Background
In 2015, Deutsche Bank filed a foreclosure action against Michael and Lori Bauer concerning a mortgaged property in Kealakekua, Hawaii. That case was dismissed for lack of prosecution under RCCH Rule 29, no motion to reinstate was filed, and no final judgment was ever entered. In 2018, self-represented plaintiff Lani Pacific — a sole proprietorship registered by David Paul Biesemeyer — purchased the property from the Bauers via quitclaim deed for $2,000.
Deutsche Bank filed a second foreclosure action in 2019 naming both the Bauers and Lani Pacific. The circuit court granted Deutsche Bank a foreclosure decree in 2021, finding that Lani Pacific took title subject to Deutsche Bank’s mortgage. Contemporaneously, Lani Pacific filed a quiet title action asserting that Deutsche Bank had no valid interest in the property; that action was also dismissed on summary judgment. The Hawaii Intermediate Court of Appeals consolidated the two appeals and affirmed both judgments, and the Hawaii Supreme Court denied certiorari.
Undeterred, Lani Pacific in 2023 filed what it styled as a “new civil action” incorporating an HRCP Rule 60(b)(6) motion to set aside the prior judgments, arguing that the 2015 dismissal voided all subsequent proceedings and that Deutsche Bank’s attorneys committed fraud upon the court by failing to disclose the 2015 dismissal. Deutsche Bank moved for summary judgment on grounds of res judicata, lack of standing, and absence of fraud. The circuit court granted that motion, and Lani Pacific appealed.
The Court’s Holding
The ICA affirmed the August 21, 2024 judgment in favor of Deutsche Bank. The court first addressed the procedural anomaly of Lani Pacific having filed its Rule 60(b) motion as a new independent action: because an HRCP Rule 60(b) motion is a continuation of the original proceeding rather than an independent action, it is not subject to res judicata. The court accordingly construed Lani Pacific’s filing as a continuation of the 2019 Foreclosure Action and 2020 Quiet Title Action.
On the merits, the court rejected Lani Pacific’s central argument that the 2015 dismissal voided the later judgments. Relying on Saplan v. U.S. Bank National Ass’n, 154 Hawaiʻi 181 (2024), the court held that an RCCH Rule 29 dismissal for want of prosecution does not operate as an adjudication on the merits under HRCP Rule 41(b)(3) unless a final judgment under HRCP Rule 58 has been entered. Because no final judgment was ever entered in the 2015 action, that dismissal had no preclusive effect and could not void subsequent proceedings.
The court also rejected the fraud-upon-the-court claim, finding the issue waived for failure to raise it in the trial court and, alternatively, without merit: because there was no final judgment on the merits in the 2015 action, the failure to disclose its dismissal to the circuit court could not constitute fraud upon the court. To the extent the 2023 filing could be construed as an independent action, the claims for wrongful foreclosure, fraud, conversion, and misuse of process were barred by res judicata — all arising from the same transaction and parties as the fully litigated 2019 and 2020 actions.
Key Takeaways
- An HRCP Rule 60(b) motion is a continuation of the original proceeding, not an independent action, and therefore cannot be initiated by filing a new lawsuit — courts will construe such a filing as a motion within the original case.
- A dismissal for want of prosecution under RCCH Rule 29 does not operate as an adjudication on the merits for claim-preclusion purposes unless a separate final judgment under HRCP Rule 58 has been entered.
- A fraud-upon-the-court claim based on an opposing party’s failure to disclose a prior dismissed action fails where that dismissed action produced no final judgment on the merits.
- Res judicata bars claims that were raised or could have been raised in prior actions between the same parties involving the same transaction, even when the new claims are framed as tort claims for wrongful foreclosure or conversion.
Why It Matters
This decision reinforces the finality of foreclosure judgments in Hawaii against collateral attacks mounted through procedurally creative filings. Attorneys defending lenders in post-foreclosure litigation will find useful guidance on how Hawaii courts treat RCCH Rule 29 dismissals — specifically, that they carry no preclusive force absent a formal HRCP Rule 58 judgment — and on the limits of fraud-upon-the-court doctrine when the predicate “fraud” concerns a prior proceeding that never reached a merits adjudication.
The case also illustrates the breadth of Hawaii’s res judicata doctrine. Once a foreclosure and related quiet title action have been fully litigated and affirmed through certiorari, subsequent civil actions raising any theory that could have been advanced in those proceedings will be barred, foreclosing the use of serial litigation as a delay tactic.