Opinion
CIVIL NO. 16-00347 JAO-RLP
10-19-2018
ATOOI ALOHA, LLC, by Millicent Andrade and Craig B. Stanley, its Managing Members, et al., Plaintiffs, v. ABNER GAURINO, et al., Defendants.
ORDER GRANTING DEFENDANT/THIRD-PARTY PLAINTIFF APT-320 LLC'S MOTION FOR CONFIRMATION OF SALE, DISTRIBUTION OF PROCEEDS, AND DEFICIENCY JUDGMENT; EXHIBIT A ORDER GRANTING DEFENDANT/THIRD-PARTY PLAINTIFF APT-320 LLC'S MOTION FOR CONFIRMATION OF SALE, DISTRIBUTION OF PROCEEDS, AND DEFICIENCY JUDGMENT
INTRODUCTION
Defendant/Third-Party Plaintiff APT-320 LLC ("APT-320") requests confirmation of the sale of the real property being foreclosed upon in this action, located at 3721 Kanaina Street, Honolulu, Hawaii TMK (1)-3-1-025-008 CPR 0088 ("Property"). APT-320 further requests that the Court: 1) determine reasonable expenses and attorneys' fees for the Commissioner; 2) determine other amounts due and owing for its other claims; 3) determine the priorities and claims of all other parties to this action; 4) enter a deficiency judgment in its favor if the sale proceeds are insufficient to pay its claims; 5) issue a judgment for possession and a writ of possession giving the purchaser possession of the Property; 6) deem abandoned any personal property found in the Property and authorize the purchaser to dispose of said personal property; 7) discharge the Commissioner following the conveyance and distributions and filing of the distribution statement; and 8) enter judgment pursuant to Federal Rule of Civil Procedure ("FRCP") 54(b).
For the reasons articulated below, the Court GRANTS the Motion.
BACKGROUND
As the Court and the parties are familiar with the history of this case, the Court includes only those facts relevant to the disposition of the instant Motion.
On February 13, 2014, Plaintiff Atooi Aloha, LLC ("Atooi Aloha") entered into an agreement to purchase 333 shares of Better Living Global Marketing ("BLGM") in exchange for the conveyance of the Property to Defendant Abigail Gaurino ("Abigail"). Following the conveyance of the Property, Abigail obtained a $200,000.00 mortgage on the property from Investors Funding Corporation ("IFC"), which IFC then assigned to APT-320.
On January 31, 2018, Chief U.S. District Judge J. Michael Seabright issued an Order Re: Motions for Summary Judgment and Motion for Interlocutory Decree of Foreclosure ("SJ/Foreclosure Order"), Doc. No. 238, wherein he granted summary judgment in APT-320's favor and concluded that APT-320 established a prima facie case that it is entitled to foreclose on the mortgage.
On March 1, 2018, Chief Judge Seabright issued a Foreclosure Decree. Doc. No. 262. In it, he ordered that the mortgage be foreclosed upon, that Thomas J. Wong be appointed as Commissioner, and that the Property be sold in a manner allowed by law.
On September 20, 2018, the Commissioner filed his Report. Doc. No. 318. According to the Report, the Commissioner published a notice in the Honolulu Star-Advertiser, which contained a description of the Property, and location of the public auction. The auction took place on May 22, 2018, at noon, in front of the Judiciary Building, Honolulu, Hawaii. APT-320 presented the winning bid in the amount of $399,000.00. The Commissioner recommends that this bid be confirmed and seeks compensation totaling $5,414.53, which is comprised of $4,425.00 in fees and $989.53 in expenses.
On September 30, 2018, APT-320 filed the Motion for Confirmation of Sale, Distribution of Proceeds, and Deficiency Judgment ("the Motion"). Doc. No. 329.
On October 10, 2018, APT-320 filed a Motion for Attorney's Fees and Costs, requesting $84,219.86 in fees and $701.47 in costs. Doc. No. 340.
LEGAL STANDARD
Under Hawai'i law, a "court's authority to confirm a judicial sale is a matter of equitable discretion." Sugarman v. Kapu, 104 Haw. 119, 124, 85 P.3d 644, 649 (Haw. 2004) (quoting Brent v. Staveris, 7 Haw. App. 40, 45, 741 P.2d 722, 726 (Haw. Ct. App. 1987) (citation omitted)). In the absence of arbitrary action, courts enjoy broad discretion with respect to the confirmation of judicial sales. Id. (citation omitted). "In exercising its discretion, the 'court should act in the interest of fairness and prudence, and with a just regard to the rights of all concerned and the stability of judicial sales.'" Brent, 7 Haw. App. at 45, 741 P.2d at 726 (quoting Hoge v. Kane II, 4 Haw. App. 533, 540, 670 P.2d 36, 40 (Haw. Ct. App. 1983)). Courts may deny the confirmation of a sale when the highest bid is so grossly inadequate as to shock the conscience. Id. (citing Hoge, 4 Haw. App. at 540, 670 P.2d at 40; Indus. Mortg. Co., L.P. v. Smith, 94 Hawai'i 502, 510, 17 P.3d 851, 859 (Haw. Ct. App. 2001)).
DISCUSSION
As an initial matter, the Court notes that it has received no written or other opposition or objection to this Motion. There being no objection or opposition, and no other individual having appeared at the hearing to request that bidding be reopened, the Court makes the following findings and GRANTS the Motion as stated below:
1. The Property is the property foreclosed upon in this action and is more fully described in Exhibit A, attached to this Order.
2. The Commissioner complied with the requirements of the Foreclosure Decree and the sale was legally made and fairly conducted.
3. The Court ratifies, approves, and confirms the Commissioner's Report in all respects.
4. The Court confirms the sale of the Property and authorizes the Commissioner to execute and deliver conveyance documents for the Property to APT-320 or its nominee.
5. APT-320's $399,000.00 bid, the highest bid, is fair and equitable and as high as any that could reasonably be obtained under the circumstances.
6. The Commissioner is authorized to accept the balance, if any, of the purchase price.
7. The closing date for the sale of the Property shall occur within 40 days after the filing of this Order, unless the Commissioner
determines that additional time is required.
8. Pursuant to the Foreclosure Decree and Hawai'i Revised Statutes ("HRS") § 634-51, Atooi Aloha, Plaintiff Craig B. Stanley ("Stanley"), as Trustee for the Edmon Keller and Cleavette Mae Stanley Family Trust ("the Trust"), Plaintiff Stanley, Plaintiff Millicent Andrade, Defendant Abner Gaurino, Defendant Aurora Gaurino, Abigail, Third-Party Defendant AOAO, Third-Party Cross Defendant Abigail, Third-Party Cross Defendant Stanley, as Trustee for the Trust, and Third-Party Cross Defendant Stanley, and all persons claiming by, through, or under those parties, shall be and are hereby forever barred from any and all right, title, and interest claims at law or in equity in the Property.
9. The Commissioner reasonably and necessarily incurred $989.53 in expenses and $4,425.00 in fees, which shall be the first and second priority funds, respectively, payable out of the sale and rental proceeds of the Property.
10. APT-320 requests $353.00 in expenses. The Court finds that these expenses were reasonably incurred. Said expenses, along with allowable costs and attorneys' fees, shall be the third priority funds payable out of the sale and rental proceeds of the Property.
11. In its Motion for Attorney's Fees and Costs, APT-320 submits that it is owed the following, exclusive of attorneys' fees, costs, expenses, charges, or other amounts:
$220,000.00 in principal
$ 73,031.90 in interest to August 31, 2017
$ 40,150.00 in interest to August 31, 2018, plus $110.00 per diem thereafter
$ 4,713.23 in property tax
$337,895.13 Total
APT-320 is therefore currently owed $337,895.13 in accordance with the SJ/Foreclosure Order and Foreclosure Decree. This amount shall be the fourth priority funds payable from the sale and rental proceeds of the Property.
12. Pursuant to HRS §§ 514B-146 and 667-3 and the Stipulations between AOAO and Plaintiffs and Abigail, Doc. Nos. 334, 335, AOAO is entitled to remaining proceeds, to the extent such proceeds are available, as next lien holder.
13. If the proceeds are insufficient to pay APT-320's claims, expenses, charges, costs, and attorneys' fees, or amounts due and owing to AOAO, deficiency judgments shall enter in favor of APT-320 and AOAO against Abigail, upon the filing of appropriate declarations by APT-320 and AOAO.
14. A Judgment for Possession and a Writ of Possession shall issue, giving the Purchaser Possession of the Property. APT-320 is to submit a proposed Judgment for Possession and Writ of Possession by October 29, 2018 to otake_orders@hid.uscourts.gov.
15. Any personal property found in or on the Property is deemed abandoned and may be disposed of as the Purchaser sees fit.
16. After the Commissioner has made the conveyance and distributions as set forth in this Order, and filed his distribution statement, he is discharged from further responsibilities and duties as Commissioner.
17. This Order shall be entered as a final judgment pursuant to FRCP 54(b) as there is no just reason for delay.
At the hearing, the Commissioner clarified that APT-320, not IFC, had the winning bid.
This closing period is not intended to (nor should it) curtail Defendant Association of Apartment Owners of Diamond Head Sands' ("AOAO") rights under Hawai'i's Condominium Property Act.
The Motion for Attorney's Fees and Costs is pending before Magistrate Judge Richard Puglisi.
This amount may be subject to adjustment based on additional expenses, fees, costs, and interest incurred through the conveyance of the Property. --------
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, October 19, 2018.
/s/_________
Jill A. Otake
United States District Judge
EXHIBIT A
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