NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
Electronically Filed Intermediate Court of Appeals CAAP-XX-XXXXXXX 25-SEP-2024 08:22 AM Dkt. 89 SO
NO. CAAP-XX-XXXXXXX
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAIʻI
THOMAS FRANK SCHMIDT and LORINNA JHINCIL SCHMIDT, Plaintiffs-Appellants, v. HSC, INC., a Hawaii corporation; RICHARD HENDERSON, SR.; ELEANOR R.J. HENDERSON, Defendants-Appellees, and JOHN DOES 1-10; JANE DOES 1-10; DOE CORPORATIONS 1-10; and DOE UNINCORPORATED ASSOCIATIONS, INCLUDING PARTNERSHIPS 1-10, Defendants.
APPEAL FROM THE CIRCUIT COURT OF THE THIRD CIRCUIT (CIVIL NO. 3CC061000228)
SUMMARY DISPOSITION ORDER (By: Hiraoka, Presiding Judge, Wadsworth and McCullen, JJ.)
Plaintiff-Appellants Thomas Frank Schmidt and Lorinna
Jhincil Schmidt (Schmidts) appeal from the Circuit Court of the
Third Circuit's 1 (1) November 12, 2020 Findings of Fact,
Conclusions of Law, and Order Granting Defendants' Motion for
Summary Judgment (Order Granting Summary Judgment), and
1 The Honorable Henry T. Nakamoto presided. NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
(2) November 12, 2020 order denying the Schmidts' motion to
amend and correct the Order Granting Summary Judgment "to
Conform to the [Hawai‘i] Supreme Court Decision Dated November 8,
2019, Filed in this Court on December 4, 2019 as Document
No. 169, and the December 3, 2019 [Hawaiʻi] Supreme Court
Judgment on Appeal, as Document No. 171, Filed February 14, 2020
[Dkt 173]" (Order Denying Motion to Amend).
On appeal, the Schmidts contend the circuit court
erred in concluding they were unable to pursue a claim under
Hawai‘i Revised Statutes (HRS) Chapter 651C, also known as the
Hawai‘i Uniform Fraudulent Transfers Act (HUFTA), once their
judgment against original debtor Realty Finance, Inc. (RFI)
expired.
Upon careful review of the record and the briefs
submitted by the parties and having given due consideration to
the issues raised and the arguments advanced, we resolve the
points of error as discussed below, and affirm.
The background underlying this case spans over 20
years and includes three appeals. Briefly, RFI was a wholly
owned subsidiary of HSC, Inc. Richard and Eleanor Henderson
(Hendersons) were officers and directors of HSC. Richard and
family members owned 70 percent of HSC.
RFI obtained a foreclosure judgment against the
Schmidts. In 2000, after receiving the foreclosure sale
2 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
proceeds, RFI transferred funds to the Hendersons, and
transferred funds to a law firm to satisfy an HSC debt.
Following the transfers, RFI became insolvent.
In 2004, judgment was entered in favor of the Schmidts
and against RFI for "$537,258.66, constituting the surplus of
the foreclosure sale proceeds" (2004 Judgment). In 2006, the
Schmidts filed a first amended complaint (2006 Complaint)
against HSC and the Hendersons claiming "RFI removed or
concealed assets and thereby became insolvent shortly after the
transfers were made and shortly after RFI received the mortgage
sale proceeds from" the Schmidts. In the 2006 Complaint, the
Schmidts relied on the 2004 Judgment to establish they were
creditors of RFI.
Multiple appeals occurred. In the third appeal, the
Hawai‘i Supreme Court determined the Schmidts timely raised their
HUFTA claims, and remanded the case to the circuit court.
Schmidt v. HSC, Inc., 145 Hawaiʻi 351, 362, 452 P.3d 348, 359
(2019). On remand, the circuit court issued its Order Granting
Summary Judgment, ruling the Schmidts were barred from pursuing
their HUFTA claim because "[t]he 2004 Judgment was the only
basis on which the Schmidts claimed to be creditors of RFI" and
the Schmidts "are no longer 'creditors' of RFI as their 2004
Judgment was not extended, and therefore, expired as a matter of
law under HRS § 657-5."
3 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
Here, before this court, the Schmidts raise seven
points of error, 2 which we consolidate for discussion as
2 The Schmidts' seven points of error are as follows:
1. "The trial court committed reversible error granting HSC and Henderson's 12 June 2020 motion for summary judgment that Schmidts' UFTA claim was no longer valid as their judgment against the transferor RFI expired, thereby terminating their UFTA claim";
2. "The trial court committed reversible error refusing to follow [Hawaiʻi] Supreme Court decision in Schmidt v. HSC, Inc., 145 Haw. 351, 452 P.3d 348 (2019) (Schmidt III) in which the case was remanded for the second time, holding that the Schmidts' UFTA claim was not barred by the one[-]year statute of limitations";
3. "The trial court committed reversible error denying Schmidts' 14 February 2020 motion to amend and correct the 19 October 2016 FOF, COL, order and judgment to conform with the [Hawaiʻi] Supreme Court decision in Schmidt III";
4. "The trial court committed reversible error in FOF No. 3 on 12 November 2020 in 20 ROA 22 at pages 2-3";
5. "The trial court committed reversible error in COL Nos. 1, 2-4 and 5 when it filed the FOF, COL and order granting Defendants' motion for summary judgment on 12 November 2020";
6. "The trial court committed reversible error in filing the 12 November 2020 order granting the Defendants HSC and Henderson's motion for summary judgment which appears in 20 ROA 222 @ page 4 and which appears also in Appendix 1 incorporated herein by reference as if fully set forth herein"; and
7. "The trial court committed reversible error filing the Final Judgment on 5 March 2021, a copy of which is appended in Appendix 11."
(Some emphasis omitted.) The Schmidts do not raise specific arguments regarding their challenge to findings of fact (FOF) 3 and conclusions of law (COL) 1-5. Nonetheless, based on our decision below, FOF 3 was not clearly erroneous and COL 1-5 were not wrong.
In the argument section of their opening brief, the Schmidts discuss due process and equal protection violations. The Schmidts, however, do not raise these issues in their points of error or cite to where in the record they raised these issues before the circuit court. Hawaiʻi Rules of Appellate Procedure (HRAP) Rule 28(b)(4). Thus, we deem these issues waived. HRAP Rule 28(b)(4); Onaka v. Onaka, 112 Hawai‘i 374, 387, 146 P.3d 89, 102 (2006) (explaining "[w]e have repeatedly warned that an appellate court will not sift through a voluminous record" where appellant fails to provide citations to the record).
4 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
asserting (1) the circuit court erred in determining their HUFTA
claim was no longer valid, and (2) the law of the case doctrine
rendered the Order Granting Summary Judgment moot.
(1) The Schmidts contend the circuit court erred in
determining their HUFTA claim was not viable because a judgment
is not required to pursue a HUFTA claim. Although a judgment is
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NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
Electronically Filed Intermediate Court of Appeals CAAP-XX-XXXXXXX 25-SEP-2024 08:22 AM Dkt. 89 SO
NO. CAAP-XX-XXXXXXX
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAIʻI
THOMAS FRANK SCHMIDT and LORINNA JHINCIL SCHMIDT, Plaintiffs-Appellants, v. HSC, INC., a Hawaii corporation; RICHARD HENDERSON, SR.; ELEANOR R.J. HENDERSON, Defendants-Appellees, and JOHN DOES 1-10; JANE DOES 1-10; DOE CORPORATIONS 1-10; and DOE UNINCORPORATED ASSOCIATIONS, INCLUDING PARTNERSHIPS 1-10, Defendants.
APPEAL FROM THE CIRCUIT COURT OF THE THIRD CIRCUIT (CIVIL NO. 3CC061000228)
SUMMARY DISPOSITION ORDER (By: Hiraoka, Presiding Judge, Wadsworth and McCullen, JJ.)
Plaintiff-Appellants Thomas Frank Schmidt and Lorinna
Jhincil Schmidt (Schmidts) appeal from the Circuit Court of the
Third Circuit's 1 (1) November 12, 2020 Findings of Fact,
Conclusions of Law, and Order Granting Defendants' Motion for
Summary Judgment (Order Granting Summary Judgment), and
1 The Honorable Henry T. Nakamoto presided. NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
(2) November 12, 2020 order denying the Schmidts' motion to
amend and correct the Order Granting Summary Judgment "to
Conform to the [Hawai‘i] Supreme Court Decision Dated November 8,
2019, Filed in this Court on December 4, 2019 as Document
No. 169, and the December 3, 2019 [Hawaiʻi] Supreme Court
Judgment on Appeal, as Document No. 171, Filed February 14, 2020
[Dkt 173]" (Order Denying Motion to Amend).
On appeal, the Schmidts contend the circuit court
erred in concluding they were unable to pursue a claim under
Hawai‘i Revised Statutes (HRS) Chapter 651C, also known as the
Hawai‘i Uniform Fraudulent Transfers Act (HUFTA), once their
judgment against original debtor Realty Finance, Inc. (RFI)
expired.
Upon careful review of the record and the briefs
submitted by the parties and having given due consideration to
the issues raised and the arguments advanced, we resolve the
points of error as discussed below, and affirm.
The background underlying this case spans over 20
years and includes three appeals. Briefly, RFI was a wholly
owned subsidiary of HSC, Inc. Richard and Eleanor Henderson
(Hendersons) were officers and directors of HSC. Richard and
family members owned 70 percent of HSC.
RFI obtained a foreclosure judgment against the
Schmidts. In 2000, after receiving the foreclosure sale
2 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
proceeds, RFI transferred funds to the Hendersons, and
transferred funds to a law firm to satisfy an HSC debt.
Following the transfers, RFI became insolvent.
In 2004, judgment was entered in favor of the Schmidts
and against RFI for "$537,258.66, constituting the surplus of
the foreclosure sale proceeds" (2004 Judgment). In 2006, the
Schmidts filed a first amended complaint (2006 Complaint)
against HSC and the Hendersons claiming "RFI removed or
concealed assets and thereby became insolvent shortly after the
transfers were made and shortly after RFI received the mortgage
sale proceeds from" the Schmidts. In the 2006 Complaint, the
Schmidts relied on the 2004 Judgment to establish they were
creditors of RFI.
Multiple appeals occurred. In the third appeal, the
Hawai‘i Supreme Court determined the Schmidts timely raised their
HUFTA claims, and remanded the case to the circuit court.
Schmidt v. HSC, Inc., 145 Hawaiʻi 351, 362, 452 P.3d 348, 359
(2019). On remand, the circuit court issued its Order Granting
Summary Judgment, ruling the Schmidts were barred from pursuing
their HUFTA claim because "[t]he 2004 Judgment was the only
basis on which the Schmidts claimed to be creditors of RFI" and
the Schmidts "are no longer 'creditors' of RFI as their 2004
Judgment was not extended, and therefore, expired as a matter of
law under HRS § 657-5."
3 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
Here, before this court, the Schmidts raise seven
points of error, 2 which we consolidate for discussion as
2 The Schmidts' seven points of error are as follows:
1. "The trial court committed reversible error granting HSC and Henderson's 12 June 2020 motion for summary judgment that Schmidts' UFTA claim was no longer valid as their judgment against the transferor RFI expired, thereby terminating their UFTA claim";
2. "The trial court committed reversible error refusing to follow [Hawaiʻi] Supreme Court decision in Schmidt v. HSC, Inc., 145 Haw. 351, 452 P.3d 348 (2019) (Schmidt III) in which the case was remanded for the second time, holding that the Schmidts' UFTA claim was not barred by the one[-]year statute of limitations";
3. "The trial court committed reversible error denying Schmidts' 14 February 2020 motion to amend and correct the 19 October 2016 FOF, COL, order and judgment to conform with the [Hawaiʻi] Supreme Court decision in Schmidt III";
4. "The trial court committed reversible error in FOF No. 3 on 12 November 2020 in 20 ROA 22 at pages 2-3";
5. "The trial court committed reversible error in COL Nos. 1, 2-4 and 5 when it filed the FOF, COL and order granting Defendants' motion for summary judgment on 12 November 2020";
6. "The trial court committed reversible error in filing the 12 November 2020 order granting the Defendants HSC and Henderson's motion for summary judgment which appears in 20 ROA 222 @ page 4 and which appears also in Appendix 1 incorporated herein by reference as if fully set forth herein"; and
7. "The trial court committed reversible error filing the Final Judgment on 5 March 2021, a copy of which is appended in Appendix 11."
(Some emphasis omitted.) The Schmidts do not raise specific arguments regarding their challenge to findings of fact (FOF) 3 and conclusions of law (COL) 1-5. Nonetheless, based on our decision below, FOF 3 was not clearly erroneous and COL 1-5 were not wrong.
In the argument section of their opening brief, the Schmidts discuss due process and equal protection violations. The Schmidts, however, do not raise these issues in their points of error or cite to where in the record they raised these issues before the circuit court. Hawaiʻi Rules of Appellate Procedure (HRAP) Rule 28(b)(4). Thus, we deem these issues waived. HRAP Rule 28(b)(4); Onaka v. Onaka, 112 Hawai‘i 374, 387, 146 P.3d 89, 102 (2006) (explaining "[w]e have repeatedly warned that an appellate court will not sift through a voluminous record" where appellant fails to provide citations to the record).
4 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
asserting (1) the circuit court erred in determining their HUFTA
claim was no longer valid, and (2) the law of the case doctrine
rendered the Order Granting Summary Judgment moot.
(1) The Schmidts contend the circuit court erred in
determining their HUFTA claim was not viable because a judgment
is not required to pursue a HUFTA claim. Although a judgment is
not required to pursue a HUFTA claim, under HRS § 651C-7 (2016),
being a creditor is.
HUFTA's relief provision, HRS § 651C-7, allows a
creditor to seek relief from transfers of funds to satisfy a
claim:
(a) In any action for relief against a transfer or obligation under this chapter, a creditor, subject to the limitations provided in section 651C-8, may obtain:
(1) Avoidance of the transfer or obligation to the extent necessary to satisfy the creditor's claim;
. . . .
(b) If a creditor has obtained a judgment on a claim against the debtor, the creditor may, if the court so orders, levy execution on the asset transferred or its proceeds.
(Emphases added and formatting altered.) A creditor is defined
as "a person who has a claim against a debtor." HRS § 651C-1
(2016).
Again, the Schmidts relied on the 2004 Judgment in
their 2006 Complaint to establish they were creditors of RFI,
i.e., had a claim against RFI. The Schmidts, however, did not
seek to extend the 2004 Judgment and, thus, the 2004 Judgment
5 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
expired in 2014. HRS § 657-5 (2016). 3 An expired judgment is
presumed "paid and discharged." Id.; Realty Fin., Inc. v.
Schmidt, 104 Hawai‘i 191, 86 P.3d 1000, No. 23441, 2004 WL
541878, at *6, (Haw. Mar. 18, 2004) (mem. op.) (citing
Restatement (Second) Judgments § 18 cmt. a (2003)) (noting
"[w]hen the plaintiff recovers a valid and final personal
judgment, his original claim is extinguished and rights upon the
judgment are substituted for it").
In 2016, the circuit court entered an order deeming
the 2004 Judgment discharged. In its order, the circuit court
stated the 2004 Judgment "was entered more than ten years ago,
and no extension of the 2004 Judgment was sought by [the
Schmidts]. Under HRS § 657-5, the 2004 Judgment, with all the
rights and remedies appurtenant thereto, is conclusively deemed
3 HRS § 657-5 provides a judgment is presumed paid and discharged after 10 years unless an extension of the judgment was granted:
Domestic judgments and decrees. Unless an extension is granted, every judgment and decree of any court of the State shall be presumed to be paid and discharged at the expiration of ten years after the judgment or decree was rendered. No action shall be commenced after the expiration of ten years from the date a judgment or decree was rendered or extended. No extension of a judgment or decree shall be granted unless the extension is sought within ten years of the date of the original judgment or decree was rendered. A court shall not extend any judgment of decree beyond twenty years from the date of the original judgment or decree. No extension shall be granted without notice and the filing of a non-hearing motion or a hearing motion to extend the life of the judgment or decree.
(Emphasis added.)
6 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
paid and discharged" citing Int'l Sav. & Loan Ass'n v. Wiig, 82
Hawai‘i 197, 199, 921 P.2d 117, 119 (1996).
Once the 2004 Judgment was considered discharged, the
Schmidts lost their status as creditors of RFI. And the
Schmidts did not show there was another basis for being
creditors of RFI. Because the Schmidts were no longer creditors
of RFI, they could not sustain their HUFTA claim in the 2006
Complaint.
Thus, the circuit court did not err in granting
summary judgment.
(2) Next, the Schmidts contend the circuit court
erred in determining their HUFTA claim was not viable because
the law of the case rendered the "very tardy motion for summary
judgment under [Hawai‘i Rules of Civil Procedure] Rule 56 moot."
Contrary to the Schmidts' argument, the law of the case doctrine
does not render the Order Granting Summary Judgment moot.
Pursuant to the law of the case doctrine, "a
determination of a question of law made by an appellate court
. . . may not be disputed by a reopening of the question at a
later stage of [the] litigation." Hussey v. Say, 139 Hawai‘i
181, 186, 384 P.3d 1282, 1287 (2016) (quoting Tabieros v. Clark
Equip. Co., 85 Hawaiʻi 336, 352 n.8, 944 P.2d 1279, 1295 n.8
(1997)).
7 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
Here, the issue of whether the Schmidts' HUFTA claim
remained viable once the 2004 Judgment expired was not
previously addressed, and the Hawai‘i Supreme Court specifically
declined to address this issue in the third appeal. Schmidt,
145 Hawai‘i at 360, 452 P.3d at 357.
Thus, contrary to the Schmidts' argument, the law of
the case doctrine did not render the Order Granting Summary
Judgment moot.
Based on the foregoing, we affirm the November 12,
2020 Order Granting Summary Judgment and November 12, 2020 Order
Denying Motion to Amend.
DATED: Honolulu, Hawai‘i, September 25, 2024.
On the briefs: /s/ Keith K. Hiraoka Presiding Judge R. Steven Geshell, for Plaintiffs-Appellants. /s/ Clyde J. Wadsworth Associate Judge Paul Alston, Madisson L. Heinze, /s/ Sonja M.P. McCullen (Dentons), Associate Judge for Defendants-Appellees.