County of Kaua'i v. United States Department of Agriculture Rural Housing Service et al
ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AGAINST ALL PARTIES AND FOR INTERLOCUTORY DECREE OF FORECLOSURE re 26 Motion for Summary Judgment. Signed by JUDGE LESLIE E. KOBAYASHI on 10/06/2015. -- The County's Motion for Summary Judgment Against All Parties and for Interlocutory Decree of Foreclosure, filed July 24, 2015, is HEREBY GRANTED. Specifically, this Court FINDS that: 1) as of July 15, 2015, Girald owed the County $80,534.04 in principal, interest, and fees; 2) the County is entitled to additional interest accrued until the date that the foreclosure sale is confirmed; and 3) the County is entitled to reasonable attorneys' fees and costs incurred in this case. The a mount of the award will be determined upon the filing of the County's motion for attorneys' fees and costs, which will be referred to the magistrate judge. Further, this Court CONCLUDES that: 1) the amounts owed to the County constitute a v alid and enforceable lien on the Property;and 2) the County is entitled to the appointment of a commissioner to take possession of, maintain, and conduct the foreclosure sale of the Property. The Court DIRECTS the County to prepare a proposed order of foreclosure. The order of foreclosure shall include a statement that the Court certifies it as a final order pursuant to Fed. R. Civ. P. 54(b). The County shall submit the proposed order to this Court by October 27, 2015 for review and appr oval (eps )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications served by first class mail on the date 10/07/2015.
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
COUNTY OF KAUA`I,
DEBRA MARIE GIRALD aka DEBRA )
MARIE MATTHEWS, ET AL.,
CIVIL 15-00204 LEK-BMK
ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AGAINST
ALL PARTIES AND FOR INTERLOCUTORY DECREE OF FORECLOSURE
Before the Court is Plaintiff/Counterclaim Defendant
County of Kauai’s (“the County”) Motion for Summary Judgment
Against All Parties and for Interlocutory Decree of Foreclosure
(“Motion”), filed on July 24, 2015.
[Dkt. no. 26.]
Defendant/Counter claimant/Cross claimant United States
Department of Agricultural Rural Housing Service (“the United
States”) filed a statement of no opposition on August 24, 2015.
[Dkt. no. 39.]
Pro se Defendant/Cross defendant Debra Marie
Girald, also known as Debra Marie Matthews (“Girald”), did not
respond to the Motion.
Pursuant to an entering order that this
Court issued on September 24, 2015, the County filed a
supplemental memorandum in support of the Motion (“Supplemental
Memorandum”) on September 28, 2015.
[Dkt. nos. 42, 44.]
Court finds this matter suitable for disposition without a
hearing pursuant to Rule LR7.2(d) of the Local Rules of Practice
of the United States District Court for the District of Hawai`i
On August 25, 2015, this Court issued an entering order
ruling on the Motion (“8/25/15 EO Ruling”).
supersedes the 8/25/15 EO Ruling.
The instant Order
After careful consideration of
the Motion and the relevant legal authority, the County’s Motion
is HEREBY GRANTED for the reasons set forth below.
On August 15, 2007, Girald executed a promissory note
in return for a $65,000.00 loan from the County (“Note”), which
was secured by a Gap Mortgage on a unit in the condominium
project known as Ho`okena at Puhi (“Mortgage” and “Property”).
[Motion, Decl. of Indebtedness,1 Exh. 1 (Note), Exh. 2
Girald used the money from her loan from the County
and the money from another loan to purchase the Property.
other loan was secured by a first mortgage with the United States
[Mortgage at 2; Franco Decl. at ¶ 4.]
First Mortgage secured a Promissory Note that Girald executed in
return for a $180,500.00 loan from the United States (“First
[United States’ Answer to Plaintiff’s Complaint Filed
Steven Franco, a Homebuyer Specialist for the County,
prepared the Declaration of Indebtedness (“Franco Declaration”).
[Franco Decl. at ¶ 1.] He states that, “[i]n the regular
performance of [his] job functions, [he is] familiar with
business records maintained by the County for the purpose of
servicing mortgage loans.” [Id. at ¶ 2.]
April 22, 2015, Exh. A (First Note).]
Girald failed to make her required payments of
principal and interest to the County, rendering her in default on
the Note and Mortgage.
[Franco Decl. at ¶ 5.]
On March 4, 2015,
Matthew Bracken, Esq., counsel for the County, sent Girald a
letter formally notifying her that she was in default of the Note
and the Mortgage (“Default Letter”).
[Motion, Decl. of Counsel
(“Bracken Decl.”) at ¶ 3, Exh. 3 (Default Letter).]
Letter states that, as of March 3, 2015, Girald’s “loan was past
due in the amount of $1,973.15.”
[Default Letter at 1.]
stated that, if she did not pay all past due amounts within
thirty days, the County would accelerate the loan, rendering all
principal, interest, and fees immediately due.
Girald failed to cure the default, and the County
exercised its option to accelerate the loan and declare the
entire amount due.2
[Franco Decl. at ¶ 5.]
As of July 15, 2015,
Girald had not made any payments on her loan and owed the
following: loan balance - $65,000; interest accrued - $15,364.93;
For example, the Note states:
If I am in default, the Note Holder may send me a
written notice telling me that if I do not pay the
overdue amount by a certain date, the Note Holder
may require me to pay immediately the full amount
of principal which has not been paid and all the
interest that I owe on that amount.
[Note at 3, ¶ 6.C.]
and fees accrued - $169.11.
[Id., Exh. 4 (Payment History
Thus, the total amount due, as of July 15, was
In addition, the Mortgage provides that,
“[o]ut of the proceeds of any foreclosure sale, the Lender may
deduct all costs and expenses of any remedy pursued, including
attorney’s fees, may pay and discharge any lien, either prior or
junior to this Mortgage, on said Property.”
[Mortgage at 7,
The County filed this action in state court on
April 22, 2015.
The Complaint seeks, inter alia: a determination
of the amount that Plaintiff owes under the Note and Mortgage,
including attorney’s fees; a declaration that the amount due is a
valid and enforceable lien against the Property; and the
appointment of a commissioner to sell the Property.
On June 2, 2015, the United States removed the action
pursuant to 28 U.S.C. § 1442(a)(1).3
[Notice of Removal of Civil
Section 1442 states, in pertinent part:
(a) A civil action or criminal prosecution that
is commenced in a State court and that is against
or directed to any of the following may be removed
by them to the district court of the United States
for the district and division embracing the place
wherein it is pending:
(1) The United States or any agency thereof
or any officer (or any person acting under
that officer) of the United States or of any
agency thereof, in an official or individual
capacity, for or relating to any act under
Action at ¶ 4.]
On July 2, 2015, the United States filed its
answer, which included a Counterclaim against the County and a
Cross-claim against Girald.
[Dkt. no. 15.]
The answer asks,
inter alia, that the Court declare that the United States has a
valid lien on the Property and that any sale of the Property to
satisfy the County’s loan “will be subject to, and will not
disturb, Defendant United States’ lien on the subject property.”
[Id. at 2.]
Girald did not respond to the Complaint, and, on
July 15, 2015, the County filed a request for entry of default.
[Dkt. no. 20.]
On July 23, 2015, the magistrate judge granted
the request, and the Clerk’s Office entered the default.
nos. 24, 25.]
The instant Motion followed.
The County seeks summary
judgment and an order awarding it all of the relief requested in
the Complaint against all Defendants.
Specifically, the County
requests, inter alia:
(1) A money judgment, pursuant to the terms
of the Note and Mortgage, and that sum of money,
including all advances, costs, expenses, and
attorneys’ fees, is declared to be a valid
judgment, and a valid lien upon the property;
color of such office or on account of any
right, title or authority claimed under any
Act of Congress for the apprehension or
punishment of criminals or the collection of
(2) That the interest shall accrue on the
note up to the date that the sale of the Property
(3) Appointment of a commissioner to take
possession of the Property and directing the
commissioner to collect rents, preserve the
Property, and sell the Property for cash, in
United States currency, in the manner provided by
law and the orders of this Court . . . ;
(4) Directions to the commissioner providing
that after the payment of all necessary expenses
of such sale, the commissioner shall make
application of all the proceeds thereof so far as
the same may be necessary to the payment of the
amounts found due and owing: First to Defendant
United States Department of Agricultural Rural
Housing, then to the County under the Note and
Mortgage, including the aforesaid advances, costs,
expenses, and attorney’s fees toward satisfaction
of the money judgment, and the balance, if any, as
determined by this Court; [and]
. . . .
(9) A finding under Rule 54(b) of the
Federal Rules of Civil Procedure that there is no
just reason for delay in entry of the judgment and
decree of foreclosure as final judgments[.]
[Mem. in Supp. of Motion at 6-8.]
Compliance with Local Rules
At the outset, this Court notes that Local Rule 56.1(a)
requires the party filing a motion for summary judgment to also
file “a separate concise statement detailing each material fact
as to which the moving party contends that there are no genuine
issues to be tried that are essential for the court’s
determination of the summary judgment motion.”
County failed to file a concise statement of facts, this Court is
not obligated to consider the materials that the County filed in
support of the Motion.
See Local Rule LR56.1(f).4
This Court has considered the County’s supporting
materials, in spite of the County’s failure to file a concise
statement of facts.
However, this Court emphasizes that it does
not condone the County’s failure to follow the applicable rules.
The Court CAUTIONS the County that the failure to follow the
applicable rules in the future may result in sanctions.
example, if the County’s motion for attorneys’ fees and costs
does not comply with the requirements of Local Rule 54.3, the
magistrate judge and/or this Court may impose sanctions.
sanctions may include, inter alia, denying the motion without
prejudice, or a reduction in the amount of the award.
The Court now turns to the merits of the Motion.
The Mortgage states that it is “governed by federal law
and the law of the State of Hawaii in which the Property is
[Mortgage at 6, ¶ 15.]
This district court has
Local Rule 56.1(f) states that a court reviewing a motion
for summary judgment has “no independent duty to search and
consider any part of the court record not otherwise referenced in
the separate concise statements of the parties.” It is required
to consider “only those portions of the exhibits specifically
identified in the concise statements.” Id.
In general, there is no federal foreclosure
law; rather, state law serves as the law of
decision in foreclosure actions. See Whitehead v.
Derwinski, 904 F.2d 1362, 1371 (9th Cir. 1990),
overruled on other grounds by Carter v. Derwinski,
987 F.2d 611 (9th Cir. 1993). Under Hawaii law, a
court may issue a foreclosure decree when the
moving party establishes all four of the
following: (1) the existence of a promissory note,
mortgage, or other debt agreement; (2) the terms
of the promissory note, mortgage, or other debt
agreement; (3) default by the borrower under the
terms of the promissory note, mortgage, or other
debt agreement; and (4) the giving of the
cancellation notice and recordation of an
affidavit to such effect. See IndyMac Bank v.
Miguel, 184 P.3d 821, 835 (Haw. Ct. App. 2008)
(citing Bank of Honolulu, N.A. v. Anderson, 654
P.2d 1370, 1375 (Haw. Ct. App. 1982)); see also
Haw. Rev. Stats. §§ 667–1 et seq. (providing for
foreclosure by court action). The party
seeking to foreclose must provide evidence of
default, but need not determine a sum certain
before obtaining a decree of foreclosure. Miguel,
184 P.2d at 835 (citing Anderson, 654 P.2d at
OneWest Bank, FSB v. Farrar, Civ. No. 12–00108 ACK–KSC, 2014 WL
5023472, at *5 (D. Hawai`i Oct. 8, 2014).
In the instant case, the County has carried its burden
of proving the first three Anderson requirements - the existence
of Girald’s loan agreement, the terms of that agreement, and
Girald’s default under the terms of the agreement.
As to the
fourth requirement, there is undisputed evidence that: the County
gave Girald notice that it would accelerate her loan if she
failed to make all outstanding payments within thirty days;
The Court will refer to these four requirements as the
[Bracken Decl., Exh. 3 (Default Letter);] and the County
exercised its option to accelerate Girald’s loan after she failed
to make payment [Franco Decl. at ¶ 5].
established the giving of notice.
Thus, the County has
However, there is no evidence
in the record that the County satisfied the portion of the fourth
requirement regarding a recorded affidavit.
The County’s argues that it was not required to record
It describes the fourth requirement as “compliance
with notice provisions, if any.”
[Mem. in Supp. of Motion at 5
(citing Bank of Honolulu, N.A. v. Anderson, 3 Haw. App. 545, 551,
654 P.2d 1370, 1375 (1982)).]
The County’s interpretation of the
fourth requirement, however, is not supported by the plain
language of the opinion in Anderson.
See 3 Haw. App. at 551, 654
P.2d at 1375 (describing the fourth requirement as “the giving of
the cancellation notice and recordation of an affidavit to such
However, Anderson involved the foreclosure on an
agreement of sale, not a mortgage.
Id. at 546, 654 P.2d at 1372.
The agreement of sale contained an express provision requiring
that, “if the Bank desire[d] to cancel the Agreement due to
Anderson’s default, it must give written notice to her, and
record an affidavit stating that notice had been given and the
agreement had been cancelled.”
Id. at 551, 654 P.2d at 1375.
the instant case, neither the Note nor the Mortgage require the
recording of an affidavit prior to foreclosure.
See Note at 3,
¶ 6.C; Mortgage at 7, ¶ 19.
The Hawai`i Intermediate Court of Appeals (“ICA”)
reiterated the four Anderson requirements in Miguel, 117 Hawai`i
at 520, 184 P.3d at 835, and Miguel involved the foreclosure on a
promissory note and mortgage.
P.3d at 825-26.
See 117 Hawai`i at 510-11, 184
Similarly, this district court in Farrar recited
the Anderson requirements in considering a motion for summary
judgment, default judgment, and an order for interlocutory decree
of foreclosure on two promissory notes and mortgages.
5023472, at *1-2, 5.
The County points out that, in more recent cases, the
ICA has described the fourth Anderson requirement as “that notice
was given as required by the agreement,” and the ICA has not
included the language about recording an affidavit.
at 3 (some citations omitted) (citing Wells Fargo Bank, N.A. v.
Pasion, 135 Haw. 409, 353 P.3d 412 (Ct. App. 2015); Waianae Cmty.
Dev. Project Ass’n ex rel. Bd of Directors v. Quartero, 135 Haw.
216, 347 P.3d 1022 (Ct. App. 2015)).6]
Similarly, the County
argues that, although this district court has recited the “the
giving of the cancellation notice and recordation of an affidavit
to such effect” language, in considering the fourth Anderson
requirement, this district court merely “look[s] for a
Pasion is available at 2015 WL 4067259, and Quartero is
available at 2015 WL 1880783.
cancellation notice found in most note or mortgage agreements.”
[Id. at 2 (citing United States v. Guerette, No. 09-00133ACK-KSC,
2010 WL 3260191, at *8 (D. Haw. Aug. 13, 2010) (“[B]ecause there
is no dispute as to whether Defendant Guerette received notice of
cancellation, Plaintiff has satisfied the fourth requirement.”);
United States v. Perez, No. CIV. 10-00535 SOM, 2011 WL 2610127,
at *3 (D. Haw. July 1, 2011) (“[T]he Government has satisfied
Anderson’s requirement that Perez be notified of the cancellation
of his loan.”); United States v. Johnston, No. CV. 0800147DAEKSC, 2009 WL 667187, at *3 (D. Haw. Mar. 16, 2009)
(“Finally, the requirement under Anderson that Defendants be
notified of the cancellation of the loan has been satisfied.”);
OneWest Bank, FSB v. Farrar, No. CIV. 12-00108 ACK-KS, 2014 WL
5023472, at *6 (D. Haw. Oct. 8, 2014) (“Finally, OneWest has
demonstrated that it gave Borrowers notice of its intention to
This Court has recognized that:
When interpreting state law, a federal court is
bound by the decisions of a state’s highest court.
Trishan Air, Inc. v. Fed. Ins. Co., 635 F.3d 422,
427 (9th Cir. 2011). In the absence of a
governing state decision, a federal court attempts
to predict how the highest state court would
decide the issue, using intermediate appellate
court decisions, decisions from other
jurisdictions, statutes, treatises, and
restatements as guidance. Id.; see also
Burlington Ins. Co. v. Oceanic Design & Constr.,
Inc., 383 F.3d 940, 944 (9th Cir. 2004) (“To the
extent this case raises issues of first
impression, our court, sitting in diversity, must
use its best judgment to predict how the Hawai`i
Supreme Court would decide the issue.” (quotation
and brackets omitted)).
Evanston Ins. Co. v. Nagano, 891 F. Supp. 2d 1179, 1189 (D.
Hawai`i 2012) (some citations omitted).
In light of the fact-
specific nature of the Anderson requirement about recording an
affidavit, and in light of the ICA’s recent exclusion of that
part of the fourth Anderson requirement, this Court predicts that
the Hawai`i Supreme Court would hold that the recording of an
affidavit is not required in every case where the plaintiff moves
for a foreclosure decree.
This Court also predicts that the
Hawai`i Supreme Court would hold that the fourth Anderson
requirement merely requires that the foreclosing party comply
with the notice provisions of the parties’ agreement.
therefore CONCLUDES that it is not required to determine whether
the County recorded an affidavit about the intended foreclosure.7
This Court notes that, if the recording of an affidavit
was required, it would not accept the County’s representations in
the Supplemental Memorandum about the recording of the Notice of
Pendency of Action (“Notice”) with the Bureau of Conveyance
(“BOC”) prior to removal. See Suppl. Mem. at 4 (citing Doc. 19-3
pgs. 27-29). The Supplemental Memorandum cites to a document
among the records that the state court transmitted to this
district court after removal, but the document is not a copy of
the Notice that was recorded with the BOC. The cited document is
merely a copy of the Notice that the County filed in the state
court with its Complaint. The County neither attached a copy of
the Notice that it recorded with the BOC to the Supplemental
Memorandum nor provided a declaration or affidavit attesting to
the recording of the Notice. See Fed. R. Civ. P. 56(c)(1)(A)
(stating that a party moving for summary judgment must support
its assertion that a fact “cannot be . . . genuinely disputed” by
Thus, this Court FINDS that there are no genuine issues
of material fact as to the four Anderson requirements and
CONCLUDES that the County is entitled to judgment as a matter of
law as to its request for a foreclosure decree.
III. Rule 54(b) Judgment
Fed. R. Civ. P. 54(b) sates, in pertinent part:
When an action presents more than one claim for
relief – whether as a claim, counterclaim,
crossclaim, or third-party claim – or when
multiple parties are involved, the court may
direct entry of a final judgment as to one or
more, but fewer than all, claims or parties only
if the court expressly determines that there is no
just reason for delay. . . .
Hawai`i case law provides that:
“[F]oreclosure cases are bifurcated into two
separately appealable parts: (1) the decree of
foreclosure and the order of sale, if the order of
sale is incorporated within the decree; and
(2) all other orders.” Beneficial Hawaii, Inc. v.
Casey, 98 Hawai`i 159, 165, 45 P.3d 359, 365
(2002) (Casey) (quoting Security Pac. Mortgage
Corp. v. Miller, 71 Haw. 65, 70, 783 P.2d 855, 857
(1989)) (internal quotation marks omitted).
Appeals of foreclosure decrees and their
accompanying orders are allowed, even though
additional proceedings remain in the circuit
court, because of their idiosyncratic nature:
a foreclosure decree falls within that small
class of orders “which finally determine
claims of right separable from, and
“citing to particular parts of materials in the record, including
depositions, documents, electronically stored information,
affidavits or declarations, stipulations (including those made
for purposes of the motion only), admissions, interrogatory
answers, or other materials”).
collateral to, rights asserted in the action,
too important to be denied review and too
independent of the cause itself to require
that appellate consideration be deferred
until the whole case is adjudicated.”
Casey, 98 Hawai`i at 165, 45 P.3d at 365 (quoting
Int’l Sav. and Loan Ass’n, Ltd. v. Woods, 69 Haw.
11, 15, 731 P.2d 151, 154 (1987)).
Miguel, 117 Hawai`i at 520, 184 P.3d at 835.
In light of the
Hawai`i case law providing that a foreclosure decree is
immediately appealable, this Court FINDS that there is no just
reason to delay the certification of the order of foreclosure as
a final order pursuant to Rule 54(b).
On the basis of the foregoing, the County’s Motion for
Summary Judgment Against All Parties and for Interlocutory Decree
of Foreclosure, filed July 24, 2015, is HEREBY GRANTED.
Specifically, this Court FINDS that: 1) as of July 15, 2015,
Girald owed the County $80,534.04 in principal, interest, and
fees; 2) the County is entitled to additional interest accrued
until the date that the foreclosure sale is confirmed; and 3) the
County is entitled to reasonable attorneys’ fees and costs
incurred in this case.
The amount of the award will be
determined upon the filing of the County’s motion for attorneys’
fees and costs, which will be referred to the magistrate judge.
Further, this Court CONCLUDES that: 1) the amounts owed to the
County constitute a valid and enforceable lien on the Property;
and 2) the County is entitled to the appointment of a
commissioner to take possession of, maintain, and conduct the
foreclosure sale of the Property.
The Court DIRECTS the County to prepare a proposed
order of foreclosure.
The order of foreclosure shall include a
statement that the Court certifies it as a final order pursuant
to Fed. R. Civ. P. 54(b).
The County shall submit the proposed
order to this Court by October 27, 2015 for review and approval.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, October 6, 2015.
/s/ Leslie E. Kobayashi
Leslie E. Kobayashi
United States District Judge
COUNTY OF KAUA`I VS. UNITED STATES DEPARTMENT OF AGRICULTURE
RURAL HOUSING SERVICE, ET AL; CIVIL 15-00204 LEK-BMK; ORDER
GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AGAINST ALL
PARTIES AND FOR INTERLOCUTORY DECREE OF FORECLOSURE
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