Kondaur Capital Corp. v. Matsuyoshi

• Decision Date: 18 February 2021
• Docket Number: NO. CAAP-19-0000696,CAAP-19-0000696
• Citation: 150 Hawai‘i 1,496 P.3d 479
• Parties: KONDAUR CAPITAL CORPORATION, a Delaware corporation, Plaintiff-Appellee, v. Leigh MATSUYOSHI, Defendant-Appellant, and John Does 1-10, Jane Does 1-10, Doe Partnerships 1-10, Doe Corporations 1-10, Doe Entities 1-10, all persons residing with and any persons claiming by and through or under them, Defendants
• Court: Hawaii Court of Appeals

150 Hawai‘i 1

496 P.3d 479

KONDAUR CAPITAL CORPORATION, a Delaware corporation, Plaintiff-Appellee,

v. Leigh MATSUYOSHI, Defendant-Appellant,andJohn Does 1-10, Jane Does 1-10, Doe Partnerships 1-10, Doe Corporations 1-10, Doe Entities 1-10, all persons residing with and any persons claiming by and through or under them, Defendants

NO. CAAP-19-0000696

Intermediate Court of Appeals of Hawai‘i.

FEBRUARY 18, 2021

On the motion:

James J. Bickerton and Bridget G. Morgan-Bickerton (Bickerton Law Group LLLP) for Defendant-Appellant

Wayne Nasser, Francis P. Hogan, Benjamin M. Creps, and Nicholas G. Altuzarra (Ashford & Wriston, LLLP) for Plaintiff-Appellee

ORDER DENYING MOTION FOR RECUSAL OR DISQUALIFICATION BY WADSWORTH, J.¹

Defendant-Appellant Leigh Matsuyoshi (Matsuyoshi ) seeks my recusal or disqualification in this appeal primarily because, several years ago while in private practice, I represented mortgagee banks in litigation arising out of the nonjudicial foreclosure of other borrowers' mortgages. Matsuyoshi asserts Hawai‘i Revised Code of Judicial Conduct (HRCJC ) Rule 2.11(a)² as her primary ground for recusal. Under this rule, I must recuse if my impartiality³ "might reasonably be questioned," including if I "served as a lawyer in the matter in controversy" now before this court, HRCJC Rule 2.11(a)(6)(A), or "was a witness concerning the matter [in controversy,]" id. Rule 2.11(a)(6)(C). Matsuyoshi contends that: (1) my impartiality might reasonably be questioned "given [my] recent practice history"; (2) my former representation of mortgagees in other litigation, including in Bald v. Wells Fargo Bank (Bald ), Civil No. 13-00135 SOM/KSC, 2013 WL 3864449 (D. Haw. July 25, 2013), concerned "the matter in controversy"; and (3) my February 14, 2014 declaration, filed in support of a request for judicial notice in Bald v. Wells Fargo Bank, N.A. (Bald appeal ), 688 Fed.Appx. 472 (9th Cir. 2017), rendered me "a witness concerning the matter [in controversy]."

I decline to recuse on these alleged grounds. My former representation of other mortgagees in other nonjudicial foreclosure litigation involving other borrower-mortgagors — representation that ended over four years ago — does not provide an objective basis to question my ability to be impartial in this appeal. While in private practice, I simply acted as an advocate, honoring my professional responsibilities to zealously represent my clients. Further, my former representation is too attenuated from the present appeal to constitute the same "matter in controversy." Matsuyoshi has not established that the issues in Bald or any other case are closely related to the issues raised in this appeal or that I am a witness in the pending matter, as I have no personal knowledge of any evidentiary facts in the matter. Similarly, my former law firm colleagues withdrew as counsel for the defendant-mortgagee in Bald over two years ago. Therefore, I conclude that HRCJC 2.11(a) does not require my recusal in this appeal.

Matsuyoshi further contends that I must recuse because the same factors that purportedly require my recusal under HRCJC Rule 2.11(a), create "an appearance of impropriety"⁴ that compels my recusal under HRCJC Rule 1.2.⁵ I also decline to recuse on this alleged ground. In light of the above facts, which are elaborated below, Matsuyoshi has failed to establish that a reasonable person, knowing all the facts, "would perceive as materially impaired [my] independence, integrity, impartiality, temperament, or fitness to fulfill [my judicial] duties" with respect to this appeal. HRCJC, "Terminology" (defining "[a]ppearance of impropriety").

As further explained below, "[Matsuyoshi's] Motion for Recusal or Disqualification of Judge Clyde J. Wadsworth," filed on December 21, 2020, is denied.

I. Background

A. The Appeal Before This Court

This case has a long and complex procedural history that I need not detail here. The Hawai‘i Supreme Court's published opinion in Kondaur Capital Corp. v. Matsuyoshi, 136 Hawai‘i 227, 230-35, 361 P.3d 454, 457-62 (2015), provides a thorough explication of the factual and procedural background of the case prior to late-2015.

In brief, Jun Matsuyoshi and others conveyed a residential property located in Lîhu‘e, Kaua‘i (Property ) by warranty deed to Matsuyoshi in February 2007. Id. at 230, 361 P.3d at 457. The following month, Matsuyoshi signed a mortgage on the Property (Mortgage ) and a promissory note (Note ) promising to pay $500,000 to Resmae Mortgage Corporation (Resmae ) in return for a loan that Matsuyoshi had received. Id. Matsuyoshi allegedly defaulted under the loan, and pursuant to the power of sale in the Mortgage and Hawai‘i Revised Statutes (HRS ) Chapter 667, Part I, Resmae's assignee, Resmae Liquidation Properties LLC (RLP ), foreclosed on the Mortgage. Id. On November 13, 2008, RLP, now the mortgagee, bought the Property for $416,900.20 at a nonjudicial foreclosure public auction held in Honolulu. Id. In July 2010, a quitclaim deed was executed by RLP conveying the Property to Plaintiff-Appellee Kondaur Capital Corp. (Kondaur ). Id.

On June 5, 2012, Kondaur filed a complaint for possession of the Property against Matsuyoshi in the Circuit Court of the Fifth Circuit (circuit court ), which is the case underlying this appeal. Id. at 231, 361 P.3d at 458. On September 18, 2012, the circuit court entered judgment in favor of Kondaur on its motion for summary judgment. Id. at 232, 361 P.3d at 459. Kondaur appealed; this court vacated the judgment below; on certiorari review, the Hawai‘i Supreme Court vacated this court's judgment on appeal; and, thereafter, this court ruled that summary judgment in favor of Kondaur was appropriate, and affirmed the circuit court's judgment. See id. at 232-34, 361 P.3d at 459-61.

The Hawai‘i Supreme Court granted certiorari and issued its published opinion on November 23, 2015. In that opinion, the supreme court clarified that "the duties set forth in Ulrich[ v. Security Inv. Co., 35 Haw. 158 (Haw. Terr. 1939),] remain viable law and are applicable to non-judicial foreclosures of real property mortgages." Id. at 229, 361 P.3d at 456. As the court stated:

Ulrich requires mortgagees to exercise their right to non-judicial foreclosure under a power of sale in a manner that is fair, reasonably diligent, and in good faith, and to demonstrate that an adequate price was procured for the property. In instances where the mortgagee assumes the role of a purchaser in a self-dealing transaction, the burden is on the mortgagee, or its quitclaim transferee or non-bona fide successor, to establish its compliance with these obligations. Its failure to do so would render the foreclosure sale voidable and could therefore be set aside at the timely election of the mortgagor.

Id. at 240, 361 P.3d at 467 (citations and footnotes omitted).

Thus, where, as here, the mortgagee is the purchaser in a nonjudicial foreclosure sale, the mortgagee has the "burden to prove in the summary judgment proceeding that the foreclosure 'sale was regularly and fairly conducted in every particular.' " Id. at 241, 361 P.3d at 468 (quoting Ulrich, 35 Haw. at 168 ). Because RLP had failed to satisfy its initial burden of showing that the nonjudicial foreclosure sale had been conducted in a manner that was fair, reasonably diligent, in good faith, and would obtain an adequate price for the property, the mortgagor did not have to raise a genuine issue of material fact. Id. Thus, the supreme court vacated the summary judgment ruling and remanded the case to the circuit court for further proceedings. Id. at 244, 361 P.3d at 471.

Following remand, the circuit court conducted a bench trial on May 29 and 30, 2018.⁶ On March 15, 2019, the court entered: (1) Findings of Fact and Conclusions of Law After Trial (FOFs/COLs ); (2) a Writ of Ejectment; and (3) Final Judgment in favor of Kondaur and against Matsuyoshi. Kondaur subsequently filed a motion to tax costs and expenses and for an award of attorneys' fees. On September 11, 2019, the circuit court entered an order granting the motion and awarding Kondaur attorneys' fees and costs in the respective amounts of $140,600.61 and $10,536.77. This appeal followed.

On January 17, 2020, Kondaur filed a motion to dismiss the appeal for lack of jurisdiction, contending that the appeal was untimely. This court denied the motion on April 7, 2020.

Matsuyoshi filed her opening brief on June 17, 2020. She raises numerous points of error concerning the circuit court's written FOFs, oral findings of fact, COLs, other pretrial and trial rulings, and the grant of Kondaur's fees and costs motion. In sum, Matsuyoshi makes the following arguments:

A. The Lower Court Erred In Ruling, Without Substantial Evidence, That A Sale On Oahu Satisfied RLP's Duty To Use Diligent Efforts To Obtain The Best Price, and That There Was Adequate Publicity and Opportunity for Inspection By Bidders B. There Was No Substantial Evidence to Support a Finding That The Auction Sale Price to RLP Was "Adequate"

C. The Lower Court Prejudicially Erred In Admitting The Affidavit of Foreclosure..., the Motion for Summary Judgment..., and the County Tax Assessment Webpage. ...

D. There Was No Substantial Evidence and No Evidence At All To Support the Finding That The Notice of Default and Acceleration Was Delivered To or Received By Matsuyoshi At Least 30 days before the Stated Deadline to Cure

E. The Lower Court Prejudicially Erred In Refusing To Take Judicial Notice That the Honolulu Star-Bulletin Ceased To Be Circulated on Kauai in 2004, and There Was In Any Event No Substantial Evidence and No Evidence At All To Support the Finding That the Honolulu Star-Bulletin Was a Newspaper "Having A General Circulation In The County In Which The Mortgaged Property Lies"

F. The Lower Court Reversibly Erred In Awarding Fees and Costs

G. The Lower Court Erred In Entering Judgment Against Matsuyoshi on Her Counterclaim for Quiet Title

As relevant to the current...