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Oral Argument Before the Hawaii Supreme Court — SCWC-13-0000133

No. SCWC-13-0000133, Thursday, January 11, 2018, 10 a.m.

WELLS FARGO BANK, N.A. AS TRUSTEE FOR OPTION ONE MORTGAGE LOAN TRUST 2007-4 ASSET-BACKED CERTIFICATES, SERIES 2007-4, Petitioner/Plaintiff-Appellant, vs. DANIEL TSUKASA OMIYA, Respondent/ Defendant-Cross-Claimant-Appellee, and ASSOCIATION OF APARTMENT OWNERS OF ILIKAI APARTMENT BUILDING, Defendant/ Cross-Claim Defendant-Appellee, and JOHN DOES 1-20; JANE DOES 1-20; DOE PARTNERSHIPS 1-20; DOE CORPORATIONS 1-20, and DOE GOVERNMENTAL UNITS 1-20, Defendants.

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

Supreme Court Courtroom
Ali`iōlani Hale, 2nd Floor
417 South King Street
Honolulu, HI 96813

Attorney for Petitioner:

 Gary Y. Okuda

Attorneys for Respondent:

 Charles A. Price
 Michelle J. Bento

NOTE: Order accepting Application for Writ of Certiorari, filed 11/02/17.

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

[ Listen to the entire audio recording in mp3 format ]

Brief Description:

On August 18, 2010, the Association of Apartment Owners of Ilikai Apartment Building (AOAO) held a foreclosure sale on a unit owned by Petitioner Wells Fargo, N.A. (Wells Fargo).  Respondent Daniel Omiya (Omiya) purchased the unit for $15,000.  The AOAO executed a quitclaim deed to Omiya, which was recorded in the Land Court on September 15, 2010 and stamped with a new certificate of title number and the date and time.

 Wells Fargo filed a complaint on November 3, 2010 against the AOAO and Omiya seeking to regain title to the unit and alleging that the foreclosure sale had not been conducted in accordance with applicable law, that the AOAO had no power of sale rights, and that Omiya had not paid reasonable value for the unit.  Omiya moved for summary judgment, arguing that HRS § 501-118 prevents challenges to foreclosures after a new certificate has been issued.  Omiya asserted that the stamp on the quitclaim deed indicated a new certificate had been issued, that Wells Fargo made binding judicial admissions in its complaint as to the certificate, and that a bureaucratic delay explained why there was no hard copy of the certificate.  The circuit court granted summary judgment, and Wells Fargo appealed to the Intermediate Court of Appeals (ICA).

 A majority of the ICA held that there was no genuine issue of material fact as to Omiya’s ownership of the unit.  The majority reasoned that, under applicable law, a purchaser presents a deed containing certain information, the assistant registrar stamps the deed with the time and date it is received, and the deed is then considered registered from that time.  That happened in this case, the majority explained, and so, HRS § 501-118 prevented Wells Fargo from challenging the foreclosure; any delay in issuing the actual certificate was explained by a declaration submitted by Omiya.  The majority also determined that Wells Fargo was bound by its admissions.

 The dissent concluded that there was a genuine issue of material fact as to whether a certificate of title had been issued by the Land Court, the occurrence of which would have prevented a challenge to the foreclosure.  The dissent noted that a declaration submitted by Wells Fargo stated that the new certificate was only partially prepared and that a declaration submitted by Omiya indicated that the Land Court was nearly four years behind in producing certificates.  The dissent also concluded that there was a genuine issue of material fact as to the adequacy of the purchase price.

 In its application for a writ of certiorari, Wells Fargo argues that no physical certificate of title has been issued to Omiya and, thus, it should not be precluded from challenging the foreclosure.  Wells Fargo also argues that the difference between the price that Omiya paid for the unit and the tax-assessed value creates a genuine issue of material fact as to the adequacy of the purchase price.  Omiya responds that Wells Fargo’s admissions should control and that, where the lack of a hard copy of a certificate is the result of bureaucratic delay, HRS § 501-118 should still apply to prevent Wells Fargo’s challenge.  Omiya also asserts that the challenge to the purchase price is untimely raised, that Wells Fargo received notice of the foreclosure, and that he is an innocent purchaser.