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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. *** FOR PUBLICATION IN WEST’S HAWAI I REPORTS AND PACIFIC REPORTER ***
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Hawai‘i Revised Statutes (HRS) § 667-5 (Supp. 2008) (repealed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
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.
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 cross-
motions 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 six-
year 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
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 18 *** FOR PUBLICATION IN WEST’S HAWAI I REPORTS AND PACIFIC REPORTER ***
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 21 *** FOR PUBLICATION IN WEST’S HAWAI I REPORTS AND PACIFIC REPORTER ***
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 “non-
bona 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. Bristol-
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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 third-
party 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.