court abused its discretion by not granting a stay of the removed claims when decisive issues of state law were allegedly unsettled and that their federal due process rights were violated because they were not given notice nor were they permitted to intervene in the foreclosure proceedings. Finally, appellants argue that the district court, in determining that the Macks had no right to possession, wrongly applied Hawaii law.
We conclude the following: ejectment is an in personam action and the district court therefore had subject matter jurisdiction over the claims removed by the Macks to federal court; the district court did not abuse its discretion in failing to stay the federal proceedings during the pendency of the Macks' state court appeals; failure to notice the Macks or to join them in the foreclosure action did not violate their due process rights in any way; and the district court correctly applied the law of Hawaii. We affirm the judgments of the district court.
Appellants Charles and Janice Mack, who were defendants and third-party plaintiffs in the district court actions now consolidated on appeal, do business as Ancestral Arts, occupying shop 103 in the Pacific Prince Hotel in Honolulu, Hawaii. The Macks first came to occupy those premises as the result of a sub-sublease from Gordon Cook, dba Waikiki Hardware, who had received a sublease for shop 103 from Aina Alii, Inc., the lessee of the hotel. The Macks' sublease was for a term of three years ending September 30, 1976.
On September 18, 1975, foreclosure proceedings were initiated against Aina Alii in Hawaii No. 46176. A lis pendens was filed The Macks argue that on October 27, 1975, they entered into a letter agreement with Income Builders to extend their lease of shop 103 for a term of 15 years. In February, 1977, the Macks say they were assured by the attorney for Income Builders that they would receive a new lease in recordable form. They did not.
against the hotel. About this time, Income Builders, Inc. succeeded to Aina Alii's interest and also became a defendant in the foreclosure proceedings.
Because James Knaefler, the court-appointed receiver in the foreclosure proceedings, was unsure whether the Macks' claims were enforceable, he filed a motion for instructions with the Hawaii Circuit Court on June 21, 1979. The Macks' attorney appeared at the hearing on the motion and requested an evidentiary hearing in connection with the dispute over the Macks' leasehold rights. The state court declined to hold a hearing and ordered the property sold without the Macks' lease. At a public auction of the hotel, conducted on August 21, 1979, the high bid was made by Petrous Industries, Inc., who took title in the name of a nominee, Petrous Hotels, Inc.
The sale was confirmed by the Hawaii Circuit Court on August 31, 1979, passing title free and clear except for specified encumbrances, not including the Macks' alleged subleasehold interest. The Macks, who had never been named as parties or served in Hawaii No. 46176, filed appeals in connection with the receiver's motion for instructions and the formal order granting instructions to the receiver. They then filed motions for intervention in Hawaii No. 46176 and for reconsideration of the confirmation of sale. The Hawaii Circuit Court's denials of these motions were also appealed. 2
On August 2, 1979, the receiver filed a complaint for summary possession in the Hawaii courts, seeking to dispossess the Macks and to obtain a judgment for rent. The Macks removed this case to the United States District Court, and filed a counterclaim against the receiver, the principals of Income Builders, Petrous Industries, and Petrous Hotels. On March 18, 1980, Petrous Hotels filed a counterclaim against the Macks for ejectment.
On February 18, 1980, Petrous Hotels filed a complaint for ejectment in the Hawaii courts against the Macks. The Macks removed this case, as well, to district court and filed a counterclaim against Petrous Hotels.
The receiver filed a motion for partial summary judgment in the first district court case, No. 79-0346. A hearing was held on August 11, 1980, and on November 25, 1980, the Magistrate recommended that the receiver's motion should be granted for rents in the sum of $30,526.08. This report was approved by the district court subject to objection by the parties within 10 days of date of receipt. Partial summary judgment was entered on November 25, 1980. The district court subsequently declared the partial summary judgment interlocutory as the Macks' counterclaims against the receiver and Income Builders were still being litigated.
Petrous followed the receiver's lead and filed for summary judgment in both cases before the district court. In the interests of judicial economy, a consolidated hearing was held, following which Petrous was granted summary judgment on both motions. The Macks' cross-motions for summary judgment were denied.
On January 19, 1981, the district court issued an order and judgment in No. 79-0346, denying the Macks' motion for summary judgment, granting Petrous' motion, and ordering a writ of ejectment. That order is the subject of the appeal in this court's No. 81-4047. A similar order was issued in No. 80-0288 on the same date and is the subject of the appeal in this court's No. 81-4048. On March 9, 1981, the district court issued an order consolidating the two
district court cases, issued a stay pending appeal, effective upon the Macks' posting of a $10,000 bond and the payment of $1100 per month for the period commencing January 19, 1981. This March 9, 1981, order is the subject of the appeal in this court's No. 81-4164. The appeals from all three orders have been consolidated before this court.
The following issues are presented by these consolidated appeals:
(1) Did the district court lack subject matter jurisdiction because concurrent proceedings in state and federal court were both in rem or quasi in rem actions regarding the same property?
(2) Did the district court abuse its discretion in failing to stay the federal proceedings pending a resolution of related proceedings in the Hawaii courts?
(3) Were the Macks deprived of their property without due process of law?
(4) Did the district court err in its construction of the substantive law of Hawaii?
FEDERAL COURT WERE BOTH IN REM OR QUASI
IN REM ACTIONS REGARDING THE
Where concurrent proceedings in state and federal court are both suits in rem or quasi in rem, the court first assuming jurisdiction over the property 3 may maintain and exercise that jurisdiction to the exclusion of the other. Princess Lida of Thurn and Taxis v. Thompson, 305 U.S. 456, 466, 59 S.Ct. 275, 280, 83 L.Ed. 285, 291 (1939); Kline v. Burke Construction Co., 260 U.S. 226, 43 S.Ct. 79, 67 L.Ed. 226 (1922).
While it seems fairly clear that the foreclosure proceedings appealed from in the Hawaii courts are proceedings in rem, 1A (part 2) J. Moore, W. Taggart, A. Vestal & J. Wicker, Moore's Federal Practice, P 0.214, at 2359-60 & n.6 (2d ed. 1982), it is not at all clear that ejectment proceedings are similarly in rem or quasi in rem. The parties to these appeals take opposite positions on whether, under Hawaii law, ejectment actions are in rem, quasi in rem, or in personam. The Macks argue that ejectment is an in rem action so that, under the Princess Lida rule, the district court lacked jurisdiction to proceed. If, as Petrous argues, the ejectment...
To continue reading
Request your trial
-
Horowitz v. Sulla, CIVIL NO. 15-00186 JMS-BMK
...assuming jurisdiction over the property may maintain and exercise that jurisdiction to the exclusion of the other." Knaefler v. Mack, 680 F.2d 671, 675 (9th Cir. 1982). Indeed, this is a rule of exclusive jurisdiction: "where the jurisdiction of the state court has first attached, the feder......
-
Chapman v. Deutsche Bank Nat'l Trust Co.
...assuming jurisdiction over the property may maintain and exercise that jurisdiction to the exclusion of the other.” Knaefler v. Mack, 680 F.2d 671, 675 (9th Cir.1982) (footnote omitted). The property at issue in this quiet title action was also the subject of a previously filed unlawful det......
-
Seitz v. Fed. Nat'l Mortg. Ass'n
...203 n. d, 4 L.Ed. 65 (1816) (commenting in dictum that “in real actions and ejectment,” the “proceedings are in rem”); Knaefler v. Mack, 680 F.2d 671, 676 (9th Cir.1982)(holding that “the ejectment claims at issue here are in personam actions under Hawaii law” because they are brought “mere......
- Perkin-Elmer Corp. v. Computervision Corp.
-
Appellate Review of Unclear State Law in the Ninth Circuit After in Re Mclinn
...of state law great weight unless interpretation deficient in analysis or lacking in authority). 41. See, e.g., Knaefler v. Mack, 680 F.2d 671 (9th Cir. 1982) (according a district court's interpretation of unsettled state law substantial deference unless clearly wrong or clearly erroneous);......