HawaiiUSA Federal Credit Union v. Monalim
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The Supreme Court held that, in foreclosure cases in which a deficiency judgment is entered, the traditional process by which Hawai'i courts calculate a deficiency judgment can result in unjust enrichment, and therefore, the equities weigh in favor of adopting the method of calculating a deficiency judgment employed by a majority of other jurisdictions because the majority rule protects all parties to the mortgage.
Mortgagors defaulted on their loans, the property was sold, and the foreclosure sale process was less than the amount due on the mortgage. The mortgagee waited more than four years before it attempted to collect a deficiency judgment. Mortgagors argued that the traditional method for calculating a deficiency judgment is unfair and asked that the Court adopt the majority approach, in which the greater of the fair market value as of the date of the foreclosure sale or the sale prices of the property is deducted from the money owed when calculating the deficiency. The circuit court granted a deficiency judgment, and the intermediate court of appeals affirmed. The Supreme Court vacated the lower courts' judgments and remanded the case, holding that this Court adopts the majority approach to calculating deficiency judgments, and the adoption of the majority rule is prospective in effect.
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