Provident Funding Assocs., L.P. v. Gardner
| Decision Date | 16 June 2021 |
| Docket Number | SCWC-17-0000453 |
| Court | Hawaii Supreme Court |
| Parties | PROVIDENT FUNDING ASSOCIATES, L.P., Respondent/Plaintiff-Appellee, v. Gisele M. L. GARDNER, Petitioner/Defendant/Cross-Claim Plaintiff/Cross-Claim Defendant-Appellant, and Citibank (South Dakota) N.A., Respondent/Defendant-Appellee, and Travis Wittmeyer; Kanoa Bristol; Blue Wave Investment Solutions, LLC, Respondents/Defendants/ Cross-Claim Defendants/Cross-Claim Plaintiffs-Appellees. |
Glen T. Hale, Lihue, for petitioner
Matthew M. Matsunaga and Derek R. Kobayashi, Honolulu, for respondent
This case requires us to consider the binding effect of a stipulation. The parties to this foreclosure, after summary judgment was entered in favor of the note holder but before sale, entered into a stipulation in which they agreed to postpone the foreclosure auction while they worked to pursue a private sale. No private sale came to pass, and the property sold at auction for less than the parties had hoped a private sale would yield. They now dispute the effect the stipulation should have had on the circuit court proceedings.
We hold that a stipulation made during the course of litigation – reduced to writing, agreed to by all parties, and filed with the court – operates in many respects like a contract and generally binds the parties to its terms. The Circuit Court of the First Circuit (circuit court) and Intermediate Court of Appeals (ICA) therefore erred by failing to treat the stipulation at issue as a binding agreement.
This foreclosure case concerns a property in Waialua. In 2015, Provident Funding Associates, L.P., the note holder, brought a complaint for foreclosure in the circuit court1 against (as relevant to this appeal) Travis Wittmeyer, Kanoa Bristol, and Blue Wave Investment Solutions, LLC (collectively, the Blue Wave defendants), and Gisele Gardner, the record titleholder of the property and the debtor. Gardner and the Blue Wave defendants are also parties to another lawsuit (Gardner lawsuit).2 It is by virtue of the Gardner lawsuit that Provident Funding named the Blue Wave defendants in the complaint as possible junior interest holders.
After summary judgment was granted to Provident Funding but before any foreclosure sale, Gardner found a buyer who was willing to purchase the property for $700,000 (a price that would satisfy the debt in full) and entered into a contract with that buyer on April 29, 2016 (April 29, 2016 transaction). However, the Blue Wave defendants thought the property was considerably more valuable and hoped to find a private buyer who would pay more than $700,000.
On September 16, 2016, the parties entered into the First Stipulation to Continue Foreclosure Sale and Order (Stipulation). The Stipulation provided that the foreclosure sale would be continued to October 25, 2016 while the defendants pursued a private sale. Pursuant to the Stipulation, Gardner and the Blue Wave defendants agreed to try to sell the property to a third-party buyer, but if no other buyer could be found, they agreed to close the April 29, 2016 transaction. In the event neither the April 29, 2016 transaction nor a sale to a different third-party buyer closed by October 25, 2016, Provident Funding would proceed to a foreclosure sale.
Specifically, the Stipulation provided in relevant part:
(Emphases added.)
Further, the Stipulation provided that "[i]f a private sale or the April 29, 2016 transaction is consummated, Provident Funding will be paid in full from the sale proceeds," Provident Funding will be dismissed from the litigation, and "[t]he disposition of any excess proceeds will be for the remaining parties and the Court to determine/decide." All defendants stipulated "that they will not seek to make Provident Funding a party to or otherwise involve Provident Funding in" the Gardner lawsuit. The parties also agreed that "[i]f the sales proceeds are insufficient to pay the debt owed to Provident Funding in full, the case shall proceed without prejudice to Provident Funding's right to obtain a deficiency judgment and other appropriate relief."3
The Stipulation was filed with the court, which signed the Stipulation "approved and so ordered." (Capitalization altered.)
On November 23, 2016,4 Gardner filed a "Motion to Compel and for Sanctions" (Motion). She represented that the Blue Wave defendants had "block[ed]" the April 29, 2016 transaction in contravention of the Stipulation. Thus, Gardner moved the court to compel the Blue Wave defendants to, among other things, take all necessary steps to transfer the real property to the April 29, 2016 transaction buyer, and asked for sanctions against the Blue Wave defendants.
Gardner presented the following version of events.5 She claimed that she notified the Blue Wave defendants of the April 29, 2016 buyer in May 2016 - a transaction of which Provident Funding approved - and requested "access and cooperation to sell the [m]ortgaged [p]roperty," which the Blue Wave defendants refused. After the parties entered into the Stipulation, "on or about October 12, 2016, a Purchase Contract ... was fully executed between Gardner, the [Blue Wave] [d]efendants, and Brian Rose," wherein Rose, a buyer found by the Blue Wave defendants, agreed to purchase the property for $789,000 ($89,000 more than the April 29, 2016 transaction sale price) (Rose contract). However, Provident Funding refused to allow additional time to close the Rose contract, and instead, "in consequence of [the Blue Wave defendants’] lack of cooperation regarding rent, failure to pay outstanding utility bills, and the failure to open an escrow by the October 18, 2016 deadline, the Parties[’] obligation to close the April 29, 2016 transaction ... was triggered." Thus, Provident Funding - over objection by the Blue Wave defendants - asked for the foreclosure sale to be continued for thirty days in order for the April 29, 2016 transaction to close.
Between October 20, 2016 and October 26, 2016, the Blue Wave defendants asked several times to postpone the foreclosure sale in order to close the Rose contract. Provident Funding refused, taking the position that at that point, Paragraph 3 of the Stipulation required the parties to cooperate in closing the April 29, 2016 transaction; they nonetheless "stated their willingness to accept the Rose [c]ontract if it closed prior to the April 29, 2016 transaction[.]" Upon requests by Provident Funding and Gardner for "tangible proof of progress" on the Rose contract, the Blue Wave defendants represented on November 2, 2016 that Rose would not proceed unless given forty-five days to close. On November 17, 2016, Gardner "explained that closing the April 29, 2016 transaction required the [Blue Wave] [d]efendants[’] cooperation," to which the Blue Wave defendants replied that the foreclosure auction date should not be extended because Rose intended to bid $750,000 at auction. From these exchanges (which occurred via email, of which copies were attached to the motion as exhibits), Gardner concluded that "the [Blue Wave defendants’] failure to respond and the tenor of the email suggests that no cooperation is forthcoming." She further represented that the April 29, 2016 buyer remained ready, willing, and able to close. Accordingly, she sought a court order compelling the Blue Wave defendants to proceed with the April 29, 2016 transaction, in addition to sanctions against them.
Provident Funding submitted a "Position Statement" regarding the Motion on November 23, 2016. In it, Provident Funding represented that they intended to proceed with the November 29, 2016 foreclosure but remained willing to accept the proceeds from the April 29, 2016 transaction "in satisfaction of the debt" so long as those proceeds were tendered no later than December 14, 2016. It was Provident Funding's position that "[p]er Paragraph 3" of the Stipulation, "under the present circumstances," the Blue Wave defendants agreed...
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