McCullough v. Bank of America, N.A.

majority opinion

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Electronically Filed

Supreme Court

SCAP-XX-XXXXXXX

12-SEP-2025

10:28 AM

Dkt. 26 OP

IN THE SUPREME COURT OF THE STATE OF HAWAI‘I

---o0o---LARRY W. MCCULLOUGH; DERROL E. ESTRELLA; JUANITA F. ESTRELLA;

JOHN A. MATUSEK; SUNDAY M. MATUSEK;

ARTHUR M. AQUINO; MILAGROS N. AQUINO;

NEVILLE T. PRITCHARD; and BARBARA M. PRITCHARD,

Plaintiffs-Appellants,

vs.

BANK OF AMERICA, N.A.; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS,

INC.; DAMION C. CLARK; GENTRY L. CLARK; QUICKEN LOANS, INC.; JAMES SOR; AMERICAN SAVINGS BANK, F.S.B.; BRADLEY ALAN LOEFFLER

AND BARBARA JEAN LOEFFLER, INDIVIDUALLY AND AS TRUSTEES OF THE

LOEFFLER 2011 FAMILY TRUST DATED DECEMBER 22, 2011,

Defendants-Appellees,

and

ERIC TUCKER; MICHELLE TUCKER;

and U.S. BANK NATIONAL ASSOCIATION,

Defendants-Appellees.

SCAP-XX-XXXXXXX

APPEAL FROM THE CIRCUIT COURT OF THE THIRD CIRCUIT

(CAAP-XX-XXXXXXX; CASE NO. 3CC19100105K)

SEPTEMBER 12, 2025

RECKTENWALD, C.J., McKENNA, EDDINS, GINOZA, AND DEVENS, JJ.

OPINION OF THE COURT BY DEVENS, J.

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I. INTRODUCTION

This case arises from a wrongful foreclosure action filed

against Bank of America, N.A. (Lender) after Lender foreclosed

on multiple Hawai‘i Island properties pursuant to the power of

sale clauses in Lender’s mortgage agreements as authorized by

Hawai‘i Revised Statutes (HRS) § 667-5 (Supp. 2008) (repealed

2012).

Plaintiffs, Arthur and Milagros Aquino, Derrol and Juanita

Estrella, Neville and Barbara Pritchard, and John and Sunday

Matusek (collectively, Borrowers), executed mortgage agreements

with Lender, which gave Lender a lien on their respective

properties. Between 2008 to 2009, Borrowers defaulted on their

mortgage loans. Lender foreclosed on the properties. These

properties were subsequently sold to third-party purchasers.

In 2019, Borrowers brought the instant action in the

Circuit Court of the Third Circuit (circuit court) alleging

wrongful foreclosure; unfair or deceptive acts and practices and

unfair methods of competition under HRS Chapter 480 (UDAP); and

quiet title and ejectment against the current titleholders of

the properties (collectively, Titleholders). Borrowers sought

compensatory and punitive damages and the return of title and

possession of the properties.

The circuit court granted summary judgment in favor of

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Lender concluding that Borrowers could not establish

compensatory damages against Lender after accounting for the

outstanding debt on the properties. 1 The circuit court therefore

concluded that Borrowers’ wrongful foreclosure and UDAP claims

failed as a matter of law. The circuit court calculated

Borrowers’ compensatory damages as inclusive of loss of use of

the properties, personal funds used to acquire the properties,

payments in property taxes and to homeowners’ associations, and

payments on Borrowers’ loans with Lender. The court did not

include any incurred debt or unpaid interest.

The circuit court also granted summary judgment in favor of

Titleholders concluding that Borrowers could not seek the remedy

of return of title and possession of the properties without

first establishing damages; the quiet title and ejectment claims

were barred by the statute of limitations; and Titleholders were

bona fide purchasers.

We affirm the circuit court’s granting of summary judgment

consistent with this opinion. Pursuant to our holdings in Lima

v. Deutsche Bank National Trust Co., 149 Hawai‘i 457, 494 P.3d

1190 (2021) and Llanes v. Bank of America, N.A., 154 Hawai‘i 423,

555 P.3d 110 (2024), to survive summary judgment on their

1 The Honorable Robert D.S. Kim presided.

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wrongful foreclosure and UDAP claims against Lender, Borrowers

must establish compensatory damages after accounting for their

mortgage debts at the time of the foreclosures. Viewed in the

light most favorable to Borrowers and accounting for the loss of

use as asserted by Borrowers in their declarations submitted to

the circuit court, the court correctly determined that Borrowers

did not establish compensatory damages.

In filing quiet title and ejectment claims against

Titleholders, Borrowers also seek the classic remedy of a

wrongful foreclosure action, which is return of title and

possession of the properties. We hold that these claims against

Titleholders are subject to the statute of limitations for a

wrongful foreclosure action, which we conclude is six years.

Consequently, Borrowers’ claims against Titleholders for return

of title and possession of the properties, which they first

brought in 2019, are time-barred. Even if Borrowers had timely

brought their claims for return of title and possession of the

properties, the affidavits of foreclosure in question, which

were filed in the chain of title of the properties, did not

place Titleholders on constructive notice of any defects in the

foreclosure process. Therefore, the circuit court correctly

determined that Titleholders were bona fide purchasers.

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II. BACKGROUND

The following is largely undisputed on appeal. Borrowers

do not contest that they missed mortgage payments, after which

Lender commenced nonjudicial foreclosure proceedings. The

properties were subsequently sold to third-party purchasers.

A. The Aquino Property

In June 2006, Arthur and Milagros Aquino (Aquinos) obtained

a $231,200.00 mortgage loan and a $43,350.00 Mortgage, Security

Agreement, and Financing Statement from Lender. The Aquinos

subsequently purchased a property in Kea‘au, Hawaiʻi for

$289,000.00 plus $11,550.00 in closing costs financing the

purchase with the initial $231,200.00 mortgage loan; the

subsequent $43,350.00 loan; and $26,000.00 in personal funds.

After purchasing the property, the Aquinos contend they paid

$25,900.00 in interest on the first loan; $2,000.00 in interest

on the second loan; and $5,000.00 in property taxes and

insurance.

Beginning in April 2008, the Aquinos began missing payments

on their loans. In November 2008, Lender initiated a

nonjudicial foreclosure against the Aquinos’ property pursuant

to the power of sale clause in their mortgage agreement. After

postponing the foreclosure sale, Lender held the sale on July

17, 2009; Lender was the winning bidder paying $258,546.06.

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Lender recorded an Affidavit of Foreclosure Under Power of Sale

in the Bureau of Conveyances (BOC). After the foreclosure sale,

the Aquinos contend they incurred $21,000.00 in damages based on

their loss of use of the property.

At the time of the sale, Lender presented evidence that the

Aquinos owed $252,822.38 on the first loan and $42,490.98 on the

second loan, totaling $295,313.36. There is nothing in the

record indicating that Lender sought a deficiency payment on

either loan.

After the sale, Lender conveyed the property to Federal

National Mortgage Association (Fannie Mae). Thereafter, Fannie

Mae conveyed the property to subsequent purchasers.

B. The Estrella Property

In March 2008, Derrol and Juanita Estrella (Estrellas)

obtained a $525,000.00 mortgage loan from Lender. The Estrellas

purchased a property in Kailua-Kona, Hawaiʻi, for $750,000.00

plus $9,000.00 in closing costs financing the purchase with

$525,000.00 from the mortgage loan and $234,000.00 in personal

funds. Thereafter, the Estrellas contend they paid $44,000.00

in interest on the loan; $3,500.00 in escrow to cover property

taxes; and $2,400.00 in payments to their homeowner’s

association.

Beginning in February 2009, the Estrellas began missing

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payments on their loan. Lender initiated a nonjudicial

foreclosure pursuant to the mortgage agreement’s power of sale

clause. After postponing the foreclosure sale, Lender held the

sale on June 8, 2010; Lender was the winning bidder paying

$578,550.95. Lender subsequently recorded an Affidavit of

Foreclosure Sale Under Power of Sale in the BOC. After the

foreclosure sale, the Estrellas contend they incurred damages

based on loss of use totaling $35,000.00.

Lender presented evidence that at the time of the sale, the

Estrellas owed $573,935.80 on the loan. After the sale, Lender

conveyed the property to Fannie Mae. In 2011, Fannie Mae

conveyed the property to subsequent purchasers. Those

purchasers later conveyed the property to the current

titleholder. The property is subject to a mortgage lien in

favor of Mortgage Electronic Registrations Systems, Inc. (MERS)

as nominee for American Savings Bank, F.S.B.

C. The Pritchard Property

In October 2006, Neville and Barbara Pritchard (Pritchards)

obtained a $1,932,000.00 construction mortgage loan from Lender

to construct improvements on their property in Kailua-Kona,

Hawaiʻi. The Pritchards purchased the property in 2001 for

$375,000.00 using $100,000.00 in personal funds and $275,000.00

from a separate purchase mortgage loan. The Pritchards assert

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they paid “over” $22,000.00 in closing costs and $3,000.00 in

escrow and title insurance charges to secure the loan.

Thereafter, the Pritchards contend they paid $180,000.00 in

interest on Lender’s construction loan and $9,000.00 in property

taxes.

In December 2007, the Pritchards executed a second mortgage

loan granting a separate lender a security interest in the

property. In August 2008, the Pritchards executed a loan

modification with Lender.

Beginning in October 2008, the Pritchards began missing

loan payments. Lender initiated a nonjudicial foreclosure

pursuant to the mortgage agreement’s power of sale clause.

After postponing the foreclosure sale, Lender held the sale on

June 2, 2010; Lender was the winning bidder paying

$1,440,000.00. Lender subsequently recorded an Affidavit of

Foreclosure Sale Under Power of Sale in the BOC. Lender

presented evidence that at the time of the sale, the Pritchards

owed $2,136,799.31 in outstanding debt. There is nothing in the

record indicating that Lender sought a deficiency payment on the

loan. After the foreclosure sale, the Pritchards assert that

they incurred damages including $16,000.00 in lost fixtures;

$16,000.00 in storage costs; $26,000.00 in moving costs; and

$28,000.00 in loss of use of the property.

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In 2011, the current titleholders purchased the property

from Lender for $1,199,000.00. The current titleholders entered

into a mortgage agreement with MERS, as nominee for Hawaiian Tel

Federal Credit Union, to secure a loan, which was subsequently

reassigned to U.S. Bank.

D. The Matusek Property

In June 2008, John and Sunday Matusek (Matuseks) obtained a

$524,000.00 mortgage loan from Lender to refinance an existing

loan encumbering a property in Kamuela, Hawaiʻi. The Matuseks

used $519,012.00 in proceeds from their 2008 loan from Lender to

pay off the existing loan. According to the Matuseks, they

originally purchased the property for $586,988.00, plus

$22,000.00 in closing costs, using $469,550.00 from the prior

loan and $140,450.00 in personal funds. Excluding loan

proceeds, the Matuseks contend their out-of-pocket costs also

included $51,000.00 in interest paid on the 2005 loan;

$13,500.00 in property taxes; $29,000.00 in homeowner dues;

$2,493.42 in closing costs on the 2008 loan; and $4,250.00 in

interest paid on the 2008 loan.

Beginning in September 2008, the Matuseks began missing

payments on their loan with Lender. Lender initiated a

nonjudicial foreclosure pursuant to the mortgage agreement’s

power of sale clause. After postponing the foreclosure sale,

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Lender held the sale on September 11, 2009; Lender was the

winning bidder paying $436,545.00. Lender subsequently recorded

an Affidavit of Foreclosure Under Power of Sale in the BOC.

After the sale, the Matuseks asserted they incurred $22,500.00

in damages based on the loss of use of the property.

Lender presented evidence that at the time of the sale, the

Matuseks owed $560,697.18 on the loan. There is no indication

in the record that Lender sought a deficiency payment.

After the sale, Lender conveyed the property to the Federal

Home Loan Mortgage Corporation (Freddie Mac). Freddie Mac

subsequently conveyed the property to purchasers who later

conveyed the property to the current titleholders.

E. Circuit Court Proceedings

In 2019, Borrowers filed the instant action in the circuit

court against Lender and Titleholders alleging claims for

wrongful foreclosure, UDAP, and quiet title and ejectment.

Lender moved for summary judgment arguing, among other things,

that Borrowers did not establish prima facie wrongful

foreclosure or UDAP claims because their outstanding debt owed

on the mortgages at the time of the foreclosure sales exceeded

their compensatory damages. Borrowers countered that they

established compensatory damages against Lender based on the

“sale” price of the properties including their incurred mortgage

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debt plus the loss of use of the properties.

Titleholders also moved for summary judgment as to

Borrowers’ quiet title and ejectment claims arguing that

Borrowers’ claims for quiet title and ejectment failed as a

matter of law because they lacked compensatory damages; the

claims were barred by the statute of limitations; and

Titleholders were bona fide purchasers. Borrowers filed crossmotions for summary judgment against Titleholders asserting that

any conveyances of the properties after the foreclosure sales

were void and Titleholders were not bona fide purchasers.

The circuit court granted the motions for summary judgment

filed by Lender and Titleholders and accordingly denied the

cross-motions filed by Borrowers.

Relying on our decision in Lima, the circuit court ruled

that Borrowers had failed to establish compensatory damages as a

required element for their wrongful foreclosure and UDAP claims

and, thus, their claims against Lender failed as a matter of

law. The circuit court rejected Borrowers’ theory that loan

proceeds could be included in calculating their damages. The

circuit court determined that Borrowers were not entitled to

damages based on loss of use of the properties; nevertheless,

the circuit court considered Borrowers’ alleged damages based on

loss of use in its calculations and still determined that

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Borrowers’ outstanding mortgage debt at the time of the

foreclosures exceeded their claims for compensatory damages.

The circuit court also granted Titleholders’ motions for

summary judgment determining that conveyances of the properties

after the foreclosure sales were not void and that Titleholders

were bona fide purchasers. The circuit court further ruled that

Borrowers’ claims against Titleholders were barred by the sixyear statute of limitations for wrongful foreclosure and that

given Borrowers’ failure to establish damages against Lender,

they could not elect the remedy of return of title and

possession of the properties.

The circuit court issued its final judgment in favor of

Lender and Titleholders and against Borrowers, which Borrowers

appealed to the Intermediate Court of Appeals. We granted

transfer to this court.

III. STANDARD OF REVIEW

“Summary judgments are reviewed de novo and are only

appropriate where no genuine issue of material fact is

established by admissible evidence, when the evidence and

inferences drawn therefrom are viewed in the light most favoring

the party opposing summary judgment.” Llanes, 154 Hawaiʻi at

428, 555 P.3d at 115 (citation omitted). “We may affirm summary

judgments on any grounds in the record, including those upon

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which the circuit court did not rely.” Id. at 429, 555 P.3d at

116 (citation omitted).

IV. DISCUSSION

A. Borrowers have not established compensatory damages under

Lima and Llanes.

Prior to its repeal in 2012, HRS § 667-5 authorized the

nonjudicial foreclosure of a mortgaged property when “a power of

sale is contained in a mortgage[.]” HRS § 667-5(a). Borrowers

brought their claims for wrongful foreclosure and UDAP against

Lender asserting procedural deficiencies in the foreclosure

process. Our decisions in Lima and Llanes, which were decided

after Borrowers filed the instant action, addressed similar

claims and are dispositive. See Lima, 149 Hawai‘i at 467-69, 494

P.3d at 1200-02; Llanes, 154 Hawai‘i at 429-34, 555 P.3d at 116-21.

In order to establish their wrongful foreclosure claims

against Lender, Borrowers “must establish ‘(1) a legal duty owed

to the mortgagor by the foreclosing party; (2) a breach of that

duty; (3) a causal connection between the breach of that duty

and the injury sustained; and (4) damages.’” Lima, 149 Hawaiʻi

at 464, 494 P.3d at 1197 (quoting Bank of America, N.A. v.

Reyes-Toledo, 143 Hawaiʻi 249, 264 n.12, 428 P.3d 761, 776 n.12

(2018) overruled on other grounds by Wilmington Sav. Fund Soc’y,

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FSB v. Domingo, 155 Hawaiʻi 1, 556 P.3d 347 (2024)). With

respect to Borrowers’ UDAP claims, they must establish “‘(1)

either that the defendant violated the UDAP statute (or that its

actions are deemed to violate the UDAP statute by another

statute), (2) that the consumer was injured as a result of the

violation, and (3) the amount of damages sustained as a result

of the UDAP violation.’” Id. at 464–65, 494 P.3d at 1197–98

(quoting Kawakami v. Kahala Hotel Invs., LLC, 142 Hawaiʻi 507,

519, 421 P.3d 1277, 1289 (2018)).

In Lima, we established that plaintiff-borrowers pursuing

wrongful foreclosure and UDAP claims “must make a prima facie

case that their requested damages will restore them to their

pre-tort position to survive summary judgment” and “cannot rely

on nominal damages to withstand a motion for summary judgment.”

149 Hawaiʻi at 465, 466, 494 P.3d at 1198, 1199. We reasoned

that “compensatory damages are intended to restore a plaintiff

to the position they would have been in prior to the alleged

tortious act.” Id. at 466, 494 P.3d at 1199 (citation omitted).

Thus, Borrowers “must account for their remaining mortgage debts

when they establish their damages.” Id. at 469, 494 P.3d at

1202.

Llanes held that “outstanding debt may not be counted as

damages in wrongful foreclosure cases.” 154 Hawaiʻi at 434, 555

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P.3d at 121. Llanes also held that borrowers were entitled to

loss of use in calculating their compensatory damages, but

reaffirmed that any damages, including calculations based on

loss of use of a property, must be offset by a borrower’s

mortgage debt. Id. at 433, 555 P.3d at 120.

Applying our case precedent to the instant case, even

accounting for damages based on loss of use of the properties as

alleged in Borrowers’ declarations filed in the circuit court,

Borrowers’ debts at the time of the foreclosure sales exceeded

their compensatory damages. Consequently, Borrowers have not

established prima facie wrongful foreclosure or UDAP claims

against Lender.

To the extent the circuit court concluded that Borrowers

could not seek loss of use as special damages, this conclusion

was incorrect in light of our decision in Llanes. See Llanes,

154 Hawaiʻi at 433, 555 P.3d at 120. However, irrespective of

its conclusion, the circuit court nonetheless calculated the

Borrowers’ damages as inclusive of loss of use and determined

that even accounting for the loss of use of the properties,

Borrowers failed to establish compensatory damages.

Calculating Borrowers’ damages in a light most favorable to

them based on their declarations, including damages for the loss

of use of the properties, interest payments on Borrowers’

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respective loans, property tax payments, dues paid to homeowner

associations, and personal funds used to purchase the

properties, there is no genuine issue of material fact that

Borrowers’ outstanding debts owed at the time of the foreclosure

sales exceed their alleged compensatory damages.

B. Borrowers’ claims for quiet title and ejectment fail.

1. Claims against Titleholders are barred by the

statute of limitations.

Titleholders assert that Borrowers cannot seek the remedy

of return of title and possession because Borrowers did not

establish damages against Lender. 2 Further, even if these claims

were viable, Titleholders contend that Borrowers’ claims for

return of title and possession are subject to the six-year

statute of limitations in HRS § 657-1(4) (2016), which governs

personal actions, and therefore these claims against

Titleholders are time-barred. 3

In response, Borrowers argue that even absent a showing of

2 Of the parties to this appeal, only the Estrellas, the Matuseks, and the Pritchards brought claims for quiet title and ejectment. The Aquinos only sought monetary damages.

3 Borrowers’ action against Lender tolled based on a federal class action filed in the United States District Court, District of Hawaiʻi, Degamo v. Bank of America, N.A., Civil No. 13-00141 JAO-KJM, which was later dismissed. See Levi v. Univ. of Hawaii, 67 Haw. 90, 94, 679 P.2d 129, 132 (1984) (adopting the United States Supreme Court’s holdings on class-action “tolling” in which the commencement of a class action tolls the statute of limitations for putative members until class certification is denied). Titleholders were not defendants to Borrowers’ federal action. Under the circumstances of this case, class-action tolling does not apply to claims against Titleholders.

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damages against Lender, they may seek the “classic remedy” of

return of title and possession for the wrongful foreclosures.

Borrowers additionally argue that their claims against

Titleholders are not time-barred because HRS § 657-1(4) does not

apply to their quiet title and ejectment claims, which they

contend are subject solely to the limitation provided in HRS §

657-31 (2016).4

We disagree with the circuit court that Borrowers must

establish compensatory damages against Lender in order to seek

return of title and possession of the foreclosed-on properties.

However, we agree that in filing their quiet title and ejectment

claims, Borrowers essentially seek a remedy for the wrongful

foreclosures. We therefore hold that the statute of limitations

for Borrowers’ wrongful foreclosure claims also applies to their

quiet title and ejectment claims against Titleholders.

“Hawai‘i’s wrongful foreclosure law provides compensatory

damages for proven out-of-pocket losses, taking debt into

account, and, where a subject property has not been sold to a

subsequent purchaser, ‘the classic remedy for such a cause of

action: return of title and possession.’” Llanes, 154 Hawai‘i at

4 HRS § 657-31 provides that “[n]o person shall commence an action to recover possession of any lands, or make any entry thereon, unless within twenty years after the right to bring the action first accrued.”

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434, 555 P.3d at 121 (emphasis added) (quoting Santiago v.

Tanaka, 137 Hawai‘i 137, 154 n.33, 366 P.3d 612, 629 n.33

(2016)).

In Santiago v. Tanaka, we explained that “money damages . .

. may be substituted for title and possession in certain

instances pursuant to the equitable powers of a court in

adjudicating a case arising from a mortgage foreclosure[.]” 137

Hawaiʻi at 154 n.33, 366 P.3d at 629 n.33. In subsequent cases,

we referred to the “Santiago rule” explaining that if a

wrongfully foreclosed property has been sold to an innocent

purchaser for value, monetary damages are the appropriate

remedy. Mount v. Apao, 139 Hawaiʻi 167, 180, 384 P.3d 1268, 1281

(2016); see also Llanes, 154 Hawaiʻi at 434, 555 P.3d at 121;

Delapinia v. Nationstar Mortgage LLC, 150 Hawaiʻi 91, 102, 497

P.3d 106, 117 (2021).

In filing their quiet title and ejectment claims against

Titleholders, Borrowers are seeking the “classic remedy” for the

alleged wrongful foreclosures. See, e.g., Santiago, 137 Hawai‘i

at 154 n.33, 366 P.3d at 629 n.33; Mount, 139 Hawai‘i at 180, 384

P.3d at 1281; Llanes, 154 Hawai‘i at 434, 555 P.3d at 121. It

thus follows that as a remedy for the wrongful foreclosure,

Borrowers’ claims for return of title and possession of the

properties are subject to the same statute of limitations as

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their wrongful foreclosure claims. We therefore address the

applicable statute of limitations for a wrongful foreclosure

claim to determine whether Borrowers’ claims against

Titleholders are time-barred.

“A foreclosure action is a legal proceeding to gain title

or force a sale of the property for satisfaction of a note that

is in default and secured by a lien on the subject property.”

Bank of America, N.A. v. Reyes-Toledo, 139 Hawaiʻi 361, 368, 390

P.3d 1248, 1255 (2017). As we recently held in Bank of New York

Mellon v. White, a foreclosure action is an equitable action

involving a conveyance of a real property interest, therefore,

“the statute of limitations for mortgage foreclosure actions is

twenty years per HRS § 657-31.” 156 Hawaiʻi 246, 248-50, 573

P.3d 629, 631-33 (2025).

In contrast, a wrongful foreclosure action is based in

tort. Lima, 149 Hawaiʻi at 465, 494 P.3d at 1198. As discussed

supra, in filing claims for quiet title and ejectment, Borrowers

seek the “classic remedy” of return of title and possession

based on the alleged wrongful foreclosures. See Llanes, 154

Hawaiʻi at 434, 555 P.3d at 121. Therefore, even if a borrower

seeks recovery of title and possession of a property as a remedy

to a wrongful foreclosure, the claim sounds in tort.

Pursuant to HRS § 657-1(4), there is a six-year statute of

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limitations for “[p]ersonal actions of any nature whatsoever not

specifically covered by the laws of the State.” HRS § 657-1(4).

In the ICA’s opinion in Delapinia v. Nationstar Mortgage LLC

(Delapinia I), the ICA concluded that the six-year statute of

limitations under HRS § 657-1(4) applied to plaintiffs’ wrongful

foreclosure claim. 146 Hawaiʻi 218, 225, 458 P.3d 929, 936 (App.

2020), aff’d in part, vacated in part, 150 Hawaiʻi 91, 497 P.3d

106. In Delapinia v. Nationstar Mortgage LLC (Delapinia II), we

affirmed the ICA’s decision in part, but did not expressly reach

the issue of the statute of limitations for the wrongful

foreclosure claim. 150 Hawai‘i at 96 n.8, 497 P.3d at 111 n.8.

We now address the appropriate statute of limitations for a

wrongful foreclosure claim and hold that HRS § 657-1(4) applies.

See Delapinia I, 146 Hawaiʻi at 225, 458 P.3d at 936. We find

the ICA’s reasoning in Delapinia I persuasive. As in Delapinia

I, Borrowers in this case contend that Lender wrongfully

deprived them of their ownership interest in their respective

properties. See id. “In other words, [plaintiffs] alleged that

the foreclosure caused non-physical injury to their intangible

interests.” Id. Thus, HRS § 657-1(4), which applies to “claims

concerning a non-physical injury to an intangible interest of

the plaintiff,” applies to wrongful foreclosure claims. Id.

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(citation and emphasis omitted)

In this case, the applicable foreclosure sales took place

between 2009 and 2010. Borrowers filed the instant action in

2019, approximately nine years later. Accordingly, when

Borrowers filed their complaint against Titleholders, their

claims were barred by the applicable six-year statute of

limitations. HRS § 657-1(4).

2. Titleholders are bona fide purchasers.

We further hold that under these facts and circumstances

Titleholders are protected bona fide purchasers.

To begin, we respectfully disagree with Borrowers’ argument

that any wrongful foreclosure renders a subsequent sale

automatically void as opposed to it being potentially voidable.

As stated in Delapinia II, our cases

make clear that if a foreclosure violates a statute

governing the nonjudicial foreclosure scheme, or other law

extrinsic to the mortgage itself, the sale is “voidable at

the election of the mortgagor,” and in turn, “where the

property has passed into the hands of an innocent purchaser

for value, . . . an action at law for damages is generally

the appropriate remedy.”

150 Hawaiʻi at 101-02, 497 P.3d at 116-17 (emphasis original)

(quoting Mount, 139 Hawaiʻi at 180, 384 P.3d at 1281). Contrary

to Borrowers’ arguments, Delapinia II, which was based on our

case precedent, did not constitute a new rule, and its holding

applies to this case. See id. at 104, 497 P.3d at 119.

The question before us is whether Borrowers have

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established that the conveyances to Titleholders after the

foreclosure sales are voidable. As stated, pursuant to

Delapinia II, when a property has passed into the hands of an

innocent purchaser for value, making the voiding of a

foreclosure sale unfeasible, damages are generally the

appropriate remedy. Id. at 101, 497 P.3d at 116. “[I]f the

purchasers were innocent purchasers for value” then the

Borrowers would have “failed to establish that their title is

superior” to the defendant currently holding title, which is

“required for a quiet title claim to succeed[.]” Id. at 100,

497 P.3d at 115 (quotations and brackets omitted). These

“innocent purchasers,” also referred to as bona fide purchasers,

would therefore “enjoy superior title,” and any quiet title and

ejectment claim would fail. Id.

Borrowers allege procedural defects during the respective

foreclosure sales. Borrowers do not assert that they did not

have adequate notice of the foreclosure sales, but rather that

the notices of sale published in The Honolulu Advertiser and

posted on the properties were not in compliance with HRS §§ 667-5 and 667-7. According to Borrowers, these purported procedural

defects were plain on the face of the affidavits of foreclosure,

which Lender recorded in the chain of title of each property,

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and thus Titleholders are not protected bona fide purchasers.

“A bona fide purchaser” is “one who acquires an interest

in a property for valuable consideration, in good faith, and

without notice of another party’s adverse interests in the

property[.]” Delapinia II, 150 Hawaiʻi at 100, 497 P.3d at 115

(quoting 92A C.J.S. Vendor and Purchaser § 528 (2021)); see also

Kau Agribusiness Co. v. Heirs or Assigns of Ahulau, 105 Hawaiʻi

182, 193-94, 95 P.3d 613, 624-25 (2004). By contrast, a “nonbona fide purchaser is one who does not pay adequate

consideration, ‘takes with knowledge that his transferor

acquired title by fraud[,] or . . . buys registered land with

full notice of the fact that it is in litigation between the

transferor and a third party.’” Kondaur Cap. Corp. v.

Matsuyoshi, 136 Hawaiʻi 227, 240 n.27, 361 P.3d 454, 467 n.27

(2015) (brackets in original) (quoting Akagi v. Oshita, 33 Haw.

343, 347 (Haw. Terr. 1935)).

Borrowers do not contest that Titleholders paid value for

the properties, but rather argue that Titleholders were on

“constructive notice” of defects in the foreclosure process

based on the affidavits of foreclosure filed in each property’s

chain of title.

“Constructive notice arises as a legal inference . . .

where circumstances are such that a reasonably prudent person

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should make inquiries, and therefore the law charges a person

with notice of facts which inquiry would have disclosed.” SGM

P’ship v. Nelson, 5 Haw. App. 526, 529, 705 P.2d 49, 52 (App.

1985) (cleaned up); see Black’s Law Dictionary, at 1274 (12th

ed. 2024).

We hold that as a matter of law the individual affidavits

in this case did not place Titleholders on constructive notice,

or inquiry notice, of procedurally defective foreclosure sales.

See SGM P’ship, 5 Haw. App. at 529, 705 P.2d at 52. The

affidavits were signed and filed by Lender’s counsel in the BOC.

Each affidavit attested that the foreclosures occurred in

compliance with and pursuant to HRS §§ 667-5 through 667-10.

The affidavits further provided that notices of the sales were

published in The Honolulu Advertiser and the sales were

postponed by public announcement.

There was nothing on the face of these affidavits that

provided Titleholders with constructive notice that the

foreclosures were procedurally defective. Given the outcome of

this decision, we need not reach whether the notices of sale,

descriptions, and postponements complied with HRS § 667-5 and

our applicable caselaw, including Hungate v. Law Office of David

B. Rosen. See 139 Hawaiʻi 394, 403-04, 391 P.3d 1, 10-11 (2017),

abrogated on other grounds by State ex rel. Shikada v. Bristol24

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Myers Squibb Co., 152 Hawaiʻi 418, 526 P.3d 395 (2023).

We respectfully disagree with Borrowers’ constructive

notice theory that third-party purchasers should be held to the

same standard as a court reviewing a foreclosure action.

Borrowers’ theory imposes unreasonable expectations on thirdparty purchasers that does not comport with the policy of

protecting the interests of innocent purchasers and avoiding

forfeiture of those interests. See Delapinia II, 150 Hawai‘i at

104, 497 P.3d at 119; see also Keawe v. Parker, 6 Haw. 489, 496

(Haw. Kingdom 1884).

Thus, the only question before us is whether the “land

records,” specifically each affidavit of foreclosure, and the

“accessible law” at the time gave the Titleholders’ notice of

any alleged defects in title. See Kau Agribusiness Co., 105

Hawaiʻi at 193, 95 P.3d at 624. Each affidavit attested that all

procedures complied with the applicable statutes. 5 In each case,

5 The foreclosure affidavits, signed by Lender’s counsel, constituted sworn statements attesting that the foreclosures occurred in compliance with HRS Chapter 667. See HRS § 667-5 (repealed). HRS § 667-17 was enacted in 2012 after the foreclosure sales at issue. The statute requires that attorneys filing on behalf of a mortgagee seeking to foreclose on a residential property “sign and submit an affirmation that the attorney has verified the accuracy of the documents submitted, under penalty of perjury and subject to applicable rules of professional conduct.” HRS § 667-17 (2016 & Supp. 2017). In James B. Nutter & Co. v. Namahoe, in addressing a Hawaiʻi Rules of Civil Procedure Rule 60(b)(6) motion alleging fraud on the court, this court noted that “an inaccurate, incomplete, or otherwise misleading HRS § 667-17 affirmation may constitute a misrepresentation to the court.” 153 Hawaiʻi 149, 168, 528 P.3d 222, 241 (2023). Accordingly, while not at issue

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the actual foreclosure sales took place after the publication of

the notices of sale and after the notices of sales were posted

on the properties. On these undisputed facts and circumstances,

Titleholders are bona fide purchasers.

V. CONCLUSION

The circuit court’s grant of summary judgment is affirmed.

James J. Bickerton, /s/ Mark E. Recktenwald Van-Alan H. Shima and

(Bridget G. Morgan-Bickerton /s/ Sabrina S. McKenna on the briefs) for

plaintiffs-appellants /s/ Todd W. Eddins

Elizabeth Z. Timmermans, /s/ Lisa M. Ginoza (Allison Mizuo Lee and

Patricia J. McHenry on the /s/ Vladimir P. Devens briefs) for defendant-appellee

Bank of America

Pamela W. Bunn

(Madisson L. Heinze on the

briefs) for defendants-appellees

Eric Tucker, Michelle Tucker

and U.S. Bank, N.A.

Charles A. Price

for defendants-appellees

James Sor, American Savings Bank,

F.S.B., and Bradley Alan Loeffler

and Barbara Jean Loeffler,

Individually and as Trustees of

the Loeffler 2011 Family Trust

Dated December 22, 2011

in the instant case, under HRS § 667-17, an “inadequate attorney affirmation may rise to the level of fraud on the court.” Id.

McCullough v. Bank of America, N.A.

Summary · law.co

Key issues

Procedural posture

Authorities cited

Opinion · public domain