In re: Kekauoha-Alisa

Under Hawaii state law, strict compliance with foreclosure procedure is required to not void foreclosure sale. Even where a violation of strict compliance establishes unfair business practices, a claimant must establish a causal connection between the procedural violations and her injuries.

After Debtor, Ms. Kekauoha-Alisa, defaulted several times on mortgage payments, Lenders, Ameriquest Mortgage and JPMC Mortgage, initiated foreclosure sale. Ms. Kekauoha-Alisa filed for chapter 13, which automatically stayed foreclosure proceedings. Lenders properly postponed foreclosure sale three times by public announcement, but not the fourth. Shortly thereafter, Lenders sold the property, displacing Ms. Kekauoha-Alisa. Ms. Kekauoha-Alisa filed a suit in bankruptcy court and received a money judgment plus attorney’s fees against Lenders for failure to properly announce postponement of sale of the property. The Bankruptcy Appellate Panel (“BAP”) reversed the bankruptcy court’s findings. The Ninth Circuit concluded that according to the plain language of HRS § 667-5, Lenders failed to publicly announce postponement, rejecting the BAP’s conclusion that any reasonable means of communication constitutes “public announcement.” The Court affirmed the bankruptcy court’s finding that the appropriate remedy for a procedural violation is to void the foreclosure sale. The Court remanded to the bankruptcy court to recalculate damages because there was no finding of a causal link between Lenders’ failure to announce postponement and Ms. Kekauoha-Alisa’s damages. The Court refused to construe the bankruptcy court’s list of Ms. Kekauoha-Alisa’s damages as an implicit factual finding of a causal connection. Lastly, the Court vacated attorney’s fees “in light of [their] remand of the damages-causation issue.” AFFIRMED in part, VACATED and REMANDED in part.