OCWEN Loan Servicing, LLC v. Association of Apartment Owners of Elima Lani Condominiums

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
04-MAR-2022
07:46 AM
Dkt. 53 SO

NO. CAAP-XX-XXXXXXX

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI#I

OCWEN LOAN SERVICING, LLC, Plaintiff-Appellee,
v.
ASSOCIATION OF APARTMENT OWNERS OF ELIMA LANI CONDOMINIUMS,
Defendant-Appellant,
and
GEOFFREY MICHAEL MILLS, SARAH KAY MILLS fka Sarah Kay Sechowski;
JOHN DOES 1-10; JANE DOES 1-10; DOE PARTNERSHIPS 1-10; DOE
CORPORATIONS 1-10; DOE ENTITIES 1-10 and DOE GOVERNMENTAL
UNITS 1-10, Defendants

APPEAL FROM THE CIRCUIT COURT OF THE THIRD CIRCUIT
(CIVIL NO. 3CC16100041K)

SUMMARY DISPOSITION ORDER
(By: Ginoza, Chief Judge, Hiraoka and McCullen, JJ.)

Defendant-Appellant Association of Apartment Owners of
Elima Lani Condominiums appeals from the Judgment in favor of
Plaintiff-Appellee Ocwen Loan Servicing, LLC entered by the
Circuit Court of the Third Circuit on May 2, 2019.1 For the
reasons explained below, we affirm the Judgment.
Ocwen filed a complaint for mortgage foreclosure
against mortgagors Geoffrey Michael Mills and Sarah Kay Mills
(collectively, the Mills), and the Association, on February 3,
2016. The Association answered the complaint. The Mills did
not. The Mills' defaults were entered on October 30, 2018.

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The Honorable Robert D.S. Kim presided.
 NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

The Mills were also in default of maintenance fees owed
to the Association. The Association conducted a nonjudicial
foreclosure of its lien for unpaid maintenance fees. On May 16,
2018, the Association recorded an affidavit of nonjudicial
foreclosure under power of sale in the Bureau of Conveyances. On
May 23, 2018, a quitclaim deed transferring title to the Mills'
Property to the Association was recorded in the Bureau. The
quitclaim deed stated that it was "subject . . . to all
encumbrances of record[.]"
On November 14, 2018, Ocwen filed a motion for default
judgment and decree of foreclosure. The Association filed a
"Limited Memorandum in Opposition[.]" The Association contended
that as the owner of the Property, it should continue to retain
possession of the Property and collect rental proceeds until the
court entered a final judgment confirming a foreclosure sale of
the Property. The Association also reserved its right to collect
a six-month special assessment under Hawaii Revised Statutes
(HRS) § 514B-146.
On May 2, 2019, the circuit court entered an order
granting summary judgment in favor of Ocwen and against all
defendants (MSJ Order). The circuit court appointed a
commissioner to take possession of, and sell, the Property, and
vested him "with all equitable and legal title" to the Property.
The Judgment was also entered on May 2, 2019. The Association
filed a timely notice of appeal.
The Association raises two points of error:

1. "The circuit court committed reversible error
when it purportedly vested the Commissioner
with and divested the Association of
equitable and legal title to the Property
owned by the Association"; and

2. "The circuit court committed reversible error
when it purportedly vested the Commissioner
with the right to possess and manage the
Property (including collecting and receiving
rental income from the Property upon the
entry of the MSJ Order, and ordered the
Commissioner 'to take possession and manage
the Property' owned by the Association,

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 NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

including the collection and receipt of
rents."

The circuit court erred by stating that the
Commissioner was vested with legal and equitable title to the
Property, as opposed to being vested with certain powers and
charged with certain duties with respect to the Property. U.S.
Bank Tr., N.A. v. Ass'n of Apartment Owners of Waikoloa Hills
Condo. Phase I, ___ Hawai#i ___, ___, ___ P.3d ___, ___, Nos.
CAAP-XX-XXXXXXX, CAAP-XX-XXXXXXX (Consolidated), 2022 WL 574511,
at *9 (Haw. App. Feb. 25, 2022) amended by ___ Hawai#i ___, ___
P.3d ___, Nos. CAAP-XX-XXXXXXX, CAAP-XX-XXXXXXX (Consolidated),
2022 WL 592928 (Table) (Haw. App. Feb. 28, 2022). However, the
circuit court did not err or abuse its discretion in ordering the
Commissioner to take possession of and to manage, preserve, and
sell the Property, including the collection of rents. The
Association's title to the Property was subject to Ocwen's
mortgage lien, and a judgment of foreclosure is a final
determination of a foreclosed party's ownership interest in the
subject property. In other words, the Association's ownership
rights in the Property were foreclosed when the Judgment was
entered, even though further proceedings were necessary to
enforce and otherwise effectuate the MSJ Order and Judgment.
Bank of N.Y. Mellon v. Larrua, ___ Hawai#i ___, ___, ___ P.3d
___, ___, No. CAAP-XX-XXXXXXX (Consolidated with No. CAAP-18-
0000571), 2022 WL 277671, at *9 (Haw. App. Jan. 31, 2022).
For the foregoing reasons, the Judgment entered by the
circuit court on May 2, 2019, is affirmed.
DATED: Honolulu, Hawai#i, March 4, 2022.

On the briefs:
/s/ Lisa M. Ginoza
R. Laree McGuire, Chief Judge
for Defendant-Appellant
Association of Apartment Owners /s/ Keith K. Hiraoka
of Elima Lani Condominiums. Associate Judge

Mary Martin, /s/ Sonja M.P. McCullen
for Plaintiff-Appellee Associate Judge
Ocwen Loan Servicing, LLC.

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