Delapinia v. Nationstar Mortgage LLC.

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Electronically Filed
Supreme Court
SCWC-XX-XXXXXXX
25-OCT-2021
08:41 AM
Dkt. 48 OP

IN THE SUPREME COURT OF THE STATE OF HAWAI‘I

---o0o---

RAY A. DELAPINIA and ROBYN M. DELAPINIA,
Petitioners/Plaintiffs-Appellants,

vs.

NATIONSTAR MORTGAGE LLC; FEDERAL NATIONAL MORTGAGE
ASSOCIATION; TERRY LOUISE COLE; MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC.; AMERICAN SAVINGS BANK, F.S.B.,
Respondents/Defendants-Appellees.

SCWC-XX-XXXXXXX

CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-XX-XXXXXXX; CIV. NO. 2CC161000432)

OCTOBER 25, 2021

RECKTENWALD, C.J., NAKAYAMA, McKENNA, WILSON, JJ.,
AND CIRCUIT JUDGE WONG, IN PLACE OF POLLACK, J., RECUSED

OPINION OF THE COURT BY RECKTENWALD, C.J.

I. INTRODUCTION

In 2010, the plaintiffs’ Kihei property was foreclosed

by nonjudicial foreclosure under Hawai‘i Revised Statutes (HRS)
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Part I (since repealed). Several years later, the plaintiffs

sued for wrongful foreclosure and quiet title against various

defendants: their mortgagees, the subsequent purchaser of the

property, and the subsequent purchaser’s mortgagees. The

defendants moved for, and the circuit court granted, dismissal

of all claims. The Intermediate Court of Appeals (ICA), in a

published opinion, vacated in part but affirmed as to one

defendant: the subsequent purchaser’s mortgagee. Delapinia v.

Nationstar Mortgage LLC, 146 Hawai‘i 218, 458 P.3d 929 (Haw. Ct.

App. 2020).

We accepted the plaintiffs’ application for writ of

certiorari to consider two aspects of the ICA’s decision: First,

the ICA adopted the “tender rule,” a requirement under which a

plaintiff seeking to quiet title must plead that it can tender

the amount of indebtedness. We decline to opine whether the

tender rule applies in Hawai‘i wrongful foreclosure cases

generally. But we hold that it is inapplicable on these facts,

where the defendant asserting the rule against a quiet title

claim is the subsequent purchaser’s mortgagee, to whom the

plaintiff is not in debt. As the defendant who sought to assert

the tender rule was not the plaintiffs’ mortgagee, the

plaintiffs do not need to plead tender in order to establish

superior title as to that defendant.

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Second, this case requires us to consider whether

foreclosures that violate the power of sale are voidable or

void. Silva v. Lopez, 5 Haw. 262 (1884), suggests that such

wrongful foreclosures are void. However, we have considered

this question in other wrongful foreclosure contexts more

recently, and those cases favor protecting the reliance

interests of a bona fide purchaser. Accordingly, we hold that

wrongful foreclosures in violation of the power of sale are

voidable, and to the extent Silva is to the contrary, it is

overruled.

II. BACKGROUND

A. Circuit Court Proceedings

1. The Complaint

This case arises from several motions brought before

the Circuit Court of the Second Circuit 1 (circuit court) in the

Delapinias’ wrongful foreclosure suit: Nationstar Mortgage LLC

(Nationstar) and Federal National Mortgage Association’s (Fannie

Mae) (collectively, “Nationstar defendants”) motion for judgment

on the pleadings; defendant Terry Louise Cole’s motion to

dismiss, in which defendant American Savings Bank F.S.B (ASB)

joined (collectively, “Cole defendants”); and defendant Mortgage

Electronic Registration Systems, Inc.’s (MERS) motion to

1 The Honorable Rhonda I.L. Loo presided.

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dismiss. The circuit court granted all of the above motions

(although only the motions to dismiss are at issue on

certiorari), and accordingly, all facts alleged in the

plaintiffs’ First Amended Complaint (FAC) will be taken as true.

Goran Pleho, LLC v. Lacy, 144 Hawaiʻi 224, 236, 439 P.3d 176, 188

(2019).

The Delapinias alleged the following in the FAC. The

Delapinias owned property in Kihei, which was secured by

mortgage executed in 2007. “In 2010, Nationstar claimed to be

the assignee of the Mortgage . . . [and] claimed to be a

mortgagee or successor to a mortgagee entitled under HRS Chapter

667 Part I (2008) to exercise the power of sale in the

Mortgage.” In fact, “Nationstar was acting at the direction and

behest of Fannie Mae” and “did not satisfy the conditions

precedent to the valid exercise of that power.”

Nationstar, “purporting to act under the power of sale

in the Mortgage, executed a deed conveying the Property to

Fannie Mae,” but “[t]hat deed was void because Nationstar and

Fannie Mae, as the foreclosing mortgagee, did not comply with

the power of sale in the mortgage or the statute then governing

their exercise of the power of sale, HRS Chapter 667 Part I.”

The Delapinias identified the following violations of the power

of sale clause and of the statutes:

a) Plaintiffs were not served with a notice of acceleration

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that complied with Paragraph 22 of the Mortgage;
b) The notice of intention of foreclosure published by
Nationstar and Fannie Mae did not contain a description
of the Property as required by HRS Section 667-7(a)(1),
but merely published the address and Tax Map Key Number
of the Property, which did not constitute the
“description” contemplated by the statute;
c) The Notice did not offer buyers of the Property a
warranty that the putative mortgagee had the right to
sell or that the sale was conducted lawfully in
compliance with the applicable statute and the power of
sale;
d) No Defendant first advertised the notice of sale more
than 28 days before the proposed auction date as
required by HRS Section 667-7 (2008);
e) No Defendant used a Hawaii attorney to perform all of
the acts required by the power of sale, including but
not limited [to] having an attorney sign and give the
notice of sale to Plaintiffs and having an attorney who
conducted the sale executive the Affidavit of
Foreclosure;
f) No Defendant ever published any date on which the
Property was actually sold, in violation of Paragraph 22
of the Mortgage which stated that the mortgagee “shall
sell” at the time specified in the published notice;
g) No Defendant ever held an auction on a published date,
in violation of Paragraph 22 of the Mortgage which
stated that the mortgagee “shall sell” at the time
specified in the published notice;
h) No Defendant ever issued a written notice to the public
of any postponed auction date, despite the requirement
of Paragraph 15 of the Mortgage that “all notices” in
connection with the Mortgage be “in writing” and state
law requiring a “public announcement” of any
postponement;
i) The date when the Property was purportedly sold to
Nationstar or Fannie Mae (depending on whether one
believes the Affidavit of Foreclosure or the quitclaim
deed from Nationstar) was never published in a newspaper
or otherwise in writing to the public; and
j) No Defendant ever recorded a lawful Affidavit of
Foreclosure signed by the attorney conducting the
putative sale.

(Emphases in original).

Fannie Mae purchased the property, and subsequently

sold it to Cole by limited warranty deed. 2 But the Delapinias

2 The Delapinias also contest whether Cole was a bona fide
purchaser, as they argue subsequent purchasers should have been charged with
constructive notice of the defects that were inferable from the Foreclosure

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contended that both conveyances are “void and not merely

voidable” under Silva v. Lopez, 5 Haw. 262, 271 (1884), and Lee

v. HSBC Bank USA, 121 Hawaiʻi 287, 218 P.3d 775 (2009), because

of the statutory and contractual violations that rendered the

foreclosure wrongful. The plaintiffs therefore sought “the

‘classic remedy’ for a challenged nonjudicial foreclosure,”

return of title and possession, citing Santiago v. Tanaka, 137

Hawaiʻi 137, 154 n.33, 366 P.3d 612, 629 n.33 (2016).

The Delapinias brought two claims against the

defendants based on these allegations. In Count I (quiet

title), the Delapinias asked the court to quiet title in the

property in favor of the plaintiffs – except for the 2007

Mortgage, “which should remain on the Property when it is

returned to Plaintiffs” – ejectment of the third-party

purchaser, possession, and damages from the lost rental value.

In Count II (wrongful foreclosure), the Delapinias further

alleged that the Nationstar defendants failed to act “in

accordance with their duties as mortgagee”– since “no lawful

published auction ever occurred,” those duties continued. The

plaintiffs asked for compensatory and punitive damages on the

wrongful foreclosure count.

Affidavit. Whether Cole is in fact a bona fide purchaser is not at issue in
this appeal.

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2. Motions to Dismiss and for Judgment on the Pleadings

The Cole defendants moved to dismiss 3 the FAC under

Hawaiʻi Rules of Civil Procedure (HRCP) Rule 8(a) 4 and Rule

12(b)(6) 5 on the basis that they were protected by their status

as bona fide purchasers. 6 The Cole defendants pointed to this

court’s decisions in Santiago and Mount v. Apao, 139 Hawaiʻi 167,

384 P.3d 1268 (2016), 7 which they claim establish that “an

unlawful nonjudicial foreclosure is at most ‘voidable,’ unless

the property has been sold to innocent purchasers for value, in

which case the appropriate remedy is an award of damages.” As

pleaded, it was “apparent from the face of the pleading” that

the foreclosure was at most voidable, not void. Under Santiago

and Mount, the appropriate remedy when the property has been

conveyed to “innocent purchasers for value” is damages. It was

also “apparent from the face of the FAC” that Cole was a bona

fide purchaser.

The Delapinias argued in response that this court has

described “the classic remedy for such a cause of action [as]

3 The Nationstar defendants supported and joined in the arguments
set forth in this motion.

4 HRCP Rule 8(a) provides:

A pleading which sets forth a claim for relief . . . shall
contain (1) a short and plain statement of the claim showing that
the pleader is entitled to relief, and (2) a demand for judgment
for the relief the pleader seeks. Relief in the alternative or of
several different types may be demanded.

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return of title and possession.” (Emphasis omitted). Moreover,

the Delapinias contend Mount did not address the remedy when the

sale violated the power of sale clause, rather than the statute.

On the other hand, Silva “is on point and is

ultimately controlling here.” Per the plaintiffs, that case

stands for the principle that “if the power of sale was violated

by improper publication of notice of the sale, the sale is ‘void

and not merely voidable,’” quoting Silva, 5 Haw. at 271. They

maintained that Silva remains good law – cited approvingly by

Kondaur Cap. Corp. v. Matsuyoshi, 136 Hawai‘i 227, 240 n.26, 361

P.3d 454, 467 n.26 (2015), and Mount – and as a result, “[the]

foreclosure was void and conveyed nothing,” negating the Cole

5 HRCP Rule 12(b)(6) allows for the dismissal of complaints for
“failure to state a claim upon which relief can be granted.”

6 They also contended that the Delapinias’ claims were time-barred.
Likewise, the Nationstar defendants filed an answer to the FAC, largely
denying the allegations and asserting as a defense, among other things, the
statute of limitations. They subsequently moved for judgment on the
pleadings, or in the alternative for summary judgment, per HRCP Rule 12(c).
In that motion, they too argued that the Delpainias’ claims were time barred,
either by a two- or six-year statute of limitations. The motion also
reiterated the arguments that “an improperly completed non-judicial
foreclosure is voidable” not void. (Emphasis omitted). In the alternative,
they argued that laches barred recovery.

The Delapinias contended that the relevant statute of limitations
was twenty years.

The court circuit concluded that the two-year statute of
limitations applied and barred the claim.

7 Mount was decided after the FAC but before the relevant motions
from the defendants.

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defendants’ bona fide purchaser defense. (Original emphasis

altered).

MERS also moved to dismiss the FAC. It raised

substantially similar arguments regarding Cole’s bona fide

purchaser status, contending that the foreclosure sale cannot be

voided pursuant to Santiago and Mount. MERS asserted that

“citation to the [1884] Silva decision ignores the rulings in

both Mount and Santiago.” And, like the Cole defendants, MERS

argued that Cole was a bona fide purchaser because only notice

of pending litigation – not the record notice alleged in the

complaint – would have undermined the protection afforded to

third-party purchasers for value.

Further, MERS argued that “[w]hile this case should be

dismissed in its entirety against MERS based on Cole’s bona fide

purchaser defense, Plaintiffs’ underlying claims are equally

meritless” because the Delapinias failed to “allege that they

have paid or are able to tender the amount of indebtedness that

would be due under the Mortgage,” citing cases from the United

States District Court for the District of Hawaiʻi that appear to

adopt the “tender rule.” “Here, Plaintiffs[’] Count I should be

dismissed because they do not allege that they have paid or are

able to tender the amount of indebtedness. In fact, Plaintiffs

argue that if they prevail that ‘the Property remains encumbered

by the [Mortgage].’”

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In opposition to MERS, the Delapinias reiterated many

of the same arguments as they presented in their response to the

Cole defendants’ motion. They emphasized that Silva directly

controls this case and renders the deed void, not voidable. The

Delapinias also addressed MERS’s contention that the “tender

rule” barred their complaint. They acknowledged this rule has

been “adopted in some mainland jurisdictions,” but asserted it

is inapplicable here. (Capitalization altered). MERS cited

cases in which the quiet title claim was against the mortgagee;

here, “[t]he FAC plainly alleges that the original mortgage that

Plaintiffs gave to Nationstar’s and Fannie Mae’s assignor

remains on the property, and Plaintiffs only seek to quiet the

title to the Property[.]” (Emphasis in original). They “will

accept the Property back with the mortgage still on it,” at

which point the Nationstar defendants are free to “attempt a

lawful foreclosure” should the default remain. In any event,

Santiago “does not hold that the mortgagor must first pay off or

offer to pay off the mortgage before being entitled to” relief

in the form of possession.

The circuit court granted the Cole defendants’ motion,

orally ruling as follows:

Even when accepting Plaintiffs’ factual allegations
as true, dismissal of the claims against Terry Cole,
American Savings Bank and Nationstar is appropriate.
. . .
As to the sale being void or voidable, any reading of
the law in Hawaii is improperly completed nonjudicial

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foreclosure sales are voidable -- my reading of the law,
excuse me, is that nonjudicial foreclosure sales are
voidable if the claim is timely and the current owners are
not bona fide purchasers.
There’s no allegation that Defendants did not pay
value for the property, and there is no allegation that the
current owners had actual notice of Plaintiffs’ claims.
There is no allegation that Plaintiffs or anyone else
recorded any kind of documentation reasonably indicating
Plaintiffs had any interest in the subject [property].
Therefore, the argument for the non-bona fide purchaser
status under constructive or inquiry notice fails as well.
So I’m going to go ahead and grant both motions.

The circuit court subsequently granted MERS’s motion

as well, issuing the following in its written order:

1. Under Hawaiʻi law, a properly completed non-
judicial foreclosure sale is voidable if the claim is
timely and the current owners are bona fide purchasers.
There is no allegation that Cole did not acquire the
property for value and there is no allegation that Cole had
notice of Plaintiffs’ outstanding claims if any, so Cole is
a bona fide purchaser. The court notes that it has already
dismissed claims against Cole because of her innocent bona
fide purchaser status. As Cole’s mortgagee, Defendant MERS
receives the same protection as Cole.
2. Plaintiffs fail to state a Quiet Title Claim as
they do not allege that they have paid or are able to
tender the amount of indebtedness due under their mortgage.
3. The notice of sale complied with the mortgage.
The notice of sale properly described the property under
HRS 667-7(a)(1).
4. The publishing of the notice of sale complied
with HRS 667-7.
5. A Hawaii attorney is not required to sign the
notice of sale or affidavit of foreclosure.
6. Lastly, written publication of postponement of an
auction is not necessary.

B. ICA Proceedings

The Delapinias appealed. The ICA affirmed in part and

vacated in part 8 the circuit court’s judgment in a published

8 The ICA vacated the circuit court’s order granting judgment on
the pleadings to Nationstar and Fannie Mae and the order dismissing the Cole
defendants, which was based in part on the conclusion that the Delapinias’
claim was time-barred by the two-year statute of limitations. As before the

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opinion. Regarding the dismissal of MERS, the ICA reasoned that

the tender rule barred the Delapinia’s claim:

The tender rule is based on the principle that a plaintiff
seeking to quiet title “must at least prove that he has a
substantial interest in the property and that his title is
superior to that of the defendants.” Maui Land & Pineapple
Co.[ v. Infiesto], 76 Haw[ai‘i] [402,] 408, 879 P.2d [507,]
513 [(1994)]. The tender rule requires as [sic] borrower,
in bringing a quiet title action, to allege that he has
paid, or is able to tender, the amounts owed. Klohs v.
Wells Fargo Bank, N.A., 901 F. Supp. 2d 1253, 1262-63 (D.
Haw. 2012).

Delapinia, 146 Hawaiʻi at 228, 458 P.3d at 939.

In this case, “the Delapinias did not allege either

that ‘they have paid off [Nationstar Mortgage] or are prepared

to tender all amounts owing’ to Nationstar such as is necessary

to establish superior title and maintain a quiet title action.”

Id. (brackets in original) (quoting Klohs, 901 F. Supp. 2d at

1262).

The ICA also concluded that no exception to the tender

rule applied. The ICA reasoned that tender requirement does not

apply “where the borrower brings a quiet title claim against a

party who, according to the allegations in the Complaint (which

the court accepts as true), is not a mortgagee and who otherwise

circuit court, see supra note 6, the parties argued in their ICA briefs over
whether the relevant statute of limitations was 2-, 6-, or 20-years.

The ICA concluded that the statute of limitations was six years,
and that the Delapinias timely filed their complaint. Delapinia, 146 Hawaiʻi
at 224–26, 458 P.3d at 935–37. As no defendant sought certiorari review,
this memo will not address the statute of limitations issue any further.

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has no interest in the property whatsoever.” Id. (quoting

Klohs, 901 F. Supp. 2d at 1263 n.6). However,

based on the Delapinias’ allegations in the FAC, MERS has
an interest in the Property. In the portion of the FAC
describing the parties to the action, the Delapinias
described MERS as “a foreign corporation which is and at
all relevant times was doing business in Hawaii, and which
claims to hold a mortgage on the Property as nominee.” In
their quiet title count, the Delapinias alleged that
“Defendant Cole has purported to grant a first mortgage on
the Property to Defendant MERS as nominee of ‘Pinnacle
Capital Mortgage Corporation[.]’” Thus, where MERS has an
interest in the Property according to the allegations in
the FAC, the tender rule applies.

Id. (brackets in original).

As to the Cole defendants, “[t]o the extent that the

Delapinias alleged that a wrongful foreclosure voided the sale

and all subsequent transfers, we reject this contention as a

matter of law.” Id. at 229, 458 P.3d at 940. “While it is true

that the supreme court has not expressly overruled Silva, the

supreme court has more recently held that improper foreclosure

sales are voidable.” Id. The ICA pointed to Kondaur and

Santiago for this principle, noting that in both cases, we

determined the foreclosure sale to be “voidable.” Id. (citing

Kondaur, 136 Hawaiʻi at 240, 361 P.3d at 467; Santiago, 137

Hawaiʻi at 158, 366 P.3d at 633). And while this court in Mount

cited Silva approvingly and acknowledged that in Lee, we held a

foreclosure sale to be void, Mount also factually distinguished

Lee on the grounds that the sale in Lee was not yet completed.

Id. (citing Mount, 139 Hawaiʻi at 180, 384 P.3d at 1281). Thus,

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the ICA “conclude[d] that improper foreclosure sales are

voidable, rather than void, and that the supreme court has

either distinguished or impliedly overruled its earlier

decisions holding to the contrary.” Id.

Nonetheless, the ICA vacated the order dismissing the

Cole defendants because “[t]he Delapinias were not required to

make any allegations pertaining to possible affirmative defenses

in the FAC,” and the circuit court’s conclusion that Cole was a

bona fide purchaser as a matter of law was improper. Id.

C. Supreme Court Proceedings

On certiorari, the Delapinias challenge the ICA’s

holding adopting the tender rule and the ICA’s treatment of

Silva. First, they argue that the ICA gravely erred by

“requiring a wrongful foreclosure victim to also plead and prove

the ability to tender the full amount of the wrongfully

foreclosed mortgage as a condition to receiving the ‘classic

remedy’ [of return of title and possession].” (Emphasis

omitted). Even if the tender rule were Hawaiʻi law, the

Delapinias argue that the ICA did not correctly analyze the

rule’s exceptions. Second, the Delapinias argue that the ICA

“gravely erred in exceeding its constitutional authority and

declaring that Silva v. Lopez, . . . a decision of this court

that has stood for over 135 years, has been ‘impliedly

overruled[.]’” Per the Delapinias, “[t]his court has never

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distinguished Silva” on its holding that improper foreclosure

sales are void as opposed to voidable. “[T]he ICA does not have

the power to limit decisions of this court,” and Silva directly

controls.

The Nationstar defendants and the Cole defendants

argued in response that the ICA correctly declined to apply

Silva. MERS additionally defended the ICA’s application of the

tender rule: per MERS, the Delapinias are conflating their

wrongful foreclosure claim against the Nationstar defendants

with the quiet title claim against MERS. Quiet title requires

that the Delapinias establish the superiority of their title,

which MERS claims requires the Delapanias to “prov[e] that

[they] can cure the default[.]” The rule is rooted in equity:

“[e]quity will not interpose its remedial power in the

accomplishment of what seemingly would be nothing but an idly

and expensively futile act[.]” (Quoting Arnolds Mgmt. Corp. v.

Eischen, 158 Cal. App. 3d 575, 578-79 (1984)).

III. STANDARD OF REVIEW

A trial court’s ruling on a motion to dismiss is
reviewed de novo. The court must accept plaintiff’s
allegations as true and view them in the light most
favorable to the plaintiff; dismissal is proper only if it
appears beyond doubt that the plaintiff can prove no set of
facts in support of his or her claim that would entitle him
or her to relief.

Goran Pleho, 144 Hawaiʻi at 236, 439 P.3d at 188 (quoting Wong v.

Cayetano, 111 Hawaiʻi 462, 476, 143 P.3d 1, 15 (2006)) (emphasis

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omitted).

IV. DISCUSSION

A. MERS May Not Assert the Tender Rule to Bar the Quiet Title
Action in this Case

The tender rule has been described as follows:

As a general rule, a debtor cannot set aside the
foreclosure based on irregularities in the sale without
also alleging tender of the amount of the secured debt.
. . . “The rationale behind the rule is that if [the
borrower] could not have redeemed the property had the sale
procedures been proper, any irregularities in the sale did
not result in damages to the [borrower].”

Ram v. OneWest Bank, FSB, 183 Cal. Rptr. 3d 638, 649-50 (Cal.

Ct. App. 2015) (citations omitted) (brackets in original).

Although we have not determined whether the tender

rule is Hawaiʻi law, in other jurisdictions, the rule is rooted

in the principle that “a defaulted borrower who seeks to set

aside a [foreclosure] sale is required to do equity before the

court will exercise its equitable powers.” Lona v. Citibank

N.A., 202 Cal. App. 4th 89, 112 (2011). Said differently,

plaintiffs must “come into equity with clean hands” by paying

their outstanding debts. Shimpones v. Stickney, 28 P.2d 673,

678 (Cal. 1934). Allowing plaintiffs to claim property without

paying what they owe “would give them an inequitable windfall,

allowing them to evade their lawful debt.” Stebley v. Litton

Loan Servicing, LLP, 134 Cal. Rptr. 3d 604, 607 (Cal. Ct. App.

2011); see also Dimock v. Emerald Properties LLC, 97 Cal. Rptr.

2d 255, 262 (Cal. Ct. App. 2000) (“Th[e tender] requirement is

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based on the theory that one who is relying upon equity in

overcoming a voidable sale must show that he is able to perform

his obligations under the contract so that equity will not have

been employed for an idle purpose.”).

In jurisdictions in which the tender rule applies,

“there is no exclusive list of circumstances where a tender is

not essential.” 9 5 Miller & Starr, Cal. Real Estate § 13:256

cmt. (4th ed. 2019). The question of tender turns on the

“equities of the situation,” the “degree of prejudice” or

“misconduct,” and the “nature” of the default. Id. In

California, for instance, the requirement of tender is an

element of a wrongful foreclosure claim, but California courts

recognize several exceptions:

9 The ICA seemed to conclude that the only exception to the tender
rule lies “where the borrower brings a quiet title claim against a party who,
according to the allegations in the Complaint (which the court accepts as
true), is not a mortgagee and who otherwise has no interest in the property
whatsoever.” Delapinia, 146 Hawaiʻi at 228, 458 P.3d at 939 (emphasis
omitted) (quoting Klohs, 901 F. Supp. 2d at 1263 n.6). Because the FAC
alleged that MERS claimed an interest in the property, the ICA reasoned that
the tender rule could not be excused.

But the language “who otherwise has no interest in the property
whatsoever” comes from the United States District Court for the District of
Hawaiʻi case Klohs v. Wells Fargo Bank, N.A., 907 Supp. 2d 1253, 1263 n.6 (D.
Haw. 2012), which in turn was quoting Amina v. Bank of New York Mellon, No.
CIV. 11-00714 JMS, 2012 WL 3283513, at *4 (D. Haw. Aug. 9, 2012). In
context, that language merely reflected the facts of Amina, in which the
plaintiffs alleged the defendant bank was threatening to foreclose when it
lacked any connection at all to the mortgage. Id. at *1. As explained
herein, there are a number of exceptions to the tender rule. Indeed, as the
Delapinias point out, every quiet title action will, by its nature, require
the plaintiffs to allege that the defendants have claimed an interest in the
property, so it cannot be the case that mere allegations that the defendant
has claimed an interest will per se require the plaintiff to plead tender.

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First, if the borrower’s action attacks the validity
of the underlying debt, a tender is not required since it
would constitute an affirmation of the debt. . . .
Second, a tender will not be required when the person
who seeks to set aside the trustee’s sale[ 10] has a
counterclaim or setoff against the beneficiary. In such
cases, it is deemed that the tender and the counterclaim
offset one another, and if the offset is equal to or
greater than the amount due, a tender is not
required. . . .
Third, a tender may not be required where it would be
inequitable to impose such a condition on the party
challenging the sale. (Humboldt Savings Bank v. McCleverty
(1911) 161 Cal. 285, 291, 119 P. 82 (Humboldt).) In
Humboldt, the defendant’s deceased husband borrowed $55,300
from the plaintiff bank secured by two pieces of property.
The defendant had a $5,000 homestead on one of the
properties. (Id. at p. 287, 119 P. 82.) When the
defendant’s husband defaulted on the debt, the bank
foreclosed on both properties. In response to the bank’s
argument that the defendant had to tender the entire debt
as a condition precedent to having the sale set aside, the
court held that it would be inequitable to require the
defendant to “pay, or offer to pay, a debt of $57,000, for
which she is in no way liable” to attack the sale of her
$5,000 homestead. (Id. at p. 291, 119 P. 82.)
Fourth, no tender will be required when the trustor
is not required to rely on equity to attack the deed
because the trustee’s deed is void on its face.

Lona, 202 Cal. App. 4th at 112-13 (citations and footnotes

omitted).

We need not and do not decide whether the tender rule

applies in wrongful foreclosure claims. We hold, however, that

the rule does not bar the quiet title action against MERS under

the circumstances of this case, where the party asserting the

rule in a motion to dismiss is not the plaintiff’s mortgagee.

The Delapinias are not indebted to MERS, who asserts the tender

rule here and who is involved in this case through the

10 In California, a trustee’s sale is a nonjudicial foreclosure
procedure; the trustee holds the power of sale. See 5 Miller & Starr, Cal.
Real Estate § 13:1.

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subsequent purchaser – MERS, in other words, was never the

Delapinias’ mortgagee. Cf. Trusty v. Ray, 249 P.2d 814, 817

(Idaho 1952) (“A mortgagor cannot without paying his debt quiet

title as against the mortgagee[.]” (emphasis added)); Rockridge

Tr. v. Wells Fargo, N.A., 985 F. Supp. 2d 1110, 1158 (N.D. Cal.

2013) (“[A] borrower may not assert a quiet title action against

a mortgagee without first paying the outstanding debt on the

property.” (emphasis added)); Marzan v. Bank of Am., 779 F.

Supp. 2d 1140, 1156 (D. Haw. 2011), abrogated on other grounds

by Compton v. Countrywide Fin. Corp., 761 F.3d 1046 (9th Cir.

2014) (“[I]n order to assert a claim for ‘quiet title’ against a

mortgagee, a borrower must allege they have paid, or are able to

tender, the amount of indebtedness.” (emphasis added)).

Bank of America, N.A. v. Reyes-Toledo, 143 Hawaiʻi 249,

428 P.3d 761 (2018), supports this conclusion. In that case,

the ICA concluded that the tender rule barred a homeowner’s

quiet title counterclaim as against a bank seeking foreclosure

on her property, which she alleged was not her mortgagee. Id.

at 254, 428 P.3d at 766. We vacated the decision of the ICA,

reasoning that under our notice-pleading standard, the

homeowner, by asserting that the bank was not her mortgagee,

stated a quiet title claim sufficient to survive a motion to

dismiss. Id. at 265-66, 428 P.3d at 777-78. Reyes-Toledo thus

suggests that the tender rule, if it is Hawai‘i law, does not bar

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a suit from proceeding against a party who is not the

plaintiff’s mortgagee, as the homeowner’s quiet title claim

survived in that case by virtue of the fact that they pleaded

that the bank was not the mortgagee. 11 We did not require the

homeowner to satisfy their debt against the true mortgagee in

order to “come into equity with clean hands,” Shimpones, 28 P.2d

at 678, because the debt was allegedly not the defendant’s to

enforce.

This conclusion makes sense given the equitable

reasons underpinning the rule. In a quiet title action,

“[w]hile it is not necessary for the plaintiff to have perfect

title to establish a prima facie case, he must at least prove

that he has a substantial interest in the property and that his

title is superior to that of the defendants.” Ibbetson v.

Kaiawe, 143 Hawaiʻi 1, 17, 422 P.3d 1, 17 (2018) (quoting Maui

Land & Pineapple Co. v. Infiesto, 76 Hawai‘i 402, 407-08, 879

11 One federal district court has taken Reyes-Toledo as

implicit endorsement of the [tender] rule; after all, the
survival of Reyes-Toledo’s quiet title claim, devoid as it
was of allegations of tender, appears to have been
predicated on the Hawaiʻi Supreme Court’s acceptance at face
value, under the notice pleading standard, of her
allegations that Bank of America was not the mortgagee.

Gamblin v. Nationstar Mortgage LLC, 2018 WL 5831207 at *13 (D. Haw.
November 7, 2018) (emphasis in original).

While we have not implicitly or explicitly endorsed the tender
rule, we agree that Reyes-Toledo supports the conclusion that a non-mortgagee
defendant to a quiet title claim, like MERS in this case, may not invoke it.

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P.2d 507, 512-13 (1994)). The Delapinias do not need to plead

tender to establish superior title to MERS, even assuming they

would in a wrongful foreclosure action against the Nationstar

defendants, because the Delapinias claim MERS acquired its

interest via a non-innocent third-party purchaser, who knowingly

purchased the property from a wrongful foreclosure. 12 Cf.

Carpenter v. PNC Bank, N.A., 386 F. Supp. 3d 1339, 1347 (D. Haw.

2019) (holding that quiet title plaintiffs had adequately

pleaded their “superior title” to defendants when plaintiffs

alleged that the defendants purchased the subject property

following a wrongful foreclosure and were not bona fide). The

wrongful foreclosure count was not dismissed. Allowing those in

MERS’s position – non-mortgagees who are allegedly non-bona fide

purchasers – to evade the quiet title action altogether by

asserting the tender rule against the Delapinias in a motion to

dismiss would not serve the rule’s equitable purpose of

preventing the Delapinias from “evad[ing] their lawful debt,”

Stebley, 134 Cal. Rptr. 3d at 607, because it is not MERS’s debt

to enforce in this case.

12 “A non-bona fide purchaser is one who does not pay adequate
consideration, ‘takes with knowledge that his transferor acquired title by
fraud, or buys registered land with full notice of the fact that it is in
litigation between the transferor and a third party.’” Kondaur, 136 Hawai‘i
at 240 n.27, 361 P.3d at 467 n.27 (brackets and ellipsis omitted) (quoting
Akagi v. Oshita, 33 Haw. 343, 347 (Haw. Terr. 1935)).

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On the other hand, if the third-party purchasers were

indeed innocent purchasers for value, 13 their interests are

adequately safeguarded by virtue of our conclusion below that

the sale is at most voidable. If the purchasers were bona fide,

damages would be the appropriate remedy. See infra Part IV.B.

Accordingly, if the purchasers were innocent purchasers for

value, the Delapinias have failed to establish “that [their]

title is superior to that of [MERS],” Ibbetson, 143 Hawaiʻi at

17, 422 P.3d at 17 (2018), as required for a quiet title claim

to succeed; innocent purchasers for value would enjoy superior

title to the Delapinias if the sale is not void ab initio. 92A

C.J.S. Vendor and Purchaser § 528 (2021) (“A bona fide

purchaser, meaning one who acquires an interest in a property

for valuable consideration, in good faith, and without notice of

another party’s adverse interests in the property, takes such

title free of any interests of third persons except those of

which the bona fide purchaser has notice.”). For this reason,

MERS’s argument that the tender rule is needed to protect bona

fide purchasers is unavailing – that the sale is voidable means

13 Whether Cole was in fact a bona fide purchaser is a contested
issue upon which we do not comment in this opinion.

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their purported bona fide purchaser status is a defense to the

quiet title action. 14

Therefore, under the facts of this case, we hold that

the tender rule does not bar the action against MERS, and MERS

should not have been dismissed on that basis. We emphasize that

the scope of this holding is limited: the application of the

tender rule to wrongful foreclosures generally, or to factual

and procedural circumstances unlike those presented by this

case, is not before us. We hold only that the tender rule is

not an absolute bar to a quiet title action against a party to

whom the plaintiff is not indebted under the facts of this case,

and the Delapinias have alleged sufficient facts for their quiet

title action against MERS to survive dismissal at this stage.

B. A Wrongful Foreclosure in Violation of the Power of Sale Is
Voidable, Not Void, and Silva Is Overruled to the Extent it
Held to the Contrary

We next turn to whether, if true, the facts alleged in

the Delapinias’ complaint render the foreclosure sale void or

voidable. If void, the sale is “invalid” and “unenforceable,”

and a subsequent purchaser “is entitled only to return of

[their] down[ ]payment plus accrued interest.” Lee v. HSBC Bank

USA, 121 Hawai‘i 287, 292, 218 P.3d 775, 780 (2009). If

14 If the sale were void, the tender rule would not apply in any
event. E.g., Barrionuevo v. Chase Bank, N.A., 885 F. Supp. 2d 964, 970 (N.D.
Cal. 2012) (“[W]here a sale is void, rather than simply voidable, tender is
not required.” (citation omitted)).

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voidable, the sale can be invalidated at the timely election of

the mortgagor, but “where the property has passed into the hands

of an innocent purchaser for value, rendering the voiding of a

foreclosure sale impracticable, an action at law for damages is

generally the appropriate remedy.” Mount v. Apao, 139 Hawai‘i

167, 180, 384 P.3d 1268, 1281 (2016). Answering this question

requires us to revisit the rule set forth in Silva v. Lopez.

The ICA correctly observed that Silva’s holding is in tension

with our recent wrongful foreclosure precedent. We therefore

take this opportunity to overrule Silva to that extent that case

would render foreclosures in violation of the power of sale

void. Foreclosures in violation of the power of sale are

voidable.

In Silva, the defendant mortgagee failed to comply

with “all the directions of the power of sale”: he did not

“ent[er] upon or demand for the possession of the mortgaged

premises and chattels” and, as particularly important here, he

did not provide “three weeks to intervene between the first

publication and the time of sale mentioned.” 5 Haw. at 263,

271. The mortgagee held the sale on June 24, 1884; had he done

so on June 25, 1884, “the advertisement would have been

sufficient in time,” but as it was, the mortgagee failed to

comply with the power of sale, which required three weeks’

notice. Id. at 268. Justice Austin held in the decision

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appealed from that “if the notice is insufficient, the sale

under it is void and not merely voidable,” and the supreme court

adopted this analysis. Id. at 271; see also id. at 265

(referring to the opinion of Justice Austin “[f]or the full

discussion and citation of authorities” on the issue of notice).

Justice Austin acknowledged that “[t]here are several purchasers

upon whom this decree will operate as a hardship.” Id. at 273.

Nonetheless, “the sale must be set aside, and the conveyances

made thereunder must be cancelled.” Id.

The Delapinias argue that here, as in Silva, they have

alleged that the mortgagees failed to comply that the

advertising provisions of the power of sale, allegations that we

take as true; accordingly, they contend the ICA was bound to

follow Silva, and the sale is void. We agree that to the extent

the ICA concluded that Silva has been impliedly overruled, it

erred. As recently as in Mount, we noted: “As far back as 1884,

this court voided a mortgage sale of real estate and livestock

because the mortgagee had not complied with the conditions of

the power of sale by scheduling the foreclosure sale one day too

early.” 139 Hawaiʻi at 180, 384 P.3d at 1281 (citing Silva, 5

Haw. at 263). We also explained that Lee and the United States

Court of Appeals for the Ninth Circuit opinion In re Kekauoha-

Alisa, 674 F.3d 1083 (9th Cir. 2012), which applied Hawai‘i law,

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likewise held wrongful foreclosures to be void rather than

voidable. Id. But we distinguished those cases on their facts.

In Lee, the high bidder at the nonjudicial foreclosure sale
had not completed the sale. 121 Hawaiʻi at 289, 218 P.3d at
777. Under those facts, we held that the sale was void and
that the high bidder was entitled only to return of his
down payment plus accrued interest. Id. In Kekauoha–Alisa,
the lender itself had purchased the property through a
credit bid, so no third party was involved. 674 F.3d at
1086.

Mount, 139 Hawaiʻi at 180, 384 P.3d at 1281.

That said, Silva is inconsonant with the direction of

our recent precedent, and we clarify today that a wrongful

foreclosure that violates the power of sale is voidable, not

void. This conclusion flows from our cases that make clear that

if a foreclosure violates a statute governing the nonjudicial

foreclosure scheme, or other law extrinsic to the mortgage

itself, the sale is “voidable at the election of the mortgagor,”

and in turn, “where the property has passed into the hands of an

innocent purchaser for value, . . . an action at law for damages

is generally the appropriate remedy.” Mount, 139 Hawaiʻi at 180,

384 P.3d at 1281. In Mount, for instance, the mortgagee had

“fail[ed] to provide reinstatement or cure information to [the

mortgagor], as required by HRS § 667–5(c)(1),” and accordingly,

“the nonjudicial foreclosure sale was conducted in violation of

HRS § 667–5.” Id. at 179–80, 384 P.3d 1268, 1280–81.

Nonetheless, we noted that the third-party purchasers had

“completed the sale, took possession of the Property, and have

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now had the Property for some time . . . rendering the voiding

of a foreclosure sale impracticable[.]” Id. at 180, 384 P.3d at

1281; see also Kondaur, 136 Hawaiʻi at 242 n.29, 361 P.3d at 469

n.29 (“[I]f the Ulrich[ v. Sec. Inv. Co., 35 Haw. 158, 168

(1939)] requirements were not satisfied, a quitclaim deed would

convey only a voidable interest in the property.”).

Santiago is particularly instructive. That case arose

from an ejectment action after a foreclosure pursuant to HRS

§ 667-5; the mortgagors raised wrongful foreclosure as a defense

to the action, arguing that either the power of sale clause in

the mortgage was deficient to permit nonjudicial foreclosure, or

they had a right to cure the defect, which they properly

exercised. Santiago, 137 Hawaiʻi at 154, 366 P.3d at 629. The

circuit court concluded neither argument had merit; we reversed

on both issues. But as to the mortgagor’s remedy, we explained:

Where it is determined that the nonjudicial
foreclosure of a property is wrongful, the sale of the
property is invalid and voidable at the election of the
mortgagor, who shall then regain title to and possession of
the property. See Ulrich v. Sec. Inv. Co., 35 Haw. 158,
168 (1939) (holding that where a self-dealing mortgagee
fails to exercise its right to non-judicial foreclosure in
a manner that is fair, reasonably diligent, and in good
faith and to demonstrate that an adequate price was
procured for the property, the resulting sale is void); Lee
v. HSBC Bank USA, 121 Hawaiʻi 287, 292, 218 P.3d 775, 780
(2009) (concluding “that an agreement created at a
foreclosure sale conducted pursuant to HRS section 667–5 is
void and unenforceable where the foreclosure sale is
invalid under the statute”). Voiding the foreclosure sale
at this time, however, has been rendered impracticable
because the [property] has already been resold by [the
defendant] to a third party. See 123 Am. Jur. Proof of
Facts 3d § 31 (2011) (“It has long been held that if the
property has passed into the hands of an innocent purchaser

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for value, an action at law for damages is generally the
appropriate remedy.”).

Santiago, 137 Hawaiʻi at 158, 366 P.3d at 633.

Even though we held that the mortgagee altogether

lacked a power of sale, we nonetheless determined that the sale

was at most voidable, and where the property had passed to a

bona fide purchaser, the appropriate remedy was damages. Id.

We see no reason why a foreclosure in violation of a power of

sale ought to be treated differently. It stands to reason that

if damages were proper absent any authorizing power of sale, the

same must be true when the defect is failure to comply with an

otherwise-valid power of sale.

The Delapinias attempt to distinguish Santiago and

related cases. They argue that rather than supply a blanket

rule, we “used such non-exclusive terms as ‘impracticable’ and

‘generally,’” pointing out “the purchaser was not before the

court” in Santiago. But these distinctions are unavailing. The

impracticability of voiding the sale does not stem from the

absence of the bona fide purchaser to the suit but from the

reliance interests they have accrued. In Santiago, we relied on

Jenkins v. Wise, 58 Haw. 592, 574 P.2d 1337 (1978), to justify

the award of damages. Jenkins explains: “Equity, however,

abhors forfeitures and where no injustice would thereby result

to the injured party, equity will generally favor compensation

rather than forfeiture against the offending party.” Id. at
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597, 574 P.2d at 1341. In a wrongful foreclosure in violation

of a power of sale where the purchasers have “completed the

sale, took possession of the Property, and have now had the

Property for some time,” Mount, 139 Hawai‘i at 180, 384 P.3d at

1281, the principle from Jenkins disfavoring forfeiture applies

with equal force.

The Delapinias argue that failure to adopt their

position would leave Hawaiʻi “out of step” with other states, but

we are not persuaded by the cases they cite from other

jurisdictions. The Massachusetts Supreme Judicial Court

decision Pinti v. Emigrant Mortgage Co., 33 N.E.3d 1213 (Mass.

2015) is a particularly useful counterpoint insofar as it

illustrates the differences between Hawai‘i law and that of other

states. In that case, the Massachusetts Supreme Judicial Court

concluded that a mortgagee must strictly comply with the terms

of the power of sale. 33 N.E.3d at 1218. The mortgagee failed

to strictly comply because it alerted the mortgagors of their

“right to assert in any lawsuit for foreclosure and sale the

nonexistence of a default or any other defense,” whereas the

power of sale required notice of “the right to bring a court

action.” Id. at 1222 (emphasis in original). The court

reasoned that in a nonjudicial foreclosure state like

Massachusetts, the former language might wrongly give the

impression that the mortgagor need not initiate an action but

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may simply raise the defense in due course of judicial

foreclosure proceedings. Id.

A majority of the Pinti court concluded that this

defect rendered the foreclosure void and any subsequent

conveyances to third parties a nullity. “[A] bona fide

purchaser’s ‘title is not to be affected by mere irregularities

in executing a power of sale contained in a mortgage, of which

irregularities he has no knowledge, actual or constructive.’”

Id. at 1225 (citing Chace v. Morse, 76 N.E. 142, 143-44 (Mass.

1905); Rogers v. Barnes, 47 N.E. 602, 604 (Mass. 1897)). The

deficient notice amounted to more than a “mere irregularity”

because of the “disastrous consequences” it could have:

if the mortgagor has a valid defense to the foreclosure
sale going forward, but is not made aware that he or she
must initiate an action in court against the mortgagee to
raise that defense, the sale may well proceed and result in
title passing to a bona fide purchaser without knowledge of
the issue—at which point, and depending on the nature of
the defense, the mortgagor’s right to redeem his or her
home may well be lost.

Id. at 1225-26.

Three justices dissented on this issue. They would

have held that the sale was voidable, but only because in their

view, the notice provision was not a substantive requirement of

the power of sale. Id. at 1228 (Cordy, J., dissenting).

Indeed, even the dissenters agreed with the “familiar rule that

one who sells under a power [of sale] must follow strictly its

terms. If he fails to do so, there is no valid execution of the

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power, and the sale is wholly void.” Id. at 1228-29 (brackets

in original) (quoting U.S. Bank Nat’l Ass’n v. Ibanez, 941

N.E.2d 40 (Mass. 2011)) (quotation marks omitted). The

dissenters explained that failure to adhere to the integral

terms of a power of sale (e.g., “the existence of a default”;

“assignment of the note or authority to act on behalf of the

note holder at the time of foreclosure”; or, saliently here,

“proper advertisement of the foreclosure sale”) renders a deed

void ab initio. Id. at 1229. By contrast, where “there are

equitable reasons why the sale should be set aside,” the deed is

voidable in equity - in which case, “[t]he principle which is

applied in courts of equity is that they will not throw the loss

upon a person who has innocently acquired title to property for

value.” Id. at 1228-29 (citations omitted).

It would seem, then, that the Pinti court would

unanimously agree that if, as the plaintiffs allege, the

Nationstar defendants failed to strictly comply with the

advertisement requirements of the power of sale, the deed would

be void ab initio in Massachusetts. See McGreevey v.

Charlestown Five Cents Sav. Bank, 2 N.E.2d 543, 544 (Mass. 1936)

(holding that a sale advertised in the wrong county did not

“strictly compl[y]” with power of sale, and “the sale is wholly

void”).

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Other states likewise do not apply a blanket rule as

to when a sale is void versus voidable, and instead evaluate the

magnitude of the error – “mere irregularities” (as put in

Massachusetts) will not void a sale, but substantial defects

will. 15 See, e.g., Ram, 234 Cal. App. 4th at 11 (“A sale is not

rendered void merely because of minor or technical

defects. . . . A sale is rendered void, though, when the

defects are substantial, such as when there has been a failure

to give notice of sale to the trustor or to specify the correct

default in the notice of default.”); Williams v. Kimes, 996

S.W.2d 43, 45 (Mo. 1999) (“In circumstances where the defect is

so great that it goes to the very right or power to foreclose,

then the non-judicial foreclosure is void and no title is

conveyed through the sale.”).

But Pinti provides a useful touchpoint here because

Massachusetts and other jurisdictions that apply this framework

to determine whether a sale is void or voidable would also have

likely concluded that the sale in Santiago, in which the

mortgagee altogether lacked a power of sale, was void, whereas

15 The Delapinias would claim that failure to adhere to the terms of
the power of sale qualifies was more than a “mere irregularity,” but some of
these jurisdictions may well conclude that deviation from the advertisement
requirements in the power of sale was merely procedural and the sale
voidable. Cf. Ram, 234 Cal. App. 4th 1, 17 (2015) (notice of default
executed by individual who was not trustee at that time (and would only
become trustee weeks thereafter) was not void, but at most voidable, because
notice defect was nonprejudicial).

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our court concluded the sale to be voidable. Compare 137 Hawaiʻi

at 158, 366 P.3d at 633 (“Where it is determined that the

nonjudicial foreclosure of a property is wrongful, the sale of

the property is invalid and voidable at the election of the

mortgagor[.]”) with Rogers v. Barnes, 47 N.E. 602, 604 (Mass.

1897) (“The argument certainly is strong that a bona fide

purchaser for value ought to be protected in his title by what

appears on the record in the registry of deeds, in the absence

of knowledge to the contrary; but the argument is, we think,

stronger that a mortgagor should not be deprived, without his

knowledge, of his equity of redemption, by a sale under a power

contained in a mortgage, which authorizes a sale only in case of

a default, when there has been no default.”). And while the

Delapinias argue that failure to adopt their position would

leave Hawaiʻi “out of step” with other states, some other

jurisdictions nonetheless appear to come out the other way. 16

The Supreme Court of Michigan, for instance, explained:

It was true that failure to advertise according to the
terms of the power of sale invalidates the sale. Eubanks
v. Becton, 158 N.C. 230, 73 S.E. 1009 [(1912)]. But it is
said that such sale is not absolutely void, but will pass
the legal title. Eubanks v. Becton[ ]; Brett v. Davenport,

16 And by the same token, some of the out-of-state cases cited by
the Delapinias would hold that sales conducted in violation of statute are
void. See, e.g., Jensen v. Andrews, 163 N.W. 571, 571 (S.D. 1917) (failure
to state the specific hour at which the sale is to take place in the
advertisement, in violation of the state code, “will be void and of no effect
to convey title”). But Mount held that such a sale is voidable. 139 Hawaiʻi
at 180, 384 P.3d at 1281.

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151 N.C. [56], 65 S.E. 611 [(1909)]. While such sale would
be set aside as to the purchaser, a subsequent or remote
grantee without notice and in good faith takes a good title
against such defects or irregularities in the sale of which
he had no notice.

Fox v. Jacobs, 286 N.W. 854, 856 (Mich. 1939) (quoting Hinton v.

Hall, 82 S.E. 847, 848 (N.C. 1914)). 17

There is therefore precedent from other jurisdictions

that supports both positions – void or voidable. But Hawaiʻi law

has moved unmistakably towards the conclusion that sales

pursuant to a wrongful foreclosure are voidable, regardless of

whether the violation was statutory or contractual, substantial

or a mere irregularity. This policy protects the interests

accrued by innocent purchasers and avoids forfeiture if

possible, while deterring the conduct of the party that

wrongfully foreclosed through a damages remedy. Applied to

these facts, we hold that wrongful foreclosures in violation of

a power of sale are voidable. Thus, “where the property has

passed into the hands of an innocent purchaser for value,

rendering the voiding of a foreclosure sale impracticable, an

action at law for damages is generally the appropriate remedy.”

17 Fox arose from a statutory violation, but as is clear from the
quoted passage, it did not distinguish between a statutory versus contractual
violation. See Kim v. JPMorgan Chase Bank, N.A., 825 N.W.2d 329, 336-37
(Mich. 2012) (describing a lower court’s holding that a foreclosure
undertaken before the mortgagee acquired his interest in the property was
void ab initio to be “contrary to the established precedent of this Court,”
which has “long held that defective mortgage foreclosures are voidable”).

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Mount, 139 Hawaiʻi at 180, 384 P.3d at 1281 (citing Santiago, 137

Hawaiʻi at 158, 366 P.3d at 633).

V. CONCLUSION

For the foregoing reasons, the ICA’s March 13, 2020

judgment on appeal is vacated in part, as to defendant MERS, and

affirmed as to all other defendants. The circuit court’s

April 18, 2017 Final Judgment is vacated, and this case is

remanded to the circuit court for further proceedings consistent

with this opinion.

James J. Bickerton /s/ Mark E. Recktenwald
(Bridget G. Morgan-Bickerton,
Stanley H. Roehrig, /s/ Paula A. Nakayama
John F. Perkin and
Van-Alan H. Shima /s/ Sabrina S. McKenna
with him on the briefs)
for petitioners /s/ Michael D. Wilson

Jade Lynne Ching (David A. /s/ Paul B.K. Wong
Nakashima and Kanoelani S.
Kane with her on the brief)
for respondents Nationstar
Mortgage LLC and Federal
National Mortgage Association

Michael C. Bird (Jonathan W.Y.
Lai, Thomas J. Berger and
Summer H. Kaiawe with him
on the brief) for respondents
Terry Louise Cole and
American Savings Bank, F.S.B.

Patricia J. McHenry
and Janjeera S. Hail
for respondent Mortgage
Electronic Registration
Systems, Inc.

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