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Oral Argument Before the Hawaii Supreme Court

Nos. SCWC-13-0002977, SCWC-13-0002610 AND SCWC-14-0000556, Thursday, June 18, 2015, 11:15 A.M.

GERALD K. MOUNT, JR. and JANE R. MOUNT,Respondents/Plaintiffs/Counterclaim Defendants/Appellees, vs. MARGARET APAO, Petitioner/Defendant/Appellant, and DIRK APAO as Co-Personal Representative of the ESTATE OF ROSE MARIE ALVARO, deceased, Petitioner/Defendant/Counter-claim Plaintiff/Third-Party Plaintiff-Appellant, and SESHA LOVELACE, as Co-Personal Representative of the ESTATE OF ROSE MARIE ALVARO, deceased, Respondent/Defendant/Cross-Claim Defendant/Appellee, and U.S. BANK NATIONAL ASSOCIATION, A NATIONAL ASSOCIATION AS TRUSTEE FOR THE STRUCTURED ASSET SECURITIES CORPORATION MORTGAGE PASS-THROUGH CERTIFICATES 2005-SC1, Respondent/Third-Party Defendant/Cross-Claim Plaintiff/Appellee.

The above-captioned case has been set for argument on the merits at:

Supreme Court Courtroom
Aliʻiolani Hale, 2nd Floor
417 South King Street
Honolulu, HI 96813

Attorneys for Petitioners Apao, et al.:

Gary Victor Dubin and Frederick J. Arensmeyer

Attorneys for Respondents Mounts:

Michael C. Bird, Summer H. Kaiawe, Robert E. Chapman, and Mary Martin

Attorneys for Respondent U.S. Bank:

Paul Alston, Pamela W. Bunn, and J. Blaine Rogers

NOTE: Order accepting Application for Writ of Certiorari, filed 04/23/15.

COURT: MER, CJ; PAN, SSM, RWP, and MDW, JJ.

[ Listen to the entire audio recording in mp3 format ]

Brief Description:

This consolidated appeal arises from an ejectment action initiated after a non-judicial foreclosure of real property pursuant to a power of sale. Petitioners Dirk Apao as personal representative of the Estate of Rose Marie Alvaro (“Estate”), deceased, and Margaret Apao (collectively, “the Apaos”), are beneficiaries of and the current and former personal representatives of the Estate.

In brief summary, the subject property passed through probate to the Apaos as co-personal representatives of the Estate, and subsequently went into default for non-payment of the mortgage. Margaret Apao resigned as co-personal representative and was replaced with beneficiary Sesha Lovelace (“Lovelace”). Thereafter, U.S. Bank notified Dirk Apao and Lovelace as co-personal representatives of its intent to initiate a non-judicial foreclosure proceeding over the subject property. Lovelace requested information concerning reinstatement of the loan under HRS § 667-5. U.S. Bank, through its mortgage servicer, refused to provide the requested information to Lovelace because it disputed her status as co-personal representative. Lovelace later resigned as co-personal representative, making Dirk Apao the sole personal representative.

The Mounts purchased the property at a public foreclosure auction for approximately $1.2 million, and filed a complaint in the Circuit Court of the First Circuit (“circuit court”) for ejectment and possession. Dirk Apao filed a counterclaim and third-party complaint against the Mounts and U.S. Bank, asserting that the non-judicial foreclosure is void as a result of the HRS § 667-5 violation, is not an exempt proceeding under the Hawai#i Probate Code, and is inequitable because the subject property is appraised at over $3 million. The parties submitted various motions for summary judgment, which the circuit court granted in favor of the Mounts and U.S. Bank as to all claims, reserving the issue of damages. The circuit court also entered a writ of possession and judgment in favor of the Mounts.

The Apaos appealed from nine orders and judgments of the circuit court, resulting in three separate appeals. One such appeal concerned the circuit court’s award of damages and attorneys’ fees and costs in favor of the Mounts and U.S. Bank while the initial appeal was pending before the Intermediate Court of Appeals (“ICA”).

The ICA consolidated the appeals and affirmed the circuit court’s grant of summary judgment and award of damages and attorneys’ fees and costs against the Apaos, concluding that the non-judicial foreclosure was an exempt proceeding under the Hawai#i Probate Code.

In their application, the Apaos present the following questions:

1. Did the [ICA] commit a grave error of law in concluding, without offering any legal analysis, that a non-judicial mortgage foreclosure conducted pursuant to former section 667-5 of the [HRS] was a “proceeding,” as that term is used in the Hawaii Probate Code, thereby exempting a mortgagee conducting a non-judicial foreclosure of a decedent’s mortgage from complying with the claims requirements of the Probate Code pursuant to Section 560:3-803(d)(1)?

2. Did the [ICA] commit grave errors of law and fact in affirming the Circuit Court’s entry of summary judgment against Petitioners Dirk Apao and Margaret Apao, where there was at the very least a genuine issue of material fact with respect to whether Respondent U.S. Bank complied with the requirements of former section 667-5(c)(1) of the [HRS], where the record demonstrates that the co-personal representative of the subject estate requested reinstatement figures from U.S. Bank prior to the subject non-judicial foreclosure, but none were provided to the estate?

3. Did the [ICA] commit grave error of law in affirming the Circuit Court’s issuance of a Writ of Possession prior to the entry of a final and appealable judgment, and worse, in completely failing to address Petitioners’ argument that the Circuit Court’s subsequent award of damages to respondents Gerald K. Mount, Jr. and Jane R. Mount resulted in an unlawful splitting of the Mounts’ claim for ejectment?

4. Did the [ICA] commit grave errors of law and fact in affirming the Circuit Court’s conclusion that Petitioner Dirk Apao’s counterclaim and third-party complaint was in the nature of assumpsit, and thereby awarded attorneys’ fees and costs to both Respondents, U.S. Bank and the Mounts, pursuant to Section 607-14 of the [HRS] — especially where (1) Petitioner Margaret Apao was not a party to the Counterclaim, (2) there was no contractual relationship or breach thereof asserted by Dirk Apao against the Mounts, and (3) all of the claims disputed between the Apaos and the Mounts sounded in tort?

5. Did the [ICA] commit grave error of law in affirming the Circuit Court’s award of damages on the Mount’s [sic] ejectment claim, which damages the Circuit Court’ [sic] measured in part by the Mounts’ rental of another, unrelated property?

6. Did the [ICA] commit grave error of law and fact in affirming the Circuit Court’s award of supplemental damages to the Mounts, who failed to mitigate those damages and benefited from their own misconduct?

This case concerns the rights of a personal representative to raise a statutory violation on behalf of an estate that accrued to a former co-personal representative with adverse interests.