Indymac Bank v. Miguel

• Decision Date: 09 May 2008
• Docket Number: No. 27561.,No. 26881.,No. 27406.,26881.,27406.,27561.
• Citation: 184 P.3d 821,117 Haw. 506
• Parties: INDYMAC BANK, Plaintiff-Appellee, v. Vic Garo MIGUEL and Estrella Garin Miguel, Defendants-Appellants, and American Savings Bank, F.S.B.; Hawaii-USA Federal Credit Union, fka Oahu Educational Employees Federal Credit Union; Newtown Estates Community Association; Director, Department of Taxation, State of Hawai`i, Defendants, and John Does 1-10; Jane Does 1-10; Doe Partnerships 1-10; Doe Corporations 1-10; Doe Entities 1-10 and Doe Governmental Units 1-10, Defendants. and Indymac Bank, F.S.B., Plaintiff-Appellee, v. Vic Garo Miguel and Estrellita Garin Miguel, Defendants-Appellants and American Savings Bank, F.S.B.; HawaiiUSA Federal Credit Union, fka Oahu Educational Employees Federal Credit Union; Director, Department of Taxation, State of Hawai`i, Defendants-Appellees, and Newtown Estates Community Association; John Does 1-10; Jane Does 1-10; Doe Partnerships 1-10; Doe Corporations 1-10; Doe Entities 1-10 and Doe Governmental Units 1-10, Defendants.
• Court: Hawaii Court of Appeals

184 P.3d 821

117 Haw. 506

INDYMAC BANK, Plaintiff-Appellee, v. Vic Garo MIGUEL and Estrella Garin Miguel, Defendants-Appellants, and American Savings Bank, F.S.B.; Hawaii-USA Federal Credit Union, fka Oahu Educational Employees Federal Credit Union; Newtown Estates Community Association; Director, Department of Taxation, State of Hawai`i, Defendants, and John Does 1-10; Jane Does 1-10; Doe Partnerships 1-10; Doe Corporations 1-10; Doe Entities 1-10 and Doe Governmental Units 1-10, Defendants. and Indymac Bank, F.S.B., Plaintiff-Appellee, v. Vic Garo Miguel and Estrellita Garin Miguel, Defendants-Appellants and American Savings Bank, F.S.B.; HawaiiUSA Federal Credit Union, fka Oahu Educational Employees Federal Credit Union; Director, Department of Taxation, State of Hawai`i, Defendants-Appellees, and Newtown Estates Community Association; John Does 1-10; Jane Does 1-10; Doe Partnerships 1-10; Doe Corporations 1-10; Doe Entities 1-10 and Doe Governmental Units 1-10, Defendants.

No. 26881.

No. 27406.

No. 27561.

Intermediate Court of Appeals of Hawai`i.

May 9, 2008.

Gary Victor Dubin, on the briefs, Honolulu, for Defendants-Appellants.

Steven T. Iwamura, Robert M. Ehrhorn, Jr. (Clay Chapman Crumpton Iwamura & Pulice), Honolulu, on the briefs, for Plaintiff-Appellee.

WATANABE, Presiding Judge, FOLEY and FUJISE, JJ.

Opinion of the Court by FUJISE, J.

Plaintiff-Appellants Vic Garo Miguel and Estrellita Garin Miguel (Estrellita) (collectively Appellants) appeal from the decree of foreclosure entered on September 9, 2004 in No. 26881, the judgment confirming the sale entered on June 30, 2005 in No. 27406, and the order expunging the notices of pendency of action entered on September 20, 2005 in No. 27561, rendered by the Circuit Court of the First Circuit (circuit court).¹ The September 9, 2004 decree of foreclosure was entered pursuant to the circuit court's findings of fact and conclusions of law granting the July 19, 2004 motion for summary judgment filed by Plaintiff-Appellee IndyMac Bank (IndyMac). The June 30, 2005 judgment confirming the sale was entered pursuant to the order confirming the sale and the writ of possession, also entered on June 30, 2005.

Background

Appellants executed and delivered to Alliance Bancorp (Alliance) a promissory note (Note) for $532,000.00, dated December 1, 1994, and signed on December 2, 1994. The Note was secured by a mortgage (Mortgage) on Appellants' residence (Property), also dated December 1, 1994, but acknowledged before a notary on December 2, 1994. The Mortgage was recorded in the Land Court by the Office of the Assistant Registrar of the Land Court for the State of Hawai'i on December 14, 1994. By an assignment agreement dated December 1, 1994 and recorded in Land Court on October 17, 1996, the Note and Mortgage were assigned to the Bank of New York (BNY).

On November 7, 1997, Appellants sent a notice of cancellation to BNY's designated agent and thereby initiated proceedings under the Truth-in-Lending Act, 15 United States Code §§ 1601-1693 (1968) (TILA) to rescind the Mortgage. Immediately subsequent to mailing the notice, Appellants stopped making payments on the loan. Estrellita filed a complaint seeking to enforce her rights under TILA in the United States District Court for the District of Hawai'i (federal district court).

On August 2, 2000, the federal district court held a bench trial and ruled in favor of Estrellita. BNY appealed the district court's decision to the United States Court of Appeals for the Ninth Circuit (Ninth Circuit), which, on November 4, 2002, remanded the case to the federal district court with instructions to dismiss the case for lack of subject matter jurisdiction. Miguel v. Country Funding Corp., 309 F.3d 1161 (9th Cir.2002).

The instant litigation commenced on April 4, 2003, when IndyMac filed a complaint against Appellants in the circuit court. The complaint prayed for, inter alia, a determination of the amounts due under the Note and the authorization of a foreclosure sale of the Property under the Mortgage. However, BNY's interest in the Note and Mortgage was not assigned to IndyMac until June 6, 2003, the date BNY and IndyMac executed an assignment agreement. The assignment agreement was subsequently recorded with the Land Court on July 15, 2003.

IndyMac filed a second² motion for summary judgment on July 9, 2004 which Appellants opposed on August 4, 2004. The circuit court heard argument on August 18, 2004 and granted the motion at the end of the hearing. The order granting the motion for summary judgment, the decree of foreclosure, and the judgment were entered on September 9, 2004. Appellants filed their notice of appeal from the September 9, 2004 judgment on October 11, 2004, resulting in appeal No. 26881. At the February 2, 2005 foreclosure auction, the Property was sold for $1,069,897.00.

On May 9, 2005, IndyMac moved for an order confirming the foreclosure sale. On June 30, 2005, over Appellants' objection, the circuit court entered an order and judgment granting IndyMac's motion for an order confirming the foreclosure sale, as well as a writ of possession. Appellants filed a notice of appeal from the June 30, 2005 judgment on July 14, 2005, resulting in appeal No. 27406.

On July 14, 2005, Appellants recorded two notices of pendency of action corresponding to the two appeals. Indymac moved to expunge the notices of pendency of action on August 11, 2005 which the circuit court granted by order dated September 20, 2005. Appellants filed their notice of appeal from this order on October 20, 2005, resulting in appeal No. 27561. A deficiency judgment in the amount of $47,655.30 was entered in favor of Indymac on October 26, 2005.

Standard of Review

I. Summary Judgment

The circuit court's ruling on the motion for summary judgment is reviewed de novo, or under the same standard as applied by the lower court. Mottl v. Miyahira, 95 Hawai'i 381, 388, 23 P.3d 716, 723 (2001); see also Querubin v. Thronas, 107 Hawai'i 48, 56, 109 P.3d 689, 697 (2005).

II. Standing

The court's jurisdiction may not be invoked by a party who does not have standing to bring suit. Mottl, 95 Hawai'i at 388, 23 P.3d at 723. "Whether the circuit court had jurisdiction to hear the plaintiff's complaint presents a question of law, reviewable de novo." Id.

III. Expungement of a Lis Pendens

An order expunging notice of pendency of action is reviewed under the abuse of discretion standard. S. Utsunomiya Enters., Inc. v. Moomuku Country Club, 75 Haw. 480, 504, 866 P.2d 951, 964 (1994). "In determining the validity of a lis pendens, courts have generally restricted their review to the face of the complaint." Id. at 505, 866 P.2d at 964.

Discussion

Appellants raise four identical points of error in both appeal Nos. 26881 and 27406. Appellants challenge (1) IndyMac's standing to bring this suit; (2) the failure of the circuit court to treat a Federal Reserve Board ruling concerning TILA as effectively overruling the Ninth Circuit's decision; and (3) the circuit court's granting of IndyMac's motion for summary judgment. Finally, we will address Appellants' appeal from the expungement of their notices of lis pendens in appeal No. 27561.

I. IndyMac Had Standing.

In their second point, Appellants offer two bases for their contention that IndyMac lacked standing. First, Appellants contend that Alliance assigned its interest in Appellants' Note and Mortgage to BNY one day prior to execution of the Note and Mortgage in favor of Alliance. Appellants reason that, as Alliance did not yet have an interest in the Note and Mortgage when it purported to assign them to BNY, BNY received no interest in Appellants' Note and Mortgage, and therefore, was unable to convey an interest in the Note and Mortgage to IndyMac. Thus, Appellants conclude that IndyMac lacks an interest in the Note and Mortgage and could not have been injured by a default on the Mortgage by Appellants.

Appellants also argue, in support of their second point, that IndyMac initiated this lawsuit before assignment of BNY's interest in Appellants' Note and Mortgage to IndyMac was recorded. According to Appellants, by initiating the lawsuit prior to recordation, even assuming there was an interest to convey by BNY, IndyMac effectively had no interest at the onset of this litigation.

In their third point on appeal, Appellants raise their final challenge to IndyMac's standing. Appellants contend that at the time the mortgage was executed, Alliance, whom Appellants contend was acting as their mortgage broker, did not possess a valid mortgage broker's license. As such, they argue, the mortgage was not valid.

Standing is the threshold requirement borne by the party bringing suit to allege "such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends . . . [.]" Baker v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691, 7 L.Ed.2d 663 (1962). In other words, "[s]tanding is that aspect of justiciability focusing on the party seeking a forum rather than on the issues he wants adjudicated." Life of the Land v. Land Use Comm'n of State of Hawaii, 63 Haw. 166, 172, 623 P.2d 431, 438 (1981). Absent a demonstration that a plaintiff has such a sufficient personal stake in the dispute, a court lacks jurisdiction and cannot exercise its remedial powers to resolve the matter. In re Application of Matson Navigation Co. v. Fed. Deposit Ins. Corp., 81 Hawai'i 270, 275, 916 P.2d 680, 685 (1996).

A defect in standing could preclude this court from reaching Appellants' merit-based challenges because "[s]tanding is concerned with whether the parties have the right to bring suit." Pele Def. Fund v. Puna Geothermal Venture, 77 Hawai'i 64, 67, 881 P.2d 1210, 1213 (1994) (quoting Maryland Waste Coal. v. Maryland Dep't of Environ., 84 Md. App. 544, 548, 581 A.2d 60, 61 (1990), rev'd on other grounds by Med. Waste...