Lima et al v. Deutsche Bank National Trust Company et al
Filing
278
ORDER Certifying A Question To The Hawai`i Supreme Court. (CV 12-00509-SOM-WRP; CV 12-00514-SOM-WRP; CV 13-00135-SOM-RT)The Clerk of Court is directed to transmit a copy of this order to the Hawaii Supreme Court under official seal of the Uni ted States District Court of the District of Hawaii.The parties in each case shall file a joint notice in this court within one week of the Hawaii Supreme Courts decision to accept or reject certification. If the Hawaii Supreme Court accepts the certified question, the parties in each case shall file a joint status report to this court every six months after the date of acceptance, or more frequently if circumstances warrant. Further proceedings in this court are stayed pending a ction by the Hawaii Supreme Court. The pending motions in Lima, Gibo, and Bald are hereby terminated without prejudice. All upcoming dates and deadlines in these cases are vacated. Deadlines that have already expired are not affected by this order, m eaning that, if new dates are later set, expired deadlines are not automatically extended. The court directs the Clerk to administratively close all three cases while the matter is pending in the Hawaii Supreme Court. Signed by JUDGE SUSAN OKI MOLLWAY on 5/16/2019. (cib)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
LIONEL LIMA, JR., et al.,
)
individually and on behalf of )
all others similarly
)
)
situated,
)
Plaintiffs,
)
)
vs.
)
)
DEUTSCHE BANK NATIONAL TRUST
)
COMPANY,
)
)
Defendant.
_____________________________ )
)
)
EVELYN JANE GIBO, et al.,
individually and on behalf of )
)
all others similarly
)
situated,
)
)
Plaintiffs,
)
vs.
)
)
U.S. BANK NATIONAL
)
ASSOCIATION,
)
)
Defendant.
)
_____________________________ )
)
DAVID EMORY BALD, et al.,
)
individually and on behalf of )
all others similarly
)
situated,
)
)
Plaintiffs,
)
)
vs.
)
)
WELLS FARGO BANK, N.A.,
)
)
Defendant.
)
_____________________________ )
Civ. No. 12-00509 SOM-WRP
ORDER CERTIFYING A QUESTION
TO THE HAWAI‘I SUPREME COURT
Civ. No. 12-00514 SOM-WRP
Civ. No. 13-00135 SOM-RT
ORDER CERTIFYING A QUESTION TO THE HAWAI‘I SUPREME COURT
I.
CERTIFIED QUESTION.
Pursuant to section 602-5(a)(2) of Hawai‘i Revised
Statutes and Rule 13 of Hawai‘i Rules of Appellate Procedure,
this court respectfully certifies the following question to the
Hawai‘i Supreme Court:
When (a) a borrower has indisputably
defaulted on a mortgage for real property,
(b) a lender has conducted a nonjudicial
foreclosure sale but has not strictly
complied with the requirements governing
such sales, and (c) the borrower sues the
lender over that noncompliance after the
foreclosure sale and, if the property was
purchased at foreclosure by the lender,
after any subsequent sale to a third-party
purchaser, may the borrower establish the
requisite harm for liability purposes under
the law of wrongful foreclosure and/or
section 480-2 of Hawai‘i Revised Statutes by
demonstrating the loss of title, possession,
and/or investments in the property without
regard to the effect of the mortgage on
those items?
The gist of the above question may be restated
(assuming but not including the underlying factual predicates)
as a question about which party has the burden of proof:
Is the effect of the mortgage considered
only as a matter of setoff that a lender has
the burden of proving after the borrower
establishes the amount of the borrower’s
damages, or does a borrower with no
preforeclosure rights in property except as
encumbered by a mortgage bear the burden of
accounting for the effect of the mortgage in
establishing the element of harm in the
liability case?
2
This question of substantive Hawai‘i law is
“determinative of the cause” in three putative class actions
before this court and is not answered by “clear controlling
precedent in the Hawai‘i judicial decisions.”
Haw. R. App. P.
13(a).
The three cases are Lionel Lima, et al. v. Deutsche
Bank National Trust Company, Civ. No. 12-00509 SOM-WRP (“Lima”);
Evelyn Jane Gibo, et al. v. U.S. Bank National Association, Civ.
No. 12-00514 SOM-WRP (“Gibo”); and David Emory Bald, et al. v.
Wells Fargo Bank, N.A., Civ. No. 13-00135 SOM-RT (“Bald”).
A negative answer to the certified question will
dispose of all claims in each case.
This court therefore
respectfully asks the Hawai‘i Supreme Court to exercise its
discretion to accept and decide the certified question.
II.
STANDARD FOR CERTIFYING A QUESTION.
The Hawai‘i Supreme Court has jurisdiction and power
“[t]o answer, in its discretion, any question of law reserved by
a circuit court, the land court, or the tax appeal court, or any
question or proposition of law certified to it by a federal
district or appellate court if the supreme court shall so
provide by rule[.]”
Haw. Rev. Stat. § 602-5(a)(2).
“When a federal district court or appellate court
certifies to the Hawai‘i Supreme Court that there is involved in
any proceeding before it a question concerning the law of
3
Hawai‘i that is determinative of the cause and that there is no
clear controlling precedent in the Hawai‘i judicial decisions,
the Hawai‘i Supreme Court may answer the certified question by
written opinion.”
Haw. R. App. P. 13(a).
The court certifying a question must provide “a
statement of prior proceedings in the case, a statement of facts
showing the nature of the cause, the question of law to be
answered, and the circumstances out of which the question
arises.”
Haw. R. App. P. 13(b).
III.
STATEMENT OF PRIOR PROCEEDINGS AND OF FACTS.
These three putative class actions 1 have proceeded in a
parallel manner.
Filed in 2012 in state court and removed to
federal court, these cases have lengthy histories, which the
court summarizes here only as relevant to the certified
question.
Lima arises from alleged conduct relating to
the nonjudicial foreclosure of properties owned by Plaintiffs
Lionel Lima, Jr., Barbara-Ann Delizo-Lima, Calvin Jon Kirby II,
Leneen Kron, Deirdre-Dawn K. Cabison, James C. Clay, Scott A.
Coryea, Katheryn Coryea, Richard H. Farnham, Nancy L. Farnham,
Timothy Ryan, Donna Ryan, Kaniala Salis, and Brian S. Weatherly
(all fourteen plaintiffs referred to collectively as “the Lima
Plaintiffs”).
1
The Lima Plaintiffs are suing Defendant Deutsche
No class has been certified to date.
4
Bank National Trust Company (“Deutsche Bank”).
See Lima, ECF
No. 238 (Second Amended Complaint). 2
Gibo arises from alleged conduct relating to the
nonjudicial foreclosure of property owned by Plaintiffs Evelyn
Jane Gibo, Patrick Stephen Hemmens, Deanne Davidson Hemmens,
Vincent Labasan, and Jennifer Strike (all five plaintiffs
referred to collectively as “the Gibo Plaintiffs”).
The Gibo
Plaintiffs are suing Defendant U.S. Bank National Association
(“U.S. Bank”).
See Gibo, ECF No. 196 (Second Amended
Complaint). 3
Finally, Bald arises from alleged conduct relating to
the nonjudicial foreclosure of property owned by Plaintiffs
David Emory Bald, Emily Lelis, James L.K. Dahlberg, Michael John
Myers, Jr., Tham Nguyen Myers, David Levy, and Thomas T. Au (all
seven plaintiffs referred to collectively as “the Bald
Plaintiffs”).
The Bald Plaintiffs are suing Defendant Wells
2
The Second Amended Complaint, filed on June 20, 2018, is the
operative complaint in Lima. The Lima Plaintiffs filed their
original Complaint in state court on June 4, 2012, and a First
Amended Complaint on September 6, 2012. Lima, ECF Nos. 1-1, 12.
3
The Second Amended Complaint, filed on June 20, 2018,
operative complaint in Gibo. The Gibo Plaintiffs filed
original Complaint in state court on June 18, 2012, and
Amended Complaint on September 6, 2012. Gibo, ECF Nos.
2.
5
is the
their
a First
1-1, 1-
Fargo Bank, N.A. (“Wells Fargo”).
See Bald, ECF No. 99 (First
Amended Complaint). 4
This order refers to the Lima Plaintiffs, Gibo
Plaintiffs, and Bald Plaintiffs collectively as “Plaintiff
Borrowers” and to Deutsche Bank, U.S. Bank, and Wells Fargo
collectively as “Defendant Banks.” 5
When removed, the cases included claims not only
against Defendant Banks, but also against David Rosen, Defendant
Banks’ attorney in the foreclosure proceedings.
Plaintiff
Borrowers alleged that Defendant Banks and Rosen had breached
their duties in selling the properties when they advertised the
foreclosure sales as sales by quitclaim deed and postponed the
sales without publishing notices of new dates and times.
Plaintiff Borrowers owned properties in Hawai‘i
encumbered by mortgages.
his or her mortgage.
Each Plaintiff Borrower defaulted on
Each Bald Plaintiff’s mortgage debt
exceeded the amount obtained through the foreclosure sale.
4
The First Amended Complaint, filed on November 27, 2017, is the
operative complaint in Bald. The Bald Plaintiffs filed their
original Complaint in state court on July 23, 2012, and an
amended Complaint on September 7, 2012. Bald, ECF Nos. 1-1, 13.
5
Plaintiff Borrowers in each case are represented by the same
counsel. The only exception is Emily Lelis. Currently
proceeding pro se, she has yet to file anything or appear in
court. See Bald, ECF Nos. 145, 155. Deutsche Bank and U.S.
Bank are represented by the same counsel; Wells Fargo is
represented by separate counsel. With the overlap in counsel,
much of the briefing across the three cases also overlaps.
6
Bald, ECF No. 170-1, PageID # 3297.
Although this court has
less detailed information for the Lima and Gibo Plaintiffs, they
also appear to have had mortgage balances exceeding the
foreclosure sales prices.
Lima, ECF No. 238-1, PageID #s 10594-
96; Gibo, ECF No. 260-1, PageID #s 11089-90.
Further, Wells
Fargo described some Bald Plaintiffs as having deliberately
chosen to default, as they were investors who owned multiple
properties and decided to spend their funds on more profitable
properties.
Bald, ECF No. 170-1, PageID # 3297.
Following the defaults, Defendant Banks, as
mortgagees, initiated nonjudicial foreclosure proceedings, and
the properties were sold in foreclosure between 2008 and 2011.
Third parties purchased some of the properties.
Defendant Banks
purchased other properties themselves at the foreclosure sales
and later sold them to third-party purchasers.
Plaintiff Borrowers sued Defendant Banks, asserting
violations of the mortgages’ power of sale clause, violations of
section 667-5 of Hawai‘i Revised Statutes, and unfair and
deceptive acts or practices (“UDAP”) in violation of section
480-2 of Hawai‘i Revised Statutes.
No. 1-2; Bald, ECF No. 1-3.
7
Lima, ECF No. 1-2; Gibo, ECF
This court granted motions to dismiss filed by
Defendant Banks and Rosen in each case, dismissing all claims. 6
Lima, ECF No. 77; Gibo, ECF No. 94; Bald, ECF No. 45.
The court
concluded that Hawai‘i’s nonjudicial foreclose law did not bar
advertisements of sales by quitclaim deeds and did not require
publication of auction postponements.
Plaintiff Borrowers
appealed the court’s orders to the Ninth Circuit.
The Lima and
Gibo appeals were consolidated, and the same Ninth Circuit panel
presided over both the Lima/Gibo appeal and the Bald appeal.
The Ninth Circuit withheld any ruling pending the
Hawai‘i Supreme Court’s decision in Hungate v. Law Office of
David B. Rosen, 139 Haw. 394, 391 P.3d 1 (2017).
Ultimately, in
unpublished decisions, the Ninth Circuit, relying on Hungate,
reversed the dismissal of claims against Defendant Banks and
remanded the cases to this court.
Bald v. Wells Fargo Bank,
N.A., 688 F. App’x 472 (9th Cir. 2017); Lima v. Deutsche Bank
Nat’l Tr. Co., 690 F. App’x 911 (9th Cir. 2017).
The Ninth
Circuit held that Plaintiff Borrowers had standing as
“consumers” under section 480-2 of Hawai‘i Revised Statutes, had
adequately alleged that Defendant Banks’ advertising and
postponement practices were unfair within the meaning of section
480-2, and had alleged sufficient facts showing injury under
6
The Bald Plaintiffs had previously dismissed Rosen from their
lawsuit, so the court denied Rosen’s motion to dismiss as moot.
8
section 480-2.
See Bald, 688 F. App’x at 474-77; Lima, 690 F.
App’x at 913.
In the Lima/Gibo appeal, the Ninth Circuit also
held that the Lima and Gibo Plaintiffs had sufficiently alleged
Deutsche Bank’s and U.S. Bank’s liability for the alleged
conduct.
Lima, 690 F. App’x at 913-14.
The Ninth Circuit
affirmed the dismissal of the claims against Rosen.
Id. at 915.
On remand, this court gave Plaintiff Borrowers leave
to file amended complaints.
The amended complaints removed
Rosen as a defendant, added new plaintiffs, and added other
practices that Defendant Banks had allegedly wrongfully engaged
in during the nonjudicial foreclosure proceedings.
Plaintiff
Borrowers complained of the following practices:
a.
Recording and publishing Notices of
Sale that did not include a “description of
the mortgaged property” (a) as required by
HRS Section 667-7(a)(1) (2008) and (b) which
was “sufficient to inform the public of the
nature of the property to be offered for
sale” and “calculated to interest
purchasers,” as required by Ulrich v. Sec.
Inv. Co., 35 Haw. 158, 172-73 (1939);
b.
Publishing and/or posting the Notice of
Sale for less time than required by statute;
c.
Selling the property despite having
failed to send the borrower a notice of
acceleration that gave the notice that the
standard form mortgage required about the
unconditional right the borrower had to
bring a separate suit to stop the sale.
d.
Issuing notices of sale that lacked a
description of the property that would
interest prospective buyers and/or comply
with statute;
9
e.
Advertising the auctions of properties
by “quitclaim deed” and/or without any
covenants or warranties of title whatsoever;
f.
Postponing auctions so frequently that
the substantial majority of sale dates
advertised in the Class’s published notices
of sale were not the actual auction dates;
g.
Postponing auctions without publishing
notices of the rescheduled auctions’ new
dates and times;
h.
Changing the location of the auction
without publishing the new location; and
i.
Including as a term of sale that time
was of the essence and that successful
bidders were expected to close their sales
within thirty days of their auctions, when
in fact such sales either never, or almost
never, closed within the specific timeframe.
Lima, ECF No. 182, PageID #s 6540-41; Gibo, ECF No. 196, PageID
#s 6520-21; see also Bald, ECF No. 99, PageID #s 2577-78
(complaining of roughly half of the listed practices).
In their amended complaints, Plaintiff Borrowers now
assert: (1) a tort claim for wrongful foreclosure, and (2) a
UDAP claim under section 480-2. 7
Lima, ECF No. 182, PageID
#s 6550, 6564; Gibo, ECF No. 196, PageID #s 6530, 6541; Bald,
ECF No. 99, PageID # 2604.
7
The claim is phrased as one for both UDAP and unfair methods of
competition (“UMOC”). See, e.g., Lima, ECF No. 182, PageID
# 6564. While section 480-2 applies to both UDAP and UMOC
claims, Plaintiff Borrowers have not made separate arguments
relating to UDAP and UMOC. See HRS § 480-2(a) (“Unfair methods
of competition and unfair or deceptive acts or practices in the
conduct of any trade or commerce are unlawful.”).
10
Plaintiff Borrowers seek damages “at law and in
equity, including but not limited to rescissory or equitable
damages intended to be equivalent to restoration of title and
possession unlawfully taken from Plaintiffs and the other
members of the Class, market value, lost rental value and sums
expended by Plaintiffs and other members of the Class in the
acquisition and/or improvement of their wrongfully sold
properties, moving or rental of alternate properties.”
Lima,
ECF No. 182, PageID # 6570; Gibo, ECF No. 196, PageID # 6547;
see also Bald, ECF No. 99, PageID # 2608. 8
They also seek
several other forms of relief, including treble damages.
Defendant Banks in each case filed motions for summary
judgment, arguing, among other things, that Plaintiff Borrowers’
claims fail because they cannot prove the harm element of either
their wrongful foreclosure claim or their section 480-2 claim.
Lima, ECF No. 238; Gibo, ECF No. 260; Bald, ECF No. 170.
Defendant Banks argue that, assuming that Defendant Banks
8
The Bald complaint uses slightly different wording:
[D]amages at law and in equity, including but not
limited to rescissory or equitable damages
intended to be equivalent to a restoration of
title and possession unlawfully taken from
Plaintiffs and the other members of the Class,
and sums expended by Plaintiffs and the other
members of the Class in the acquisition and/or
improvement of their wrongfully sold
properties[.]
Bald, ECF No. 99, PageID # 2608 (emphasis added).
11
engaged in the alleged practices and that those practices
violated the powers of sale and the statutes governing
nonjudicial foreclosure proceedings, Plaintiff Borrowers offer
no evidence that they suffered any harm as a result of the
practices.
Lima, ECF No. 238-1, PageID #s 10587-10600, 10601-
02, 10610-11; Gibo, ECF No. 260-1, PageID #s 11081-94, 11095-96,
11104-05; Bald, ECF No. 170-1, PageID #s 3295-3300.
Defendant
Banks argue that Plaintiff Borrowers provide no evidence that
Plaintiff Borrowers would have been able to keep their
properties had the allegedly wrongful actions not occurred, that
the sales prices of the properties would have been higher had
the actions not occurred, and/or that the properties’ sales
prices or fair market values exceeded the amounts owed on
Plaintiff Borrowers’ mortgages.
Plaintiff Borrowers respond that evidence that each
Plaintiff Borrower lost title, possession, and the value of
investments in that Plaintiff Borrower’s property is sufficient
to survive summary judgment.
Lima, ECF No. 247, PageID
#s 13966-80; Gibo, ECF No. 268, PageID #s 13125-39; Bald, ECF
No. 185, PageID #s 4704-13.
Plaintiff Borrowers argue that they
were harmed by the loss of title and possession of the
properties that they had before Defendant Banks foreclosed.
According to Plaintiff Borrowers, their mortgage debts are
relevant only after Defendant Banks’ liability has been proven
12
at trial--i.e., as a matter of setoff that Defendant Banks have
the burden of proving in the damages stage.
After hearing argument on the summary judgment
motions, this court issued a minute order on April 30, 2019,
asking the parties to submit briefs on whether to certify a
question to the Hawai‘i Supreme Court.
The order explained:
During summary judgment proceedings in this
case, the court has expressed concern about
whether Plaintiffs have adequately shown
that they sustained harm as a result of
Defendants’ allegedly wrongful actions.
Plaintiffs have pointed to the loss of title
to and possession of their real property and
to the alleged loss of their investments in
the property. This court is uncertain
whether, as part of their liability case,
Plaintiffs must take into account that any
such loss is subject to the mortgage that
was foreclosed on. Plaintiffs view the
effect of the mortgage as an offset that
Defendants have the burden of proving in the
damages part of the case, not something that
must be considered in determining whether,
as a matter of the elements of the liability
portion of the case, Plaintiffs have
sustained harm at all. While the liability
issue goes to the identity and nature of the
harm, and the damages issue goes to the
extent or amount of the harm, it is not
presently clear to this court that the
effect of the mortgage falls entirely and
exclusively within the damages issue. This
makes a difference for summary judgment
purposes because Defendants are asking this
court to rule that Plaintiffs fail to show
the existence of harm in the context of the
liability portion of the case. When
Plaintiffs say their harm includes the loss
of title and possession and leave out of
that description any reference to the
encumbrances on that title and possession,
they appear to be saying that they satisfy
13
the elements of their case in chief by
showing that they have been deprived of more
than they would have had even with a
properly conducted foreclosure. Is that a
legitimate definition of their harm for
liability purposes under Hawaii law, or is
the law so unclear that a question should be
certified?
Lima, ECF No. 267; Gibo, ECF No. 288; Bald, ECF No. 198.
parties submitted their briefs on May 6, 2019.
The
Lima, ECF Nos.
273, 274; Gibo, ECF Nos. 292, 293; Bald, ECF Nos. 200, 201.
The court has concluded that the most appropriate
course of action is to seek guidance from the Hawai‘i Supreme
Court.
In doing so, this judge recognizes her duty to decide
the matters before her.
This judge does not lightly impose on
another court while doing that.
However, in the interest of
deciding correctly and promptly, this judge, for the first time
in over 20 years on the bench, certifies a question.
IV.
QUESTION OF LAW TO WHICH AN ANSWER IS SOUGHT AND
EFFECT OF AN ANSWER ON THE PROCEEDINGS.
The question to which an answer is sought asks:
When (a) a borrower has indisputably
defaulted on a mortgage for real property,
(b) a lender has conducted a nonjudicial
foreclosure sale but has not strictly
complied with the requirements governing
such sales, and (c) the borrower sues the
lender over that noncompliance after the
foreclosure sale and, if the property was
purchased at foreclosure by the lender,
after any subsequent sale to a third-party
purchaser, may the borrower establish the
requisite harm for liability purposes under
the law of wrongful foreclosure and/or
section 480-2 of Hawai‘i Revised Statutes by
14
demonstrating the loss of title, possession,
and/or investments in the property without
regard to the effect of the mortgage on
those items?
The intended focus of the certified question is on the
nature of the harm required to prove liability, not on the
calculation of the amount or extent of damages.
The court is
unsure whether the effect of the mortgage may be effectively
ignored in determining whether a borrower has established
liability.
The question may be restated as asking about the
allocation of burdens between the parties:
Is the effect of the mortgage considered
only as a matter of setoff that a lender has
the burden of proving after the borrower
establishes the amount of the borrower’s
damages, or does a borrower with no
preforeclosure rights in property except as
encumbered by a mortgage bear the burden of
accounting for the effect of the mortgage in
establishing the element of harm in the
liability case?
If the Hawai‘i Supreme Court concludes that the effect
of a mortgage must be considered in determining whether a
borrower establishes the harm element of a prima facie liability
case for wrongful foreclosure or a section 480-2 claim, this
court anticipates granting summary judgment for Defendant Banks
because Plaintiff Borrowers’ only evidence of harm relates to
the loss of title, possession, and investments in the properties
without regard to any mortgage.
A grant of summary judgment on
these grounds would dispose of all claims.
15
If the Hawai‘i Supreme Court arrives at a different
conclusion, that ruling will not dispose of the cases.
Instead,
this court will need to address the remaining arguments in
Defendant Banks’ motions for summary judgment, as well as the
issues in motions to dismiss filed by Deutsche Bank and U.S.
Bank.
Lima, ECF No. 232; Gibo, ECF No. 257.
Wells Fargo has
also filed a separate motion for partial summary judgment.
Bald, ECF No. 171.
These motions are substantial and together
raise dozens of complicated and often related issues.
The
effect of the mortgage on establishing harm is the only matter
common to all Plaintiff Borrowers’ claims.
That is, even if
this court addressed all of the other issues, it is unlikely
that the claims of all named Plaintiff Borrowers would be
disposed of by motions.
Notably, Plaintiff Borrowers in all three cases have
filed for class certification.
259; Bald, ECF No. 124.
Lima, ECF No. 237; Gibo, ECF No.
In the aggregate, the motions involve
over 1,500 borrowers whose properties were foreclosed.
In
support of their class certification motions, Plaintiff
Borrowers submitted an expert report on damages, specifically
with respect to calculations of lost rental value.
Defendant
Banks have filed motions to strike the report on Daubert
grounds.
181.
Lima, ECF No. 234; Gibo, ECF No. 237; Bald, ECF No.
The harm issue raised in Defendant Banks’ summary judgment
16
motions is directly relevant to the class certification motions
and may also affect the Daubert motions. 9
If this court denies summary judgment on liability and
grants class certification, the trials in these cases will be
lengthy.
Multiple trials may be required if certain issues need
to be tried separately.
For example, there could be separate
trials to determine the amount of damages for each Plaintiff
Borrower if damages are tied to the value of each Plaintiff
Borrower’s property and/or to the date of foreclosure of that
property.
These cases are very old and have gone up on appeal to
the Ninth Circuit once already.
Defendant Banks argue that
certifying a question will cause further delay.
This court
understands that a federal court typically tries to predict how
a state supreme court would rule on an issue.
However, if this
court predicts incorrectly, the length of the resulting delay
and the extent and complexity of the required proceedings would
far eclipse any delay flowing from certification of a question.
Although an affirmative answer to the question being
certified here is expected to dispose of the three cases before
this court, such an answer would not necessarily leave borrowers
in other cases with no remedy against lenders who have not
9
An answer to the certified question would likely affect several
other actions pending in this district court, some before
several other judges.
17
strictly complied with nonjudicial foreclosure requirements.
The question as framed here goes to the legal issue of who has
the burden of proof, and the effect of the answer in the three
cases in issue turns on whether, if Plaintiff Borrowers have the
burden, they have met or failed to meet their burden.
Even if
Plaintiff Borrowers are unsuccessful in the three cases in issue
here, that in no way precludes borrowers in other cases with
different records from meeting any burden the law may place on
them.
In short, clarifying the law will not inexorably rob all
borrowers of any remedy.
V.
LEGAL CIRCUMSTANCES OUT OF WHICH THE CERTIFIED
QUESTION ARISES.
Recently, the Hawai‘i Supreme Court has issued several
opinions relating to wrongful foreclosure and UDAP claims, some
with factual allegations similar to those raised in Lima, Gibo,
and Bald.
The Ninth Circuit and federal district judges in this
jurisdiction have also applied Hawai‘i substantive law to
analyze such claims.
However, the case law addressing
nonjudicial foreclosures does not provide a clear answer to the
certified question.
This court views as unsettled how the harm issue
should be addressed in the context of both the wrongful
foreclosure tort claims and the UDAP claims before it.
Stated
in its starkest terms, resolving the parties’ dispute (and
answering the certified question) could leave Plaintiff
18
Borrowers with no recovery or with a windfall.
In other words,
in trying to discern where the burdens lie, this court is not
engaging in a purely philosophical exercise.
One might think
that everything will sort itself out if this court simply allows
the cases to proceed, and that whether the mortgage debt is
considered as a liability issue or as a setoff issue will not
matter to the final judgments.
That would ignore the status of
the three cases, particularly the class action issues.
Far from
trying to determine how many angels can dance on the head of a
pin, this court is trying to parse the governing law in a manner
that will allow these cases to proceed in an orderly fashion.
A.
Wrongful Foreclosure Tort Claims.
“Hawaii law requires strict compliance with statutory
foreclosure procedures” enumerated in section 667-5 of Hawai‘i
Revised Statutes, the now-repealed nonjudicial foreclosure
statute.
In re Kekauoha-Alisa, 674 F.3d 1083, 1090 (9th Cir.
2012) (citing Lee v. HSBC Bank USA, 121 Haw. 287, 218 P.3d 775
(2009)).
In the past few years, the Hawai‘i Supreme Court has
formally recognized the tort of wrongful foreclosure arising out
of violations of section 667-5.
See Bank of America, N.A. v.
Reyes-Toledo, 143 Haw. 249, 263, 428 P.3d 761, 775 (2018)
(citing Hungate v. Law Office of David B. Rosen, 139 Haw. 394,
407, 391 P.3d 1, 14 (2017); Santiago v. Tanaka, 137 Haw. 137,
157-58, 366 P.3d 612, 632-33 (2016); and Mount v. Apao, 139 Haw.
19
167, 180, 384 P.3d 1268, 1281 (2016), as examples of the Court’s
“past consideration of potential circumstances in which a
wrongful foreclosure claim may exist in non-judicial
foreclosures”).
The Hawai‘i Supreme Court has not yet identified the
elements of a wrongful foreclosure claim specifically in the
nonjudicial foreclosure context, but it has stated that
“[g]enerally, if a foreclosure is conducted negligently or in
bad faith to the detriment of the mortgagor, the mortgagor may
assert a claim of wrongful foreclosure by establishing the
following elements: (1) a legal duty owed to the mortgagor by
the foreclosing party; (2) a breach of that duty; (3) a causal
connection between the breach of that duty and the injury
sustained; and (4) damages.”
Reyes-Toledo, 143 Haw. at 264
n.12, 428 P.3d at 776 n.12 (citing James Buchwalter et al., 59
C.J.S. Mortgages § 650 (2009)).
Thus, “to assert a wrongful
foreclosure claim, . . . the mortgagor must have suffered an
‘injury in fact’ and damages as a result.”
Id. at 264, 28 P.3d
at 776.
It is unclear whether the effect of the mortgage must
be considered when determining whether a borrower has provided
evidence of injury and damages in its prima facie case of
wrongful foreclosure.
As stated above, the only evidence of
harm provided by Plaintiff Borrowers is evidence of the loss of
20
title, possession, and investments in the properties, as if all
of these attach to property owned free and clear.
Generally, tort claims require “the plaintiff to show
‘that the harm would not have occurred’ in the absence of--that
is, but for--the defendant’s conduct.”
Univ. of Tex. Sw. Med.
Ctr. v. Nassar, 570 U.S. 338, 346-47 (2013) (citing Restatement
of Torts § 431, Comment a (negligence); § 432(1), and Comment a
(same)) (other citations omitted).
It is undisputed that
Plaintiff Borrowers defaulted on their mortgages and were
subject to foreclosure.
If Plaintiff Borrowers’ harm is the
loss of title, possession, and investments in their properties,
that loss might well have occurred even if Defendant Banks had
not engaged in the alleged advertising, publication, and
postponement practices.
That is, even if Defendant Banks had
conducted the nonjudicial foreclosure proceedings according to
all applicable requirements, 10 Plaintiff Borrowers’ properties
might still have been sold at foreclosure.
Plaintiff Borrowers argue that O’Grady v. State, 140
Haw. 36, 398 P.3d 625 (2017), precludes this type of “but for”
analysis.
See, e.g., Lima, ECF No. 274, PageID # 17173.
In
O’Grady, falling rocks and a related car accident on a state
10
This court is not here saying that it has made any factual
finding that Defendant Banks have engaged in unlawful practices
or wrongfully foreclosed. Such a determination will, in any
event, be rendered unnecessary if Plaintiff Borrowers are
determined to have failed to show cognizable harm.
21
highway led to a negligence claim.
at 629.
See 140 Haw. at 40, 398 P.3d
The Hawai‘i Supreme Court applied “a two-step analysis
for determining whether the defendant’s conduct was the legal
cause of the plaintiff’s injuries.”
Id. at 44, 398 P.3d at 633.
“[T]he defendant’s conduct is the legal cause of the harm to the
plaintiff if ‘(a) the actor’s conduct is a substantial factor in
bringing about the harm, and (b) there is no rule of law
relieving the actor from liability because of the manner in
which his or her negligence has resulted in the harm.’”
Id.
(alterations omitted) (quoting Taylor-Rice v. State, 91 Haw. 60,
74, 979 P.2d 1086, 1100 (1999)).
O’Grady did not address
foreclosures, but assuming the “substantial factor” test applies
in the present context, it is unclear whether Plaintiff
Borrowers can show that Defendant Banks’ alleged conduct was a
substantial factor in bringing about the loss of title,
possession, and investments in Plaintiff Borrowers’ properties
if Plaintiff Borrowers fail to account for the mortgages they
indisputably defaulted on.
Possibly, the harm to Plaintiff Borrowers should be
viewed as the loss of title, possession, and investments in
their properties earlier than the loss would have occurred with
properly conducted foreclosures.
This interpretation recognizes
that the foreclosure sales of the properties were inevitable
given Plaintiff Borrowers’ defaults, but that the sales should
22
have been redone to comply with all requirements governing the
manner of foreclosure.
In other words, even if Plaintiff
Borrowers’ properties would have eventually been sold (absent
evidence that they could have cured their defaults had the sales
been postponed), they suffered harm from Defendant Banks’
premature selling of the properties.
However, even this characterization of harm raises the
question of how to deal with Plaintiff Borrowers’ mortgages.
If
Plaintiff Borrowers can claim only the loss of something they
had in the first place, then how can they ignore the mortgages,
as they never had unencumbered interests in their properties?
Absent the foreclosure sales, Plaintiff Borrowers
would have continued to be obligated to make their mortgage
payments.
And absent any noncompliance with foreclosure
requirements, Plaintiff Borrowers’ mortgages would have been
taken into account.
Under this line of reasoning, Plaintiff
Borrowers themselves arguably must include evidence of their
outstanding mortgage debt in claiming harm in the form of loss
of title, possession, and investments.
That is, they cannot
claim as harm the loss of something they never had.
But this court cannot say that this line of reasoning
reflects Hawai‘i law on the appropriate remedy in all wrongful
foreclosure cases.
Critical to this court’s uncertainty is
Santiago v. Tanaka, which involved a wrongful foreclosure of
23
property owned by the Santiagos.
The Santiagos had a purchase
money mortgage from their seller, who proceeded to foreclose
even though the Santiagos were not in default when their
property was sold.
615, 632-33.
See 137 Haw. at 140, 157-58, 366 P.3d at
The Hawai‘i Supreme Court noted that “the classic
remedy” in such circumstances would be “return of title and
possession,” but that “money damages . . . may be substituted
for title and possession in certain instances pursuant to the
equitable powers of a court in adjudicating a case arising from
a mortgage foreclosure.”
Id. at 154 n.33, 366 P.3d at 629 n.33.
To “prevent forfeiture of [the Santiagos’] interests,” the
Hawai‘i Supreme Court “exercise[d] [its] equitable power in
awarding restitution.”
Id. at 158, 366 P.3d at 633.
It
concluded that “the Santiagos are entitled to restitution of
their proven out-of-pocket losses.”
Id.
Having purchased the
property in 2006 for $1,317,518.31, the Santiagos were entitled
to $1,412,790.79, which included the Santiagos’ $800,000 down
payment on the property, $585,161.60 covering “mortgage payments
from September 2006 to March 2011,” $17,518.31 in closing
charges associated with the sale, and $10,110.88 in property
taxes that the Santiagos paid following the foreclosure sale.
See id. at 142, 158, 366 P.3d at 617, 633.
It is not clear from
the opinion why mortgage payments that ended up totaling
$585,161.60 were made up to March 2011.
24
The foreclosure sale
occurred in October 2008.
See id. at 145, 366 P.3d at 620.
Moreover, mortgage payments from 2006, when the Santiagos bought
the property, through June 2008 totaled $235,161.60.
n.17, 366 P.3d at 619 n.17.
Id. at 144
That means that more than half of
the $585,161.60 in mortgage payments were made after the
foreclosure sale.
Later, in Mount v. Apao, the Hawai‘i Supreme Court
directed the circuit court on remand “to apply Santiago to
determine an appropriate remedy for the wrongful foreclosure.”
139 Haw. at 180, 384 P.2d at 1281.
Hungate also cited Santiago,
stating that, “[w]hen voiding the foreclosure is not possible,
the mortgagor is entitled to ‘restitution of their proven outof-pocket losses’ through a wrongful foreclosure claim.”
139
Haw. at 407, 391 P.3d at 14.
Plaintiff Borrowers rely on Santiago for the
proposition that the harm in a wrongful foreclosure is the loss
of title and possession in the property, and that, if return of
title and possession is not feasible, then a court may award
restitution to the borrower pursuant to the court’s equitable
powers.
Plaintiff Borrowers conclude that a borrower’s
outstanding mortgage debt is not relevant to determining whether
a borrower is harmed by a violation of foreclosure requirements;
Plaintiff Borrowers view mortgages as relevant only as a matter
of setoff.
See, e.g., Lima, ECF No. 247, PageID #s 13970-80.
25
The Santiago decision makes no mention of the effect
of any remaining mortgage obligation owed by the Santiagos.
The
wrongful foreclosure was premised on mortgage provisions
allowing the lender to declare all outstanding amounts
immediately due and payable upon the Santiagos’ default.
Haw. at 144, 366 P.3d at 619.
137
But there is no discussion in the
Santiago opinion going to the satisfaction of any mortgage
obligation, even after the holder of the purchase money mortgage
bought the property for $365,000 at the foreclosure auction in
2008.
See id. at 145, 366 P.3d at 620.
That foreclosure price was far below the more than
$1.3 million that the Santiagos had paid just two years earlier.
The Hawai‘i Supreme Court appears to have been intent on
avoiding a huge windfall to the lender.
The Court did not
expressly refer to any windfall to the victimized borrowers, but
the “total out-of-pocket losses of $1,412,790.79” resulting from
the wrongful foreclosure appears to have disregarded any
remaining mortgage obligation, and to have ended up compensating
the Santiagos for payments made even during the years they
occupied the property.
Thus, the Santiagos were repaid whatever
they had spent, were left with no debts, and were in effect
given rent-free occupancy before losing title.
Plaintiff
Borrowers therefore read Santiago as establishing that, under
Hawai‘i law, borrowers who have been subjected to wrongful
26
foreclosures may end up debt-free, and reimbursed for all
payments made relating to the property or to the foreclosure.
As added support for their reading, Plaintiff
Borrowers point to Beneficial Hawaii, Inc. v. Kida, 96 Haw. 289,
30 P.3d 895 (2001), in which a mortgage was declared void
because it had issued through the services of an unlicensed
mortgage broker.
That left the purchaser owning property free
and clear of a mortgage.
But this purported windfall resulted
from the mortgagee’s failure “to adduce evidence sufficient to
prove that it was entitled to any equitable relief.”
296, 30 P.3d at 902.
Id. at
This court therefore questions whether
Plaintiff Borrowers should rely on Kida as establishing what
Plaintiff Borrowers may recover.
It was the failure of proof,
not some unassailable borrower’s right, that resulted in the
purported windfall to the borrower.
Notably, Santiago and Mount involved borrowers who had
cured their defaults or were denied the opportunity to cure.
The decisions do not expressly limit the remedies discussed to
those for whom no foreclosure at all should have occurred, but
this court recognizes that not all wrongful foreclosures are the
same.
Like the three cases before this court, Hungate involved
wrongdoing in the manner in which the nonjudicial foreclosure
was conducted, not foreclosure that never should have occurred
even had the lender strictly complied with procedural
27
requirements.
The borrower in Hungate had defaulted, and the
opinion gives no indication that the borrower could have cured
the default.
The borrower’s remedy for wrongful foreclosure
remained “out-of-pocket losses.”
391 P.3d at 6.
See Hungate, 139 Haw. at 399,
Plaintiff Borrowers read “out-of-pocket losses”
as allowing them to recover title, possession, and investments
in their properties in the same manner that the nondefaulting
Santiagos did.
See, e.g., Lima, ECF No. 247, PageID #s 13969-
72.
Although relying on Santiago, Plaintiff Borrowers do
not appear to be seeking a full extinguishing of mortgage debt.
They instead seek to avoid having to take that debt into account
at the summary judgment stage or the class certification stage.
Defendant Banks argue that if a borrower has an “underwater”
mortgage (i.e., a mortgage with an outstanding balance that
exceeds the value of the property) or if a borrower deliberately
chooses to default, the borrower cannot ignore the mortgage debt
when challenged at the summary judgment stage.
The conundrum before this court is how, if at all, the
“out-of-pocket losses” restitution analysis bears on whether a
borrower can prove the harm element in the liability portion of
a wrongful foreclosure claim.
Santiago may suggest that any
remaining mortgage debt be disregarded, and the investment value
in the property be returned to borrowers without setoff.
28
See
137 Haw. at 158, 366 P.3d at 633.
The Hawai‘i Supreme Court
recognized that, “[a]t the time of their ejectment, the
Santiagos had made virtually full payment to Tanaka for the
Tavern, including an $800,000 down payment and $585,161.60 in
mortgage payments.”
Id.
It is not clear whether the result
would have been the same if the mortgage debt had substantially
exceeded the value of the property.
If the effect of the mortgage does matter in the harm
analysis, such that a borrower whose debt exceeds the value of
the property does not suffer harm, that of course leaves the
question of how to determine the value of the property.
Defendant Banks offer the foreclosure prices as evidence of
value, but this court is not here adopting that approach or
including that issue in the certified question.
This court
notes that Santiago appeared to disregard the foreclosure price
of $365,000.
B.
See 137 Haw. at 145, 366 P.3d at 620.
UDAP Claims.
To state a UDAP claim, a plaintiff must demonstrate:
“(1) a violation of section 480–2; (2) injury to the consumer
caused by such a violation; and (3) proof of the amount of
damages.”
Isagawa v. Homestreet Bank, 769 F. Supp. 2d 1225,
1237 (D. Haw. 2011) (citing Davis v. Wholesale Motors, Inc., 86
Haw. 405, 417, 949 P.2d 1026, 1038 (App. 1997)).
“[W]hile proof
of a violation of chapter 480 is an essential element of an
29
action under HRS § 480–13, the mere existence of a violation is
not sufficient ipso facto to support the action; forbidden acts
cannot be relevant unless they cause [some] private damage.”
Robert’s Haw. Sch. Bus, Inc. v. Laupahoehoe Transp. Co., Inc.,
91 Haw. 224, 254 n.30, 982 P.2d 853, 883 n.30 (1999) (second
alteration in original) (quoting Ai v. Frank Huff Agency, Ltd.,
61 Haw. 607, 618, 620-21, 607 P.2d 1304, 1312, 1313 (1980)),
superseded by statute on other grounds as noted in Davis v. Four
Seasons Hotel Ltd., 122 Haw. 423, 428 n.9, 228 P.3d 303, 308 n.9
(2010).
“HRS chapter 480 does not define injury or damages,
but ‘Hawai‘i courts have not set a high bar for proving’
injury.”
Hungate, 139 Haw. at 412, 391 P.3d at 19 (quoting
Compton v. Countrywide Fin. Corp., 761 F.3d 1046, 1053 (9th Cir.
2014)).
However, “[a]ny injury must be fairly traceable to the
defendant’s actions.”
Kekauoha-Alisa, 674 F.3d at 1092 (citing
Flores v. Rawlings Co., LLC, 117 Haw. 153, 167 n.23, 177 P.3d
341, 355 n.23 (2008)).
In Kekauoha-Alisa, the Ninth Circuit addressed injury
in a UDAP claim in an adversary proceeding in bankruptcy court.
The claim was founded on alleged violations of section 667-5’s
publication requirements.
The Ninth Circuit stated, “Under HRS
§ 480–13, the injury is measured through standard expectation
damages, i.e., damages sufficient to make the plaintiff whole.”
30
Kekauoha-Alisa, 674 F.3d at 1092 (citing Leibert v. Fin.
Factors, Ltd., 71 Haw. 285, 290-91, 788 P.2d 833, 836–37
(1990)).
Because the bankruptcy court “made no finding--
explicit or otherwise--that the enumerated damages were caused
by and fairly traceable to Lenders’ improper postponement,” the
Ninth Circuit remanded the case to the bankruptcy court to make
such findings.
Id. at 1093.
The Ninth Circuit said it was not enough for a debtor
to “simply list[] as damages Debtor’s loss of equity in her
property, the rental value of the property for the time Debtor
was apparently excluded from possession, and attorneys’ fees
accrued in the state court ejectment action.”
Id.
It reasoned:
The damages the bankruptcy court awarded all
flow from the foreclosure on Debtor’s home
and appear to give Debtor an inappropriate
windfall. This seems irreconcilable with
the bankruptcy court’s finding that Debtor
did not experience foreclosure of her home
because of Lenders’ imperfect postponement
procedure. As the bankruptcy court phrased
it, “There is no question, . . . that the
Mortgage was in default and that the
mortgagee was entitled to foreclose. The
only question is whether the proper party
foreclosed the Mortgage in the proper
manner.” In sum, the court’s findings of
fact appear to establish that Debtor’s
losses “result[ed] from” her default, rather
than Lenders’ failure to shout out the
postponement of the foreclosure.
31
Id. (citing Haw. Med. Ass’n v. Haw. Med. Serv. Ass’n, Inc., 113
Haw. 77, 114, 148 P.3d 1179, 1216 (2006)). 11
On remand, to “properly narrow[] the inquiry to the
damage caused by Lenders’ deceptive postponement,” the
bankruptcy court was directed to “determine the difference, if
any, between Debtor’s situation had Lenders properly postponed
the foreclosure sale and Debtor’s actual situation, given that
the sale was improperly postponed.” 12
Id.
11
The Ninth Circuit also noted that the plaintiff-debtor had
suggested that “she can prove that but for Lenders’ improper
postponement, she might have succeeded in curing her default”
and that “[t]his fact, if proven, might establish that Debtor’s
temporary loss of possession of the property was ‘fairly
traceable’ to Lenders’ deceptive practice.” Kekauoha-Alisa, 674
F.3d at 1093 (quoting Flores, 117 Haw. at 167 n.23, 177 P.3d at
355 n.23).
12
On remand, the bankruptcy court stated,
[H]aving reviewed the record again, I now think that
the improper notice of postponement did not cause the
Debtor to lose the value of the equity in her
property. The defective postponement did not
extinguish the Debtor’s debt to the Lenders, discharge
the lien of the mortgage, or preclude the Lenders from
foreclosing. It means only that the Lender must
renotice the foreclosure for a later date. Any
damages flowing from the fact of the foreclosure are
not compensable, because the Lender unquestionably had
(and still has) the right to foreclose. The only
compensable damages are those caused by the wrongful
postponement of the foreclosure--in other words,
damages caused by the fact that the Lenders took
ownership and possession of the Debtor’s property
before the Lenders were entitled to do so.
In re Kekauoha-Alisa, Bankr. No. 467,468, 2012 WL 3061511, at *2
(Bankr. D. Haw. Jul. 26, 2012). The bankruptcy court went on to
award “the fair rental value of the property from the date that
32
The Ninth Circuit in Kekauoha-Alisa therefore
considered the borrower’s default when analyzing the harm
element in a UDAP claim and appeared to require the borrower to
offer evidence of harm beyond the loss of title, possession, and
investment in the property.
The Ninth Circuit’s “interpretation
of Hawai‘i law remains binding in the Ninth Circuit ‘in the
absence of any subsequent indication from the Hawai‘i courts
that our interpretation was incorrect.’”
Kona Enters., Inc. v.
Estate of Bishop, 229 F.3d 877, 884 n.7 (9th Cir. 2000)
she wrongfully lost ownership of the property pursuant to the
invalid foreclosure sale until the Lenders restore title to her
and the attorneys’ fee she incurred in [a related] ejectment
case.” Id. at *4. The award was trebled under section 480-2.
See id.
The lenders sought reconsideration of the award,
arguing that “their misconduct--the invalid notice of
postponement of the foreclosure sale--did not cause this damage,
because the Debtor was still in default and they were still
entitled to foreclose.” In re Kekauoha-Alisa, Bankr. No. 0501215, 2013 WL 773057, at *1 (Bankr. D. Haw. Feb. 27, 2013).
The bankruptcy court denied the lenders’ motion, reasoning that
“[t]he Lenders’ misconduct did cause these losses,” and that
“[w]hether or not the Debtor was able to make the mortgage
payments, the Debtor was entitled to the use and ownership of
the property until the Lenders properly foreclosed their
mortgage.” Id. at *2.
Thus, the bankruptcy court did not consider the effect
of the mortgage in determining whether the lenders caused the
debtor harm. See also Paresa v. HSBC Bank USA, N.A., Civ. No.
17-00248 DKW-RLP, 2018 WL 2090605, at *10 (D. Haw. May 4, 2018)
(referring to a premature nonjudicial foreclosure sale and
noting that “this particular type of harm may be caused by the
failure of a foreclosing mortgagee to give proper notice of
postponement,” but declining to address, on a less explicit
record of harm than exists in the three cases in issue here,
“the applicable measure of damages”).
33
(alteration omitted) (quoting Owen v. United States, 713 F.2d
1461, 1464 (9th Cir. 1983)).
However, Hungate, decided five years after the Ninth
Circuit decided Kekauoha-Alisa, may suggest that the Ninth
Circuit’s interpretation of UDAP claims was incorrect.
In
discussing whether the borrower in Hungate had alleged
sufficient facts to show the requisite harm supporting his UDAP
claim, the Hawai‘i Supreme Court stated that the borrower “need
only allege that ‘he has, as a direct and proximate result of
[the lender’s] violation of section 480-2, sustained special and
general damages’ to withstand a motion to dismiss.’”
139 Haw.
at 412, 391 P.3d at 19 (alterations omitted) (quoting Compton,
761 F.3d at 1054).
The Hawai‘i Supreme Court held that the
borrower sufficiently stated a UDAP claim because “[b]ased on
the allegations in the complaints, the factfinder could
determine [the borrower] was injured by the foreclosure sale,
which eliminated equity that [the borrower] held in the property
and prevented him from using the property.”
Id.
This court recognizes that Hungate addressed the
factual allegations required to survive a motion to dismiss, not
the evidence required to survive a motion for summary judgment.
In Kekauoha-Alisa, the Ninth Circuit was reviewing a decision
made after a bench trial.
It is unclear to this court whether
the Hawai‘i Supreme Court’s language in Hungate should be read
34
as stating that, to demonstrate harm under section 480-2, a
borrower need only provide evidence of lost use of the property
and/or lost equity or investment in the property.
As a result,
this court seeks guidance from the Hawai‘i Supreme Court on how,
if at all, the effect of a mortgage should be factored into
determining whether a borrower bringing a UDAP claim has
suffered injury for purposes of presenting its liability case in
the summary judgment context. 13
VI.
ORDER.
The Clerk of Court is directed to transmit a copy of
this order to the Hawai‘i Supreme Court under official seal of
the United States District Court of the District of Hawaii.
Haw. R. App. P. 13(c).
See
The Clerk is also directed to provide
“original or copies of all or any portion of the record” in this
case as “[t]he Hawai‘i Supreme Court may, in its discretion,
require.”
13
Id.
During a consolidated hearing on the class certification
motions, Plaintiff Borrowers argued that, if this court
determined that Plaintiff Borrowers had not established an
injury, then this court lacked subject matter jurisdiction
because Plaintiff Borrowers, absent any injury, lacked standing
to proceed. Plaintiff Borrowers are confusing jurisdictional
requirements with their burden on summary judgment. Certainly
Plaintiff Borrowers must allege an injury for this court to
exercise jurisdiction over their claims. But if Plaintiff
Borrowers fail to offer evidence of injury, that is a failure of
proof, not of jurisdiction. The question certified here goes to
what Plaintiff Borrowers must prove to maintain their claims,
not to whether Plaintiff Borrowers have at least alleged an
injury.
35
The parties in each case shall file a joint notice in
this court within one week of the Hawai‘i Supreme Court’s
decision to accept or reject certification.
If the Hawai‘i
Supreme Court accepts the certified question, the parties in
each case shall file a joint status report to this court every
six months after the date of acceptance, or more frequently if
circumstances warrant.
Further proceedings in this court are stayed pending
action by the Hawai‘i Supreme Court.
The pending motions in
Lima, Gibo, and Bald are hereby terminated without prejudice.
After the Hawai‘i Supreme Court’s decision, the motions may be
reinstated without filing additional papers.
A party wishing to
reinstate a motion should submit a letter to the court
specifying the motions to be reinstated.
deadlines in these cases are vacated.
All upcoming dates and
Deadlines that have
already expired are not affected by this order, meaning that, if
new dates are later set, expired deadlines are not automatically
extended.
The court directs the Clerk to administratively close
all three cases while the matter is pending in the Hawai‘i
Supreme Court.
\
\
\
36
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, May 16, 2019.
/s/ Susan Oki Mollway
Susan Oki Mollway
United States District Judge
Lionel Lima, et al. v. Deutsche Bank National Trust Company,
Civ. No. 12-00509 SOM-WRP, Evelyn Jane Gibo, et al. v. U.S. Bank
National Association, Civ. No. 12-00514 SOM-WRP, and David Emory
Bald, et al. v. Wells Fargo Bank, N.A., Civ. No. 13-00135 SOMRT; ORDER CERTIFYING A QUESTION TO THE HAWAI‘I SUPREME COURT.
37
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