Yanagi v. Bank of America.

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Electronically Filed
Supreme Court
SCCQ-XX-XXXXXXX
08-MAR-2023
09:03 AM
Dkt. 65 OP
IN THE SUPREME COURT OF THE STATE OF HAWAI‘I

---oOo---
________________________________________________________________

IN RE: JASPER CESAR MANUEL, Debtor,
Plaintiff-Appellee.
(Case No. 11-02712 (RJF))
(Chapter 7)
-------------------------------------------------------
RICHARD A. YANAGI, Chapter 7 Trustee,

vs.

BANK OF AMERICA, N.A.,
Defendant-Appellant.
(Adv. No. 21-90001)
________________________________________________________________

SCCQ-XX-XXXXXXX

CERTIFIED QUESTION FROM THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF HAWAIʻI
(Case No. 11-0712 (RJF) (Chapter 7); Adv. No. 21-90001)

MARCH 8, 2023

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

OPINION OF THE COURT BY McKENNA, J.

I. Introduction

The United States Bankruptcy Court for the District of

Hawaiʻi (“bankruptcy court”) certified two questions to this
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court, which we have determined are amenable to answer. Those

questions are

1. Whether an action alleging a wrongful nonjudicial
foreclosure of Land Court property that seeks only money
damages against the foreclosing lender, and does not seek
to avoid the foreclosure sale or affect title to the
property, is an action that “directly impeach[es] . . . any
foreclosure proceedings affecting registered land” within
the meaning of Haw. Rev. Stat. section 501-118(c), and is
time barred if filed after the issuance of a certificate of
title to the buyer at a foreclosure sale.

2. Whether a putative class action asserting wrongful
foreclosure claims extends the time during which a class
member may commence an individual action under Haw. Rev.
Stat. section 501-118(c), where the putative class action
was commenced before the issuance of a certificate of title
to the buyer at the foreclosure sale; and, if there is such
an extension, how long does it last?

The bankruptcy court explains that if we “answer[] the [first]

question in the affirmative, the second question will become

relevant.” We answer the first question in the negative.

Although the bankruptcy court would then consider the second

question irrelevant, we provide a brief answer to that question,

to the extent the answer continues to bear on the timeliness of

Plaintiff-Appellee1 Jasper Cesar Manuel’s (“Manuel”) wrongful

foreclosure claims.

First, an action alleging a wrongful nonjudicial

foreclosure of Land Court property that seeks only damages

against the foreclosing lender is not an action that “directly

impeaches” any foreclosure proceedings affecting registered land

1
Initially, Manuel’s bankruptcy trustee, Richard A. Yanagi, was the
plaintiff-appellee in these proceedings. By order dated August 8, 2022, this
court granted the trustee’s motion to substitute Manuel as the plaintiff-
appellee.

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within the meaning of Hawaiʻi Revised Statutes (“HRS”) § 501-118

(2018); therefore, the action is not barred by the entry of a

transfer certificate of title (“TCT”) to the buyer at a

foreclosure sale. Second, our cases hold generally that the

pendency of a putative class action tolls the time during which

a class member may commence an individual action. The time for

commencing an individual action is tolled until a clear denial

of class certification.

II. Background

The following factual and procedural background is not

reasonably undisputed. Manuel owned a condominium unit

registered in the Land Court of the State of Hawaiʻi. The

property was encumbered by a mortgage through BAC Home Loans

Servicing, the predecessor-in-interest to Defendant-Appellant

Bank of America, N.A. (“BANA”). Manuel defaulted on his

mortgage.

On June 14, 2010, BAC Home Loans Servicing conducted a

public foreclosure auction of the property and acquired the

property itself. It then conveyed the property to Federal

National Mortgage Association (“Fannie Mae”) by Mortgagee’s

Quitclaim Deed recorded in Land Court on July 28, 2010. Fannie

Mae then sold the property to Christopher Yukio Ichiki by a

Limited Warranty Apartment Deed recorded in Land Court on April

1, 2011. The Land Court certified the new TCTs on November 10,

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2015 (certifying the TCT for the transfer from BAC Home Loans

Servicing to Fannie Mae) and November 29, 2016 (certifying the

TCT from Fannie Mae to Ichiki).

Manuel filed a chapter 7 bankruptcy petition on October 12,

2011. Neither the property nor his wrongful foreclosure claim

against BANA were listed in his original bankruptcy schedules.

Manuel was discharged in bankruptcy in January 2012 and his case

closed.

In September 2012, a putative wrongful foreclosure class

action, Degamo v. Bank of America, N.A., was filed in state

court and removed to the United States District Court for the

District of Hawaiʻi (“district court”). Manuel was a member of

the plaintiff class. On March 19, 2019, the district court

dismissed the case on the basis that the class representatives

lacked standing because their prior bankruptcy cases made their

wrongful foreclosure claims property of their bankruptcy

estates, not property of the class representatives themselves.

On appeal to the United States Court of Appeals for the Ninth

Circuit (“Ninth Circuit”), the district court’s order was

affirmed in all respects but one: it was vacated and remanded

for the district court to consider a motion to intervene filed

by the trustees of the bankruptcy estates of the putative class

representatives. On remand, the district court denied the

motion as moot on September 29, 2021. Degamo v. Bank of

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America, N.A., Civil No. 13-00141 (D. Haw. Sept. 29, 2021).

This is because “the proposed intervenors’ counsel represented

[to the district court at a status conference] that the

intervenors are no longer inclined to intervene. . . .” Degamo,

Civil No. 13-00141 at 2. Plaintiffs did not appeal.

In the meantime, in December 2020, Manuel reopened his

bankruptcy case to amend his schedules to include the wrongful

foreclosure claims against BANA. The trustee of Manuel’s

bankruptcy estate filed a complaint against BANA on January 14,

2021 alleging wrongful foreclosure in violation of HRS § 667-5

(Supp. 2008) (Hawaiʻi’s former nonjudicial foreclosure statute)

and HRS Chapter 480 (2008) (specifically, Hawaiʻi’s unfair and

deceptive acts and practices and unfair methods of competition

statutes). For example, one of the specific allegations was

that the mortgagee postponed the foreclosure auction without

publishing the change of date, as required under the power of

sale and the nonjudicial foreclosure statute in effect at the

time. The complaint sought only money damages against BANA. It

did not seek return of title and possession of the property to

Manuel.

III. Certified Questions

Under HRS § 602-5(2) (2016), this court “shall have the

jurisdiction and power[]” to “answer, in its discretion, . . .

any question or proposition of law certified to it by a federal

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district[2] or appellate court if the supreme court shall so

provide by rule. . . .” Hawaiʻi Rules of Appellate Procedure

(“HRAP”) Rule 13(a) (2000) provides the following:

When a federal district or appellate court certifies to the
Hawaiʻi Supreme Court that there is involved in any
proceeding before it a question concerning the law of
Hawaiʻi that is determinative of the cause and that there is
no clear controlling precedent in the Hawaiʻi judicial
decisions, the Hawaiʻi Supreme Court may answer the
certified question by written opinion.

Questions of law certified by the federal courts are reviewable

de novo under the right/wrong standard of review. Hancock v.

Kulana Partners, LLC, 145 Hawaiʻi 374, 380, 452 P.3d 371, 377

(2019) (citation omitted).

IV. Discussion

The first certified question centers upon the

interpretation of HRS § 501-118 (the “Foreclosure” section of

our Land Court statutes found in HRS chapter 501). HRS § 501-

118 states the following:

In case of foreclosure by exercising the power of sale
without a previous judgment, the affidavit required by
chapter 667 shall be recorded with the assistant registrar.
The purchaser or the purchaser’s assigns at the foreclosure
sale may thereupon at any time present the deed under the
power of sale to the assistant registrar for recording and
obtain a new certificate. Nothing in this chapter shall be
construed to prevent the mortgagor or other person in
interest from directly impeaching by action or otherwise,
any foreclosure proceedings affecting registered land,
prior to the entry of a new certificate of title.

2
The bankruptcy court “constitute[s] a unit of the district court” under
28 U.S.C. § 151 (1984) (“In each judicial district, the bankruptcy judges in
regular active service shall constitute a unit of the district court to be
known as the bankruptcy court for that district.”).

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HRS § 501-118(c) (emphasis added). The question is whether a

wrongful nonjudicial foreclosure claim seeking only money

damages from the foreclosing lender is an action “directly

impeaching . . . any foreclosure proceedings affecting

registered land,” and, if so, whether such a proceeding must be

initiated “prior to the entry of a new certificate of title.”

A. The parties’ arguments

1. BANA’s opening brief

In its opening brief, BANA first argues that the

overarching purpose of the Land Court system in Hawaiʻi is to

“conclusively establish title to land through the issuance of a

certificate of title,” citing Wells Fargo v. Omiya, 142 Hawaiʻi

439, 446, 420 P.3d 370, 377 (2018). BANA states that the TCT

notes any encumbrances or claims adverse to the title of the

registered owner and that the holder of the TCT holds it free

from all encumbrances except those noted on the TCT. BANA

asserts HRS § 501-118 bars wrongful foreclosure claims after the

Land Court certifies a new TCT, pointing to the plain language

of the statute.

BANA next explains that two Hawaiʻi appellate cases, Aames

Funding Corp. v. Mores, 107 Hawaiʻi 95, 110 P.3d 1042 (2005), and

Omiya, 142 Hawaiʻi 439, 420 P.3d 370, both held that HRS § 501-

118(c) bars a challenge to a foreclosure proceeding after the

Land Court certifies a new TCT. BANA states that Aames barred a

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challenge to a foreclosure (based on alleged violation of the

federal Truth in Lending Act) because the Land Court had already

certified a new TCT. BANA states that Omiya affirmed that “HRS

§ 501-118 specifies ‘entry of a new certificate of title’ as the

determinative point when foreclosure proceedings may no longer

be impeached.”

BANA argues that the remedy Manuel seeks (money damages

against the foreclosing lender) does not change the result

because claims for money damages still “directly impeach the

foreclosure” under HRS § 501-118(c). To support its argument,

BANA cites to cases from the Hawaiʻi district court and the Ninth

Circuit: Fergerstrom v. PNC Bank, N.A., 342 F. Supp. 3d 1029

(D. Haw. 2018), aff’d, 802 F. App’x. 268 (9th Cir. 2020); and

Seegers v. CIT Bank N.A., Civil 17-00399 LEK-KSC, 2018 WL

1558550 (D. Haw. Feb. 28, 2018), which barred similar claims for

money damages from the foreclosing lenders in wrongful

nonjudicial foreclosure and Hawaiʻi UDAP/UMOC actions brought

after the entry of new TCTs for the properties. BANA quotes the

Fergerstrom court as holding that “because the action attacks

(i.e., impeaches) the foreclosure proceeding, the particular

form of remedy . . . does not remove these claims impeaching

title from the proscription imposed by HRS § 501-118 and Aames.”

Fergerstrom, 342 F. Supp. 3d at 1045. The Fergerstrom court

continued, “[I]t is the action itself that impeaches the prior

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foreclosure proceeding, not the measure or type of damages

sought.” Id.

BANA then notes that the Fergerstrom court rejected the

plaintiffs’ assertion that tort claims are preserved under

another section of the Land Court chapter, HRS § 501-212 (2018),

notwithstanding HRS § 501-118. HRS § 501-212 is titled “Actions

for compensation for fraud, mistake, etc.,” and it provides the

following:

Any person who, without negligence on the person’s part,
sustains loss or damage, or is deprived of land or of any
estate or interest therein, after the original registration
of land under this chapter, by the registration of any
other person as owner of such land, or of any estate or
interest therein, through fraud, or in consequence of any
error, omission, mistake, or misdescription in any
certificate of title or in any entry of memorandum in the
registration book, may prosecute a contract claim in the
circuit court for the recovery of compensation for such a
loss or damage or for such land or estate, or interest
therein; provided that when the person deprived of land or
of any estate, or interest therein, in the manner above
stated has a remedy for the recovery of the land or of the
estate, or interest therein, the person shall exhaust this
remedy before resorting to the contract claim herein
provided. Nothing in this chapter shall be construed to
deprive the plaintiff of any tort claim which the plaintiff
may have against any person for loss or damage, or
deprivation of land, or of any estate or interest therein.

BANA quotes the Fergerstrom court as stating that HRS § 501-212

“on its face, does not touch HRS § 501-118.” Fergerstrom, 342

F. Supp. 3d at 1044. The Fergerstrom court reasoned, “Whereas

[section 501-212] preserves pre-existing tort claims, [section

501-118] does not deprive a plaintiff of any tort claim – it

simply reinforces the conclusive and unimpeachable nature of

Land Court certificates of title after entry.” Id.

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BANA notes that the Ninth Circuit affirmed the Fergerstrom

court’s order as follows: “The district court correctly

determined that section 501-118’s time bar applied to

[plaintiffs’] tort claim for money damages. [Plaintiffs’]

claims were based on defects in the non-judicial foreclosure

sales of their properties and ‘directly impeach[ed] . . . the

foreclosure proceedings.” Fergerstrom, 802 F. App’x at 270.

BANA also quotes the district court’s observation in

Seegers that “[the] legislative intent [of HRS § 501-118] would

be thwarted if the conclusive and unimpeachable character of

certificates of title could be easily ‘sidestepped’ by suing the

seller of registered land for money damages as a substitute for

suing the current owner of registered land for title and

possession.” Seegers, Civil 17-0399 LEK-KSC, 2018 WL 1558550 at

*5. BANA ends its opening brief by asking this court to answer

the first certified question in the affirmative to hold that HRS

§ 501-118 bars wrongful nonjudicial foreclosure claims that seek

only money damages against the foreclosing lender after the

entry of a new TCT.

2. Manuel’s answering brief

In his answering brief, Manuel first points out that that

Land Court chapter, HRS chapter 501, permits him to bring a

wrongful foreclosure claim, which sounds in tort. Specifically,

HRS § 501-212 states, in relevant part, “Nothing in this chapter

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shall be construed to deprive the plaintiff of any tort claim

which the plaintiff may have against any person for loss or

damage, or deprivation of land, or of any estate or interest

therein.”

He then argues that HRS § 501-118 itself contains no

express time limitation to bringing a wrongful foreclosure

claim. Rather, he states that the “bar to ‘impeaching’ a

foreclosure proceeding emanates from HRS § 501-88.” That

statute is titled “Certificate as evidence,” and it provides the

following:

The original certificate in the registration book, and any
copy thereof duly certified under the signature of the
registrar or assistant registrar, and the seal of the
court, shall be received as evidence in all the courts of
the State and shall be conclusive as to all matters
contained therein, except as otherwise provided in this
chapter.

HRS § 501-88 (2018). Manuel contends that the Aames court read

HRS §§ 501-118 and 501-88 together to conclude that a

mortgagor’s claim directly impeaching a foreclosure proceeding

must be brought before the TCT is given conclusive effect to all

matters contained therein, which is upon the entry of a new TCT

following the foreclosure sale. To Manuel, this means that a

claim challenging the contents of the new TCT (specifically, the

identification of the registered owner) is barred by the entry

of the new TCT.

Manuel reads Aames and Omiya as supporting his

interpretation of HRS § 501-118 because the former mortgagors in
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both cases challenged foreclosures and claimed title to their

respective properties. As such, Manuel continues, the former

mortgagors in both Aames and Omiya raised claims “directly

impeaching” the ownership interests listed on the new TCTs. In

Aames and Omiya, this court concluded that HRS § 501-118 barred

challenges to title after the entry of the new TCT. By

contrast, Manuel argues that his wrongful foreclosure claim does

not call into question the new owner’s title. Specifically,

Manuel points out that the new owner’s TCT will not reflect “how

a foreclosure sale was performed or whether the foreclosure was

wrongful”; therefore, his wrongful foreclosure claim does not

“directly impeach” the TCT to the property. Further, Manual

emphasizes that the remedy he seeks is tort damages for the

wrongful foreclosure, not return of title and possession.

Manuel supports his position with the plain language of the

statute. He asserts that the plain meaning of “directly

impeach” in HRS § 501-118 is to “exactly; completely,”

“absolute[ly],” “or “unconditional[ly]” “dispute, disparage,

deny, or contract” another’s title and right of possession of

property lost in foreclosure, citing WEBSTER’S NEW WORLD DICTIONARY

389 (3d college ed. 1988), and BLACK’S LAW DICTIONARY, 459, 753 (6th

ed. 1990), respectively. Looking to the rest of the Land Court

chapter, Manuel notes that the legislature has included the term

“impeach” without the modifier “directly,” for example, in HRS §

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501-144 (2018), which is titled “New certificate after

enforcement of lien; tax sale,” and which states, in relevant

part, “At any time prior to the entry of a new certificate the

registered owner may pursue all the registered owner’s remedies

to impeach or annul proceedings under executions or to enforce

liens of any description.” (Emphasis added.) Therefore, Manuel

argues, the term “directly” must carry independent significance

when it modifies the word “impeach.” He interprets “directly

impeaching” a TCT to mean “an unqualified attack on or challenge

to the title and right of possession lost to foreclosure.”

Manuel notes that the bankruptcy court questioned whether

the last sentence of HRS § 501-118 would bar a claim for money

damages against a foreclosing lender. That sentence states,

“After a new certificate of title has been entered, no judgment

recovered on the mortgage note for any balance due thereon shall

operate to open the foreclosure or affect the title to

registered land.” The bankruptcy court reasoned that the

phrases “directly impeaching . . . any foreclosure proceedings”

and “open the foreclosure or affect the title to registered”

land could not mean the same thing, otherwise the legislature

would have used the same phrasing. Manuel, however, argues that

differently phrased portions of a statute could nevertheless

mean the same thing. Further, if the last sentence does mean

something different from “directly impeaching any foreclosure

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proceeding,” Manuel reads it as pertaining to an action for a

deficiency judgment following a foreclosure sale, where the

mortgagor raises foreclosure defects as a defense to deficiency

liability; in such an instance, raising the defense does not re-

open the foreclosure or affect title, citing HawaiiUSA Fed.

Credit Union v. Monalim, 147 Hawaiʻi 33, 464 P.3d 821 (2020).

Manuel next posits that the federal courts in Fergerstrom

and Seegers interpreted the term “directly impeach” to prohibit

wrongful foreclosure claims seeking only money damages unless

the plaintiff would also have been entitled to return of title

and possession of the property. Manuel argues this reading is

contrary to our case law recognizing that a remedy for wrongful

foreclosure could be damages alone, where the foreclosed-upon

property has passed into the hands of an innocent purchaser for

value, citing Delapinia v. Nationstar Mortg. LLC, 150 Hawaiʻi 91,

497 P.3d 106 (2021); Mount v. Apao, 139 Hawaiʻi 167, 384 P.3d

1268 (2016); and Santiago v. Tanaka, 137 Hawaiʻi 137, 366 P.3d

612 (2016).

Manuel next opines that an in pari materia reading of HRS §

501-118 and other Land Court statutes also supports his position

that HRS § 501-118 does not bar money damage claims against a

foreclosing lender. Manuel reiterates that Land Court property

owners may sue in tort pursuant to HRS § 501-212. Manuel then

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points to HRS § 501-81 (2018), which is titled “Legal incidents

of registered land” and states, in relevant part

Registered land, and ownership therein, shall in all
respects be subject to the same burdens and incidents which
attach by law to unregistered land. Nothing in this
chapter shall in any way be construed to . . . change or
affect in any way any other rights or liabilities created
by law and applicable to unregistered land; except as
otherwise expressly provided in this chapter.

Manuel argues that nothing in HRS § 501-118 expressly provides

that Land Court property owners cannot recover money damages

from foreclosing lenders, when that remedy is available to non-

Land Court property owners.

Next, Manuel contends that BANA’s reading of HRS § 501-118

to preclude money damages claims after the entry of a new TCT

improperly abrogates a wrongful foreclosure plaintiff’s common

law right to sue for damages, where no express legislative

intent to do so appears. Manuel notes that the common law right

to sue for wrongful foreclosure damages originated in Johnson v.

Tisdale, 4 Haw. 605 (Haw. Kingdom 1883), and continues to be

recognized in our recent cases, such as Delapinia, 150 Hawaiʻi

91, 497 P.3d 106; Mount, 139 Hawaiʻi 167, 384 P.3d 1268; and

Santiago, 137 Hawaiʻi 137, 366 P.3d 612.

Manuel asserts that the legislative history of HRS § 501-

118 validates his reading of the statute. He notes that when

the Land Court statute was enacted in 1903, HRS § 501-118’s

predecessor stated the following: “Nothing contained in this

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Act shall be construed to prevent the mortgagor or other person

in interest from directly impeaching, by bill in equity or

otherwise, any foreclosure proceedings affecting registered

land, prior to the entry of a new certificate of title.” 1903

Haw. Sess. Laws Act 56, § 63 at 307. Manuel explains that, at

the time, a bill in equity was the vehicle by which a wrongful

foreclosure plaintiff would seek to set aside a sale and,

therefore, “directly impeach” the foreclosure proceedings. By

contrast, at the time, money damages were a form of legal

relief. With the promulgation of the Hawaiʻi Rules of Civil

Procedure, and the merger of law and equity in Hawaiʻi courts,

the “bill in equity” language in HRS § 501-118 was replaced with

“action.” Manuel asserts that HRS § 501-118 may reasonably be

read today to time-bar those claims that would have been

originally filed as bills in equity.

Manuel then argues that structural issues arise under

BANA’s reading of HRS § 501-118 as setting a time bar as “the

entry of the new TCT.” Under BANA’s interpretation of the

statute, the time a plaintiff has for bringing a wrongful

foreclosure damages claim depends upon how quickly the Land

Court can certify and enter a new TCT. Manuel points out that

the Land Court was once able to certify TCTs on the same day

they were presented, Hon. Gary W.B. Chang, Land Court:

Demystifying an Enigma, HAWAII BAR JOURNAL 4, 10 (2017); within

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months, see Aames, 107 Hawaiʻi at 96 n.2, 97, 110 P.3d at 1043

n.2, 1044; and currently, after years, see Omiya, 142 Hawaiʻi at

452, 420 P.3d at 383 (discussing the Land Court’s backlog). In

any event, Manuel argues that “foreclosed Land Court homeowners

risk having their damages remedies further curtailed by the

speed with which the Land Court enters new TCTs,” which could

lead to severe and unjust results.

Lastly, Manuel asserts that the fraud exception to HRS §

501-118 applies to his case. See HRS § 501-106 (2018) (“[I]n

all cases of registration procured by fraud the owner may pursue

all the owner’s remedies against the parties to the fraud,

without prejudice however to the rights of any innocent holder

for value of a certificate of title.”). He argues that BANA

committed constructive fraud upon Manuel due to the

confidential relationship between a self-dealing mortgagee bank,

who occupies a superior position in a nonjudicial foreclosure,

and the mortgagor, citing Hungate v. Law Off. of David B. Rosen,

139 Hawaiʻi 394, 409, 391 P.3d 1, 16 (2017).

Manuel urges this court to answer the first certified

question in the negative to hold that an action alleging

wrongful nonjudicial foreclosure of Land Court property that

seeks only money damages is not time-barred by the entry of a

new TCT because such an action does not “directly impeach”

foreclosure proceedings under HRS § 501-118.

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3. BANA’s reply brief

In its reply, BANA emphasizes that the plain language of

HRS § 501-118 precludes a mortgagor from bringing a wrongful

foreclosure claim, regardless of the remedy sought, after entry

of a new TCT. With respect to the Manuel’s argument that BANA’s

reading of HRS § 501-118 abrogates the common law right to sue

for wrongful foreclosure, BANA counter-argues that HRS § 501-118

merely sets a time limit for bringing the claim. With respect

to Manuel’s reading of the legislative history of HRS § 501-118,

BANA counter-argues that the statute’s prohibition on bringing,

past the entry of a new TCT, proceedings directly impeaching a

foreclosure “by bill of equity or otherwise” encompasses the

money damages claim Manuel asserts, as that statute is phrased

now (“any action or otherwise”) and when the statute was

originally enacted (“by bill of equity or otherwise.”). In any

event, BANA states that resort to legislative history is

unnecessary where the plain language of the statute is clear.

As to Manuel’s allegation that BANA committed constructive

fraud, BANA counter-argues (1) that the argument is irrelevant

to the certified question presented to this court; and (2)

mortgagor and mortgagee are generally not in a confidential

relationship that would give rise to a constructive fraud claim.

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B. Analysis

The first certified question asks this court to engage in

statutory interpretation of the word “directly” in HRS § 501-

118’s phrase “directly impeaching by action or otherwise, any

foreclosure proceedings affecting registered land.” Statutory

interpretation is guided by established rules:

First, the fundamental starting point for statutory
interpretation is the language of the statute itself.
Second, where the statutory language is plain and
unambiguous, our sole duty is to give effect to its plain
and obvious meaning. Third, implicit in the task of
statutory construction is our foremost obligation to
ascertain and give effect to the intention of the
legislature, which is to be obtained primarily from the
language contained in the statute itself. Fourth, when
there is doubt, doubleness of meaning, or indistinctiveness
or uncertainty of an expression used in a statute, an
ambiguity exists.

Rees v. Carlisle, 113 Hawaiʻi 446, 452, 153 P.3d 1131, 1137

(2007) (citations omitted).

In construing an ambiguous statute, “the meaning of the
ambiguous words may be sought by examining the context,
with which the ambiguous words, phrases, and sentences may
be compared, in order to ascertain their true meaning.” HRS
§ 1–15(1) (1993). Moreover, the courts may resort to
extrinsic aids in determining legislative intent. One
avenue is the use of legislative history as an interpretive
tool.

Gray v. Admin. Dir. of the Court, 84 Hawaiʻi 138, 148, 931 P.2d

580, 590 (1997) (cleaned up).

1. HRS § 501-118’s phrase “directly impeaching . . . any
foreclosure proceedings” contains an ambiguity.

The plain meaning of “directly” in HRS § 501-118 is not

obvious. We look to the rest of the Land Court chapter for

guidance in construing the word. We agree with Manuel that the

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term “directly” must have independent significance in modifying

the word “impeach” because the only statute within Chapter 501

concerning “impeaching” a TCT is HRS § 501-144. That statute is

titled “New certificate after enforcement of lien; tax sale,”

and it states, in relevant part, “At any time prior to the entry

of a new certificate the registered owner may pursue all the

registered owner’s remedies to impeach or annul proceedings

under executions or to enforce liens of any description.” The

phrase “directly impeach” in HRS § 501-118 must have a meaning

different from “impeach” in HRS § 501-144. We have held that

where the legislature “uses different terms in different parts

of a statute, we must presume this was intentional, and that the

legislature means two different things.” Peer News LLC v. City

& Cnty. of Honolulu, 138 Hawaiʻi 53, 67-68, 376 P.3d 1, 15-16

(2016) (citing Agustin v. Dan Ostrow Constr. Co., 64 Haw. 80,

83, 636 P.2d 1348, 1351 (1981).

2. Legislative history provides no guidance on
interpreting the phrase “directly impeaching . . . any
foreclosure proceedings.”

The legislative history of both HRS §§ 501-118 and -144 is

silent as to the difference in meaning, however. Further, the

legislative history of HRS § 501-118 itself provides no insight

into the meaning of “directly impeach.” We disagree with Manuel

that there is meaning to be found in the evolution of the

statutory language from 1903’s verbiage, “directly impeaching,

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by bill in equity or otherwise, any foreclosure proceedings

affecting registered land” to the current verbiage, “directly

impeaching, by action or otherwise, any foreclosure proceedings

affecting registered land.” Manuel argues that the 1903

predecessor to HRS § 501-118 barred only actions in equity

(i.e., those seeking to void title and return possession of the

property) after the entry of a new TCT; therefore, the statute

did not bar actions at law for money damages after the entry of

a new TCT. We agree with BANA that the phrase “or otherwise”

could have referred to actions at law.

3. Our precedent interpreting HRS § 501-118 has not yet
examined wrongful foreclosure complaints seeking only
money damages against foreclosing lenders.

Our state appellate court precedent interpreting HRS § 501-

118 has also never dealt with the issue of whether the entry of

a new TCT would bar a wrongful foreclosure claim seeking only

money damages. Our key cases, Aames, 107 Hawaiʻi 95, 110 P.3d

1042; Bank of New York Mellon v. Onaga, Inc., 140 Hawaiʻi 358,

400 P.3d 559 (2017); and Omiya, 142 Hawaiʻi 439, 420 P.3d 370;

have all held that HRS § 501-118 bars wrongful foreclosure

claims seeking to affect title to property after the entry of a

new TCT.

In Aames, a mortgagee bank foreclosed upon mortgagors, the

Moreses. Aames, 107 Hawaiʻi at 97, 110 P.3d at 1044. After the

Land Court issued the mortgagee a TCT to the property, the

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Moreses refused to surrender possession, and the mortgagee filed

an action for ejectment against them. Id. The district court

granted judgment for possession and writ of possession in favor

of the mortgagee and against the Moreses. Id.

On appeal, the Moreses argued that the district court did

not have jurisdiction over the case because their case involved

a dispute over title to real property, which, pursuant to HRS §

604-5(d), the district courts do not hear. Aames, 107 Hawaiʻi

98, 110 P.3d 1045. In addition to holding that the Moreses did

not sufficiently assert the source, nature, and extent of their

title claims, this court applied HRS § 501-118 to hold that

“defenses to mortgages foreclosed upon by exercise of the

mortgagee’s power of sale must be raised ‘prior to the entry of

a new certificate of title.’” Aames, 107 Hawaiʻi at 102, 110

P.3d at 1049.

In reaching this holding, we first explored the “sparse”

legislative history of Chapter 501, noting that the Land Court

system was intended to “provide[] an economic and convenient

manner of recording land titles, which . . . will do away with

the present cumbersome plan of records and largely reduce the

expense of land transfers.” Aames, 107 Hawaiʻi at 101, 110 P.3d

at 1048. The purpose of the Land Court system, we stated, was

to “conclusively establish title to land through the issuance of

a certificate of title.” Id. (citation omitted). We then held

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that HRS § 501-118 directs that [a mortgagor’s right to

challenge a foreclosure proceeding] is to be exercised ‘prior to

the entry of a new certificate of title.’” Id. We “buttressed”

this holding with HRS § 501-88, which “provides that the matters

stated in the certificate are to be given conclusive effect in

the courts.” Id. As the Moreses brought their title defense to

the ejectment proceeding after the entry of the TCT listing the

mortgagee as title holder, we held that the mortgagee’s title to

the subject property became “conclusive and unimpeachable.”

Aames, 107 Hawaiʻi at 102-03, 110 P.3d 1049-50. Thus, Aames

interpreted the “entry of a new TCT” limit in HRS § 501-118 to

protect a TCT’s conclusivity of title.

Similarly, in Onaga, we did not allow a junior creditor to

“undo” a judicial foreclosure once good faith purchasers had

entered their TCT with the Land Court. Onaga, 140 Hawaiʻi at

368, 400 P.3d at 569. In that case, the junior creditor

appealed a judicial foreclosure proceeding but did not post a

supersedeas bond. Onaga, 140 Hawaiʻi at 362, 400 P.3d at 563.

While the case was on appeal, the foreclosed upon property was

sold to good faith purchasers, who moved to intervene in the

appeal and dismiss it as moot, presenting as evidence the new

TCT issued to them. Onaga, 140 Hawaiʻi at 363, 400 P.3d at 564.

We noted that “title to the Property has already passed to the

[good faith purchasers]”; therefore, “[a]llowing [the junior

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creditor] to undo or otherwise hinder the sale of the Property

to the [good faith purchasers] would be inconsistent with the

purposes underlying our Land Court statute.” Onaga, 140 Hawaiʻi

at 368, 400 P.3d at 569. In so ruling, we cited both HRS § 501-

88 and the policy reasons explored in Aames, further

underscoring that the time limit to bring claims under HRS §

501-118 is intended to protect the conclusivity of the new TCT.

Onaga, 140 Hawaiʻi at 368-69, 400 P.3d at 569-70.

Lastly, in Omiya, this court held that a mortgagee was

entitled to bring an action seeking to “restore title” to it,

including “cancellation of a Transfer Certificate of Title,”

where the action was brought prior to the entry of a TCT to a

third-party purchaser. Omiya, 142 Hawaiʻi at 443, 456, 420 P.3d

374, 387. In Omiya, Wells Fargo foreclosed on its mortgage lien

in a nonjudicial foreclosure, then the Association of Apartment

Owners of the Ilikai Apartment Building foreclosed on the

property for nonpayment of maintenance fees. Omiya, 142 Hawaiʻi

at 443, 420 P.3d at 374. The property was then sold to a third

party. Id. The Land Court had recorded the quitclaim deed for

the conveyance to the third party, but it had not yet certified

a new TCT for the third party. Id. We held that Wells Fargo’s

action was not barred by HRS § 501-118, as its challenge to

title was brought prior to the entry (which we defined as

“certification”) of the new TCT to the third party. Omiya, 142

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Hawaiʻi at 455, 420 P.3d at 386. Thus, Wells Fargo could

directly impeach and seek to undo the foreclosure proceedings

because the certification of the new TCT had not occurred at the

time suit was brought.

In sum, the parties challenging foreclosures in Aames,

Onaga, and Omiya each sought to undo foreclosures, which does

affect the conclusivity of the matters stated within an entered

TCT (namely, the identification of the title owner). Aames, 107

Hawaiʻi 95, 110 P.3d 1042; Onaga, 140 Hawaiʻi 358, 400 P.3d 559;

Omiya, 142 Hawaiʻi 439, 420 P.3d 370. These parties did not seek

money damages against a foreclosing mortgagee, which does not

affect the conclusivity of matters stated within an entered TCT.

Aames, 107 Hawaiʻi 95, 110 P.3d 1042; Onaga, 140 Hawaiʻi 358, 400

P.3d 559; Omiya, 142 Hawaiʻi 439, 420 P.3d 370. These cases tend

to support Manuel’s contention that to “directly impeach”

foreclosure proceedings, an action must threaten the

conclusivity of a new TCT, entered after the foreclosure sale.

4. The federal cases interpreting HRS § 501-118 are not
persuasive.

BANA urges us to look to the district court and Ninth

Circuit cases holding that HRS § 501-118 bars wrongful

foreclosure claims, seeking only money damages, brought after

the entry of a new TCT. See Seegers, Civil 17-00399 LEK-KSC,

2018 WL 1558550; Fergerstrom, 342 F. Supp. 3d 1029; and

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Fergerstrom, 802 F. App’x. 268. We are not bound by these

courts’ interpretations of Hawaiʻi law, and we in fact disagree

with them. Each of these cases seem to read “directly” out of

the phrase “directly impeach” in HRS § 501-118 and is,

therefore, not useful to us in answering the first certified

question.

First, in Seegers, the district court dismissed the

Plaintiff’s quiet title and wrongful foreclosure damages claims

by applying Aames to hold that the claims were barred by the

entry of new TCTs following the foreclosure sale. Seegers, 2018

Civil 17-00399 LEK-KSC, WL 1558550 at *2. As to the wrongful

foreclosure money damages claim in particular, the district

court stated, “Plaintiff’s claimed entitlement to money damages

for loss of title and possession impeaches the foreclosure

proceeding and contradicts the Land Court’s issuance of new

certificates of title.” Seegers, Civil 17-00399 LEK-KSC, 2018

WL 1558550 at *4 (emphasis added). This statement, however,

does not interpret the word “directly,” modifying the word

“impeach” in HRS § 501-118. The district court went on to state

that the plaintiff would be entitled to money damages for loss

of title and possession “only if he was legally entitled to

title and possession of the Property,” but because new TCTs had

already been entered, he was not. Id. Finally, the district

court stated that the legislative intent behind the Land Court

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chapter “would be thwarted if the conclusive and unimpeachable

character of certificates of title would be easily ‘sidestepped’

by suing the seller of registered land for money damages as a

substitute for suing the current owner of registered land for

title and possession.” Seegers, Civil 17-00399 LEK-KSC, 2018 WL

1558550 at *5.

The Fergerstrom court borrowed heavily from Seegers in

holding, “As a matter of Hawaiʻi law, the Land Court’s entry of

Certificates of Title is conclusive and unimpeachable evidence

of the subsequent owners’ title to the properties, and

Plaintiff’s [wrongful foreclosure] claims, which seek to impeach

the foreclosure proceedings, and demand damages to compensate

for the loss of title and possession, are statutorily precluded”

Fergerstrom, 342 F. Supp. 3d at 1032 (citing Aames, 107 Hawaiʻi

at 101, 110 P.3d at 1048; HRS § 501-118) (emphasis added). Like

the Seegers court, the Fergerstrom court did not interpret the

word “directly,” modifying the word “impeach” in HRS § 501-118.

To the Fergerstrom court, the plaintiffs’ wrongful foreclosure

action “attacks (i.e., impeaches) the foreclosure proceeding”

“regardless of how the remedy is styled.” 342 F. Supp. 3d at

1045 (omitting the modifier “directly” in interpreting HRS §

501-118). Moreover, the Fergerstrom court viewed a wrongful

foreclosure claim praying only for money damages as an attempt

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to “plead around Aames by requesting equitable damages

equivalent to restoring title.” 342 F. Supp. 3d at 1042-43.

The Ninth Circuit affirmed the district court’s Fergerstrom

order in a two-page memorandum opinion that stated only, “The

district court correctly determined that section 501-118’s time

bar applied to Appellants’ tort claims for money damages.

Appellants’ claims were based on defects in the non-judicial

foreclosure sales of their properties and ‘directly impeach[ed]

. . . the foreclosure proceedings.” Fergerstrom, 802 F. App’x.

at 270 (citing Aames, 107 Hawaiʻi 95, 110 P.3d 1042). No further

reasoning is given.

None of the federal cases interpreted the term “directly”

in HRS § 501-118’s phrasing “directly impeaches any foreclosure

proceeding.” Further, the district court in both Seegers and

Fergerstrom viewed wrongful foreclosure money damages claims as

“equivalent” to claims for the return of title and possession,

when our precedent has not explicitly stated that.

5. Our recent precedent on the remedies available
following wrongful foreclosure do not foreclose the
possibility that a money damages claim could be
brought following the entry of a new TCT to a third-
party purchaser.

In fact, our precedent contemplates wrongful foreclosure

actions seeking only money damages where return of title is not

practicable (or, in this case, requested) and has not

necessarily framed the remedies as equivalents. First, in

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Santiago, we held that a mortgagee’s nonjudicial foreclosure

upon mortgagors’ property was unlawful because it did not

proceed pursuant to a power of sale (the mortgage document had

omitted a power of sale clause, which was required by law). 137

Hawaiʻi at 156, 366 P.3d at 631. Return of title and possession

of the property was not practicable, as the property had already

been resold to an innocent purchaser for value after the

foreclosure. 137 Hawaiʻi at 158, 366 P.3d at 633. Therefore, we

ruled that the mortgagors were “entitled to restitution of their

proven out-of-pocket losses from [the mortgagee’s] wrongful

foreclosure of the Mortgage and subsequent sale of the

[property].” Id. We did not measure damages as the equivalent

of title and possession.

Next, in Mount, we held that a mortgagor wrongfully

foreclosed upon mortgagees’ property by failing to provide

information on reinstating the mortgage loan within five days of

a request. 139 Hawaiʻi at 169, 384 P.3d at 1270. The property

had already been sold to a third party, whose status as an

innocent purchaser for value was not determined at the time of

appeal and certiorari. 139 Hawaiʻi at 180, 384 P.3d at 1281.

Therefore, the case was remanded to the circuit court to

determine whether the third party was an innocent purchaser for

value, in order to determine which remedy under Santiago

applied: rendering the foreclosure sale voidable and returning

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title and possession to the mortgagors (where the third party

was found not to be an innocent purchaser for value) or damages

only (where the third party was found to be an innocent

purchaser for value). Id.

In Hungate, we held that a mortgagee wrongfully foreclosed

upon a mortgagee by failing to give proper notice of a

foreclosure auction date and postponements of that date pursuant

to the mortgage’s power of sale and the non-judicial foreclosure

statute in effect at the time. 139 Hawaiʻi at 402, 391 P.3d at

9. We noted that “the mortgagor can protect its interests

through filing a claim against the mortgagee for wrongful

foreclosure,” and reiterated that, “[w]hen voiding the

foreclosure is not possible, the mortgagor is entitled to

‘restitution of their proven out-of-pocket losses’ through a

wrongful foreclosure claim.” 139 Hawaiʻi at 407, 391 P.3d at 14

(quoting Santiago, 137 Hawaiʻi at 158-59, 366 P.3d at 633-34).

Lastly, in Delapinia, we summarized the state of our

jurisprudence on remedies for wrongful foreclosure as follows:

Hawaiʻi law has moved unmistakably towards the conclusion
that sales pursuant to a wrongful foreclosure are voidable,
regardless of whether the violation of statutory of
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 damage remedy.

150 Hawaiʻi at 104, 497 P.3d at 119. Thus, Delapinia noted that

Hawaiʻi’s wrongful foreclosure remedies are twofold and

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alternative (and not necessarily equivalent) to each other: (1)

return of title and possession; or (2) money damages. Id.

We acknowledge that these rules developed in the context of

nonjudicial foreclosures of properties registered in the Bureau

of Conveyances. See Santiago, CAAP-XX-XXXXXXX, ICA Dkt. 28:38;

Mount, 139 Hawaiʻi at 170, 384 P.3d at 1271; Hungate, 139 Hawaiʻi

at 399, 391 P.3d at 6; Delapinia, CAAP-XX-XXXXXXX, ICA Dkt.

16:32.3 Although Santiago, Mount, Hungate, and Delapinia all

involved regular system property, Land Court property is

“subject to the same burdens and incidents which attach by law

to unregistered land.” HRS § 501-81.

We next consider whether HRS 501-118’s “entry of a new TCT”

limitation bars each type of remedy in the specific context of

foreclosures upon Land Court property. A complaint, filed after

the entry of a new TCT and seeking the first remedy (return of

title and possession), does “directly impeach” foreclosure

proceedings because it challenges the matters contained within a

new TCT (i.e., the identification of the owner of the property).

A complaint, filed after the entry of a new TCT and seeking the

second remedy (money damages against a wrongfully foreclosing

mortgagee), does not “directly impeach” foreclosure proceedings

3
We take judicial notice of the records filed in our appellate docket that
the foreclosed properties at issue in Santiago and Delapinia were registered
in the regular system. Hawaiʻi Rules of Evidence Rule 201.

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because it does not challenge the matters contained within the

new TCT (i.e., the identification of the owner of the property).

6. HRS § 501-118 does not bar a wrongful foreclosure
complaint seeking only money damages from the
foreclosing mortgagee, even when the complaint is
brought after the entry of a TCT to a third-party
purchaser.

In short, reading HRS § 501-118 in harmony with (1) our

precedent and (2) the purpose and policy behind the Land Court

chapter to protect the conclusivity of the matters contained

within a TCT, we hold that a wrongful foreclosure claim, seeking

only money damages against the foreclosing lender, where the

property has passed on to a third party, does not “directly

impeach” a foreclosure proceeding because it does not affect the

matters contained within the new TCT. Manuel’s case illustrates

that point: his wrongful foreclosure claim is based upon

alleged irregularities committed by the mortgagee in auctioning

his property. He seeks money damages caused by those

irregularities. He does not seek to affect any matter contained

within the new TCT (namely, the identification of the third

party owner of the property).

B. The Degamo putative class action tolled the limitations
periods for bringing a wrongful foreclosure claim.

As the entry of the new TCTs in this case did not bar

Manuel’s January 14, 2021 complaint for wrongful foreclosure

money damages, the next question is whether the complaint was

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timely. Manuel states that his Complaint was timely filed4 only

if the time for bringing it was tolled by the Degamo putative

class action. Manuel was a putative member of the plaintiff

class.

In Levi v. Univ. of Hawaiʻi, we adopted the United States

Supreme Court’s holdings on “class-action tolling.” 67 Haw. 90,

93, 679 P.2d 129, 132 (1984). The United States Supreme Court

held first that “the commencement of a class action suspends the

applicable statute of limitations as to all asserted members of

the class who would have been parties had the suit been

permitted to continue as a class action.” Am. Pipe & Constr.

Co. v. Utah, 414 U.S. 538, 554 (1974). The Court next clarified

that, “[o]nce the statute of limitations has been tolled, it

remains tolled for all members of the putative class until class

certification is denied. At that point, class members may

choose to file their own suits or to intervene as plaintiffs in

the pending action.” Crown, Cork & Seal Co. v. Parker, 462 U.S.

345, 354 (1983). We have also held that class action tolling

ends upon entry of (1) “an order expressly denying a motion for

class certification (or expressly denying the last such motion,

if there is more than one motion)”; (2) where there is no such

express order, upon entry of final judgment dismissing the class

4
We express no opinion as to whether this statement is true.

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action, or (3) upon a putative class member’s decision to opt

out of the class. Patrickson v. Dole Food Co., 137 Hawaiʻi 217,

230, 368 P.3d 959, 972 (2015) (ruling specifically on cross-

jurisdictional class action tolling).

In its opening brief, BANA argues that the Degamo class

action did not toll Manuel’s claims for two reasons. First,

BANA argues the plain language of HRS § 501-118 does not extend

the time to directly impeach foreclosure proceedings beyond the

entry of a new TCT. Second, BANA argues that HRS § 501-118 is a

statute of repose, whose outer time limit is the entry of a new

TCT. BANA states that, unlike statutes of limitations, statutes

of repose are not subject to class-action tolling, citing Cal.

Pub. Emps’. Ret. Sys. v. ANZ Secs. Inc., 137 S.Ct. 2042, 2051-52

(2017).

Manuel argues that HRS § 501-118 is not a statute of

repose, pointing out that Hawaiʻi appellate courts have held so

far that only the following statutes are statutes of repose:

HRS §§ 657-5, 657-8, 657-7.3(a), and 514B-94(b). Further,

Manuel points out that Hawaiʻi appellate courts have allowed

challenges to title in cases of fraud even after a new TCT has

been entered, citing Aames, 107 Hawaiʻi at 103, 110 P.3d at 1050,

and Fukunaga v. Fukunaga, 8 Haw. App. 273, 280-81, 800 P.2d 618,

622 (1990).

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BANA replies that if putative class actions are allowed to

toll challenges to title beyond the entry date of the TCT, the

purpose of the Land Court system, in general, and of HRS § 501-

118, in particular, would be defeated.

In answering the first certified question, we held that HRS

§ 501-118 did not preclude Manuel from filing his wrongful

foreclosure complaint after the entry of the new TCT to the

third party. Therefore, HRS § 501-118 is not the statute under

which the complaint’s timeliness is measured. Hence, whether

HRS § 501-118 is a statute of limitation or repose is not

necessary to decide. Rather, the statutes of limitations for

wrongful foreclosure and Chapter 480 claims apply.

In this case, the pendency of the Degamo putative class

action tolled the time for Manuel to file an individual action.

Class action tolling began on September 12, 2007, with the

filing of the Degamo putative class action complaint. It

clearly ended on September 29, 2021. Although the district

court had dismissed the putative class action on March 14, 2019,

the dismissal was appealed to the Ninth Circuit. Therefore,

March 14, 2019 does not mark the date that denial of class

certification became clear. The Ninth Circuit remanded the case

to the district court to consider the motion to intervene filed

by the class representatives’ bankruptcy trustees. At a status

conference, the trustees informed the district court that they

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no longer sought to intervene. Degamo, Civil No. 13-00141 at 2.

Therefore, on September 29, 2021, the district court filed its

order denying the motion to intervene as moot. Id. On that

date, the denial of class certification became clear.

V. Conclusion

First, an action alleging a wrongful nonjudicial

foreclosure of Land Court property that seeks only damages

against the foreclosing lender is not an action that “directly

impeaches” any foreclosure proceedings affecting registered land

within the meaning of HRS § 501-118(c); therefore, the action is

not barred by the entry of a TCT to the buyer at a foreclosure

sale. Second, the pendency of a putative class action asserting

wrongful foreclosure claims tolls the time during which a class

member may commence an individual action. The time for

commencing an individual action is tolled until a clear denial

of class certification. In this case, the filing of the

putative class action on September 7, 2012 tolled the time for

filing an individual wrongful foreclosure claim until September

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29, 2021, when the district court’s denial of class

certification became clear.

Patricia J. McHenry and /s/ Mark E. Recktenwald
Allizon Mizuo Lee
for defendant-appellant /s/ Sabrina S. McKenna

Van-Alan H. Shima, /s/ Michael D. Wilson
James J. Bickerton, and
Bridget G. Morgan-Bickerton /s/ Todd W. Eddins
for plaintiff-appellee
/s/ Dean E. Ochiai

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