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Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
22-MAY-2026
08:30 AM
Dkt. 80 MO

NO. CAAP-XX-XXXXXXX

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAIʻI

GERALD K. MOUNT, JR. and JANE R. MOUNT,
Plaintiffs/Counterclaim Defendants/Cross-claimants-Appellees,
v.
MARGARET APAO, Defendant-Appellant, and
DIRK APAO, AS PERSONAL REPRESENTATIVE OF THE ESTATE OF
ROSE MARIE ALVARO, DECEASED, Defendant/Counterclaimant/
Third-Party Plaintiff-Appellant, and
SESHA LOVELACE, AS CO-PERSONAL REPRESENTATIVE OF THE ESTATE OF
ROSE MARIE ALVARO, DECEASED, Defendant/Cross-claim Defendant-
Appellee, and U.S. BANK NATIONAL ASSOCIATION, A NATIONAL
ASSOCIATION AS TRUSTEE FOR THE STRUCTURED ASSET SECURITIES
CORPORATION MORTGAGE PASS-THROUGH CERTIFICATES, 2005-SC1,
Third-Party Defendant/Cross-claimant-Appellee, and
JOHN DOES 1-10; JANE DOES 1-10; DOE PARTNERSHIPS 1-10;
DOE CORPORATIONS 1-10; DOE ENTITIES 1-10;
ALL PERSONS RESIDING WITH AND ANY PERSONS CLAIMING BY AND
THROUGH OR UNDER THEM, Defendants, and
DOES 1-50, Third-Party Defendants.

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CIVIL NO. 1CC111002005)

MEMORANDUM OPINION
(By: McCullen, Presiding Judge, Guidry, J.,
and Circuit Court Judge Costa in place of Nakasone, C.J.,
Leonard, Hiraoka, and Wadsworth, JJ., recused)
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Defendant-Appellant Margaret Apao (Margaret) and

Defendant/Counterclaimant/Third-Party Plaintiff-Appellant Dirk

Apao (Dirk), as the Personal Representative of the Estate of Rose

Marie Alvaro (the Estate), appeal from the October 17, 2023

Final Judgment and eight orders entered by the Circuit Court of

the First Circuit. 1

The proceedings in this case span over 15 years, and

this is the third appeal. We vacate in part.

I. BACKGROUND

In 2011, Plaintiffs-Appellees Gerald K. Mount, Jr. and

Jane R. Mount (Mounts) filed a complaint against Margaret, and

Dirk and Sesha Lovelace (Sesha), as co-personal representatives

of the Estate. 2 The Mounts alleged that they purchased the real

property located at 2979 Mākālei Place, Honolulu, Hawai‘i 96815

(the Property) at a nonjudicial foreclosure sale, that Margaret

was living at the Property with permission from the Estate, and

that the Mounts were entitled to possession of the Property. The

Mounts asserted claims for ejectment and quiet title.

1 The Honorable John M. Tonaki entered the Final Judgment, and six of
the eight orders challenged on appeal. The Honorable Keith K. Hiraoka
entered two of the eight orders - the July 7, 2017, and October 23, 2017
orders in favor of the Mounts.
2
According to Dirk, in 2003, the circuit court appointed him and his
mother, Margaret, as co-personal representatives of the Estate. In 2010,
Sesha replaced Margaret as a co-personal representative and later resigned,
leaving Dirk as the sole personal representative of the Estate.

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Margaret and Dirk filed an answer, and Dirk, in his

capacity as personal representative of the Estate, filed a

Counterclaim against the Mounts and a Third-Party Complaint

against U.S. Bank National Association, a National Association

as Trustee for the Structured Asset Securities Corporation

Mortgage Pass-Through Certificates, 2005-SC1 (U.S. Bank).

Dirk asserted that decedent Rose Marie Alvaro (Alvaro)

obtained a $500,000.00 loan in 1999 from Fremont Investment &

Loan, which was secured by a mortgage on the Property. Dirk

asserted that the nonjudicial foreclosure U.S. Bank conducted,

which resulted in the Mounts claiming ownership of the Property,

violated the probate code, the nonjudicial foreclosure statute,

and the mortgage, and that there had been a defective and

fraudulent transfer of the mortgage. Dirk requested a

declaratory judgment that the nonjudicial foreclosure and

transfer of the Property were null and void, a judgment quieting

title in favor of the Estate, and damages.

In 2013, a stipulation for partial dismissal dismissed

the Mounts's claims against Sesha without prejudice. Another

stipulation dismissed Claim 4 of Dirk's Counterclaim and Third-

Party Complaint, the claim for defective and fraudulent transfer

of the mortgage.

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Also in 2013, the circuit court granted summary

judgment in favor of the Mounts on their claim for ejectment and

issued a writ of possession. Margaret and Dirk appealed.

In Mount v. Apao (Mount I), 139 Hawaiʻi 167, 179-80,

384 P.3d 1268, 1280-81 (2016), the Hawaiʻi Supreme Court

determined that the nonjudicial foreclosure sale conducted by

U.S. Bank violated Hawaiʻi Revised Statutes (HRS) § 667-5

(Supp. 2008), repealed by H.B. 1875, 26th Leg., Reg. Sess.

(2012), and that further proceedings were necessary to determine

if the Mounts were innocent purchasers for value.

In 2017, the circuit court granted a renewed motion for

summary judgment, which determined the Mounts were innocent or

bona fide purchasers for value. The circuit court entered a

Hawaiʻi Rules of Civil Procedure (HRCP) Rule 54(b) judgment, from

which the Estate appealed.

In the meantime, the Mounts filed a Motion for Award of

Attorneys' Fees and Costs, and Damages (Mounts's 1st motion for

damages). The circuit court granted in part and denied in part

the Mounts's 1st motion for damages, which denied them

attorneys' fees, granted costs, and denied without prejudice the

Mounts's request for damages for trespass and wrongful possession

of the Property.

The Mounts also filed a Motion for Award of Damages for

Ejectment, Pre-Judgment Interest, and for Entry of Final Judgment

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(Mounts's 2nd motion for damages). The circuit court granted in

part and denied in part the Mounts's 2nd motion for damages,

which awarded the Mounts damages and prejudgment interest but

denied their request for HRCP Rule 54(b) certification.

The circuit court issued a minute order, staying

further proceedings pending termination of the Estate's appeal

from the determination that the Mounts were innocent or bona fide

purchasers for value.

In March 2021, this court affirmed the circuit court's

determination that the Mounts were innocent or bona fide

purchasers for value. Mount v. Apao (Mount II), 149 Hawaiʻi 104,

482 P.3d 567, CAAP-XX-XXXXXXX, 2021 WL 944203 (App. Mar. 12,

2021) (mem. op.).

In 2022, Dirk moved for leave to amend his Third-Party

Complaint, which the circuit court denied.

In January 2023, U.S. Bank filed a Motion for Partial

Summary Judgment on Third-Party Plaintiff's Alleged Damages (MPSJ

regarding damages), which the circuit court granted in part.

The circuit court determined that the Estate could not recover

for certain personal damages claimed by Dirk and Margaret or for

tax obligations the Estate incurred in the sale of other Estate

real properties.

In June 2023, U.S. Bank filed a Motion for Summary

Judgment on Third-Party Plaintiff's Wrongful Foreclosure Claim

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(MSJ regarding wrongful foreclosure). U.S. Bank asserted that

the Estate had no damages caused by the wrongful foreclosure once

the outstanding mortgage debt was taken into account, and that

the Estate lacked the ability to reinstate the loan. The circuit

court granted the MSJ regarding wrongful foreclosure.

U.S. Bank filed an Amended Motion for Partial Summary

Judgment on Third-Party Plaintiff's Violation of Probate Code

Claim (MPSJ regarding Probate Code Claim). The Estate had

claimed that U.S. Bank violated HRS § 560:3-803 (2018) by

failing to timely present its claim to the Estate and that the

nonjudicial foreclosure and subsequent sale of the Property were

void (Probate Code Claim). However, according to U.S. Bank, the

Estate failed to notify U.S. Bank of the deadline for

presentation of claims against the Estate, and notwithstanding

the lack of notice, U.S. Bank provided the Estate with notice of

its claim on numerous occasions. The circuit court granted U.S.

Bank's MPSJ regarding Probate Code Claim.

In July 2023, U.S. Bank filed a Motion for Entry of

Judgment Pursuant to HRCP Rule 54(b) (Motion for Rule 54(b)

Judgment regarding Mounts's claims). U.S. Bank asserted that it

had been assigned the Mounts's claims against Margaret and the

Estate, all claims involving the Mounts were finally decided, and

it sought entry of a Final Judgment in its favor for the Mounts's

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claims. The circuit court granted the Motion for Rule 54(b)

Judgment regarding Mounts's claims.

Dirk filed a Renewal of his Motion for Partial Summary

Judgment as to Liability on his Third-Party Complaint (Dirk's

Renewed MPSJ regarding liability). The circuit court denied

Dirk's Renewed MPSJ regarding liability.

At the September 2023 hearing on U.S. Bank's Motion for

Rule 54(b) Judgment regarding Mounts's claims and Dirk's Renewed

MPSJ regarding liability, the parties agreed that although U.S.

Bank had requested entry of final judgment only as to the claims

involving the Mounts, all claims had been disposed of and entry

of a final judgment on all claims was appropriate.

On October 17, 2023, the circuit court entered a Final

Judgment with respect to all claims. Judgment was entered

(1) in favor of U.S. Bank, as assignee of the Mounts's claims

against Margaret and the Estate in the amount of $406,452.62 as

of May 31, 2023, with per diem interest of $53.43 continuing to

accrue thereafter, and (2) in favor of U.S. Bank on the Estate's

Counterclaims against the Mounts and the Third-Party Complaint

against U.S. Bank.

Margaret and Dirk appeal from the October 17, 2023

Final Judgment, and the (1) July 7, 2017 order granting in part

and denying in part Mounts's 1st motion for damages;

(2) October 23, 2017 order granting in part and denying in part

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Mounts's 2nd motion for damages; (3) April 11, 2022 order denying

Dirk's motion for leave to amend his Third-Party Complaint;

(4) April 12, 2023 order granting in part and denying in part

U.S. Bank's MPSJ regarding damages; (5) August 14, 2023 order

granting U.S. Bank's MPSJ regarding Probate Code Claim;

(6) August 29, 2023 order granting U.S. Bank's MSJ regarding

wrongful foreclosure; (7) September 18, 2023 order denying

Dirk's Renewed MPSJ regarding liability; and (8) September 18,

2023 order granting U.S. Bank's Motion for Rule 54(b) Judgment

regarding Mounts's claims.

II. DISCUSSION

On appeal, Dirk (and Margaret) raise the following

five points of error (POE), contending the circuit court:

(1) erred by granting U.S. Bank's motion for summary judgment on

the Estate's wrongful foreclosure claim; (2) erred by granting

U.S. Bank's motion for partial summary judgment on the Estate's

violation of the Probate Code Claim; (3) erred by entering

judgment in favor of U.S. Bank and against the Estate and

Margaret in the amount of $406,452.62; (4) erred by denying the

Estate's motion for summary judgment as to liability; and

(5) abused its discretion by denying the Estate's motion for

leave to amend the third-party complaint.

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We hold the circuit court erred by granting summary

judgment in favor of U.S. Bank on the Estate's claim for

wrongful foreclosure (POE 1). We otherwise affirm.

A. The Circuit Court Erred by Granting Summary Judgment in
Favor of U.S. Bank on the Estate's Claim for Wrongful
Foreclosure (POE 1)

Dirk asserts that the circuit court erred by granting

summary judgment on the Estate's wrongful foreclosure claim

because the Estate was entitled to recover for the equity in the

Property at the time of U.S. Bank's wrongful foreclosure, but the

circuit court accepted U.S. Bank's arguments that the Estate is

limited to recovering its out-of-pocket expenses minus the

outstanding mortgage debt, and the Estate would not have been

able to reinstate the loan.

We review the grant or denial of summary judgment de

novo. Nationstar Mortg. LLC v. Kanahele, 144 Hawaiʻi 394, 401,

443 P.3d 86, 93 (2019).

To prevail on a wrongful foreclosure claim, a borrower

must establish: "(1) a legal duty owed to the mortgagor by the

foreclosing party; (2) a breach of that duty; (3) a causal

connection between the breach of that duty and the injury

sustained; and (4) damages." Bank of Am., N.A. v. Reyes-Toledo,

143 Hawaiʻi 249, 264 n.12, 428 P.3d 761, 776 n.12 (2018),

overruled on other grounds by Wilmington Sav. Fund Soc'y, FSB v.

Domingo, 155 Hawaiʻi 1, 556 P.3d 347 (2024).

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Because the Hawaiʻi Supreme Court determined in Mount I

that it was wrong for U.S. Bank not to provide reinstatement

figures, the Estate may be able to recover the positive equity.

The Estate presented sufficient evidence to raise a genuine

issue of material fact regarding its ability to reinstate the

loan and, therefore, it was error to grant summary judgment in

favor of U.S. Bank on the Estate's wrongful foreclosure claim.

1. Positive equity

The damages recoverable by a borrower for wrongful

foreclosure differ depending on whether the unlawful foreclosure

was "merely procedurally defective" or undertaken "without

foreclosure authority" at all. Llanes v. Bank of Am., N.A., 154

Hawaiʻi 423, 431, 555 P.3d 110, 118 (2024) (citing Wong v. Ass'n

of Apartment Owners of Harbor Square, 154 Hawaiʻi 58, 63, 67, 545

P.3d 547, 552, 556 (2024)). In Llanes, the plaintiff borrowers

pursuing wrongful foreclosure claims were not current on their

mortgages, and the lender had the right to foreclose upon their

properties under powers of sale. Id. The borrowers claimed that

the nonjudicial foreclosures did not comply with the requirements

of HRS § 667-5 because the lender continued the auction but did

not republish notice of the actual auction dates. Id. at 426-27,

555 P.3d at 113-14. Borrowers sought restitution and damages,

including the foreclosed properties' market values plus

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interest, lost rent, and acquisition and improvement costs. Id.

at 427, 555 P.3d at 114.

The supreme court held that, in computing damages for

the wrongful foreclosures, the Llanes borrowers were entitled to

recover their out-of-pocket expenses less the amount of the

forgiven mortgage debts. Id. at 431-32, 555 P.3d at 118-19.

They also were permitted to recover for loss-of-use damages,

which the Llanes borrowers claimed for the period beginning from

when they were ousted from their properties and continuing until

six months after the properties were sold to third parties. Id.

at 427, 433, 545 P.3d at 114, 120. The supreme court agreed with

the circuit court's determination that the Llanes borrowers were

not entitled to recover for the value of the properties at the

time of the loan because it would put them "in a much better

position than they were in pre-foreclosure where the property was

a distressed asset in a depressed housing market." Id. at 427,

432, 545 P.3d at 114, 119.

In Wong, the Hawaiʻi Supreme Court held that the

plaintiff was entitled to recover positive equity in the property

as an element of damages for wrongful foreclosure where a

condominium association conducted a nonjudicial foreclosure

without authority to do so. 154 Hawaiʻi at 61, 545 P.3d at 550.

The condominium association in Wong did not have a power of sale

that permitted it to conduct nonjudicial foreclosures. Id. The

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supreme court stated that the damages should be calculated by

taking the positive equity in the property when wrongfully

foreclosed (property's market value minus outstanding mortgage

debt), adding lost rents or use from the time between the

wrongful foreclosure and a valid foreclosure, minus unpaid

association fees and assessments up until the valid foreclosure.

Id. at 61, 67, 545 P.3d at 550, 556. The supreme court stated

that computing damages in this manner "places the plaintiff in

their pre-tort position with a remedy tethered to the wrong."

Id. at 61, 545 P.3d at 550. As relevant here, the supreme court

stated:

A plaintiff's pre-tort position also includes their
equitable right to redeem the property before a final
foreclosure judgment. See Fed. Home Loan Mortg. Corp. v.
Transamerica Ins. Co., 89 Hawaiʻi 157, 164, 969 P.2d 1275,
1282 (1998) (recognizing equitable redemption). If a
plaintiff can clearly show that they would have redeemed
their property absent the AOAO's wrongful foreclosure, they
may assert damages from losing their equitable right.

Id. at 66-67, 545 P.3d at 555-56.

In Mount I, the supreme court determined that U.S.

Bank's nonjudicial foreclosure on the Estate's Property was

wrongful because Sesha made repeated requests for reinstatement

figures from February 2011, until the foreclosure sale on

April 4, 2011, and U.S. Bank failed to provide it. 139 Hawaiʻi

at 178-79, 384 P.3d at 1279-80. The supreme court noted that "a

right to cure a default and stop the foreclosure continues up to

the day of the confirmation of the sale", and "equity abhors

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forfeitures." Id. at 178, 384 P.3d at 1279 (quoting Santiago v.

Tanaka, 137 Hawaiʻi 137, 157, 366 P.3d 612, 632 (2016)).

Based on Wong and the Mount I determination that the

foreclosure was wrongful, unless it was undisputed that the

Estate would have been incapable of reinstating the loan, the

Estate should be entitled to recover the positive equity in the

Property as of the date of the foreclosure sale. See Wong, 154

Hawaiʻi at 66-67, 545 P.3d at 555-56.

In moving for summary judgment, U.S. Bank asserted that

consistent with Lima v. Deutsche Bank Nat'l Tr. Co., 149 Hawaiʻi

457, 467, 494 P.3d 1190, 1200 (2021), which held that a

borrower's mortgage debt must be taken into account in computing

damages, the Estate would not be able to prove out-of-pocket

damages. With respect to the first mortgage, the payments made

by Alvaro and her Estate prior to the foreclosure totaled

$531,538.90. However, the balance of the first mortgage paid by

the nonjudicial foreclosure sale was $574,918.19. With respect

to the second mortgage, payments made by Alvaro and her Estate

totaled $270,024.04. The second mortgage holder received

payment of $600,084.48 from the nonjudicial foreclosure sale

proceeds. 3 Because the amounts paid on the first and second

3 In the argument section of U.S. Bank's memorandum in support of the
MPSJ regarding Wrongful Foreclosure Claim, there is a typographical error
that the amount paid on the second mortgage was $600,084.14, but its exhibit
showed the payment as being for $600,084.48. The facts section of the
memorandum states the amount paid on the second mortgage as being $600,084.48,
consistent with its Exhibit 21.

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mortgages upon closing of the nonjudicial foreclosure sale

($574,918.19 + $600,084.48 = $1,175,002.67) exceeded the payments

made by Alvaro and the Estate on those mortgages ($531,538.90 +

$270,024.04 = $801,562.94), U.S. Bank argued that the Estate

would be unable to prove any out-of-pocket damages. 4

U.S. Bank continues to maintain that the Estate was

limited to out-of-pocket damages because in Mount I the supreme

court instructed the circuit court to apply Santiago to

determine an appropriate remedy, and in Santiago the plaintiff

was awarded out of pocket losses. However, the supreme court

noted that, similar to Santiago, the Mounts had possession of

the Property for some time, which may render voiding the

foreclosure sale impracticable. 139 Hawaiʻi at 180, 384 P.3d at

1281.

U.S. Bank asserts that even under Wong, the Estate

would not be able to prove damages because this court determined

in Mount II that the Mounts had paid adequate consideration for

the property. However, adequate consideration to qualify as a

bona fide purchaser is not the same as fair market value because

4 If the Estate is entitled to indemnification from U.S. Bank for its
liability to the Mounts, the Estate still would not be able to demonstrate
damages under the out-of-pocket-expenses method. The October 17, 2023 Final
Judgment awarded U.S. Bank, as assignee of the Mounts's claims, a judgment of
$406,452.62, plus per diem interest of $53.43 for each day after May 31,
2023, until the judgment was satisfied. The payments made by Alvaro and the
Estate on the mortgages and the amount owed to the Mounts total $1,208,015.56
($801,562.94 + $406,452.62), which exceeds the $1,175,002.67 debt paid off
through the nonjudicial foreclosure by $33,012.89. The Estate received
$33,926.96 in surplus proceeds from U.S. Bank's nonjudicial foreclosure.

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a bona fide purchaser is not required to pay fair market value.

See McCullough v. Bank of Am. N.A., 156 Hawaiʻi 446, 456, 575

P.3d 536, 546 (2025) (explaining that "a bona fide purchaser is

one who acquires an interest in a property for valuable

consideration, in good faith, and without notice of another

party's adverse interests in the property") (citation modified);

HawaiiUSA Fed. Credit Union v. Monalim, 147 Hawaiʻi 33, 45, 464

P.3d 821, 833 (2020) (recognizing that "the price obtained at a

foreclosure sale is often far below the fair market value").

The Estate presented an appraisal report prepared by

Matthew Yong and Harlin Young, licensed appraisers, that

determined the fair market value of the Property to be

approximately $3,500,000.00 on July 22, 2011, the date U.S. Bank

conveyed the Property to the Mounts. 5 Rather than receive the

$2,324,997.33 of equity ($3,500,000.00 (fair market value) -

$574,918.19 (1st mortgage balance) - $600,084.48 (2nd mortgage

balance)) in the Property at the time of transfer to the Mounts,

the Estate only received $33,926.96 in surplus proceeds from the

wrongful foreclosure. Considering the lost equity alone, it

appears that the circuit court erred in granting summary

judgment on the wrongful foreclosure claim on the basis that the

5 A copy of the deed recorded on July 22, 2011, conveying the Property
to the Mounts is attached to the Mounts's Complaint.

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Estate was limited to out-of-pocket expenses and could prove no

damages. 6

2. Genuine issue of material fact

Construed in the light most favorable to the Estate,

Dirk's submissions raise a genuine issue of material fact

regarding the Estate's ability to reinstate the loan and whether

the wrongful foreclosure caused the Estate damages.

Dirk submitted his declaration, which included a list

he prepared identifying five real properties the Estate owned, in

addition to the subject Property, and his estimates of the equity

in each of the real properties totaling approximately

$5,865,000.00. Dirk asserted that if U.S. Bank had litigated a

claim in the formal probate proceeding or a judicial foreclosure

action, it would have been required to provide reinstatement

information, which would have allowed the Estate to avoid

foreclosure through mortgage financing, private lending, or

selling the Estate's other assets. The Estate also could have

sold the subject Property. The appraisal obtained by the Estate

showed there was $2,324,997.33 of equity in the Property at the

time of the transfer to the Mounts.

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The Estate also claimed it should be awarded prejudgment interest,
storage costs incurred for storing the Estate's personal property after being
evicted, attorneys' fees and costs, and indemnification for the amounts owed
to the Mounts. The Estate presented storage rental contracts and credit card
statements to substantiate its claimed storage expenses but did not present
any theory as to why the Estate would be entitled to an attorneys' fees award.

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U.S. Bank asserts that the Estate failed to raise a

genuine issue of material fact that the failure to provide the

reinstatement quote caused the Estate damages because the Estate

did not have enough cash to bring the loan current and had no

evidence of any timely steps taken to reinstate the loan.

U.S. Bank submitted copies of the Estate's bank

statements showing the Estate lacked cash. U.S. Bank also

submitted a declaration from Gary Dubin, attorney for Dirk, in

which Dubin stated that the Estate's cash flow was insufficient

to pay the existing mortgages and maintain the Estate

properties, and that Dirk, Margaret, and another family member

loaned the Estate over $300,000.00. U.S. Bank also submitted

Dirk's deposition testimony acknowledging the Estate had only

approximately $10,000.00 in cash, although he claimed he would

have been able to obtain funds to reinstate the loan within

thirty days through borrowing from a friend or his brother. An

April 1, 2011 reinstatement quote prepared by the loan servicer

but not sent to the co-personal representatives stated

$144,586.95 was necessary to reinstate the loan.

In addition, U.S. Bank argued that although Dirk

claimed the Estate could sell assets to reinstate the loan, it

did not list any real properties for sale until February 2011,

when it listed a Kapiʻolani Boulevard property for sale, and the

sale did not close until July 31, 2013, more than two years after

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the nonjudicial foreclosure sale. Dirk testified that the

Kapiʻolani Boulevard property sale proceeds were applied to tax

liens. The Estate was aware the subject mortgage loan had been

in default since 2010 because Margaret received a February 25,

2010 reinstatement quote addressed to Alvaro and shared it with

Dirk.

However, the fact that the Estate only listed the

Kapiʻolani Property for sale and the sale did not close by the

time of the Mounts's purchase does not establish that the Estate

would not - or could not - have raised the cash necessary to

reinstate the loan if given a reinstatement quote. The auction

appears to have generated significant interest in the Property,

with Gerald Mount stating that three to five parties other than

himself participated in the bidding, and approximately fifteen to

twenty bids were submitted. Dirk states the co-personal

representatives "could have then made arrangements" to reinstate

the loan "through obtaining mortgage financing, private lending,

or selling other assets of the Estate" or selling the Property

itself. See Mount I, 139 Hawaiʻi at 177, 384 P.3d at 1278

(citing HRS § 560:3-703(a) (Supp. 1997)) ("A personal

representative is a fiduciary acting on behalf of an estate.").

Construed in the light most favorable to the Estate,

the declaration and the appraisal suggesting that there was

$2,324,997.33 of equity in the Property appear to raise a

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disputed issue of material fact of whether the Estate was capable

of, and would have reinstated the first mortgage loan or sold

the Property, if presented with a formal reinstatement quote.

B. The Circuit Court Did Not Err by Denying Dirk's Renewed MPSJ
Regarding Liability (POE 4)

We next address POE 4 as it relates to the Estate's

wrongful foreclosure claim. In POE 4, Dirk asserts the circuit

court erred by denying his Renewed MPSJ regarding liability on

the wrongful foreclosure claim. Dirk contends Mount I determined

that U.S. Bank's nonjudicial foreclosure was wrongful and was

law of the case. Therefore, Dirk asserts, the circuit court

should have determined liability in favor of the Estate and

ordered a trial on damages.

A determination of a question of law made by an

appellate court becomes law of the case and may not be reopened

at a later stage of the litigation. Weinberg v. Mauch, 78

Hawaiʻi 40, 47, 890 P.2d 277, 284 (1995). Although Mount I

determined that U.S. Bank violated HRS § 667-5(c) by not

providing Sesha with reinstatement figures, the Estate would

still need to prove causation before liability on the wrongful

foreclosure claim could be established. See Reyes-Toledo, 143

Hawaiʻi at 264 n.12, 428 P.3d at 776 n.12.

For the reasons discussed above regarding POE 1, the

law of the case does not mandate liability in favor of the Estate

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because the issues of causation and damages were disputed issues

of fact.

C. The Circuit Court Did Not Err by Granting Summary Judgment
on the Violation of Probate Code Claim (POE 2)

Dirk asserts that by proceeding with the nonjudicial

foreclosure auction, U.S. Bank violated HRS § 560:3-803(c)(2) of

the Hawaiʻi probate code, which bars claims arising after the

death of the decedent, if not presented to the Estate within

eighteen months of the decedent's death or within four months

after the claim arises, whichever is later. 7

In moving for summary judgment on the violation of

probate code claim, U.S. Bank asserted that it did not violate

HRS § 560:3-803 because: (1) the co-personal representatives

failed to notify U.S. Bank of the deadline to present claims

against the Estate; and (2) notices sent to the Property,

addressed to Alvaro, constitute a timely presentation of the

claim to the Estate.

HRS § 560:3-803, "Limitations on presentation of

claims," states in part:

(a) All claims against either a decedent or a
decedent's estate that arose before the death of the
decedent, including claims of the State and any subdivision
thereof, whether due or to become due, absolute or
contingent, liquidated or unliquidated, founded on
contract, tort, or other legal basis, if not barred earlier
by another statute of limitations or non-claim statute, are
barred against the estate, the personal representative, the

7
U.S. Bank agrees that its claim arose after Alvaro's death because
Alvaro died in 2002, but the loan default occurred in March 2009.

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decedent's trustee and the heirs and devisees of the
decedent, unless presented within the earlier of the
following:

(1) No later than:

(A) Four months after the date of the first
publication of notice to creditors if
notice is given in compliance with
section 560:3-801(a); or

(B) Sixty days after the mailing or other
delivery of a written notice, as provided
in section 560:3-801(b); whichever period
(A) or (B) expires later; or

(2) Within eighteen months after the decedent's
death, if notice to creditors has not been
published as provided in section 560:3-801(a)
or delivered as provided in section 560:3-
801(b).

. . . .

(c) All claims against a decedent's estate which
arise at or after the death of the decedent, including
claims of the State and any subdivision thereof, whether
due or to become due, absolute or contingent, liquidated or
unliquidated, founded on contract, tort, or other legal
basis, are barred against the estate, the personal
representative, the decedent's trustee, and the heirs and
devisees of the decedent, unless presented as follows:

(1) A claim based on a contract with the personal
representative or trustee, within four months
after performance by the personal
representative or trustee is due; or

(2) Any other claim, within the later of four
months after it arises, or the time specified
in subsection (a)(2).

(d) Nothing in this section affects or prevents:

(1) Any proceeding to enforce any mortgage, pledge,
or other lien upon property of the estate[.]

(Emphases added.)

At the hearing, the circuit court stated:

THE COURT: Okay. The -- the Court will grant Third
Party Defendant U.S. Bank's motion for partial summary
judgment on the Third Party Plaintiff's violation of
probate code claim. The Court will find that there's no
genuine issue of material fact that U.S. Bank timely made a

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claim within four months of the claim arising. U.S. Bank
presented their claim in compliance with HRS 560:3-
803(c)(2) within four months after it arose.

Specifically, the April 16th, 2009 default notice was
mailed to the property where Ms. Apao, the personal
representative at the time, resided. Also, the fax that
Ms. Apao sent to her son on March 31st, 2010 indicates that
Ms. Apao had notice that the mortgage was in default and
that the reinstatement amount was $72,645.42. And the fact
that the communications came through [American Home
Mortgage Servicing, Inc. (AHMSI)], the Court is not
convinced that the parties did not have notice that AHMSI
was the agent for the bank, when clearly it was the
mortgage through U.S. Bank that was being discussed in
these communications.

In Lawelawe v. Kahalepuna, 26 Haw. 615 (Haw. Terr.

1922), the Territorial Court held that no particular form is

required to present a claim against an estate, and explained:

The purposes of a claim are to advise the legal
representative of the estate of the deceased debtor of the
nature and amount of the alleged indebtedness so that he may
intelligently determine whether the same is just and should
be paid and if paid would be available as a bar to any
future action that might be prosecuted by the creditor upon
the same claim. When presented the administrator or
executor, as trustee for all creditors and beneficiaries
ultimately entitled, is bound to investigate the claim and
if found to be just, make provision for its payment. These
requirements are simple and due to the liberality of
interpretation accorded to statutes of this character in
respect to the remedy provided no formality is required.
The sufficiency of a claim is not measured by its ability to
withstand a general or special demurrer. A cause of action,
as that term is understood in pleading, need not be stated.
The rules of pleading do not apply.

26 Haw. at 617-18.

Given that no particular form is required for the

presentation of a claim, the circuit court did not err in

determining there was no genuine issue of material fact that

U.S. Bank timely presented a claim through its April 16, 2009

default notice.

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The April 16, 2009 default notice was addressed to the

Borrower, Alvaro, at the Property, rather than to Margaret or

Dirk as co-personal representatives. A declaration from James

Brantley (Brantley), vice president of Homeward Residential,

Inc., formerly known as AHMSI, states that neither Homeward nor

the prior servicer, Option One Mortgage, was ever provided

documentation evidencing the death of the Borrower or given an

address other than the Property address for giving of notices to

the Borrower. As a result, all communications regarding the

loan were addressed to the Borrower and sent to the Property.

The April 16, 2009 default notice identified the debt

as the original mortgage in the amount of $500,000.00, with the

first payment made on December 1, 1999, and the Borrower as Rose

Marie Alvaro. It identified the Property as securing the debt,

stated the loan was in default due to non-payment of the March 1,

2009 payment and subsequent payments, and that $11,606.14 was

necessary to cure the default. It advised that if AHMSI did not

receive the amount necessary to cure the default within thirty

days, AHMSI would accelerate the loan balance and proceed with

foreclosure.

Margaret testified at deposition that she began

residing at the Property around 2006 or 2007 and collected the

mail. She also acknowledged that she did not notify the

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Estate's creditors of Alvaro's death, although she made payments

on the mortgage using checks drawn on the Estate's account.

In arguing that the April 16, 2009 default notice was

not a valid presentation of claim, Dirk argued there was no proof

of mailing to or receipt by the co-personal representatives.

Dirk also asserted the April 16, 2009 default notice was

improperly addressed to the decedent, and not the personal

representative and did not properly identify U.S. Bank as the

claimant or explain AHMSI's relationship to U.S. Bank. Dirk

continues to assert these arguments on appeal.

However, the Brantley declaration states that AHMSI

sent the April 16, 2009 default notice to the Borrower on or

about the same date to notify the Borrower the loan was in

default. Brantley states that he has personal knowledge of the

matters in his declaration based upon his review of business

records on file for the loan. Margaret presented no evidence to

dispute that she was still living at or collecting mail at the

Property at the time of the April 16, 2009 default notice.

Dirk asserts that U.S. Bank incorrectly argued that the

co-personal representatives were required to and failed to notify

creditors of the deadline to present claims against the Estate.

The Estate was not required to provide notice to creditors,

although providing notice to creditors would shorten the time for

presentation of claims. See HRS §§ 560:3-801(a) (providing that

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a person petitioning for appointment of a personal representative

or probate of a will may publish notice to creditors), -803(a)

(barring claims four months after first publication of notice of

creditors or sixty days after delivery of notice but allowing

until eighteen months after a decedent's death if notice has not

been published or given to creditors).

On this record, the circuit court was not wrong in

determining there was no genuine issue of material fact that

U.S. Bank satisfied the requirements of HRS § 560:3-803(c)(2) of

the Hawaiʻi probate code through the April 16, 2009 default

notice mailed to the Property.

D. The Circuit Court Did Not Err or Abuse Its Discretion by
Entering Judgment in Favor of U.S. Bank as Assignee of the
Mounts's Claims (POE 3)

Dirk asserts that the circuit court erred by entering

judgment in favor of U.S. Bank as assignee of the Mounts's claims

because (1) U.S. Bank was not substituted in as a party in place

of the Mounts and (2) it was unjust given that the nonjudicial

foreclosure that U.S. Bank conducted was wrongful and caused the

Estate to incur liability to the Mounts.

1. A separate motion was not required

Dirk cites HRCP Rule 25 to support his contention that

U.S. Bank was required to file a motion for substitution to

obtain judgment in its favor as assignee of the Mounts's claims.

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HRCP Rule 25(c) states:

Transfer of interest. In case of any transfer of
interest, the action may be continued by or against the
original party, unless the court upon motion directs the
person to whom the interest is transferred to be substituted
in the action or joined with the original party. Service
of the motion shall be made as provided in subdivision (a)
of this rule.

Dirk also argues that, in Sandstrom v. Larsen, 59 Haw. 491, 501,

583 P.2d 971, 979 (1978), the supreme court explained that in

order for a transferee of an interest to be substituted as a

party, a motion for substitution must first be made. Because

U.S. Bank did not file a motion to be substituted in place of

the Mounts, Dirk contends that the circuit court erred in

entering judgment in favor of U.S. Bank as assignee of the

Mounts's claims.

Sandstrom is distinguishable and involved a mandatory

injunction requiring Appellants to comply with a restrictive

height covenant. Id. at 492, 583 P.2d at 974. The supreme

court commented that a motion for substitution of parties would

be necessary to enforce the mandatory injunction if the downslope

property owner had sold their property. Id. at 501, 583 P.2d at

979.

In this case, U.S. Bank did not need to be substituted

in as a party because it was already a party to the suit.

HRCP Rule 8(e)(1) states that "[e]ach averment of a

pleading shall be simple, concise, and direct. No technical

forms of pleading or motions are required." HRCP Rule 8(f)

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states that "[a]ll pleadings shall be so construed as to do

substantial justice." "If a claim for relief is otherwise

alleged, substance controls over form." Gelsey v. Ka Ono Ulu

Est. Cmty. Ass'n, Inc., 143 Hawaiʻi 523, 432 P.3d 2, CAAP-15-

0000510, 2018 WL 6735172, at *2 (App. Dec. 24, 2018) (mem. op.)

(citing In re Eric G., 65 Haw. 219, 224, 649 P.2d 1140, 1144

(1982)).

In its Motion for Rule 54(b) Judgment regarding

Mounts's claims, U.S. Bank asked for judgment in its favor on the

Mounts's claims and attached a copy of an Assignment of Judgment

and Claims signed by the Mounts. Even if a motion for

substitution was necessary, there was no error in granting the

Motion for Rule 54(b) Judgment regarding Mounts's claims because

the substance of the motion may be construed as requesting both

substitution and entry of final judgment.

2. No abuse of discretion in granting U.S.
Bank's request for entry of final judgment
on the Mounts's claims

Dirk asserts that it was unjust for the circuit court

to enter a monetary judgment in favor of U.S. Bank against the

Estate given that U.S. Bank conducted a wrongful foreclosure, and

the Estate incurred liability to the Mounts as a result. Before

entering a monetary judgment in favor of U.S. Bank, Dirk

asserts, the Estate should recover damages for the wrongful

foreclosure and reimbursement for its liability to the Mounts.

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HRCP Rule 54(b) permits certification of finality for

an immediate appeal where "(1) more than one claim for relief is

presented or multiple parties [three or more] are involved, and

(2) the judgment entered completely disposes of at least one

claim or all of the claims by or against at least one party."

Elliot Megdal & Assocs. v. Daio USA Corp., 87 Hawaiʻi 129, 133,

952 P.2d 886, 890 (App. 1998) (citations omitted).

A lower court's decision to enter an HRCP Rule 54(b)
certification is reviewed on appeal under a dual standard.
The extent of a lower court's power to enter an HRCP
Rule 54(b) certification of finality is a question of law,
reviewed de novo. However, a lower court's decision to
utilize its power under HRCP Rule 54(b) is reviewed under
the abuse of discretion standard.

Id. at 132, 952 P.2d at 889 (citations omitted).

The Mounts asserted claims against Margaret and the

Estate, and the Estate asserted claims against the Mounts. When

U.S. Bank answered the Estate's Third-Party Complaint, U.S. Bank

did not file any claims. Thus, once it was determined that the

Mounts were good faith purchasers for value and entitled to

monetary damages against Margaret and the Estate for their

continued possession of the Property, the circuit court had the

power to authorize a final judgment on the Mounts's claims. See

FFG, Inc. v. Jones, 6 Haw. App. 35, 45, 708 P.2d 836, 844

(App. 1985) ("[A]t least one 'claim' or all rights and

liabilities of at least one party must be decided before the

lower court can apply Rule 54(b)."). It was within the

discretion of the circuit court to enter a final judgment on the

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Mounts's claims, and Dirk does not demonstrate that the circuit

court abused its discretion.

The presence of a counterclaim seeking setoff is a

factor weighing against the grant of an HRCP Rule 54(b)

certification but is not controlling. Arimizu v. Fin. Sec. Ins.

Co., 5 Haw. App. 106, 113, 679 P.2d 627, 633-34 (App. 1984)

(citing Curtiss-Wright Corp. v. Gen. Elec. Co., 446 U.S. 1, 9

(1980)) (noting that federal counterpart to HRCP Rule 54(b)

"would lose much of its utility" if the presence of a

counterclaim renders certification inappropriate).

Here, allowing for entry of an HRCP Rule 54(b)

judgment on the Mounts's claims would expedite reaching a final

decision on those claims in a case with a lengthy litigation

history. Also, the Estate admittedly had cash flow problems and

had been liquidating assets to pay claims, such as the Kapiʻolani

Boulevard property it sold to satisfy tax liens.

In contrast, nothing appears to suggest that the

Estate would be unable to collect from U.S. Bank if it

ultimately obtains a judgment against U.S. Bank. Accordingly,

there was no abuse of discretion by the circuit court in granting

the HRCP Rule 54(b) certification.

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E. The Circuit Court Did Not Abuse Its Discretion by Denying
Dirk Leave to Amend the Estate's Third-Party Complaint
(POE 5)

Finally, Dirk contends that the circuit court abused

its discretion by denying him leave to amend his Third-Party

Complaint. Dirk sought to amend the Third-Party Complaint to add

a claim against U.S. Bank for unfair and deceptive acts and

practices (UDAP) and remove the claims seeking recovery of

possession and title to the Property, leaving two claims against

U.S. Bank - the wrongful foreclosure/declaratory judgment claim

and the UDAP claim.

U.S. Bank argues, among other things, that Dirk's

inexcusable delay in moving to amend was egregious because it

was based on facts known to him and arising out of the

foreclosure conducted in 2011. U.S. Bank also raised prejudice

because witnesses involved in the nonjudicial foreclosure were no

longer available or had faded memories, those still available may

need to be re-deposed, and records may no longer be available.

The denial of leave to amend a complaint under HRCP

Rule 15(a) or (b) is reviewed under the abuse of discretion

standard. Carvalho v. AIG Hawaiʻi Ins. Co., 150 Hawaiʻi 381, 384,

502 P.3d 482, 485 (2022) (citing Kamaka v. Goodsill Anderson

Quinn & Stifel, 117 Hawaiʻi 92, 104, 176 P.3d 91, 103 (2008)).

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Counsel for U.S. Bank told the circuit court that

Fremont Investment & Loan, Inc., the original mortgagee, was

liquidated, and the prior servicer, Option One, was out of

business. The foreclosing law firm, RCO Hawaii, is also out of

business. Derek Wong, the attorney identified in the notice of

auction, was deposed in October 2012. Also, one of U.S. Bank's

expert witnesses had passed away.

The circuit court acknowledged that the supreme court

held in Carvalho that undue delay alone is not a sufficient basis

to deny leave to amend. 150 Hawaiʻi at 386, 502 P.3d at 487.

However, the circuit court denied leave to amend based on

prejudice, stating that adding a new UDAP claim "would

potentially have the effect of -- prejudicing the Defendants,"

and that Plaintiffs still had their cause of action for damages.

Given that the facts that formed the basis for the

proposed new UDAP claim had been known to the Estate and some

businesses involved in the loan and the nonjudicial foreclosure

were no longer in business, there was no abuse of discretion by

the circuit court in denying leave to amend.

III. CONCLUSION

For the foregoing reasons, we vacate in part the

circuit court's October 17, 2023 Final Judgment as to the

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wrongful foreclosure claim but otherwise affirm. We remand this

case to the circuit court for further proceedings consistent

with this memorandum opinion.

DATED: Honolulu, Hawaiʻi, May 22, 2026.

On the briefs: /s/ Sonja M.P. McCullen
Presiding Judge
Frederick J. Arensmeyer,
for Defendant-Appellant /s/ Kimberly T. Guidry
Margaret Apao and Defendant/ Associate Judge
Counterclaimant/Third-Party
Plaintiff-Appellant Dirk /s/ Brian A. Costa
Apao, as Personal Circuit Court Judge
Representative of the Estate
of Rose Marie Alvaro,
Deceased.

David A. Nakashima,
Michelle N. Comeau,
(Nakashima Ching), and
Meagan S. Tom,
for Third-Party Defendant/
Cross-claimant-Appellee.