Citimortgage, Inc. v. Brum, Sr.

NOT FOR PUBLICATION IN WEST'S HAWAI‘I REPORTS AND PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
21-MAY-2024
08:09 AM
Dkt. 186 SO

NO. CAAP-XX-XXXXXXX

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI‘I

CITIMORTGAGE, INC., Plaintiff/Counterclaim Defendant-Appellee,
v.
MICHAEL COSTA BRUM, SR., JULIE PIERRETTE BRUM,
ASSOCIATION OF APARTMENET OWNERS
OF KALELE KAI, Defendants/Cross-claim Defendants-Appellees;
DAVID V. BIRDSALL AND CARLA J. BIRDSALL, AS CO-TRUSTEES OF THE
BIRDSALL REVOCABLE LIVING TRUST DATED MARCH 17, 1999,
Defendants/Counterclaimants/Cross-claimants-Appellants;
and
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 FIRST CIRCUIT
(CASE NO. 1CC151000301)

SUMMARY DISPOSITION ORDER
(By: Wadsworth, Presiding Judge, Nakasone and Guidry, JJ.)

This case arises out of the foreclosure on a

condominium property. Defendants/Counterclaimants/Cross-
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Claimants-Appellants David V. Birdsall and Carla J. Birdsall, as

Co-Trustees of the Birdsall Revocable Living Trust Dated

March 17, 1999 (the Birdsalls) appeal from the following

judgments and orders, entered by the Circuit Court of the First

Circuit (circuit court): (1) a January 2, 2019 Hawaiʻi Rules of

Civil Procedure (HRCP) Rule 54(b) "Judgment on Jury Waived Trial

Held on November 13 – 15, [2017]" (Judgment on Foreclosure and

Counterclaim); (2) a July 5, 2019 "Dispositive Order Re

[Plaintiff/Counterclaim Defendant-Appellee Citimortgage, Inc.'s

(Citimortgage)] Motion for Recovery of Attorney's Fees and Costs

Incurred in Defense of the Birdsall Counterclaim" (Attorneys'

Fees Award); (3) a September 10, 2019 HRCP Rule 54(b) "Judgment"

on an order confirming the foreclosure sale (Confirmation

Judgment); and (4) an October 1, 2019 Order Denying Birdsalls'

August 23, 2019 Motion for Stay of the [Attorneys' Fees Award]

(Order Denying Stay).1

The Birdsalls raise eleven points of error which

collectively challenge the circuit court's orders, judgments,

findings, and conclusions denying the Birdsalls' counterclaims

for quiet title and declaratory relief, excluding the Birdsalls'

proposed trial exhibits, granting Citimortgage's affirmative

foreclosure claim, granting Citimortgage's request for

1 The Honorable Jeffrey P. Crabtree presided.

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attorneys' fees and costs in defending the counterclaims,

confirming the sale of the foreclosed property, and denying the

Birdsalls' respective requests to stay the Judgment on

Foreclosure and Counterclaim and the Attorneys' Fees Award

pending the appeal.

We review the circuit court's grant or denial of

summary judgment de novo. Ibbetson v. Kaiawe, 143 Hawaiʻi 1, 10,

422 P.3d 1, 10 (2018) (citation omitted). Summary judgment is

appropriate if there is no genuine issue as to any material fact

and the moving party is entitled to judgment as a matter of law.

Id. at 10-11, 422 P.3d at 10-11. We review findings of fact for

clear error and conclusions of law de novo. Bremer v. Weeks,

104 Hawaiʻi 43, 51, 85 P.3d 150, 158 (2004). We review a grant

or denial of a stay motion for abuse of discretion. Shanghai

Inv. Co., Inc. v. Alteka Co., Ltd., 92 Hawaiʻi 482, 503-04,

993 P.2d 516, 537-38 (2000), overruled on other grounds by

Blair v. Ing, 96 Hawaiʻi 327, 336, 31 P.3d 184, 193 (2001).

Evidentiary rulings based on relevance are reviewed under the

right/wrong standard. Estate of Klink ex rel. Klink v. State,

113 Hawaiʻi 332, 352, 152 P.3d 504, 524 (2007).

Upon careful review of the record and the briefs

submitted, and having given due consideration to the arguments

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advanced and the issues raised by the parties, we resolve the

Birdsalls' arguments as follows:2

(1) The Birdsalls first contend the mortgage on the

subject property (Mortgage), and the accompanying promissory

note (Note), were void when made because the initial holder of

the Mortgage and Note, ABN AMRO Mortgage Group, Inc. (ABN), did

not exist at that time.3 It is undisputed that ABN had merged

with and into Citimortgage before the Mortgage and Note were

executed. The Birdsalls contend that ABN is a "dead"

corporation, and that it could not, as such, enter into a

contract.

It is undisputed that Citimortgage is a New York

corporation, and was the surviving entity in the merger with

ABN. New York Banking Law § 602(3) (McKinney 1966), which

2 We have reordered the Birdsalls' points of error, and we address
only the discernible arguments that the Birdsalls raise in their opening
brief. Hawaii Ventures, LLC v. Otaka, Inc., 114 Hawaiʻi 438, 477, 164 P.3d
696, 735 (2007) ("[T]he court may disregard points of error when the
appellant fails to present discernible arguments supporting those assignments
of error[.]") (citation omitted). Section (1) of this disposition addresses
the contentions set forth on pp. 26-29 and 39-40 of the Birdsalls' opening
brief.

3 Citimortgage sued to foreclose the Mortgage. The mortgagors of
the subject property are Defendants/Cross-Claim Defendants-Appellees Michael
Costa Brum, Sr. and Julie Pierrette Brum (the Brums). The subject property
was owned by the Birdsalls at the time Citimortgage sued to foreclose, the
Birdsalls having previously acquired the subject property via quitclaim deed,
subject to all encumbrances. The Birdsalls counterclaimed, disputing
Citimortgage's entitlement to foreclose.

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governs mergers of banking corporations under New York law,4

provides that,

any reference to a merged corporation in any contract, will or
document, whether executed or taking effect before or after the
merger, shall be considered a reference to the receiving
corporation if not inconsistent with the other provisions of the
contract, will or document[.]

(Emphasis added). Under New York law, a merged corporation may

thus execute a contract post-merger, and the Birdsalls identify

no provision in the Mortgage or Note suggesting the loan funds

must be provided by ABN, such that it would be inconsistent with

their terms to consider the references to ABN as references to

Citimortgage. The circuit court did not, therefore, err in

determining that the Mortgage and Note were valid as to

Citimortgage.

(2) The Birdsalls contend Citimortgage "flunked" the

test to establish standing to foreclose by failing to prove it

4
Citimortgage, into which ABN merged, is a New York corporation.
It thus appears New York Banking Law § 602 controls with respect to the
merger. Though ABN was a Delaware corporation, the corporate merger statutes
of Delaware, Hawaiʻi, and New York all suggest that the laws of the
jurisdiction of the surviving entity govern the effect of the merger. See
generally Del. Code Ann. tit. 8, § 252 (West 2017); N.Y. Bus. Corp. Law § 907
(McKinney 2023); Hawaii Revised Statutes §§ 414-311 (2004), 414-311.6
(2004). New York Business Corporation Law contains general provisions
governing corporate mergers. However, New York Banking Law § 602 applies
specifically to lenders, and expressly addresses the effect of a contract by
a merged entity executed after the merger. See Matter of Khan v. Annucci,
186 A.D.3d 1370, 1372 (N.Y. App. Div. 2020) ("In the case of a conflict
between a general statute and a special statute governing the same subject
matter, the general statute must yield.") (citations omitted).

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owned the Mortgage and Note at the time the complaint was filed.5

They assert that the allonge to the Note (the Allonge), which

was purportedly indorsed in blank by Citimortgage, and

thereafter never left Citimortgage's possession, is "a phony"

because the signature was forged, the signer was not employed by

Citimortgage, and it was signed after the complaint was filed.

These contentions lack merit.

To establish standing to foreclose, the "plaintiff

must necessarily prove its entitlement to enforce the note" at

the time the complaint was filed, "as it is the default on the

note that gives rise to the action." Bank of America, N.A. v.

Reyes-Toledo, 139 Hawaiʻi 361, 368, 390 P.3d 1248, 1255 (2017).

When an instrument is indorsed in blank, it "becomes payable to

bearer and may be negotiated by transfer or possession alone

until specially indorsed." Id. at 370, 390 P.3d at 1257.

The Birdsalls' conclusory arguments identify no

credible evidence on which to conclude the circuit court clearly

erred in determining that the Note was validly indorsed in blank

before the complaint was filed, and that the original blank-

indorsed Note thereafter never left Citimortgage's possession.

(3) The Birdsalls contend the circuit court erred in

concluding that they would be unjustly enriched if Citimortgage

5 Section (2) addresses the contentions set forth on pp. 27-29, and
41 of the Birdsalls' opening brief.

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did not possess a valid first priority lien.6 The circuit court

determined that Citimortgage was entitled to foreclose on the

apartment as an alternative remedy "if the [N]ote or [M]ortgage

are found to be invalid." We decline to reach this issue, given

our conclusion that the Note and Mortgage are not invalid.7

(4) The Birdsalls contend, without more, "[t]he order

and judgment confirming the foreclosure sale must be vacated"

and "[t]he judgment of foreclosure must likewise be vacated[.]"8

In support of these arguments, the Birdsalls "incorporate by

reference" their prior contentions that the circuit court erred

in its findings and conclusions. The Birdsalls' contentions

lack merit, for the reasons set forth in this disposition.

(5) The Birdsalls contend the circuit court erred in

excluding trial exhibits showing that the Mortgage and Note were

not in ABN's loan "pipeline" at the time of the merger, and

which thus "proved" that Citimortgage could not be successor in

interest to ABN.9 The Birdsalls' contention lacks merit.

6 Section (3) addresses the contentions set forth on pp. 17-21 of
the Birdsalls' opening brief.

7 The Birdsalls proceed, on pp. 17, 22-23 of their opening brief,
to challenge several findings of fact and conclusions of law, entered by the
circuit court on May 15, 2018, and June 21, 2018. We determine that the
Birdsalls have not demonstrated that these findings are clearly erroneous,
nor that these conclusions are wrong.

8 Section (4) addresses the contentions set forth on pp. 29-30 of
the Birdsalls' opening brief.

9 Section (5) addresses the contentions set forth on pp. 30-31 of
the Birdsalls' opening brief.

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The circuit court properly excluded such evidence as

irrelevant to the triable issues because it had already

previously determined, on summary judgment, that Citimortgage,

as "successor by merger to ABN" "is the holder" of the Mortgage

and Note, and therefore held a "valid first priority mortgage

lien[.]"

(6) The Birdsalls contend the circuit court reversibly

erred in denying their respective stay motions.10 As we have

rejected the Birdsalls' challenges to the Judgment on

Foreclosure and Counterclaim, and Confirmation Judgment, the

Birdsalls' argument regarding the circuit court's denial of its

Motion to Stay Foreclosure is moot. See Wells Fargo Bank, N.A.

v. Ah Chong, No. CAAP-XX-XXXXXXX, 2015 WL 1265973 (Haw. App.

Mar. 19, 2015) (SDO).

Moreover, the Birdsalls fail to provide an adequate

record on which to conclude that the circuit court abused its

discretion in denying their motion for a stay of the Attorneys'

Fees Award. See In re RGB, 123 Hawaiʻi 1, 27, 229 P.3d 1066,

1092 (2010) ("[T]he burden is upon appellant . . . to show error

by reference to matters in the record, and he or she has the

responsibility of providing an adequate transcript.") (citations

omitted).

10 Section (6) addresses the contentions set forth on p. 32 of the
Birdsalls' opening brief.

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(7) The Birdsalls contend the Attorneys' Fees Award is

excessive and not related to work performed in defending against

their counterclaim.11 For the reasons set forth below, we do not

reach these arguments; we vacate the Attorneys' Fees Award on

other grounds, in accordance with Cole v. City and County of

Honolulu, 154 Hawaiʻi 28, 543 P.3d 460 (2024).

Citimortgage's post-judgment motion for attorneys'

fees and costs (Motion for Fees and Costs) is deemed filed on

January 2, 2019, for the purpose of calculating the 90-day

period to resolve the motion. Buscher v. Boning, 114 Hawaiʻi

202, 221, 159 P.3d 814, 833 (2007) (deeming a prematurely filed

post-judgment motion for attorneys' fees and costs to be filed

"immediately after the judgment becomes final for the purpose of

calculating the 90-day period" to resolve the motion, under

Hawaiʻi Rules of Appellate Procedure (HRAP) Rule 4(a)(3)). The

circuit court thus had until April 2, 2019, to resolve the

motion. See Cole, 154 Hawaiʻi at 31-32, 543 P.3d at 463-64 ("The

second clause [of HRAP Rule 4(a)(3)] requires the court to enter

that post-judgment order within 90 days after the party files

the motion. . . . Courts have no power to rule on a post-

judgment motion after the 90-day period. . . . [HRAP

11 Section (7) addresses the contentions set forth on pp. 24-27 of
the Birdsalls' opening brief.

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Rule 4(a)(3)] nullifies an order entered 90 days after a post-

judgment motion.").

The circuit court disposed of the Motion for Fees and

Costs via two orders: (1) a November 21, 2018 "Interim Order,"

which ruled that Citimortgage was entitled to an award of

reasonable attorneys' fees and costs, and (2) the July 5, 2019

Attorneys' Fees Award, which awarded the actual fees and costs,

thereby resolving the Motion for Fees and Costs. Because the

Attorneys' Fees Award was entered after expiration of the 90-day

deadline in HRAP Rule 4(a)(3), it is nullified. In the

circumstances here, and in light of prior Hawaiʻi case law, we

conclude that Citimortgage may reassert its claims for

attorneys' fees and costs upon remand. See Victoria Ward Ctr.,

L.L.C. v. Gold Guys Holdings, LLC, Nos. CAAP-XX-XXXXXXX, CAAP-

XX-XXXXXXX, CAAP-XX-XXXXXXX, 2019 WL 2635689, at *12 (Haw. App.

June 27, 2019) (mem. op.) (construing predecessor version of

HRAP Rule 4(a)(3)); In re Int’l Union of Painters & Allied

Trades, Painters Local Union 1791 v. Endo Painting Serv., Inc.,

Nos. CAAP-XX-XXXXXXX, CAAP-XX-XXXXXXX, CAAP-XX-XXXXXXX, 2015

WL 3649836, at *4 (Haw. App. June 10, 2015) (mem. op.) (same).

For the foregoing reasons, we vacate the Attorneys'

Fees Award. We affirm all other orders and judgments appealed

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from, and remand for further proceedings consistent with this

summary disposition order.

DATED: Honolulu, Hawaiʻi, May 21, 2024.

On the briefs: /s/ Clyde J. Wadsworth
Presiding Judge
R. Steven Geshell
for Defendants/ /s/ Karen T. Nakasone
Counterclaimants/ Associate Judge
Cross-claimants-Appellants.
/s/ Kimberly T. Guidry
Benjamin M. Creps Associate Judge
for Plaintiff/Counterclaim
Defendant-Appellee.

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