Bank of Haw. v. Bertelmann

• Docket Number: CAAP-19-0000824
• Decision Date: 26 December 2023
• Parties: BANK OF HAWAII, Plaintiff-Appellee, v. KEVIN M. BERTELMANN, INDIVIDUALLY AND AS TRUSTEE OF THE HAROLD E. BERTELMANN REVOCABLE LIVING TRUST DATED MARCH 10, 2010, Defendant-Appellant, And COUNTY OF HAWAI'I, REAL PROPERTY TAX DIVISION, Defendant-Appellee, And JOHN DOES 1-20, JANE DOES 1-20, DOE CORPORATIONS 1-20, DOE ENTITIES 1-20, AND DOE GOVERNMENTAL UNITS 1-20, Defendants
• Court: Hawaii Court of Appeals

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BANK OF HAWAII, Plaintiff-Appellee,
v.
KEVIN M. BERTELMANN, INDIVIDUALLY AND AS TRUSTEE OF THE HAROLD E. BERTELMANN REVOCABLE LIVING TRUST DATED MARCH 10, 2010, Defendant-Appellant,

And COUNTY OF HAWAI'I, REAL PROPERTY TAX DIVISION, Defendant-Appellee, And JOHN DOES 1-20, JANE DOES 1-20, DOE CORPORATIONS 1-20, DOE ENTITIES 1-20, AND DOE GOVERNMENTAL UNITS 1-20, Defendants

No. CAAP-19-0000824

Intermediate Court of Appeals of Hawaii

December 26, 2023

NOT FOR PUBLICATION IN WEST'S HAWAI'I REPORTS AND PACIFIC REPORTER

APPEAL FROM THE CIRCUIT COURT OF THE THIRD CIRCUIT (CIVIL NO. 18-1-0304).

Kevin M. Bertelmann Defendant-Appellant

Jai W. Keep-Barnes (Bays Lung Rose & Holma) for Plaintiff-Appellee

By: Ginoza, Chief Judge, Wadsworth and Nakasone, JJ.

MEMORANDUM OPINION

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Defendant-Appellant Kevin M. Bertelmann (Bertelmann), self-represented, appeals from: (1) the October 21, 2019 "Findings of Fact and Conclusions of Law and Order Granting Plaintiff Bank of Hawaii's [(BOH)] Motion for Summary Judgment and For Interlocutory Decree of Foreclosure, Filed August 1, 2019" (Foreclosure Decree); and (2) the October 21, 2019 Judgment and Notice of Entry of Judgment (Foreclosure Judgment), both filed and entered by the Circuit Court of the Third Circuit (Circuit Court).^[1]

On appeal, Bertelmann contends^[2] that the Circuit Court (1) lacked jurisdiction because BOH "lacked proper standing to sue[,]" and thus the Foreclosure Decree and Foreclosure Judgment are void; (2) erroneously granted BOH's Motion to Set Aside Entry of Default; (3) erroneously denied Bertelmann's Motion to Continue; and (4) erroneously granted BOH's Motion for Summary Judgment and For Interlocutory Decree of Foreclosure (MSJ).

We affirm.

I. BACKGROUND

On November 29, 2018, BOH filed a foreclosure complaint against Bertelmann, individually and as trustee of the Harold E. Bertelmann Revocable Living Trust (Bertelmann Trust). The Complaint alleged, among other things, that: Bertelmann's parents, Harold E. (Harold) and Margaret K. (Margaret) Bertelmann (collectively, Parents) took out a loan in 2003 with BOH by executing a Home Equityline Agreement (Note); the loan with BOH was secured by a mortgage (Mortgage) on real property on Pohā Street, Nā'ālehu, Hawai'i 96722 (Subject Property); the Subject Property was transferred via a 2010 deed to the

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Bertelmann Trust; Bertelmann was named as successor trustee for the Bertelmann Trust in 2015 after Harold passed; that Bertelmann, as Trustee of the Bertelmann Trust, transferred the Subject Property to himself, individually, in a 2016 deed; Bertelmann defaulted on the Note; following demand to cure the default and Bertelmann's failure to cure, the entire principal balance of the Mortgage and Note were accelerated and immediately due and payable; and BOH was entitled to foreclose the Mortgage and sell the Subject Property.

On January 31, 2019, Bertelmann filed his Answer and Counterclaims (Counterclaim).^[3] On February 25, 2019, BOH filed its Answer to Bertelmann's Counterclaim.

On February 28, 2019, Bertelmann submitted to the Circuit Court his Request for Entry of Default, pursuant to Hawai'i Rules of Civil Procedure (HRCP) Rule 55(a),^[4] "against [BOH] for failure to file a valid Reply within the time allowed by the above rules and law."

On March 1, 2019, Bertelmann's brother, Chris P. Bertelmann (Chris), filed a Motion to Intervene. On March 4, 2019, the Circuit Court granted Bertelmann's Request for Entry of Default against BOH.

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On March 13, 2019, BOH filed a non-hearing Motion to Set Aside Entry of Default (Motion to Set Aside) pursuant to HRCP Rule 55(c),^[5] arguing that BOH filed and served its Answer to Bertelmann's Counterclaim on February 25, 2019. The Circuit Court granted the Motion to Set Aside (Order Setting Aside Default).

On April 24, 2019, the Circuit Court denied Chris's Motion to Intervene.

On July 29, 2019, Chris filed a Notice of Transfer of Title and Ownership of Subject Real Property with the Circuit Court, giving notice of the transfer of the Subject Property from Bertelmann to Chris.

On August 1, 2019, BOH filed its Motion for Summary Judgment (MSJ) on the Complaint arguing, among other things, that Bertelmann was in default for failing to pay the principal and interest due under the Note and Mortgage, and BOH was entitled to foreclosure of the Mortgage secured by the Subject Property. Exhibits to the MSJ included: a legal description of the Subject Property (Exhibit 1), the Note (Exhibit 2), the Mortgage (Exhibit 3), a death certificate of the Parents (Exhibit 4 and 6), a 2010 Warranty Deed transferring the Subject Property from Harold to the Bertelmann Trust (Exhibit 5), a 2016 Warranty Deed transferring the Subject Property from Bertelmann as trustee of the Bertelmann Trust to Bertelmann as an individual (Exhibit 7), the payment history for the Note (Exhibit 8), a September 11, 2018 Notice of Default letter sent to the successor of the Bertelmann Trust at the Subject Property address (Exhibit 9), and a notice of pendency of action

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(Exhibit 10).^[6] A Declaration of Rachel Anfinson (Anfinson) as the Assistant Vice President of BOH was also attached.

On August 30, 2019, Bertelmann filed a non-hearing "Motion to Join," seeking leave to join Chris as a "third party Defendant-Counter Plaintiff" in the case.

On September 6, 2019, Bertelmann filed a "Memorandum of Points and Authorities in Support of Motion to Continue" (Motion to Continue) arguing, among other things, that the provisions and terms of the Mortgage were "unconscionable and/or illegal and the contract when viewed in its entirety is void"; that the BOH failed to give notice of the MSJ to the County of Hawai'i, Real Property Tax Division (County) and Chris; that the MSJ exhibits contained "redacted materials, or uncertified public document[s]"; that BOH failed to establish standing; and that the September 11, 2018 Notice of Default letter was sent to his "property address and not to his mailing address."

At the September 11, 2019 hearing on the MSJ, the Circuit Court orally denied Bertelmann's Motion to Continue^[7] and

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proceeded to hear BOH's MSJ. While Bertelmann did not present arguments in opposition at the hearing, both the Circuit Court and BOH acknowledged that Bertelmann's Motion to Continue contained arguments in opposition to the MSJ.^[8] The Circuit Court granted the MSJ.

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On October 21, 2019, the Circuit Court filed the Foreclosure Decree and entered the Foreclosure Judgment. Bertelmann timely appealed.

II. STANDARDS OF REVIEW

Standing

"The issue of standing is reviewed de novo on appeal." Tax Found. of Haw. v. State, 144 Hawai'i 175, 185, 439 P.3d 127, 138 (2019) (brackets omitted) (quoting Mottl v. Miyahira, 95 Hawai'i 381, 388, 23 P.3d 716, 723 (2001)).

Motion to Set Aside an Entry of Default

We review a Circuit Court's ruling on a request to set aside a default under HRCP Rule 55(c) for abuse of discretion. Chen v. Mah, 146 Hawai'i 157, 171, 457 P.3d 796, 810 (2020) (quoting Cnty. of Hawai'i v. Ala Loop Homeowners, 123 Hawai'i 391, 404, 235 P.3d 1103, 1116 (2010)).

Motion for Continuance

"A trial court's decision to deny a request for a continuance pursuant to HRCP Rule 56(f) will not be reversed absent an abuse of discretion." Kaleikini v. Yoshioka, 128 Hawai'i 53, 67, 283 P.3d 60, 74 (2012) (quoting Josue v. Isuzu Motors Am., Inc., 87 Hawai'i 413, 416, 958 P.2d 535, 538

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(1998)). "An abuse of discretion occurs if the trial court 'clearly exceeded the bounds of reason or disregarded rules or principles of law or practice to the substantial detriment of a party litigant.'" Id. (quoting Amfac, Inc. v. Waikiki Beachcomber Inv. Co., 74 Haw. 85, 114, 839 P.2d 10, 26 (1992)).

Motion for Summary Judgment

On appeal, "[a] trial court's decision on a motion for summary judgment is reviewed de novo." Wells Fargo Bank, N.A. v. Fong, 149 Hawai'i 249, 253, 488 P.3d 1228, 1232 (2021) (citation omitted).

[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 the moving party is entitled to judgment as a matter of law.

The burden is on the party moving for summary judgment (moving party) to show the absence of any genuine issue as to all material facts, which, under applicable principles of substantive law, entitles the moving party to judgment as a matter of law.

Id. (quoting French v. Haw. Pizza Hut, Inc., 105 Hawai'i 462, 470, 99 P.3d 1046, 1054 (2004); Fujimoto v. Au, 95 Hawai'i 116, 136, 19 P.3d 699, 719 (2001)).

III. DISCUSSION

A. POE 1: Bertelmann's contention that the Circuit Court lacked jurisdiction because BOH "lacked proper standing to sue" is waived.

Bertelmann argues that BOH did not have standing at the time it filed its Complaint because a foreclosing plaintiff must suffer an "injury in fact" to invoke the jurisdiction of the court; the "injury in fact" is the mortgagor's failure to make payment; and BOH did not suffer any injury in fact from Bertelmann, because Bertelmann "was neither mortgagee nor mortgagor since he did not sign the Note." Bertlemann contends

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that because BOH "lacked proper standing to sue[,]" the Circuit Court lacked jurisdiction.

BOH asserts that Bertelmann "did not raise this argument in the Circuit Court, and therefore, it should be disregarded as having been waived."

In Hawai'i state courts, "standing is not an issue of subject matter jurisdiction[.]" Tax Found. of Haw., 144 Hawai'i at 192, 439 P.3d at 144. Unlike issues of subject matter jurisdiction, which may be raised at any time or even sua sponte, standing is not a jurisdictional issue and may be waived. See id. at 191 n.21, 439 P.3d at 143 n.21.

Here, it appears that Bertelmann did not raise these...