Hemsher, Jr. v. Bank of America, N.A.

• Court: Hawaii Supreme Court
• Decided: September 12, 2025
• Docket: SCAP-23-0000531
• Status: Published

Opinion

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Electronically Filed Supreme Court SCAP-XX-XXXXXXX 12-SEP-2025 11:52 AM Dkt. 43 SO

SCAP-XX-XXXXXXX

IN THE SUPREME COURT OF THE STATE OF HAWAI‘I

ROBERT R. HEMSHER, JR.; BRIDGETTE B. HEMSHER; STEPHEN P. CANO; and NINA Q. CANO, Plaintiffs-Appellants,

vs.

BANK OF AMERICA, N.A.; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; WAYNE MICHAEL TILKA; DOROTHY JEAN TILKA; MAUNA LANI GOLF H2, LLC; WAYNE BOTELHO; KATHLEEN P. BOTELHO; JASON J. BOTELHO; and WELLS FARGO BANK, N.A., Defendants-Appellees.

APPEAL FROM THE CIRCUIT COURT OF THE THIRD CIRCUIT (CAAP-XX-XXXXXXX; CASE NO. 3CCV-XX-XXXXXXX)

SUMMARY DISPOSITION ORDER (By: Recktenwald, C.J., McKenna, Eddins, Ginoza, and Devens, JJ.)

Plaintiffs, Robert and Bridgette Hemsher and Stephen and

Nina Cano (collectively, Borrowers), took out mortgage loans

from Bank of America, N.A. (Lender) subject to liens on their

properties. Between 2008 to 2009, Borrowers defaulted on their

loans. Lender subsequently foreclosed on the properties

pursuant to the power of sale clauses in Borrowers’ mortgage *** NOT FOR PUBLICATION IN WEST’S HAWAI I REPORTS AND PACIFIC REPORTER ***

agreements as authorized by Hawai‘i Revised Statutes (HRS)

§ 667-5 (Supp. 2008) (repealed 2012). In 2020, Borrowers filed

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).

The circuit court granted summary judgment in favor of

Lender and Titleholders as to all claims. 1 Borrowers appealed to

the Intermediate Court of Appeals; we granted transfer to this

court.

We addressed similar issues in our recent decision

McCullough v. Bank of America, N.A., ___ Hawaiʻi ___, ___ P.3d

___, 2025 WL __________ (Haw. Sep. 12, 2025). As with the

plaintiffs in McCullough, Borrowers in this case have not

established compensatory damages 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). Further, pursuant to our decision in

McCullough, Borrowers’ claims against Titleholders are barred by

the six-year statute of limitations pursuant to HRS § 657-1(4)

1 The Honorable Robert D.S. Kim presided.

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(2016). Additionally, Titleholders are protected bona fide

purchasers.

I.

The following is largely undisputed on appeal. Borrowers

in this case do not contest that they missed mortgage payments,

after which Lender commenced nonjudicial foreclosure

proceedings. Thereafter, the properties were conveyed to third-

party purchasers.

In June 2007, Robert and Bridgette Hemsher (Hemshers)

obtained two loans from Lender’s predecessor in interest, in the

amounts of $475,350.00 and $89,100.00 respectively, to refinance

an existing mortgage encumbering their property located in

Kailua-Kona, Hawaiʻi. According to the Hemshers, they purchased

the property in 2005 for $558,000.00 financing the purchase with

a $557,955.00 development acquisition loan and some personal

funds to cover closing costs. The Hemshers contend they paid

$30,000.00 in interest on the prior development acquisition

loan. As to their loans with Lender, the Hemshers contend they

paid $45,401.42 in interest on their first loan and $9,725.38 in

interest on their second loan. They further claim that they

paid $6,000.00 in closing costs on the two loans with Lender.

Beginning in January 2009, the Hemshers began missing

payments on both loans. In September 2009, Lender initiated a

nonjudicial foreclosure against the Hemshers’ property pursuant 3 *** NOT FOR PUBLICATION IN WEST’S HAWAI I REPORTS AND PACIFIC REPORTER ***

to the power of sale clause in the mortgage agreements. After

postponing the sale by public announcement, Lender held the

foreclosure sale on November 19, 2009; Lender was the winning

bidder paying $512,283.29. Lender recorded an Affidavit of

Foreclosure Under Power of Sale in the Bureau of Conveyances

(BOC). After the foreclosure sale, the Hemshers contend they

incurred $25,200.00 in damages based on their loss of use of the

property.

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

Hemshers owed $506,711.42 and $87,973.54 on their loans with

Lender. 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. Those

purchasers conveyed the property to a third-party who thereafter

conveyed the property to the current titleholders.

In January 2007, Stephen and Nina Cano (Canos) obtained a

$448,388.00 mortgage loan from Lender’s predecessor in interest.

The Canos purchased a property in Kamuela, Hawai‘i for

$569,832.67, including closing costs, financing the purchase

with the loan proceeds and $121,444.67 in personal funds.

Thereafter, the Canos contend they paid $47,641.20 in interest

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on the loan.

In December 2008, the Canos began missing payments on their

loan. Lender initiated a nonjudicial foreclosure pursuant to

the mortgage agreement’s power of sale clause. After postponing

the sale by public announcement, Lender held the foreclosure

sale on January 15, 2010; Lender was the winning bidder paying

$350,471.00. Lender subsequently recorded an Affidavit of

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

foreclosure sale, the Canos contend they incurred damages based

on their loss of use of the property totaling $28,800.00.

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

Canos owed $486,458.77 on the loan. After the foreclosure sale,

Lender conveyed the property to Federal Home Loan Mortgage

Corporation (Freddie Mac). Freddie Mac subsequently conveyed

the property to the current titleholder.

In 2020, Borrowers brought 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 as to Borrowers’ wrongful

foreclosure and UDAP claims, citing to this court’s decision in

Lima and arguing that Borrowers did not establish prima facie

wrongful foreclosure or UDAP claims because the outstanding debt

owed on the mortgages at the time of the foreclosure sales

exceeded Borrowers’ compensatory damages. In response, 5 *** NOT FOR PUBLICATION IN WEST’S HAWAI I REPORTS AND PACIFIC REPORTER ***

Borrowers asserted they established compensatory damages against

Lender based on the “total acquisition cost” of the properties

including any incurred mortgage debt plus damages due to their

loss of use of the properties.

Titleholders filed separate motions for summary judgment.

Titleholders asserted that the conveyances to Titleholders were

not void; Borrowers’ claims for quiet title and ejectment failed

because they could not establish damages against Lender;

Borrowers’ claims were barred by the statute of limitations; and

Titleholders were bona fide purchasers.

The circuit court granted the motions for summary judgment

filed by Lender and Titleholders. As to Lenders’ motion for

summary judgment, the circuit court rejected Borrowers’ method

for calculating damages as inclusive of incurred debt and unpaid

interest. The circuit court determined that Borrowers were not

entitled to damages for loss of use, but nevertheless included

those alleged damages in its calculations. The circuit court

ruled that the wrongful foreclosure and UDAP claims failed as a

matter of law because Borrowers did not present evidence of

compensatory damages in excess of their respective debts.

As to Titleholders’ motions for summary judgment, the

circuit court determined that a conveyance after a wrongful

foreclosure sale is voidable, not void, and Titleholders were

protected bona fide purchasers. The circuit court further ruled 6 *** NOT FOR PUBLICATION IN WEST’S HAWAI I REPORTS AND PACIFIC REPORTER ***

that Borrowers’ claims for return of title and possession were

barred by the statute of limitations, and Borrowers could not

proceed with their quiet title and ejectment claims against

Titleholders because they could not establish compensatory

damages against Lender.

The circuit court issued its final judgment in favor of

Lender and Titleholders, which Borrowers appealed to the

Intermediate Court of Appeals. We granted Borrowers’

application for transfer to this court.

II.

We review summary judgments de novo. Llanes, 154 Hawaiʻi at

428, 555 P.3d at 115. This court “may affirm summary judgments

on any grounds in the record, including those upon which the

circuit court did not rely.” Id. at 429, 555 P.3d at 116

(citation omitted).

Lender initiated its nonjudicial foreclosures on the

mortgaged properties pursuant to HRS § 667-5, which was repealed

in 2012. As we noted in McCullough, our decisions in Lima and

Llanes, decided after Borrowers filed the instant action, 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. Lima

requires that we account for Borrowers’ outstanding debt when

they establish damages. 149 Hawaiʻi at 469, 494 P.3d at 1202.

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Llanes held that “invested debt” cannot be included in

Borrowers’ calculation of compensatory damages. 154 Hawaiʻi at

432-34, 555 P.3d at 119-21.

Applying our precedent to Borrowers’ claims, even

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

alleged in the declarations Borrowers 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.

The circuit court incorrectly concluded that Borrowers

could not seek loss of use as special damages. See id. at 433,

555 P.3d at 120. However, the circuit court nevertheless

calculated Borrowers’ damages as inclusive of loss of use and

determined that even accounting for such damages, Borrowers did

not establish compensatory damages. Based on Borrowers’

declarations filed in the circuit court, there is no genuine

issue of material fact that Borrowers’ alleged damages,

including loss of use of the properties, did not exceed the

outstanding debt owed at the time of the foreclosure sales. See

McCullough, ___ Hawaiʻi at ___, ___ P.3d at ___.

Addressing Borrowers’ claims against Titleholders, these

claims are barred by the six-year statute of limitations for

wrongful foreclosure claims. As in McCullough, we respectfully 8 *** NOT FOR PUBLICATION IN WEST’S HAWAI I REPORTS AND PACIFIC REPORTER ***

disagree with the circuit court that Borrowers are precluded

from seeking return of title and possession of the properties

without first establishing out-of-pocket damages. However,

McCullough held that “the statute of limitations for Borrowers’

wrongful foreclosure claims also applies to their quiet title

and ejectment claims against Titleholders.” Id. at ___, ___

P.3d at ___. We reasoned that in bringing claims for quiet

title and ejectment, borrowers essentially sought a remedy for

their wrongful foreclosure claims, which were subject to the

six-year statute of limitations in HRS § 657-1(4). Id. at ___,

___ P.3d at ___. As with the plaintiffs in McCullough, in this

case, Borrowers’ claims for return of title and possession of

the properties are subject to the wrongful foreclosure statute

of limitations and, thus, are time-barred. 2

The statute of limitations for a wrongful foreclosure claim

is six years pursuant to HRS § 657-1(4). Id. at ___, ___ P.3d

at ___. The foreclosure sales took place between 2009 and 2010.

Borrowers filed their complaint in 2020. Accordingly, when

Borrowers filed the instant action, their claims against

Titleholders for return of title and possession of the

properties based on the wrongful foreclosures were time-barred

2 As with the McCullough plaintiffs, Titleholders were not defendants to the federal action filed in Degamo v. Bank of America, N.A., Civil No. 13- 00141 JAO-KJM. Under the circumstances of this case, class-action tolling does not apply to claims against Titleholders.

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by the statute of limitations. HRS § 657-1(4).

Titleholders are further protected against Borrowers’

claims as bona fide purchasers. See McCullough, ___ Hawaiʻi at

___, ___ P.3d at ___. Borrowers allege procedural defects

during the foreclosure sales. Specifically, they contend 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 defects were plain

on the face of the affidavits of foreclosure recorded in the

chain of title of each property, and therefore, Titleholders

were on constructive notice of a wrongful foreclosure.

As we noted in McCullough, we disagree with Borrowers that

our decision in Delapinia v. Nationstar Mortgage LLC, 150 Hawaiʻi

91, 497 P.3d 106 (2021) constituted a new rule. Accordingly,

Delapinia applies to this case and any conveyance to a third-

party purchaser after a wrongful foreclosure sale is voidable

and not void. Delapinia, 150 Hawaiʻi at 93, 497 P.3d at 108.

As to Borrowers’ primary assertion that Titleholders were

on constructive notice of any defects in the foreclosure

process, consistent with our decision in McCullough, we conclude

the affidavits filed in the chain of title of the properties did

not place Titleholders on notice of any defects in the

foreclosure process. See ___ Hawaiʻi at ___,___ P.3d at ___.

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“Constructive notice arises as a legal inference . . .

where circumstances are such that a reasonably prudent person

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).

For both properties, Lender’s counsel signed a foreclosure

affidavit, which was subsequently recorded 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. In each case, the actual

foreclosure sales took place after the publication of the

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

properties.

There was nothing on the face of these affidavits that

provided Titleholders with constructive notice that the

foreclosures were procedurally deficient. Under these facts and

circumstances, we conclude that Titleholders are bona fide

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III.

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

DATED: Honolulu, Hawaiʻi, September 12, 2025.

James J. Bickerton, /s/ Mark E. Recktenwald Van-Alan H. Shima and (Bridget G. Morgan-Bickerton /s/ Sabrina S. McKenna on the briefs) for /s/ Todd W. Eddins plaintiffs-appellants /s/ Lisa M. Ginoza Elizabeth Z. Timmermans, (Allison Mizuo Lee and /s/ Vladimir P. Devens Patricia J. McHenry on the brief) for defendant-appellee Bank of America

Summer H. Kaiawe (Michael C. Bird and Vanessa D. Wen on the briefs) for Mauna Lani Golf H2, LLC

Charles A. Price for defendants-appellees Wayne Michael Tilka and Dorothy Jean Tilka