OneWest Bank, F.S.B. v. Ass'n of the Owners of the Kumulani at the Uplands at Mauna Kea
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In this foreclosure case, the Supreme Court held that the circuit court's award of a forfeited down payment as damages to the Association of the Owners of the Kumulani of the Uplands at Mauna Kea, creditors in the judicial foreclosure action, was an abuse of discretion.
In response to a pair of post-judgment motions, the circuit court entered two orders. The first order found OneWest Bank, F.S.B., the foreclosing mortgagee and winning bidder at the foreclosure auction, liable for damages in an amount equal to its down payment for failure to close the foreclosure sale. The second order awarded the down payment as expectation damages to the association, a junior lienholder. On appeal, OneWest challenged the circuit court's jurisdiction to assess damages against OneWest and award them to the association. The Supreme Court held that because, pursuant to Haw. Rev. Stat. 667-3, creditors in a judicial foreclosure action are entitled to payment according to the priority of their liens, the circuit court erred by awarding damages to the Association rather than by applying the down payment amount to reduce the debt owed to OneWest.
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