Bank of Hawaii v. Shinn

200 P.3d 370, 120 Haw. 1, 2008 Haw. LEXIS 307
CourtHawaii Supreme Court
DecidedDecember 29, 2008
Docket27832
StatusPublished
Cited by27 cases

This text of 200 P.3d 370 (Bank of Hawaii v. Shinn) is published on Counsel Stack Legal Research, covering Hawaii Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bank of Hawaii v. Shinn, 200 P.3d 370, 120 Haw. 1, 2008 Haw. LEXIS 307 (haw 2008).

Opinions

Opinion of the Court by

ACOBA, J.

Petitioner/DefendanL-Appellant Michael L. Shinn (Petitioner) seeks review of the judgment of the Intermediate Court of Appeals (ICA), filed on March 30, 2008, pursuant to its published opinion filed on February 29, 2008,1 affirming the March 7, 2006 Order of the first circuit court (the court)2 denying Petitioner’s Hawaii Rules of Civil Procedure (HRCP) Rule 60(b) (2008) motion (1) to set aside the court's December 18, 2003 Order granting the motion of Respondent/Plaintiff-Appellee Bank of Hawaii (Respondent) to extend a deficiency judgment against Petitioner entered on December 21, 1993, and (2) to expunge the court’s December 21, 1993 joint and several judgment against Petitioner. See Bank of Hawaii v. Shinn, 118 Hawai'i 132, 138, 185 P.3d 880, 886 (App.2008).

We hold (1) that Hawaii Revised Statutes (HRS) § 657-5 (Supp.2007)3 controls over [3]*3HRCP Rule 5(a) (2008),4 and therefore, notice of a proposed extension of a judgment pursuant to HRS § 657-5 must be provided to the judgment debtor prior to the granting of the extension, even if the debtor is in default and is not required under HRCP Rule 5(a) to be served with pleadings; and (2) although the failure to provide notice under HRS § 657-7 (1993) to a party in default is error, such error was harmless under the circumstances of this ease. Accordingly, the December 18, 2003 order granting extension of judgment was not void under HRCP Rule 60(b)(4).5 The error was harmless in this ease because Petitioner had never appeared in the action to defend himself, he had an opportunity to be heard at the Rule 60(b) hearing, he offered no defense on the merits to the original judgment or the extension, and thus failed to demonstrate any prejudice. Therefore, the ICA’s judgment is affirmed, albeit on different grounds.

I.

In 1990, Petitioner and his business associates formed Kahala Ventures, a Hawai'i partnership. On June 25, 1990, Kahala Ventures borrowed $1,500,000 from Respondent to develop property located in Kahala (property). The lending agreement required the loan to be repaid in full by January 1, 1993. On March 22 of that same year, Respondent filed its complaint for foreclosure and deficiency after Petitioner and his partners failed to make the payments. On April 1,1993, the complaint and summons were served on Petitioner at his home. Respondent moved for summary judgment on the foreclosure later that month. Notice of the summary judgment motion and hearing were sent to Petitioner at the same address by U.S. mail. Petitioner filed no answer to the complaint and never appeared in court, resulting in a default judgment against him, entered by the clerk of the court on May 6,1993.6

On June 23, 1993, the court granted Respondent’s summary judgment motion. The [4]*4Foreclosure Decree determined that $1,565,426.17 was due on the loan as of April 23, 1993, with per diem interest of $471.98 thereafter. By August of 1993, Respondent had sold the mortgaged property for $1,208,218.87.

On December 16,1993, Respondent served the Affidavit of Michael C. Webb, requesting entry of a deficiency judgment against Petitioner and others in the amount of $467,120, on Petitioner by U.S. mail to the same residence in Kahala. On December 21, 1993, Respondent obtained a deficiency judgment against Petitioner and others, which was served on Petitioner, also via U.S. mail, to his Hawaii address.

On August 9, 2000, Respondent filed a release of the judgment as to Petitioner’s partner, Defendant Donald Eovino, due to his receipt of a discharge in bankruptcy.

On December 10, 2003, Respondent filed a motion to extend the deficiency judgment for an additional ten years, and to set aside an “order of dismissal,” which had been entered on June 28, 2002, for inactivity. The motion to extend was not served on Petitioner. Eight days later, the court held a hearing on the motion and entered an order extending the judgment for ten years and setting aside the order of dismissal to the extent that it dismissed claims and parties that were already subject to judgment or otherwise previously dismissed.

Because Respondent did not notify Petitioner of its motion to extend, he did not learn of the extension until 2005. On January 17, 2006, Petitioner filed a HRCP Rule 60(b) motion seeking to void the trial court’s 2003 grant of extension, and to expunge the extended deficiency judgment, which was recorded at the Bureau of Conveyances. Petitioner argued that HRS § 657-5 requires notice to the judgment debtor of any motion to extend a judgment, and that Petitioner had an absolute right to notice of the motion to extend.

The court heard argument on Petitioner’s motion on February 7, 2006. At the hearing, Respondent “emphasized that [Petitioner] had never contested the default or appealed the underlying judgment ... [and] ... raised no defenses on the merits to the original [¡Judgment or its extension.” Respondent also offered the testimony of its Vice President of Commercial Collections, David Bowman, by way of a declaration stating that Respondent had been informed on various occasions that Petitioner had moved back and forth between Colorado and Florida, to show that Respondent was unaware of Petitioner’s exact address. Petitioner’s arguments focused on the legislative intent in HRS § 657-5 that notice must be provided, on his belief that Respondent actually knew of his exact whereabouts at the time of the extension and that Respondent’s assertions to the contrary were hearsay. On March 7, 2006, without announcing any findings of fact or conclusions of law, the court entered an order denying Petitioner’s motion to set aside the extension of judgment.

On March 22, 2006, Petitioner filed his notice of appeal. On February 29, 2008, the ICA affirmed the court’s March 7, 2006 order denying Petitioner’s Rule 60(b) motion. The ICA determined, based on an in pari mate-ria reading of HRS § 657-5 and HRCP Rules 5(a) and 55(b)(2) (2008),7 that Respondent was not required to provide notice to Petitioner prior to entry of the extension of judgment because the notice requirement does not apply to parties who fail to appear and are defaulted. Shinn, 118 Hawai'i at 136-37, 185 P.3d at 884-85. Therefore, the ICA concluded that the court had properly denied Petitioner’s Rule 60(b) motion to set aside the extension of judgment. Petitioner filed his Application for Writ of Certiorari (Application) on June 18, 2008. This court accepted certiorari and oral argument on the merits was heard on October 16,2008.

II.

Petitioner lists the following pertinent questions in his Application:8

1. Was Petitioner deprived of (a) his ... HRS [§ ]657-5 statutory procedural [5]*5rights,

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Bluebook (online)
200 P.3d 370, 120 Haw. 1, 2008 Haw. LEXIS 307, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bank-of-hawaii-v-shinn-haw-2008.