U.S. Bank National Association v. Harada

• Court: Hawaii Intermediate Court of Appeals
• Decided: April 30, 2026
• Docket: CAAP-24-0000071
• Status: Published

Opinion

NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER

Electronically Filed Intermediate Court of Appeals CAAP-XX-XXXXXXX 30-APR-2026 08:36 AM Dkt. 75 SO

NO. CAAP-XX-XXXXXXX

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAIʻI

U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE, SUCCESSOR IN INTEREST TO BANK OF AMERICA NATIONAL ASSOCIATION, AS TRUSTEE, SUCCESSOR BY MERGER TO LASALLE BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR STRUCTURED ASSET INVESTMENT LOAN TRUST MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2004-7, Plaintiff-Appellee, v. BRUCE MARTIN HARADA, Defendant-Appellee, and TEREEN TERUKO HARADA, Defendant-Appellant, and VILLAGES OF KAPOLEI ASSOCIATION; HAWAIʻI HOUSING FINANCE AND DEVELOPMENT CORPORATION; STATE OF HAWAIʻI-DEPARTMENT OF TAXATION, Defendants-Appellees, and DOES 1 through 20, inclusive, Defendants.

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT (CASE NO. 1CC121001484)

SUMMARY DISPOSITION ORDER (By: Leonard, Presiding Judge, Wadsworth and McCullen, JJ.)

Defendant-Appellant Tereen Teruko Harada appeals from

the Circuit Court of the First Circuit's January 5, 2024 "Order

Approving Commissioner's Report and Granting [Plaintiff-Appellee NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER

U.S. Bank National Association's] Renewed Motion for

Confirmation of Foreclosure Sale, Allowance of Costs,

Commissions and Fees, Distribution of Proceeds, Directing

Conveyance Filed on September 19, 2023" (Order Confirming

Foreclosure Sale) and Judgment. 1 (Formatting altered.)

On appeal, Harada contends the circuit court erred in

confirming the judicial foreclosure sale of real property in

Kapolei (the Property) and erred in failing to stay proceedings

to re-market the Property.

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 this

appeal as discussed below and affirm.

In March 2004, Harada's husband at the time executed a

$180,000.00 adjustable-rate note secured by a mortgage on the

Property, and had defaulted by September 2007. A complaint to

foreclose was filed in May 2012.

In December 2022, U.S. Bank moved for summary judgment

and an interlocutory decree of foreclosure on the Property. In

January 2023, Defendant Hawaiʻi Housing Finance and Development

Corporation (HHFDC) moved for partial summary judgment to

1 The Honorable James H. Ashford presided until January 1, 2024, when the case was reassigned to the Honorable Shirley M. Kawamura, who entered the appealed-from order and judgment consistent with Judge Ashford's December 1, 2023 oral ruling.

2 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER

establish its priority for its shared appreciation equity lien

(SAE lien) on the Property.

In March 2023, the circuit court granted U.S. Bank's

motion, appointed Matthew S. Sumstine as Commissioner

(Commissioner Sumstine), and ordered the Property sold at

auction. The circuit court also found that the "Mortgage

constitutes a first priority interest" in the Property, "subject

only to the interest of Defendant [HHFDC]" and that the "amounts

owed to HHFDC shall be determined at a subsequent confirmation

hearing."

The circuit court ordered that, following the sale of

the Property, "[a] further hearing shall be held in this action

to consider confirmation of the foreclosure sale," where it

"shall hear proof of the claim of any other party and shall

determine the priority among the claims of the parties besides

[U.S. Bank]." The circuit court further ordered that "[a]t the

hearing, the Court may also allow reopening of the auction by

accepting higher bids."

Following the circuit court's order, Commissioner

Sumstine prepared a fact sheet (the Fact Sheet), which was "made

available to all interested parties." The Fact Sheet described

the Property and pertinent financial information. Importantly,

in addition to listing the amount due under the note and

mortgage as an estimated $497,899.95 as of May 27, 2023, the

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Fact Sheet included the following advisement highlighted in

yellow:

[Hawaiʻi] Housing Finance and Development Corporation (HHFDC) Holds a senior/priority interest which is not disputed and owed approximately $250,000 as of April 4, 2023.

After advertising the auction three times in the

Honolulu Star-Advertiser newspaper, Commissioner Sumstine

received nineteen telephone and email inquiries, and twenty

people attended the two open houses. Then, on May 17, 2023, the

Property was sold at auction to the highest bidder, a third-

party purchaser, Ascend Properties LLC, for $475,000.00. Four

bidders attended the auction, making a total of eighteen bids.

U.S. Bank moved to confirm the sale, which Harada

opposed. Before the circuit court could rule on the motion,

however, U.S. Bank withdrew its motion as "incomplete" and

"filed in error."

The circuit court then granted HHFDC's motion for

partial summary judgment, ordering that "HHFDC is entitled to

judgment and distribution of its SAE lien from foreclosure

proceeds after payment of the Commissioner's fees and costs,

prior to all others." The circuit court subsequently determined

that the amount due on HHFDC's SAE lien was $250,442.04.

In September 2023, U.S. Bank renewed its motion to

confirm the foreclosure sale. However, instead of seeking to

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confirm the May 17, 2023 sale of the Property for $475,000.00,

U.S. Bank argued that bidding should be reopened. U.S. Bank

acknowledged the sale should not have gone forward in the first

place because "[b]idders at the foreclosure auction may not have

understood" that "the confirmed buyer will receive title to the

Property free and clear of both [U.S. Bank]'s mortgage and the

HHFDC's senior lien in return for the confirmed sale price" and

that bidders "may have expected that they were bidding on the

Property being free and clear of Plaintiff's mortgage, but still

subject to the continuing lien of the HHFDC, which would then

need to be paid at closing." Therefore, U.S. Bank argued that

"any interested parties who wish to re-open bidding and [sic]

should be allowed as a matter of equity to obtain the highest

possible purchase price for the Property in the current market

conditions."

Harada opposed, arguing that merely reopening the bid

at the confirmation hearing did not satisfy the law's

requirement that "the mortgagee take and use all fair and

reasonable means to obtain the best price for the foreclosed

upon property." Instead, Harada argued, "[t]o obtain the best

price for the Property, the Property must be re-marketed with

current, accurate, and reliable information. Re-marketing

includes re-publication, open houses, and re-public auctioning

of the sale of the Property."

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U.S. Bank replied, arguing that its duty had been

satisfied because all interested bidders were notified by

Commissioner Sumstine that HHFDC's senior SAE lien "will be paid

from the sale proceeds and released as part of the confirmed

sale" and "interested bidders are prepared to reopen the bidding

process." U.S. Bank's reply included, as an exhibit, an email

exchange between U.S. Bank's attorney and Commissioner Sumstine,

in which the latter explained, "I have reached out to my normal

email list and am cross referencing those who emailed me who may

not be on the list. Several have said they will reopen."

On December 1, 2023, the circuit court held a hearing

on U.S. Bank's renewed motion to confirm. The record on appeal

does not contain a transcript of the hearing. 2 The circuit

court's minutes reflect that attorneys for U.S. Bank, Harada,

Ascend Properties, LLC, and the other named Defendants were

present and that "counsel had no objections to the bidding being

re-opened." Bidding was reopened and Commissioner Sumstine

reported the results of the reopened bid. Argument was then

2 Hawaiʻi Rules of Appellate Procedure (HRAP) Rule 10(b) requires an appellant to request transcripts of court proceedings "[w]hen an appellant desires to raise any point on appeal that requires consideration of the oral proceedings before the court appealed from." Under HRAP Rule 11(a), "[i]t is the responsibility of each appellant to provide a record, as defined in Rule 10 of these Rules and the Hawaiʻi Court Records Rules, that is sufficient to review the points asserted and to pursue appropriate proceedings in the court or agency appealed from to correct any omission."

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heard, after which the circuit court orally granted U.S. Bank's

renewed motion to confirm the foreclosure sale.

The circuit court entered its written order on

January 5, 2024, confirming the foreclosure sale to the highest

bidder, a third-party purchaser, Sherwin Siu Chin Louie, for

$655,000.00. Judgment was entered the same day.

Harada contends the circuit court erred when it found

that "the price obtained by the Commissioner fairly represents

the market value of the Mortgaged Property under the

circumstances of the sale and present economic conditions and

that no other person indicated any interest in submitting a

higher bid" because U.S. Bank (and Commissioner Sumstine) did

not discharge its duty to use all " fair and reasonable means in

obtaining the best prices for the property on sale." (Emphasis

omitted.) See generally Ulrich v. Sec. Inv. Co., 35 Haw. 158,

168 (Haw. Terr. 1939), aff'd, Kondaur Cap. Corp. v. Matsuyoshi,

136 Hawaiʻi 227, 229, 361 P.3d 454, 456 (2015); Hungate v. Law

Off. of David B. Rosen, 139 Hawaiʻi 394, 409, 391 P.3d 1, 16

(2017), abrogated on other grounds by, State ex rel. Shikada v.

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

According to Harada, "[t]o obtain the best price for

the Property, and respect the rights of Defendant-Appellant

Tereen Harada, the confirmation hearing should have been stayed,

the Property re-marketed with current, accurate, and reliable

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information. Re-marketing would include re-publication, open

houses, and re-public auctioning of the sale of the Property."

We review the circuit court's confirmation of a

judicial foreclosure sale for abuse of discretion:

The lower court's authority to confirm a judicial sale is a matter of equitable discretion. If the highest bid is so grossly inadequate as to shock the conscience, the court should refuse to confirm. In exercising its discretion, the court should act in the interest of fairness and prudence and with just regard for the rights of all concerned and the stability of judicial sales.

Hoge v. Kane, 4 Haw. App. 533, 540, 670 P.2d 36, 40 (App. 1983)

(citation omitted). "Hence, the exercise of discretion by the

lower court judge will not be disturbed on appeal except for

abuse." Indus. Mortg. Co. v. Smith, 94 Hawaiʻi 502, 510, 17 P.3d

851, 859 (App. 2001) (citation modified).

To the extent Harada argues the circuit court abused

its discretion by confirming the sale despite U.S. Bank and

Commissioner Sumstine allegedly not "us[ing] all fair and

reasonable means in obtaining the best prices for the property

on sale" as required under Ulrich, that argument fails because

Ulrich does not apply to judicial foreclosure sales. See, e.g.,

Kondaur, 136 Hawaiʻi at 229, 235, 361 P.3d at 456, 462 ("We hold

that the duties set forth in Ulrich remain viable law and are

applicable to non-judicial foreclosures of real property

mortgages." (Emphasis added.)).

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Moreover, to the extent Harada argues the circuit

court abused its discretion by declining to re-market the

Property because doing so could yield a higher price, this court

has previously rejected similar arguments. See Brent v.

Staveris Dev. Corp., 7 Haw. App. 40, 46-47, 741 P.2d 722, 726-27

(App. 1987); Smith, 94 Hawaiʻi at 511-12, 17 P.3d at 860-61.

Instead, this court held, "under circumstances conceptually

similar to those we face here, that the appellant's conjecture

about the higher price a new sale might yield was just that,

conjecture, and insufficient to establish an abuse of discretion

on the part of the lower court[.]" Smith, 94 Hawaiʻi at 512, 17

P.3d at 861 (citing Brent, 7 Haw. App. at 46-47, 741 P.2d at

726-27). As this court has explained,

The circumstances of this case reduce to pure conjecture [the appellant's] argument that a resale after further notice would ensure that a substantially greater sale price would have been obtained. . . . Even if a new sale had been ordered by the lower court, there is no guarantee that more interest in the property would have been generated, or that the successful bid at the new auction would have been as high or higher than [the confirmed] bid. Moreover, a new sale would have entailed more costs for the parties involved.

Id. (quoting Brent, 7 Haw. App. at 46-47, 741 P.2d at 726-27).

In any event, Harada has not shown that the confirmed

sale price of $655,000.00 is "so grossly inadequate as to shock

the conscience." Hoge, 4 Haw. App. at 540, 670 P.2d at 40;

HawaiiUSA Fed. Credit Union v. Monalim, 147 Hawaiʻi 33, 45, 464

P.3d 821, 833 (2020) (explaining judicial sales often result in

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a price below fair market value as a result of the forced nature

of the sale); Wodehouse v. Hawaiian Tr. Co., 32 Haw. 835, 852

(Haw. Terr. 1933). The original bid was $475,000.00; after the

bidding was reopened, the sales price increased $180,000.00 to

$655,000.00. And Harada's opening brief does not point to any

evidence of the fair market value of the Property so as to

demonstrate that $655,000.00 shocks the conscience.

Accordingly, the circuit court did not abuse its

discretion when it confirmed the sale of the Property.

Based on the foregoing, we affirm the circuit court's

January 5, 2024 Order Confirming Foreclosure Sale and Judgment.

DATED: Honolulu, Hawaiʻi, April 30, 2026.

On the briefs: /s/ Katherine G. Leonard Presiding Judge Stephen J.T. Chow (Fukunaga Matayoshi Ching & /s/ Clyde J. Wadsworth Kon-Herrera), and Associate Judge Leighton K. Lee, for Defendant-Appellant. /s/ Sonja M.P. McCullen Associate Judge Edmund K. Saffery, Christopher P. St. Sure, Kenory E. Khuy, (Goodsill Anderson Quinn & Stifel), for Plaintiff-Appellee.