Bank of Hawaii v. Mostoufi ( 2023 )

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
05-MAY-2023
08:08 AM
Dkt. 68 SO
NO. CAAP-XX-XXXXXXX
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI#I
BANK OF HAWAII, Plaintiff-Appellee,
v.
HOSSAIN MOSTOUFI; MITRA MOSTOUFI; BRASHER'S SACRAMENTO AUTO
AUCTION, INC., DIRECTOR OF BUDGET AND FISCAL SERVICES, CITY AND
COUNTY OF HONOLULU, Defendants-Appellants,
and
JOHN DOES 1-50; JANE DOES 1-50; DOE PARTNERSHIPS 1-50; DOE
CORPORATIONS 1-50; DOE "NON-PROFIT CORPORATIONS 1-50; and DOE
GOVERNMENTAL UNITS 1-50, Defendants
APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CIVIL NO. 1CC111001366)
SUMMARY DISPOSITION ORDER
(By: Ginoza, Chief Judge, Hiraoka and McCullen, JJ.)
Defendants-Appellants Hossain Mostoufi and Mitra
Mostoufi (collectively, the Mostoufis) appeal from: (1) the order
granting the motion filed by Plaintiff-Appellee Bank of Hawaii
(BOH) to confirm the foreclosure sale, approve the commissioner's
report, award attorneys' fees and costs, enter a deficiency
judgment, and issue a writ of possession (Order Confirming Sale);
and (2) the judgment confirming the foreclosure sale (Judgment
Confirming Sale). Both were entered by the Circuit Court of the
First Circuit on November 26, 2018.1 For the reasons explained
below, we affirm the Order Confirming Sale and the Judgment
1
The Honorable Dean E. Ochiai presided.
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Confirming Sale, without prejudice to the Mostoufis contesting
the amount of any deficiency judgment should BOH move for entry
of a deficiency judgment against either of them.
BOH filed the complaint below on July 5, 2011. BOH
made two loans to Hossain.2 Each loan was secured by a mortgage
on real property (the Property) owned by the Mostoufis.3 Hossain
defaulted on the loans. BOH sought to foreclose on the
mortgages. The Mostoufis answered the complaint, denied BOH's
allegations, and asserted various affirmative defenses.
BOH filed a motion for summary judgment and
interlocutory decree of foreclosure on March 2, 2018. On
April 17, 2018, the circuit court entered findings of fact,
conclusions of law, and an order granting the motion and
appointing a commissioner to sell the Property (Foreclosure
Order). The Foreclosure Judgment was entered on May 11, 2018.
The Mostoufis did not appeal from the Foreclosure Judgment.
The commissioner filed a report on August 15, 2018.
BOH was the only bidder at the foreclosure auction. On
September 21, 2018, BOH moved for approval of the commissioner's
report, confirmation of the foreclosure sale, award of attorneys'
fees and costs, a deficiency judgment, and a writ of possession.
The Order Confirming Sale and the Judgment Confirming Sale were
entered on November 26, 2018. This appeal followed.
The Mostoufis contend that the circuit court erred
because: (1) it didn't determine the actual value of the
foreclosed property before ordering entry of a deficiency
judgment; and (2) BOH's motion to recover its attorneys' fees and
costs incurred to obtain the Foreclosure Judgment was untimely.
We review questions of law de novo under the
right/wrong standard. HawaiiUSA Fed. Credit Union v. Monalim,
2
This case was the subject of two prior appeals: Bank of Hawaii v.
Mostoufi, No. CAAP-XX-XXXXXXX, 2016 WL 3615664 (Haw. App. June 30, 2016)
(SDO); and Bank of Hawaii v. Mostoufi, No. CAAP-XX-XXXXXXX, 2016 WL 3615334(Haw. App. June 30, 2016) (SDO). We mention only the facts and procedural
history relevant to this third appeal.
3
Hossain and Mitra are siblings.
2
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
147 Hawai#i 33, 40, 464 P.3d 821, 828 (2020), cert. denied sub
nom. Monalim v. HawaiiUSA Fed. Credit Union, 141 S. Ct. 1059(Mem.), 208 L. Ed. 2d 525 (Jan. 11, 2021). A mortgage
foreclosure is a proceeding in equity. Id. at 41, 464 P.3d at
829. We review equitable relief for abuse of discretion; a trial
court abuses its discretion if it clearly exceeds the bounds of
reason or disregards rules or principles of law or practice to
the substantial detriment of the appellant. Id. at 40, 464 P.3d
at 828.
(1) The Mostoufis argue that the circuit court erred
by failing to determine the actual value of the Property before
ordering entry of a deficiency judgment.
HRS § 667-1.5 (2016) "confers on the court specific
authority to render a deficiency judgment, as an incident to the
foreclosure." Monalim, 147 Hawai#i at 47, 464 P.3d at 835
(internal quotation marks omitted) (quoting Bank of Honolulu,
N.A. v. Anderson, 3 Haw. App. 545, 549, 654 P.2d 1370, 1374
(1982)). HRS § 667-51 (2016) provides, in relevant part:
(a) Without limiting the class of orders not specified in
section 641-1 from which appeals may also be taken, the
following orders entered in a foreclosure case shall be
final and appealable:
(1) A judgment entered on a decree of foreclosure,
and if the judgment incorporates an order of
sale or an adjudication of a movant's right to a
deficiency judgment, or both, then the order of
sale or the adjudication of liability for the
deficiency judgment also shall be deemed final
and appealable;
(2) A judgment entered on an order confirming the
sale of the foreclosed property, if the circuit
court expressly finds that no just reason for
delay exists, and certifies the judgment as
final pursuant to rule 54(b) of the Hawaii rules
of civil procedure; and
(3) A deficiency judgment; provided that no appeal
from a deficiency judgment shall raise issues
relating to the judgment debtor's liability for
the deficiency judgment (as opposed to the
amount of the deficiency judgment), nor shall
the appeal affect the finality of the transfer
of title to the foreclosed property pursuant to
the order confirming sale.
3
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
(Emphasis added.) In this case, neither the Foreclosure Judgment
nor the Judgment Confirming Sale liquidated the amount of any
deficiency. The circuit court hasn't entered a deficiency
judgment against the Mostoufis under HRS § 667-51(a)(3). Should
BOH move for entry of a deficiency judgment, the Mostoufis could
then "request a determination of the fair market value of the
real estate as of the date of the foreclosure sale." Monalim,
147 Hawai#i at 49, 464 P.3d at 837 (cleaned up).4 Accordingly,
we conclude that the Mostoufis' first point of error is
premature. It may be raised, if appropriate, on an appeal from
any deficiency judgment that may be entered by the circuit court
in the future.
(2) The Mostoufis argue that BOH's motion to recover
its attorneys' fees and costs connected with the Foreclosure
Judgment was untimely, because BOH didn't file the motion within
fourteen days after entry of the judgment as required by Hawai#i
Rules of Civil Procedure (HRCP) Rule 54(d).
HRCP Rule 54(d)(2) provides, in relevant part:
(A) Claims for attorneys' fees and related
nontaxable expenses shall be made by motion unless the
substantive law governing the action provides for the
recovery of such fees as an element of damages to be proved
at trial.
(B) Unless otherwise provided by statute or order of
the court, the motion must be filed and served no later than
14 days after entry of an appealable order or judgment[.]
(Emphasis added.)
4
In Monalim, the supreme court adopted a new method of calculating
a deficiency judgment allowing "the deficiency defendant the right to insist
that the greater of the fair market value of the real estate or the
foreclosure sale price be used in calculating the deficiency." 147 Hawai#i at
45, 464 P.3d at 833 (cleaned up). The new right applied prospectively, "to
foreclosure cases in which a deficiency judgment is first entered after the
date of" the supreme court's opinion. Id. at 54, 464 P.3d at 842. In this
case, the record on appeal does not reflect entry of a deficiency judgment;
the right recognized in Monalim would thus apply to any future deficiency
judgment against the Mostoufis.
4
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
The Foreclosure Order stated:
10. . . . At the hearing to consider confirmation of
the foreclosure sale, . . . there shall be determined . . .
the amount of the attorneys' fees and costs of [BOH], and
the final payment of the proceeds of the foreclosure sale
shall be directed.
BOH was allowed, under the Foreclosure Order, to file its motion
for attorneys' fees connected with the Foreclosure Judgment as
part of its motion for confirmation of the foreclosure sale. The
Mostoufis' second point of error is without merit.
Based upon the foregoing, we affirm the circuit court's
"Order Granting Plaintiff's Motion for: (1) Confirmation of Sale;
(2) Approval of Commissioner's Report; (3) Attorneys' Fees and
Costs; (4) Deficiency Judgment; and (5) Writ of Possession" and
the "Final Judgment," without prejudice to the Mostoufis
contesting the amount of any deficiency judgment should BOH move
for entry of a deficiency judgment against either of them.5
DATED: Honolulu, Hawai#i, May 5, 2023.
On the briefs:
/s/ Lisa M. Ginoza
Gary Victor Dubin, Chief Judge
Frederick J. Arensmeyer,
for Defendants-Appellants /s/ Keith K. Hiraoka
Hossain Mostoufi and Mitra Associate Judge
Mostoufi.
/s/ Sonja M.P. McCullen
J. Blaine Rogers, Associate Judge
Jenny J.N.A. Nakamoto,
Mitzi A. Lee,
for Plaintiff-Appellee
Bank of Hawaii.
5
The parties do not raise, and we express no opinion on, the issue
of whether Mitra can be a debtor on any deficiency judgment.
5