Galima et al v. Association of Apartment Owners of Palm Court
ORDER DENYING DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT, ECF 263 and ECF 266 - Signed by JUDGE LESLIE E. KOBAYASHI on 4/10/2020.On the basis of the foregoing, the AOAO's Motion for Summary Judgment and Chow's Motion for Summary Judgment, both filed October 18, 2019, are HEREBY DENIED. (jni)
UNITED STATES DISTRICT COURT
DISTRICT OF HAWAII
RUDY AKONI GALIMA, ROXANA
CIV. NO. 16-00023 LEK-RT
ASSOCIATION OF APARTMENT OWNERS
OF PALM COURT, BY AND THROUGH
ITS BOARD OF DIRECTORS; DOE
DEFENDANTS 1-10, BRYSON CHOW,
ORDER DENYING DEFENDANTS’ MOTIONS FOR SUMMARY JUDGMENT
This matter arises out of the foreclosure of
Plaintiffs Rudy Akoni Galima and Roxana Beatriz Galima’s
(“Plaintiffs”) condominium apartment by Defendant Association of
Apartment Owners of Palm Court’s (“AOAO”) pursuant to the
nonjudicial foreclosure procedure available at that time within
Chapter 667, Part I of the Hawai`i Revised Statutes.1
December 31, 2019, partial summary judgment was granted in favor
Unless otherwise specified, all references to
“Chapter 667, Part I” in this case refer to the versions of Haw.
Rev. Stat. §§ 667-5 to 667-10 in effect at the time of the
nonjudicial foreclosure on Plaintiffs’ condominium unit. See,
e.g., Galima v. Ass’n of Apartment Owners of Palm Court,
CIVIL 16-00023 LEK-KSC, 2017 WL 1240181, at *2 & n.3 (D. Hawai`i
Mar. 30, 2017) (“3/30/17 Order”). Sections 667–5, 667–5.7,
667-6, 667–7, and 667–8, which were in effect in 2010, were
repealed in 2012. 2012 Haw. Sess. Laws Act 182, §§ 50-54 at
of Plaintiffs on their wrongful foreclosure claim because the
AOAO did not have an agreed upon power of sale provision or
other contractual agreement which authorized it to use
Chapter 667, Part I.
Subsequently, the State of Hawai`i
Legislature passed Senate Bill No. 551 – A Bill for an Act
Relating to Condominiums (which became law on July 10, 2019 and
is known as Act 282), and it states that the legislative intent
in 1999 and in subsequent legislative sessions regarding
nonjudicial foreclosures was that condominium associations
should be able to use the nonjudicial foreclosure process
regardless of whether an agreed upon power of sale existed in
the associations’ governing documents.
The current motions
address the effect of Act 282 on Plaintiffs’ remaining claims in
The question raised therefore is:
Does Act 282
require the partial summary judgment as to the wrongful
foreclosure claim entered in favor of Plaintiffs and against the
AOAO and Defendant Bryson Chow (“Chow”) to be eviscerated, and
instead require summary judgment to be entered in favor of the
The AOAO first raised the issue of the effect of the
passage of Senate Bill 551 in the proceedings related to its
motion for summary judgment regarding damages, but this Court
declined to address the issue because the bill had not yet
become law. Galima v. Ass’n of Apartment Owners of Palm Court,
CIV. NO. 16-00023 LEK-RT, 2019 WL 1982514, at *2 n.3 (D. Hawai`i
May 3, 2019) (“5/3/19 Order”).
AOAO and Chow (“Defendants”), and against Plaintiffs?
The long and fact-intensive procedural history and
background of this case are set forth at length in previous
court orders and are familiar to the parties.3
A brief review of
certain rulings by this Court and the Hawai`i Intermediate Court
of Appeals (“ICA”) regarding whether condominium associations
were permitted to use the nonjudicial foreclosure procedure, and
the reactionary enactment of Act 262 is helpful here.
The ruling pertinent to the issues at hand in the
3/30/17 Order regarding Defendants’ respective motions to
Having examined the relevant statutes, their
legislative history, and instructive case law
regarding the foreclosure of mortgages, this
Court PREDICTS that the Hawai`i Supreme Court
would reject Defendants’ proposed interpretation
of [Haw. Rev. Stat.] § 514B-146(a) (2010) and
would agree with Plaintiffs’ proposed
interpretation. Thus, this Court CONCLUDES that,
The relevant factual and procedural background of this
case is set forth in: the December 31, 2018 Order Granting in
Part and Denying in Part: Plaintiffs’ Motion for Partial Summary
Judgment; Defendant AOAO’s Motion for Summary Judgment; and
Defendant Chow’s Motion for Summary Judgment (“12/31/18 Order”);
and the May 3, 2019 Order Granting in Part and Denying in Part
Defendants’ Motions for Summary Judgment Regarding Damages
(“5/3/19 Order”). [Dkt. nos. 173, 246.]
because § 514B-146(a) (2010) required a
condominium association to foreclose upon its
lien “in like manner as a mortgage of real
property,” an association could only use the
Chapter 667, Part I foreclosure procedure if it
had an agreement with the condominium owner
providing for a power of sale. . . .
2017 WL 1240181, at *9.
The conclusion relied heavily on the
Hawai`i Supreme Court’s careful review of pertinent legislative
The Hawai`i Supreme Court’s discussion in
Hungate [v. Law Office of David B. Rosen] of the
legislative history behind the 2008 amendments to
Chapter 667 is instructive.
[A]mendments to the foreclosure process set
forth in HRS chapter 667 Part I were
intended to “expand the rights of
mortgagors.” Kondaur Capital Corp. v.
Matsuyoshi, 136 Hawai`i 227, 239, 361 P.3d
454, 466 (2015) (explaining that amendments
to former HRS § 667-5 “added requirements
that mortgagees must fulfill in order to
accomplish a valid foreclosure sale”
resulting in a benefit to mortgagors by
“expand[ing] and bolster[ing] the
protections to which they are entitled”).
. . . [A] close reading of the
legislative history of the 2008 amendment
shows it was enacted to set additional
burdens on the mortgagee to protect the
mortgagor . . . . The amendment’s structure
or scheme attempted “to streamline and
ensure transparency in the non-judicial
foreclosure process by requiring a
foreclosure mortgagee to provide pertinent
information regarding the property to
interested parties.” S. Stand. Comm. Rep.
No. 2108, in 2008 Senate Journal, at 917
2017 WL 747870, at *9 [(Hawai`i Feb. 27, 2017)4]
(italic emphases and some alterations in Hungate)
(bold emphases added); see also id. (“the statute
was amended to benefit the ‘party in breach of
the mortgage agreement’” (quoting H. Stand. Comm.
Rep. No. 1192, in 2008 House Journal, at 1450)).
Section 514B-146(a) (2010) – which was in effect
in 2008 when the legislature enacted the 2008
amendments to Chapter 667 – provided that the
foreclosure of a condominium association lien was
to be treated like the foreclosure of a mortgage.
Because the legislature is presumed to have been
aware of that fact when it enacted the 2008
amendments to Chapter 667, the legislature is also
presumed to have intended that the additional
protections provided for mortgagors in the
amendments to Chapter 667 would also be available
to condominium owners subject to condominium
Id. at *8 (footnote omitted).
Subsequently, in its 12/31/18 Order, the Court made
clear that the rulings in the 3/30/17 Order regarding the
requirements of § 514B-146(a) (2010) and Chapter 667, Part I
were rulings of law which apply throughout the case, absent an
intervening change in the controlling law.
WL 6841818, at *8.
12/31/18 Order, 2018
Summary judgment was granted in favor of
Plaintiffs as to the elements of their wrongful foreclosure
claim (“Count I”) because the AOAO did not have an agreed upon
power of sale provision or other contractual agreement
authorizing it to utilize Chapter 667, Part I, and therefore the
The Westlaw version of Hungate cited in the 3/30/17 Order
was later published. 139 Hawai`i 394, 391 P.3d 1.
foreclosure of Plaintiffs’ unit pursuant to Part I violated
Id. at *9.
Summary judgment was also granted in
favor of the AOAO as to Plaintiffs’ unfair or deceptive acts or
practices claim (“Count III”) and their fraud claim
Id. at *11-12.
Additional rulings were made
which do not bear directly on the issues raised in the Motions.
In 2018, the ICA similarly interpreted § 514B-146 and
a power of sale is an authority reserved by or
granted to a person or entity to dispose of
another person’s vested property interest, for
the first party’s own benefit or the benefit of a
third party. See Victoria Ward[, Ltd. v. Zion
Sec. Corp.], 36 Haw. [614,] 630 [(Terr. 1944)].
We will not infer that such significant powers
have been granted over an entire class of
property in the absence of a clear legislative
act or, with respect to a particular association
or property, by express authorization in a
contract entered into by, or otherwise binding
on, the affected parties. HRS chapter 667
provides for various alternative processes or
procedures through which a lienholder might
foreclose on a property, but it does not grant a
lienholder association with a power of sale over
a unit owner’s property. Rather, such power of
sale must otherwise exist in order for the
association to lawfully avail itself of the
nonjudicial foreclosure alternative.
Plaintiffs, however, were not awarded summary judgment on
liability for Count I because there are triable issues of
material fact of material fact as to the AOAO’s asserted
defenses. 12/31/18 Order, 2018 WL 6841818, at *9-11.
Sakal v. Ass’n of Apartment Owners of Hawaiian Monarch, 143
Hawai`i 219, 226, 426 P.3d 443, 450 (Ct. App. 2018),
reconsideration denied, NOS. CAAP-15-0000529 and CAAP-150000573, 2018 WL 4483207 (Hawai`i Ct. App. Sept. 19, 2018), and
cert. granted, SCWC-15-0000529, 2019 WL 245225 (Hawai`i Jan. 17,
The ICA concluded that “§ 514B-146 does not authorize an
association to conduct a nonjudicial or power of sale
foreclosure other than as provided in HRS chapter 667, which
does not authorize a nonjudicial or power of sale foreclosure
absent a power of sale.”
Id. at 228, 426 P.3d at 452.
reaching this conclusion, it noted there was no statutory
language in Chapters 667, 514A, or 514B expressly granting a
power of sale.
Id. at 228 & n.18, 426 P.3d at 452 & n.18.
“Nothing in the legislation or legislative history of Hawai`i
condominium law supports a conclusion that, at any time, the
Legislature enacted or intended to enact a statute granting
Sakal is still pending before the Hawai`i Supreme Court
and will be decided without oral argument. See Sakal, SCWC-150000529, Order Denying Request for Oral Argument & for Judicial
Notice, filed 8/6/19 (stating the request for judicial notice of
Act 282 was unnecessary). The Hawai`i Supreme Court has allowed
the parties in Malabe v. Ass’n of Apartment Owners of Executive
Center ex rel. Board of Directors to address issues related to
Act 282. Malabe, SCWC-17-0000145, Order, filed 7/16/19
(ordering the parties to file supplemental briefs addressing
whether Senate Bill 551 applies to the case). Oral argument was
heard on September 19, 2019. Id., Minutes, filed 9/20/19. As
of the date of this Order, the supreme court has not issued a
decision in either Sakal or Malabe.
powers of sale over all condominiums in the State to their
Id. at 228 n.18, 426 P.3d at 452
The State of Hawai`i Legislature passed Senate Bill
No. 551 – A Bill for an Act Relating to Condominiums - during
the 2019 regular session, it became law on July 10, 2019, and is
known as Act 282.
2019 Haw. Sess. Laws Act 282, at 779-83; 2019
House Journal, at 735 (Governor’s Message re Act 282).
description of Act 282’s purpose, the legislature states, in
the intermediate court of appeals in Sakal v.
Association of Apartment Owners of Hawaiian
Monarch, 143 Haw. 219, 426 P.3d 443 (2018), held
that the legislature intended that associations
can only conduct nonjudicial foreclosures if they
have specific authority to conduct nonjudicial
foreclosures in their declaration or bylaws or in
an agreement with the owner being foreclosed
The legislative history indicates this was
not the intent of the legislature in 1999, nor in
legislatures that have made subsequent
amendments. Therefore, this Act confirms the
legislative intent that condominium associations
should be able to use nonjudicial foreclosure to
collect delinquencies regardless of the presence
or absence of power of sale language in an
association’s governing documents.
Id., § 1 at 780 (emphasis added).
A similar statement is
contained in the legislature’s findings.
Act 282 amended § 514B-146(a) as follows:
Id., § 1 at 779.
The lien of the association may be
foreclosed by action or by nonjudicial or power
of sale foreclosure [procedures set forth in
chapter 667], regardless of the presence or
absence of power of sale language in an
association’s governing documents, by the
managing agent or board, acting on behalf of the
association and in the name of the association;
provided that no association may exercise the
nonjudicial or power of sale remedies provided in
chapter 667 to foreclose a lien against any unit
that arises solely from fines, penalties, legal
fees, or late fees, and the foreclosure of any
such lien shall be filed in court pursuant to
part IA of chapter 667.
2019 Haw. Sess. Laws Act 282, § 3 at 782.
In addition, it
amended § 667-1 as follows:
““Power of sale” or “power of sale foreclosure”
means a nonjudicial foreclosure when [the]:
(1) The mortgage contains, authorizes,
permits, or provides for a power of sale, a
power of sale foreclosure, a power of sale
remedy, or a nonjudicial foreclosure[.]; or
(2) For the purposes of part VI, an
association enforces its claim of an
association lien, regardless of whether the
association documents provide for a power of
sale, a power of sale foreclosure, a power
of sale remedy, or a nonjudicial
2019 Haw. Sess. Laws Act 282, § 4 at 782.
Act 282 also states:
Sections 3 and 4 of this Act shall be applied
retroactively to any case, action, proceeding, or
claim arising out of a nonjudicial foreclosure
under section 667–5 (repealed June 28, 2012),
Hawaii Revised Statutes, and parts II and VI of
chapter 667, Hawaii Revised Statutes, that arose
before the effective date of this Act and in
which a final non–appealable judgment has not yet
Id., § 5 at 782-83.
Although the Court directed the parties to address the
effect of Act 282 in the instant motions, they raise additional
arguments seeking dismissal or summary judgment on other
grounds, which have been previously litigated in this case.
example, Chow in his motion7 reiterates his argument that the
plain language of the applicable statutes - in particular, Haw.
Rev. Stat. § 514A-82(b)(13) which incorporates as part of each
condominium’s bylaws - authorized condominium associations to
utilize Chapter 667, Part I.8
[Mem. in Supp. of Chow Motion at
Chow filed his Motion for Summary Judgment on October 18,
2019 (“Chow Motion”). [Dkt. no. 266.] The AOAO’s Motion for
Summary Judgment was filed on the same date (“AOAO Motion”).
[Dkt. no. 263.]
For purposes of the motions to dismiss, this Court
concluded that Haw. Rev. Stat. Chapter 514B applied, but it
“note[d] that Haw. Rev. Stat. § 514A-90(a) (2010) was
substantially similar to § 514B-146(a) (2010).” 3/30/17 Order,
2017 WL 1240181, at *3 & n.6. Thus, § 514A-82(b)(13) was not
addressed. The 12/31/18 Order also did not address
§ 514A-82(b)(13). Chow did not seek reconsideration of either
the 3/30/17 Order or the 12/31/18 Order on the ground that this
Court erred by failing to address his § 514A-82(b)(13) argument.
His attempt to litigate that argument again at this stage is an
untimely request for reconsideration. Moreover, § 514A82(b)(13) was addressed, and an argument similar to Chow’s was
rejected, in Brown v. Porter McGuire Kiakona & Chow, LLP, CIVIL
(. . . continued)
To the extent that the Motions seek dismissal or summary
judgment on any ground besides the effect of Act 282, the
Motions are summarily DENIED as untimely attempts to seek
reconsideration of this Court’s prior orders.
Rule LR60.1 (stating motions for reconsideration based upon
“[m]anifest error of law or fact . . . must be filed and served
within fourteen (14) days after the court’s order is issued”).
Notice to the State of Hawai`i
As Plaintiffs raise a constitutional challenge to
Act 262, Fed. R. Civ. P. 5.1(a) and (b) are controlling here:
(a) Notice by a Party. A party that files a
pleading, written motion, or other paper drawing
into question the constitutionality of a . . .
state statute must promptly:
(1) file a notice of constitutional
question stating the question and
identifying the paper that raises it, if:
. . . .
(B) a state statute is questioned and
the parties do not include the state,
one of its agencies, or one of its
officers or employees in an official
16-00448 LEK-KJM, 2017 WL 3763843, at *3 (D. Hawai`i Aug. 30,
2017)(“CV 16-488 8/30/17 Order”). The Galima analysis of
Chapter 667, Part I was reaffirmed, despite the § 514A-82(b)(13)
argument. Id. at *7. Even if it was required to address the
§ 514A-82(b)(13) argument belatedly raised in this case, this
Court would follow the analysis set forth in the CV 16-448
(2) serve the notice and paper on . . . the
state attorney general if a state statute is
questioned - either by certified or
registered mail or by sending it to an
electronic address designated by the
attorney general for this purpose.
(b) Certification by the Court. The court must,
under 28 U.S.C. § 2403, certify to the
appropriate attorney general that a statute has
These requirements have been satisfied:
Plaintiffs filed a Notice of Constitutional Question and served
it on the State of Hawai`i Attorney General via certified mail
on November 7, 2019; [dkt. no. 274;] and a Certification to the
Attorney General of the State of Hawai`i Regarding a
Constitutional Challenge to a State Act was filed on January 31,
2020, [dkt. no. 279].
The certification was served on the
attorney general via certified mail.
The attorney general has declined to intervene in this
See Fed. R. Civ. P. 5.1(c) (“Unless the court sets a
later time, the attorney general may intervene within 60 days
after the notice is filed or after the court certifies the
challenge, whichever is earlier.” (emphasis added)).
This Court ruled that none of Plaintiffs’ filings prior to
Defendants’ filing of the instant Motions triggered the
requirements of Rule 5.1(a). [Minute Order, filed 8/6/19 (dkt.
no. 262), at 2.]
The AOAO contends Plaintiffs do not have standing to
challenge the constitutionality of Act 282 because Plaintiffs
have not suffered a concrete, particularized injury because of
Act 282, which has yet to be applied to them.
The United States
Supreme Court has stated:
Our cases have established that the
“irreducible constitutional minimum” of standing
consists of three elements. Lujan [v. Defenders
of Wildlife], 504 U.S.[ 555,] 560, 112 S. Ct.
2130 [(1992)]. The plaintiff must have
(1) suffered an injury in fact, (2) that is
fairly traceable to the challenged conduct of the
defendant, and (3) that is likely to be redressed
by a favorable judicial decision. Id., at 560–
561, 112 S. Ct. 2130; Friends of the Earth, Inc.
[v. Laidlaw Envt’l Servs. (TOC), Inc.], 528 U.S.
[167,] 180–181, 120 S. Ct. 693 [(2000)]. The
plaintiff, as the party invoking federal
jurisdiction, bears the burden of establishing
these elements. FW/PBS, Inc. v. Dallas, 493 U.S.
215, 231, 110 S. Ct. 596, 107 L. Ed. 2d 603
(1990). . . .
Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016).
“injury in fact” is “the first and foremost” standing
Id. (brackets, citation, and internal quotation
“To establish injury in fact, a plaintiff must
show that he or she suffered ‘an invasion of a legally protected
interest’ that is ‘concrete and particularized’ and ‘actual or
FW/PBS was overruled on other grounds by City of
Littleton v. Z.J. Gifts D-4, LLC, 541 U.S. 774 (2004).
imminent, not conjectural or hypothetical.’”
Id. at 1548
(quoting Lujan, 504 U.S., at 560, 112 S. Ct. 2130).
Plaintiffs face an imminent injury that is neither
conjectural nor hypothetical.
They previously established, as a
matter of law, the elements of their wrongful foreclosure claim.
See 12/31/18 Order, 2018 WL 6841818, at *9.
The AOAO and Chow
now contend Act 282 requires summary judgment entered against
Plaintiffs as to that same claim. If these arguments are
accepted, Plaintiffs lose the possibility of recovery on
A sufficiently imminent injury therefore exists to
confer standing upon Plaintiffs to challenge the validity of
Related to the issue of standing is the issue of
whether the validity of Act 282 is ripe for adjudication.
“While standing is primarily concerned with
who is a proper party to litigate a particular
matter, ripeness addresses when litigation may
occur.” Lee v. Oregon, 107 F.3d 1382, 1387 (9th
Cir. 1997). “[I]n many cases, ripeness coincides
squarely with standing’s injury in fact prong.”
Thomas v. Anchorage Equal Rights Comm’n, 220 F.3d
1134, 1138 (9th Cir. 2000) (en banc). In fact,
the ripeness inquiry is often “characterized as
This does not constitute a ruling that Plaintiffs have
standing to assert an affirmative claim for relief arising from
Act 282. This Court makes no findings or conclusions regarding
whether Plaintiffs would have standing to assert an affirmative
standing on a timeline.” Id. “A claim is not
ripe for adjudication if it rests upon
‘contingent future events that may not occur as
anticipated, or indeed may not occur at all.’”
Texas v. United States, 523 U.S. 296, 300, 118 S.
Ct. 1257, 140 L. Ed. 2d 406 (1998) (quoting
Thomas v. Union Carbide Agric. Prods. Co., 473
U.S. 568, 580–81, 105 S. Ct. 3325, 87 L. Ed. 2d
Hawai`i v. Trump, 241 F. Supp. 3d 1119, 1133 (D. Hawai`i 2017)
(alteration in Trump).
As noted within the standing analysis,
if Defendants’ interpretation of Act 282 is accepted, the loss
to be suffered by Plaintiffs is not merely anticipated or
contingent but would require granting summary judgment in
Defendants’ favor as to Count I, even though Plaintiffs were
previously granted partial summary judgment on that claim.
issue of Act 282’s validity is therefore ripe for adjudication.
Act 282’s Effect on this Case
The portions of Act 282 most relevant to the instant
case are: § 1, the legislature’s statement of its findings and
the purposes for Act 282; § 3 and § 4, the relevant statutory
amendments; and § 5, the provision that makes § 3 and § 4
Turning first to § 1, because federal question
jurisdiction exists over Plaintiffs’ FDCPA claim and
supplemental jurisdiction exists over their state law claims,
Hawai`i substantive law applies to the state law claims.
3/30/17 Order, 2017 WL 1240181, at *5.
Decisions by the Hawai`i
Supreme Court bind interpretation of state statutes and
legislative acts at issue in this case.
controlling decision currently exists and therefore this Court
must predict how the Hawai`i Supreme Court would decide the
issue of whether Act 282 applies in actions asserting wrongful
foreclosure under the 2010 version of Chapter 667, Part I.
id. (some citations omitted) (citing Trishan Air, Inc. v. Fed.
Ins. Co., 635 F.3d 422, 427 (9th Cir. 2011); Burlington Ins. Co.
v. Oceanic Design & Constr., Inc., 383 F.3d 940, 944 (9th Cir.
In Act 282, § 1, the legislature found “that
condominium associations, since 1999, have been authorized to
conduct nonjudicial foreclosures regardless of the presence or
absence of power of sale language in an association’s governing
2019 Haw. Sess. Laws Act 282, § 1 at 779; see also
supra Background Section II (quoting Act 282, § 1 at 780).
evidence of the legislative intent in 1999, and in relevant
years thereafter, Act 282 cited: Haw. Rev. Stat. § 667-40, which
was enacted in 1998; 1999 Haw. Sess. Laws Act 236, § 1 at 723
(legislative findings); Haw. Rev. Stat. §§ 514A-90 and 514-82,
which were enacted in 1999 and repealed as of January 1, 2019;
the pre-2012 Haw. Rev. Stat. § 667-5; Haw. Sess. Laws Act 164 at
755-816 (recodifying Chapter 514A); the Real Estate Commission’s
Final Report to the Legislature – Recodification of
Chapter 514A, Hawaii Revised Statutes (Condominium Property
Regime), dated December 31, 2003;12 and 2012 Haw. Sess. Laws
Act 182, § 3.2 at 636-45 (enacting Chapter 667, Part VI).
These sources were available to and examined by this
Court in determining whether Defendants were authorized to
utilize Chapter 667, Part I to foreclose upon Plaintiffs’ unit
in 2010, and whether the defendants in CV 16-448 were authorized
to utilize Part I in 2011.
See, e.g., 3/30/17 Order, 2017 WL
1240181, at *3-9 (discussing whether Defendants were authorized
to utilize Part I, including § 667-5 (2010), or were required to
utilize Chapter 667, Part II); CV 16-448 8/30/17 Order, 2017 WL
3763843, at *4 (discussing the legislative history of
Chapters 514A and 514B, including 1999 Haw. Sess. Laws Act
After careful examination, it concluded that “the
statutes in question (as interpreted by the Hawai`i Supreme
The Real Estate Commission’s report is available at
At the time of 2017 WL 3763843, Benita J. Brown (“Brown”)
and Craig and Kristine Connelly (“the Connellys”) were all
plaintiffs in CV 16-448, which had two association defendants
and two law firm defendants. However, Brown’s and the
Connellys’ claims were later severed, and Brown’s claims against
the relevant defendants are now in CV 17-00554 LEK-RT. See
CV 16-448, order, filed 11/3/17 (dkt. no. 106). Brown’s
condominium unit and the Connellys’ condominium unit were each
foreclosed upon in 2011. CV 16-448 8/30/17 Order, 2017 WL
3763843, at *1-2.
Court) [we]re unambiguous; and a plain language reading of the
statutes” dictated the finding that condominium associations are
not authorized to conduct nonjudicial foreclosures without a
power of sale.
3/30/17 Order, 2017 WL 1240181, at *7.
Similarly, in CV 16-448, it concluded that the relationship
between § 514A-82(b)(13) and Chapter 667 (2011) was “clear from
a plain language reading.”
3763843, at *4.
CV 16-448 8/30/17 Order, 2017 WL
Defendants’ argument regarding the legislative
history of § 514A-82(b)(13) and § 514A-90(a)/§ 514B-146(a) was
therefore contrary to the plain language of those statutes.
The ICA meticulously considered the legislative
history cited in Act 282, § 1 as well.
See, e.g., Sakal, 143
Hawai`i at 225-28, 426 P.3d at 449-52 (discussing, inter alia,
1999 Haw. Sess. Laws Act 226 and 2012 Haw. Sess. Laws Act 182,
§ 3.2); Malabe v. Ass’n of Apartment Owners of Exec. Ctr. ex
rel. Bd. of Dirs., NO. CAAP-17-0000145, 2018 WL 6258564, at *2
(Hawai`i Ct. App. Nov. 29, 2018) (citing the Sakal discussion of
“the plain language and legislative intent of both HRS § 667-5
and § 514B-146(a)”), cert. granted, SCWC-17-0000145, 2019 WL
2060931 (Hawai`i May 9, 2019), and, 2019 WL 2225392 (Hawai`i
May 23, 2019).
The original statutory language and acts are
completely silent as to any legislative intent regarding
authorizing condominium associations to use the nonjudicial
In short, the legislative history cited in
Act 282, § 1 is made from whole cloth and created many years
after the fact.
Section 1 is thus “subsequent legislative history” and
is not necessarily regarded with the same authority as the
original statutory language and acts:
With regard to the use of subsequent
legislation in interpreting statutes, “[t]here
are no principles of construction which prevent
the utilization by the courts of subsequent
enactments or amendments as an aid in arriving at
the correct meaning of a prior statute, and it is
very common for a court, in construing a statute,
to refer to subsequent legislation as impliedly
confirming the view which the court has decided
to adopt.[“] Gomes v. Campbell, 37 Haw. 252, 257
(Haw. Terr. 1945) (quoting 50 Am. Jur. Statutes,
§ 337); see also Hawaii Providers Network v. AIG
Ins. Co., 105 Hawai`i 362, 370 n.19, 98 P.3d 233,
241 n.19 (2004) (“It is important to note that
while arguments predicated upon subsequent
legislative actions must be weighed with extreme
care, they should not be rejected out of hand as
a source that a court may consider in the search
for legislative intent.”) (citation and internal
quotation marks omitted); State v. Dudoit, 90
Hawai`i 262, 268 n.3, 978 P.2d 700, 706 n.3
(1999) (“This court employs subsequent
legislative history only to confirm its
interpretation of an earlier statutory
provision.”) (citation and internal quotation
This quote from Dudoit is taken from Macabio v. TIG
Insurance Co., 87 Hawai`i 307, 317, 955 P.2d 100, 110 (1998),
indicating that the Hawai`i Supreme Court’s statement regarding
the use of subsequent legislative history applies to both
criminal and civil statutes. See Dudoit, 90 Hawai`i at 268 n.3,
978 P.2d at 706 n.3.
State v. Dunbar, 139 Hawai`i 9, 20, 383 P.3d 112, 123 (Ct. App.
2016) (emphases and some alterations in Dunbar).
quoted statement in Dudoit was immediately followed by the
statement: “The legislature cannot change the intent behind a
statute through subsequent amendments that do not have
Dudoit, 90 Hawai`i at 268 n.3, 978 P.2d at
Legislative override of a prior judicial construction
of a statute can be perilous.
One justice of the Hawai`i
Supreme Court recognized that “[a] legal environment in which
any subsequent legislative statement can retroactively override
the prior construction of a statute by this court is . . .
State v. Brantley, 99 Hawai`i 463, 483, 56 P.3d
1252, 1272 (2002) (Acoba, J., dissenting).
However, the supreme
court has recognized that the legislature can do so in the
context of a valid retroactive amendment to the statute.
Whether this Court can consider the subsequent legislative
history in Act 282, § 1 depends upon validity of the
Neither this Court’s rulings regarding the relevant
statutes in this case nor the ICA’s holdings in Sakal constitute
rulings by the Hawai`i Supreme Court. However, similar policy
concerns exist when the legislature attempts to override
judicial rulings by creating subsequent legislative history that
is not supported by either the plain language of the relevant
statutes or the statutes’ contemporaneous legislative history.
legislature’s attempt to make the amendments to § 667-1 and
§ 514B-146(a) retroactive to the 2010 statutes relevant to the
Sections 3 Through 5
Act 282, § 3 amended the version of § 514B-146(a) that
was in effect when the act was passed; § 4 did the same for
§ 667-1; and § 5 made those amendments retroactive.
legislature’s decision to amend the existing versions of § 514B146(a) and § 667-1 is not at issue in this case, nor is the
legislative decision to apply the amendments retroactively to
prior versions of § 514B-146(a) and § 667-1 which were similar
with the versions in effect when Act 282 was passed.
critical distinctions exist between the statutes that were in
effect at the time of the foreclosure on Plaintiffs’ unit and
the versions of § 514B-146(a) and § 667-1 amended by Act 282.
Amendment of § 667-1
First, Chapter 667, Part I (2010) does not contain a
definitions section comparable to the current § 667-1.
definition of “‘[p]ower of sale’ or ‘power of sale foreclosure’”
exists in Part I (2010), which Act 282 amends.
Haw. Rev. Stat. §§ 667-5 to 667-10 (2010).
The only definition
of “‘[p]ower of sale’ or ‘power of sale foreclosure’” appearing
in the 2010 version of Chapter 667 is in Part II.
See Haw. Rev.
Stat. § 667-21 (2010) (stating, inter alia, “‘[p]ower of sale’
or ‘power of sale foreclosure’ means a nonjudicial foreclosure
under this part when the mortgage contains, authorizes, permits,
or provides for a power of sale, a power of sale foreclosure, a
power of sale remedy, or a nonjudicial foreclosure”).
The current version of § 667-1 contains multiple
definitions - including that of “‘[a]ssessment” and
However, Act 282, § 4 amends only § 667-1’s
definition of “‘[p]ower of sale’ or ‘power’ of sale
No other definition is affected.
that the Act 282, § 4 definition of “‘[p]ower of sale’ or
‘power’ of sale foreclosure’” does not replace all prior
versions of § 667-1 in their entirety.
Instead, the Act 282,
§ 4 definition merely replaces any previous definition of these
specific terms (within the definition section).
This means that
the definitional replacement is effective for the version of
§ 667-1 existing in 2019 (that is, at the time Act 282 was
enacted) as well as for all previous versions of § 667-1, but
only those versions up to 2012, when the definitions section was
See 2012 Haw. Sess. Laws Act 182, § 3.1 at 635-
Said another way, section 4 only replaces definitions
Act 182 redesignated the former § 667-1 as Haw. Rev.
Stat. § 667-1.5 and added the current version of § 667-1. 2012
Haw. Sess. Laws Act 182, § 3.1 at 635-36; id., § 3.5 at 648.
From 2012 to the present, § 667-1.5 and the other statutory
(. . . continued)
contained in versions of § 667-1 existing from 2012 to 2019 but
cannot insert a definition where none previously existed.
Section 667-1 (2010), which was in effect at the time
of the foreclosure on Plaintiffs’ unit, is devoid of any
It merely states: “The circuit court may
assess the amount due upon a mortgage, whether of real or
personal property, without the intervention of a jury, and shall
render judgment for the amount awarded, and the foreclosure of
Execution may be issued on the judgment, as
ordered by the court.”
Because section 667-1 (2010) addresses a
subject matter unrelated to the definition adopted in Act 282,
§ 4, § 667-1 (2010), it cannot be altered by Act 282, § 4.
§ 4 amendment to the definition of “‘[p]ower of sale’ or ‘power
of sale foreclosure’” does not apply to or affect the original
language of § 667-1 (2010).17
This Court therefore predicts that the Hawai`i Supreme
Court would hold that the amendment to § 667-1 in Act 282, § 4
does not apply to wrongful foreclosure claims challenging
foreclosures conducted pursuant to Chapter 667, Part I (2010).
provisions regarding foreclosure by action have been within
Chapter 667, Part IA.
In theory, the Act 282, § 4 amended definition could be
applied to § 667-21 (2010), which was a definitions section.
This is irrelevant because Defendants did not conduct the
foreclosure of Plaintiffs’ unit pursuant to Chapter 667, Part II
Amendment of § 514B-146(a)
Because the provisions of Act 282 are severable, § 3
may still apply in this case, even though § 4 does not.
2019 Haw. Sess. Laws Act 282, § 7 at 783.
This amendment to
§ 514B-146(a) in Act 282, however, suffers from similar defects
to those of § 4.
Unlike § 667-1, § 514B-146 did exist in 2010 and
addressed the same subject matter contained in the 2018 version
amended by Act 282.
Because Act 282, § 3 restates § 514B-146(a)
in its entirety, it appears that the amended version could
simply replace the 2010 version of subsection (a).
§ 514B-146 was amended multiple times between 2010 and 2019.
See 2011 Haw. Sess. Laws Act 48, § 14 at 103; 2012 Haw. Sess.
Laws Act 182, § 10 at 655-57; 2013 Haw. Sess. Laws Act 196, § 1
at 627-30; 2014 Haw. Sess. Laws Act 235, § 2 at 836-37; 2018
Haw. Sess. Laws Act 195, § 4 at 668-72.
To insert the Act 282,
§ 3 version of § 514B-146(a) into § 514B-146 (2010) would also
incorporate all amendments to § 514B-146(a) adopted in 2012,
2013, 2014, and 2018,18 even though none of those acts made the
amendments to § 514B-146(a) retroactive.
For example, § 514B-146(a) (2010) stated:
Act 48 added a new subsection (h) to § 514B-146; it did
not amend subsection (a). 2011 Haw. Sess. Laws Act 48, § 14 at
All sums assessed by the association but unpaid
for the share of the common expenses chargeable
to any unit shall constitute a lien on the unit
with priority over all other liens, except:
(1) Liens for taxes and assessments lawfully
imposed by governmental authority against
the unit; and
(2) All sums unpaid on any mortgage of
record that was recorded prior to the
recordation of a notice of a lien by the
association, and costs and expenses
including attorneys’ fees provided in such
In contrast, this portion of the current § 514B-146(a) includes
a provision stating that, subject to certain exceptions, an
association’s lien for unpaid assessments expires six years
after it is recorded, unless an enforcement proceeding was
instituted prior to that date.
See also 2012 Haw. Sess. Laws
Act 182, § 10.1 at 655 (adopting the provision regarding the
expiration of the lien).
The paragraph of § 514B-146(a) that
was amended in Act 282, § 3 also includes the requirement that
the foreclosure of a lien “arising solely from fines, penalties,
legal fees, or late fees” (“Penalty Lien”) must be conducted
pursuant to Chapter 667, Part IA.
That requirement cannot apply
to § 514B-146(a) (2010) because Part IA did not yet exist.
2012 Haw. Sess. Laws Act 182, § 3.5 at 648 (designating as
Part IA the portion of Part I that remained after the repeal of
§§ 667-5, 667-5.7, 667-6, 667-7, and 667-8).
Although the lien expiration provision and the Penalty
Lien provision have nothing to do with the issues in this case,
these differences serve to illustrate how the statutory schemes
of the current § 514B-146(a) and § 514B-146(a) (2010) are
significantly different from one another.
“nonjudicial or power of sale foreclosure” processes referred to
in the current version of § 514B-146(a) are the processes
described in in Haw. Rev. Stat. Chapter 667, Part II and
See Haw. Rev. Stat. §§ 667-21 to 667-41, 667-91 to
Neither apply here.
Defendants did not conduct the
foreclosure of Plaintiffs’ unit pursuant to Part II, and Part VI
was not enacted until 2012 (or two years after the foreclosure
in this case).
See 2012 Haw. Sess. Laws Act 182, § 3.2 at 636-
The only other nonjudicial or power of sale
foreclosure existing in 2010 was Chapter 667, Part I, the
relevant portions of which were repealed in 2012.
Sess. Laws Act 182, §§ 50-54 at 684.
See 2012 Haw.
Act 282, § 3 does not
expressly refer to Chapter 667, Part I, as it existed in 2010
nor does it expressly state that it revives the repealed
If the current § 514B-146(a) language is inserted
into § 514B-146(a) (2010), it would impliedly revive statutes
previously repealed by prior legislatures.
In other words, the
legislature in 2012 revoked relevant portions of Chapter 667,
Part I and the current § 514B-146(a) cannot (without explicit
intent and language) raise § 514B-146(a)(2010) fully from the
It is important to note what and why portions of
Chapter 667, Part I were revoked in 2012.
The expiration of
association liens, the limitation of Penalty Liens, and the
adoption of a power of sale foreclosure process designed
specifically for owners’ associations were all recommendations
made by the mortgage foreclosure task force established by the
legislature in 2010 (“Task Force”).19
See Legislative Reference
Bureau, Final Report of the Mortgage Foreclosure Task Force to
the Legislature for the Regular Session of 2012, In Accordance
with Act 162, Session Laws of Hawaii 2010 (December 2011)
(“Final Task Force Report”) at 30 (recommending the addition of
what became Chapter 667, Part VI); id. 48 (recommending
amendments to Haw. Rev. Stat. § 514A-90 to, inter alia, place
time limits on liens and prohibiting Penalty Liens); id. at 51
(recommending parallel amendments to § 514B-146).
purpose was “to implement the recommendations of the mortgage
foreclosure task force submitted to the legislature for the
regular session of 2012, and other best practices to address
Act 182 summarizes the establishment of the Task Force
and its functions. 2012 Haw. Sess. Laws Act 182, § 1 at 630.
mortgage foreclosures and related issues.”
Act 182, § 1 at 630.
2012 Haw. Sess. Laws
In recommending and enacting what became
Chapter 667, Part VI, the Task Force and the legislature
recognized that, while a nonjudicial method to foreclose upon
association liens was necessary, so were limitations to protect
the consumers’ interests, namely the homeowners/association
members whose units were being foreclosed.
See Haw. Rev. Stat.
§ 667-104 (prohibiting certain conduct in the context of
association lien foreclosure); Final Task Force Report at 47
(recommending the enactment of what became § 667-104).
words, consumer protection for homeowners was paramount.
legislature found that insufficient protections for homeowners
existed when associations conducted foreclosures under the
version of Chapter 667, Part I in effect prior to Act 182.
Inserting the current § 514B-146(a) into § 514B-146(a)
(2010) would revive the Part I process for associations without
the limitations and homeowner protections enacted by
legislatures in 2012 and in subsequent years.
illogical and absurd result.
interpreted in such a manner.
This would be an
Hawai`i statutes are not be
3/30/17 Order, 2017 WL 1240181,
at *7 n.12 (“The Hawaii Supreme Court has recognized that state
statutes should be interpreted in a manner that avoids absurd,
contradictory, illogical, and inconsistent results.” (some
citations omitted) (citing Seki ex rel. Louie v. Haw. Gov’t
Emps. Ass’n, AFSCME Local No. 152, AFL–CIO, 328 P.3d 394, 409–10
This same principle must be applied to Act 282.
This Court therefore predicts that the Hawai`i Supreme
Court would hold that the amendment to § 514B-146(a) in Act 282,
§ 3 does not apply to wrongful foreclosure claims challenging
foreclosures conducted pursuant to Chapter 667, Part I (2010).
It is not necessary to adopt Defendants’ illogical
interpretation of Act 282, §§ 3, 4, and 5.
interpretation exists which is logical and gives effect to all
sections of the act.
Cf. Ass’n of Condo. Homeowners of Tropics
at Waikele ex rel. Bd. of Dirs. v. Sakuma, 131 Hawai`i 254, 256,
318 P.3d 94, 96 (2013) (“Courts are bound to give effect to all
parts of a statute, and that no clause, sentence, or word shall
be construed as superfluous, void, or insignificant if a
construction can be legitimately found which will give force to
and preserve all words of the statute.” (brackets, quotation
marks, and citation omitted)).
Act 282, §§ 3 and 4 can be
applied to the current versions of § 667-1 and § 514B-146(a).
The retroactivity provision in § 5 can be applied in a logical
manner to apply the §§ 3 and 4 amendments to earlier versions of
§ 667-1 and § 514B-146(a) that are substantially similar with
the current versions.
In the case at hand, the issue is whether § 667-1
(2010) - or another comparable provision in Chapter 667, Part I
(2010) - and § 514B-146(a) (2010) are substantially similar with
the current versions of § 667-1 and § 514B-146(a).
A logical interpretation of Act 282, §§ 3, 4, and 5 is
possible (that is, that they apply only to earlier versions of
§ 667-1 and § 514B-146(a) substantially similar with the current
Therefore, the illogical interpretation advanced by
Defendants in the instant Motions (that is, that they apply to
§ 667-1 (2010) - or another comparable provision in Chapter 667,
Part I (2010) - and § 514B-146(a) (2010)) must be and is
Separation of Powers
Plaintiffs’ primary constitutional argument is that
Act 282 violates the separation of powers doctrine established
in the United States Constitution and the Hawai`i Constitution.
It does not.
No final court judgment existed at the time
Act 282 was enacted.
Article III, § 1 of the Hawai`i Constitution provides
that the “legislative power of the State shall be vested in a
legislature, which shall consist of two houses, a senate and a
house of representatives.
Such power shall extend to all
rightful subjects of legislation not inconsistent with this
constitution or the Constitution of the United States.”
Article I, § 1 of the United States Constitution is comparable.
“As a general rule, the role of the court in supervising the
activity of the legislature is confined to seeing that the
actions of the legislature do not violate any constitutional
Schwab v. Ariyoshi, 58 Haw. 25, 37, 564 P.2d 135,
The Hawai`i Supreme Court has stated:
We recognize that “[t]he separation of
powers doctrine is not expressly set forth in any
single constitutional provision, but like the
federal government, Hawaii’s government is one in
which the sovereign power is divided and
allocated among three co-equal branches.” Hawaii
Insurers Council v. Lingle, 120 Hawai`i 51, 69,
201 P.3d 564, 582 (2008) (internal quotation
marks and citation omitted). The separation of
powers doctrine is intended “to preclude a
commingling of essentially different powers of
government in the same hands and thereby prevent
a situation where one department would be
controlled by, or subjected, directly or
indirectly, to, the coercive influence of either
of the other departments.” Pray v. Judicial
Selection Comm’n of State, 75 Haw. 333, 353, 861
P.2d 723, 732 (1993) (internal quotation marks
and citation omitted).
Alakai Na Keiki, Inc. v. Matayoshi, 127 Hawai`i 263, 275, 277
P.3d 988, 1000 (2012) (alteration in Alakai).
The Hawai`i courts interpret the Hawai`i Constitution
in a manner that provides greater protections than that required
by corresponding provisions in the United States Constitution.
See, e.g., Pele Def. Fund v. Paty, 73 Haw. 578, 601, 837 P.2d
1247, 1262 (1992) (citing State v. Kam, 69 Haw. 483, 748 P.2d
372 (1988); Hawaii Housing Authority v. Lyman, 68 Haw. 55, 704
P.2d 888 (1985); State v. Tanaka, 67 Haw. 658, 701 P.2d 1274
(1985); State v. Russo, 67 Haw. 126, 681 P.2d 553 (1984), appeal
after remand, 69 Haw. 72, 734 P.2d 156 (1987)).20
There does not
appear to be any Hawai`i case law interpreting the separation of
powers doctrine in a more expansive manner than the doctrine is
interpreted under federal law, therefore it is assumed that
Hawai`i law regarding the separation of powers doctrine is
consistent with federal law.
The United States Supreme Court has identified the
following “types of legislation that require federal courts to
exercise the judicial power in a manner that Article III
forbids”: 1) statutes that “prescribe rules of decision to the
Judicial Department of the government in cases pending before
it,” although this is permissible when “Congress amends
applicable law”; 2) statutes that “vest review of the decisions
of Article III courts in officials of the Executive Branch”;21
and 3) statutes “retroactively commanding the federal courts to
Kam was abrogated in part on other grounds by Tax
Foundation of Hawai`i v. State, 144 Hawai`i 175, 192 & n.22, 439
P.3d 127, 144 & n.22 (2019), reconsideration denied, SCAP16-0000462, 2019 WL 1858284 (Hawai`i Apr. 25, 2019).
This category also includes statutes allowing “direct
review of a judicial decision by officials of the Legislative
. . . Branch.” Miller v. French, 530 U.S. 327, 343 (2000).
reopen final judgments.”
Plaut v. Spendthrift Farm, Inc., 514
U.S. 211, 218 (1995) (brackets, citations, and internal
quotation marks omitted).
The first category does not apply in
this case because Act 282 amends currently applicable Hawai`i
The second category does not apply because Act 282 does
not establish any mechanism for legislative officials or
executive officials to review judicial decisions.
the third category is applicable in this case.
Rulings in this case were made regarding Chapter 667,
Part I and § 514B-146 (2010) which resulted in a grant of
summary judgment in favor of Plaintiffs on their wrongful
If Act 282 was to be interpreted in the
manner advocated by Defendants, these rulings would have to be
However, these rulings are not final judgments.
Miller, 530 U.S. at 344.
A legislative act amending currently applicable law
and making the amendments retroactive is not unique.
however, includes the curiously unusual feature of retroactive
application of the amendments essentially to revive a statutory
scheme repealed seven years before Act 282 was passed.
the legislature’s unabashed effort to undo rulings by the ICA,
which are consistent with the rulings in this federal case.
However, the separation of powers doctrine allows the
legislature to do so until those rulings become part of a final
No final judgment exists yet in any of these cases.
This Court predicts that the Hawai`i Supreme Court
would hold that the legislature’s attempt in Act 282 to
circumvent judicial decisions which are not yet final judgments
in wrongful foreclosure litigation challenging foreclosures
conducted pursuant to Chapter 667, Part I (2010) does not
violate the separation of powers doctrine and thus is not
Other Constitutional Arguments
Plaintiffs also argue Act 282 is unconstitutional
because: it violates their rights under the Contracts Clause of
the United States Constitution; it violates the Due Process
Clause of the United States Constitution and the Hawai`i
Constitution; it violates the Equal Protection Clause of the
United States Constitution and the Hawai`i Constitution; and
enforcing Act 282 would result in a taking, in violation of the
United States Constitution and the Hawai`i Constitution.
The Contracts Clause restricts the power of
States to disrupt contractual arrangements. It
provides that “[n]o state shall . . . pass any
. . . Law impairing the Obligation of Contracts.”
U.S. Const., Art. I, § 10, cl. 1. . . . [T]he
Clause applies to any kind of contract. See
Allied Structural Steel Co. v. Spannaus, 438 U.S.
234, 244–245, n.16, 98 S. Ct. 2716, 57 L. Ed. 2d
727 (1978). . . .
At the same time, not all laws affecting
pre-existing contracts violate the Clause. See
El Paso v. Simmons, 379 U.S. 497, 506–507, 85 S.
Ct. 577, 13 L. Ed. 2d 446 (1965). To determine
when such a law crosses the constitutional line,
this Court has long applied a two-step test. The
threshold issue is whether the state law has
“operated as a substantial impairment of a
contractual relationship.” Allied Structural
Steel Co., 438 U.S., at 244, 98 S. Ct. 2716. In
answering that question, the Court has considered
the extent to which the law undermines the
contractual bargain, interferes with a party’s
reasonable expectations, and prevents the party
from safeguarding or reinstating his rights. See
id., at 246, 98 S. Ct. 2716; El Paso, 379 U.S.,
at 514–515, 85 S. Ct. 577; Texaco, Inc. v. Short,
454 U.S. 516, 531, 102 S. Ct. 781, 70 L. Ed. 2d
738 (1982). If such factors show a substantial
impairment, the inquiry turns to the means and
ends of the legislation. In particular, the
Court has asked whether the state law is drawn in
an “appropriate” and “reasonable” way to advance
“a significant and legitimate public purpose.”
Energy Reserves Group, Inc. v. Kansas Power &
Light Co., 459 U.S. 400, 411–412, 103 S. Ct. 697,
74 L. Ed. 2d 569 (1983).
Sveen v. Melin, 138 S. Ct. 1815, 1821–22 (2018) (some
alterations in Sveen).
The first step “has three components: whether there is
a contractual relationship, whether a change in law impairs that
contractual relationship, and whether the impairment is
Gen. Motors Corp. v. Romein, 503 U.S. 181, 186
“This Court previously recognized that ‘a
condominium’s governing documents are contractual obligations
between the condominium association and a condominium owner.’”
12/31/18 Order, 2018 WL 6841818, at *8 (brackets omitted)
(quoting CV 16-448 8/30/17 Order, 2017 WL 3763843, at *8).
contractual relationship did exist between Plaintiffs and the
See id. at *5 (“Plaintiffs were members of the AOAO while
they owned the Unit.” (citations omitted)).
contract, Plaintiffs were obligated to pay association fees and,
when they failed to do so, the AOAO had the ability to obtain a
lien and seek satisfaction.
Implicit in the AOAO’s contractual
right to lien recovery is the obligation that the AOAO act in
good faith and pursue the recovery in a legally permissible
Cf. Kutkowski v. Princeville Prince Golf Course, LLC,
129 Hawai`i 350, 359, 300 P.3d 1009, 1018 (2013) (“‘Every
contract imposes upon each party a duty of good faith and fair
dealing in its performance and its enforcement.’” (quoting
Restatement (Second) of Contracts § 205 (1981)).
As this case currently stands, the AOAO obtained
Plaintiffs’ unit as a result of a nonjudicial foreclosure (a
process to which the AOAO was not legally permitted to use at
the time the contract was entered) and Plaintiffs sought damages
resulting from this foreclosure by filing the instant action.
Act 282 became law and now retroactively validates the AOAO’s
nonjudicial foreclosure of Plaintiffs’ unit and extinguishes
Plaintiffs’ ability to recover for their wrongful foreclosure
Thus, the act does “interfere with a party’s
reasonable expectations, and prevents the party from
safeguarding or reinstating his rights.”
at 1822 (citations omitted).
See Sveen, 138 S. Ct.
A change in law does “trigger
Contract Clause scrutiny if [it] impair[s] the obligation of
pre-existing contracts, even if they do not alter any of the
contracts’ bargained-for terms.”
Gen. Motors, 503 U.S. at 189
All three parts of the first step of the analysis have
therefore been met.
The second step of the analysis - whether Act 282 is a
reasonable way to address a significant and legitimate public
purpose – requires scrutiny of the act’s purpose which is to
“confirm the legislative intent that condominium associations
should be able to use nonjudicial foreclosure to collect
delinquencies regardless of the presence or absence of power of
sale language in an association’s governing documents.”
Haw. Sess. Laws Act 282, § 1 at 780.
Because Act 282 benefits a
favored group and not a basic societal interest, it does not
appear to be enacted for the public good.
See, e.g., Allied
Structural Steel Co., 438 U.S. at 242 (stating it previously
upheld a mortgage moratorium law against a Contract Clause
attack because the state law “was enacted to protect a basic
societal interest, not a favored group,” and was “appropriately
tailored to the emergency that it was designed to meet” (citing
Home Building & Loan Ass’n v. Blaisdell, 290 U.S. 398, 445-447
Most telling is that Act 282 serves to revive the
Part I process solely for condominium associations and without
the homeowner/consumer protections enacted by legislatures in
2012 and in subsequent years.
The Court therefore finds Act 282
does not address a significant and legitimate public purpose.
Act 282 therefore is unconstitutional because it
violates Plaintiffs’ rights under the Contracts Clause of the
United States Constitution.
As to the Due Process Clause in the Fourteenth
Amendment, the United States Supreme Court has stated: “Where a
state law . . . is challenged on due process grounds, we inquire
whether the State has deprived the claimant of a protected
property interest, and whether the State’s procedures comport
with due process.”
Lujan v. G & G Fire Sprinklers, Inc., 532
U.S. 189, 195 (2001) (citation omitted).
The Fourteenth Amendment protects this
interest, however, only from a deprivation by
state action. Private use of state-sanctioned
private remedies or procedures does not rise to
the level of state action. See, e.g., Flagg
Bros., Inc. v. Brooks, 436 U.S. 149 (1978). . . .
But when private parties make use of state
procedures with the overt, significant assistance
of state officials, state action may be found.
See, e.g., Lugar v. Edmondson Oil Co., 457 U.S.
922 (1982); Sniadach v. Family Finance Corp., 395
U.S. 337 (1969).
Tulsa Prof’l Collection Servs., Inc. v. Pope, 485 U.S. 478, 485–
Enacting a law does not constitute the type of
“overt, significant assistance of state officials” that converts
a private party’s use of the remedies provided in the act into
See, e.g., Lugar, 457 U.S. at 932-33 (stating the
Supreme Court “has consistently held that constitutional
requirements of due process apply to garnishment and prejudgment
attachment procedures whenever officers of the State act jointly
with a creditor in securing the property in dispute”).
Act 282’s enactment cannot constitute state action and
Plaintiffs’ due process argument fails under federal law.
The analysis of whether there was a violation of the
Due Process Clause of the Hawai`i Constitution has some
distinctions from that under federal law.
See, e.g., Lono v.
Ariyoshi, 63 Haw. 138, 145, 621 P.2d 976, 981 (1981) (discussing
the plaintiff’s arguments based on the Hawai`i Constitution
after holding that the state statute and state agency rule being
challenged “did not clothe plaintiff with the requisite liberty
interest which would have triggered the application of the
procedural requirements under the fourteenth amendment of the
United States constitution”).
No case law establishing that the
interpretation of the Due Process Clause of the Hawai`i
Constitution as to the state action requirement differs from
federal law has been brought to this Court’s attention.
Plaintiffs’ due process argument fails under Hawai`i law for the
same reasons under federal law.
A violation of the Equal Protection Clause of the
Fourteenth Amendment also requires state action.
Akina v. Hawai`i, 141 F. Supp. 3d 1106, 1127 (D. Hawai`i 2015)
(citing Lugar, 457 U.S. at 935, 102 S. Ct. 2744 n.18).
Plaintiffs’ federal equal protection argument is therefore
rejected for the same reasons as their federal due process
However, the Equal Protection Clause of the Hawai`i
Constitution appears to be interpreted differently.
v. Architects Hawaii Ltd., the Hawai`i Supreme Court allowed the
individual plaintiff and one of the putative joint tortfeasors –
the only remaining defendant in the case - to pursue an equal
protection challenge to the statute of limitations barring the
plaintiff’s claims against the other putative tortfeasors.
Haw. 26, 28-29, 647 P.2d 276, 278-79 (1982) (describing the
background of appeal).
The supreme court held that the
plaintiff and the remaining defendant had standing to pursue the
equal protection challenge, id. at 34, 647 P.2d at 282, and
ultimately held that the statute violated the state Equal
Protection Clause,22 id. at 43, 647 P.2d at 288.
Shibuya does not discuss the issue of whether state action is
required, the fact that the supreme court addressed the equal
protection challenge at all indicates that state action is not
Because Shibuya has not been overruled and has
precedential effect, and because Plaintiffs have standing to
bring constitutional challenges to Act 282, Plaintiffs are
entitled to bring an equal protection challenge to Act 282 under
the Hawai`i Constitution.
In Shibuya, the Hawai`i Supreme Court stated:
“The equal protection obligation . . . is
not an obligation to provide the best governance
possible.” Schweiker v. Wilson, 450 U.S. 221,
230 (1981). “To be sure, the constitutional
demand is not a demand that a statute necessarily
apply equally to all persons.” Rinaldi v.
Yeager, 384 U.S. 305, 309 (1966). Yet even where
a statute does not employ “a classification that
is inherently invidious or that impinges on
fundamental rights,” the mandate is “that
legislation classify the persons it affects in a
manner rationally related to legitimate
governmental objectives.” Schweiker v. Wilson,
supra, 450 U.S. at 230. To satisfy this
“rational basis” test, “the classification must
Although the holding was based on the state Equal
Protection Clause, the supreme court’s analysis was guided by
United States Supreme Court decisions regarding the Equal
Protection Clause in the Fifth Amendment and the Fourteenth
Amendment. Shibuya, 65 Haw. at 43, 647 P.2d at 288.
be reasonable, not arbitrary, and must rest upon
some ground of difference having a fair and
substantial relation to the object of the
legislation, so that all persons similarly
circumstanced shall be treated alike.”
F.S. Royster Guano Co. v. Virginia, 253 U.S. 412,
65 Haw. at 35, 647 P.2d at 283 (footnote omitted).
argue Act 282 violates the state Equal Protection Clause because
there is no rational basis to “treat associations differently
from all other lien holders by allowing associations use of
Part I [(2010)] even though they do not hold mortgages
containing powers of sale, while denying that right to other
lien holders, such as holders of mechanic’s and materialman’s
[Mem. in opp. to AOAO Motion (“AOAO Opp.”), filed
11/7/19 (dkt. no. 272), at 25 (citation omitted).]
Act 282 states:
The legislature finds that condominiums
provide a valuable housing resource in Hawaii,
especially with limited space available for new
development. The structure of condominium
ownership requires each owner to share in the
total cost of maintaining common areas such as
building exteriors, landscaping, pool, and
recreation rooms, in addition to paying insurance
premiums. All owners pay for such maintenance
through fees or dues. The legislature further
finds that it is crucial that condominium
associations be able to secure timely payment of
dues to provide services to all residents of a
In 1999, the legislature noted “that more
frequently associations of apartment owners are
having to increase maintenance fee assessments
due to increasing delinquencies and related
enforcement expenses. This places an unfair
burden on those non-delinquent apartment owners
who must bear an unfair share of common
expenses . . . .” Moreover, lengthy delays in
the judicial foreclosure process exacerbated the
financial burden on association owners. The
legislature determined that associations needed a
more efficient alternative, such as power of sale
foreclosures, to provide a remedy for recurring
2019 Haw. Sess. Laws Act 282, § 1 at 779 (alteration in
The fact that one owner’s failure to pay condominium
association dues increases the proportion of common expenses
that the other owners must pay through their association dues
distinguishes liens for unpaid condominium association dues from
other types of liens, such as a mechanic’s lien or a
This is a reasonable basis to treat holders
Because Act 282, §§ 3 and 4 cannot be retroactively
applied to § 667-1 (2010) and § 514B-146(a) (2010), § 1 is
subsequent legislative history and arguably should not be
considered in the analysis of whether Act 282 violates the Equal
Protection Clause of the Hawai`i Constitution. See supra
Discussion Section II.A. However, the constitutional analysis
is in the alternative to the statutory interpretation analysis.
Even if this Court did not consider Act 282, § 1 in determining
whether there is a rational basis for the distinction between
lienholders, there are ample similar statements in the other
acts addressing issues related to condominium association liens
for delinquent assessments. See, e.g., 2012 Haw. Sess. Laws
Act 182, § 1 at 630 (stating “[m]atters involving condominium
and other homeowner associations, including association liens
and the collection of unpaid assessments” were “among the
major issues” the Task Force addressed “over several public
meetings during the legislative interim of 2011”); 1999 Haw.
Sess. Laws Act 236, § 1 at 723 (legislative finding quoted in
Act 282, § 1).
of liens for delinquent condominium association dues differently
from other lien holders, and there is “a fair and substantial
relation[ship]” between the additional remedy accorded holders
of liens for delinquent condominium association dues and the
preservation of condominium ownership as a valuable housing
See Shibuya, 65 Haw. at 35, 647 P.2d at 283.
is a rational basis for the differential treatment, and Act 282
does not violate the Equal Protection Clause of the Hawai`i
Plaintiffs also assert an equal protection violation
because Act 282, §§ 3 through 5, “improperly grants immunity to
[the] AOAO and other associations that committed wrongful
foreclosures while discriminating against homeowners by
arbitrarily, capriciously and unreasonably depriving them of
their property rights.”
[AOAO Opp. at 25 (emphasis added) (some
citations omitted) (citing Shibuya v. Architects Hawaii, Ltd.,
65 Haw. 26, 43, 647 P.2d 276, 288 (1982) (holding that equal
protection is “a requisite ‘both in the privileges conferred and
the liabilities imposed.’”)).]
Act 282 does deprive Plaintiffs of their property.
this case, Plaintiffs were obligated to pay association fees for
their condominium unit; became delinquent in their payment of
those fees; the AOAO placed a lien on their unit based, in part,
on those delinquencies; and they lost the unit when the AOAO
foreclosed upon that lien.
Act 282 will cause Plaintiffs’ loss
of the unit in foreclosure in that it authorizes a foreclosure
not permitted by law at the time that the AOAO foreclosed on the
However, this is not disparate treatment between classes.
In Shibuya, the legislature bestowed immunity from a negligence
action to certain members of the construction industry
(architects, contractors and material suppliers) and denied it
to others (equipment manufacturers).
While troubled “by the
injustice of barring a suit,” the Hawai`i Supreme Court
recognized that “fairness for defendants and the prompt
assertion of claims are proper legislative concerns, and
legislation must often favor a segment of society over others.”
Shibuya, 65 Haw. at 40-41, 647 P.2d at 286.
It found that the
statute was constitutionally infirm in its treatment of a
manufacturer defending itself in litigation from a supplier of
materials, but did not do so in the treatment of a claimant for
damages (the plaintiff) and the defendants (construction
Shibuya is thus not applicable here, and
Act 282 does not violate the Equal Protection Clause.
Plaintiffs’ final constitutional argument is that
Act 282 would eliminate their “vested claims without providing
them just compensation,” constituting a taking, in violation of
the Fifth Amendment of the United States Constitution and
article I, § 20 of the Hawai`i Constitution.
[AOAO Opp. at 25.]
The Fifth Amendment states, in pertinent part, “nor shall
private property be taken for public use, without just
(Emphasis added); see also Stop the Beach
Renourishment, Inc. v. Fla. Dep’t of Envtl. Prot., 560 U.S. 702,
Plaintiffs’ unit was not taken for public use;
In Stop the Beach Renourishment, the United States
Supreme Court stated:
though the classic taking is a transfer of
property to the State or to another private party
by eminent domain, the Takings Clause applies to
other state actions that achieve the same thing.
Thus, when the government uses its own property
in such a way that it destroys private property,
it has taken that property. See United States v.
Causby, 328 U.S. 256, 261–262 (1946); Pumpelly v.
Green Bay Co., 13 Wall. 166, 177–178 (1872).
Similarly, our doctrine of regulatory takings
“aims to identify regulatory actions that are
functionally equivalent to the classic taking.”
Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 539
(2005). Thus, it is a taking when a state
regulation forces a property owner to submit to a
permanent physical occupation, Loretto v.
Teleprompter Manhattan CATV Corp., 458 U.S. 419,
425–426 (1982), or deprives him of all
economically beneficial use of his property,
Lucas v. South Carolina Coastal Council, 505 U.S.
1003, 1019 (1992). Finally . . . , States effect
a taking if they recharacterize as public
property what was previously private property.
See Webb’s Fabulous Pharmacies, Inc. v. Beckwith,
449 U.S. 155, 163–165 (1980).
560 U.S. at 713. These cases clearly establish that, to
constitute a taking, there must be a government action that
deprived the plaintiff of his property or the use of his
(. . . continued)
Plaintiffs lost their unit in foreclosure which resulted in
personal use and gain by the AOAO.
The pending claim does not
constitute property for purposes of the Fifth Amendment takings
See Bowers v. Whitman, 671 F.3d 905, 914 (9th Cir.
2012) (“The reason an accrued cause of action is not a vested
property interest for Takings Clause purposes until it results
in a ‘final unreviewable judgment,’ is that it is inchoate and
does not provide a certain expectation in that property
interest.” (citation omitted)).
As there is not yet a “final
unreviewable judgment” regarding the wrongful foreclosure claim,
nor is there a “final unreviewable judgment” in another case
holding that only a condominium association that had express
agreement with the condominium owner providing for a power of
sale could utilize Chapter 667, Part I (2010), this issue is not
Plaintiffs’ argument that Act 282 violates the Takings
Clause of the United States Constitution cannot be sustained.
As with the Fifth Amendment Takings Clause, article I,
§ 20 of the Hawai`i Constitution states: “Private property shall
not be taken or damaged for public use without just
Plaintiffs argue the Takings Clause of the
Hawai`i Constitution is interpreted differently and would
prohibit the retroactive application of the statutory amendments
in Act 282 to this case.
See AOAO Opp. at 26 (“Retroactive
application of a law that changes the substantive vested rights
of a party is prohibited.” (citing Kaho`ohanohano v. Dep’t of
Human Servs., 117 Haw. 262, 317, 178 P.3d 538, 591 (2008)
(constitutionality of retroactive elimination of tort claim))).
However, Kaho`ohanohano did not address whether retroactive
application of a law constituted a taking, in violation of
article I, § 20 of the Hawai`i Constitution, and thus cannot
support Plaintiffs’ position that the takings analysis under the
Hawai`i Constitution is different from the takings analysis
under the United States Constitution.
Ruling and Remaining Issues
Based on principles of statutory interpretation, there
is no portion of Act 282 applicable to the statutes at issue in
the instant case, and thus Defendants’ proposed interpretation
of Act 282 is rejected.
Further, Act 282 cannot be enforced
because it violates Plaintiffs’ constitutional rights under the
Contracts Clause of the United States Constitution.
result, it is not necessary to address Defendants’ arguments
regarding Plaintiffs’ FDCPA claim and their IIED claim.
On the basis of the foregoing, the AOAO’s Motion for
Summary Judgment and Chow’s Motion for Summary Judgment, both
filed October 18, 2019, are HEREBY DENIED.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, April 10, 2020.
RUDY AKONI GALIMA, ET AL. VS. ASSOCIATION OF APARTMENT OWNERS OF
PALM COURT, ET AL.; CIVIL 16-00023 LEK-RT; ORDER DENYING
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT
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