Background
Eboni A. Prentice defaulted on homeowners association assessments and fees owed to the Maui Lani Community Association. In 2016, Wells Fargo initiated mortgage foreclosure; the Association filed a cross-claim and counterclaim seeking to foreclose its lien for unpaid assessments, late fees, and attorneys’ fees totaling $16,866.02 ($3,264 in maintenance fees and $13,542.02 in attorneys’ fees and costs as of July 2022). Prentice defaulted on the Association’s cross-claim in 2017, but that judgment was later set aside in 2022 when Prentice obtained Rule 60(b) relief.
In August 2022, the Association filed a motion for summary judgment, default judgment, and foreclosure decree. Prentice opposed, arguing the Association had not adequately proven how the attorneys’ fees were incurred or that they were reasonable. The Circuit Court granted the Association’s motion in June 2024, entering default judgment against Prentice and authorizing foreclosure. Prentice appealed.
The Court’s Holding
The court affirmed the association’s right to foreclose for the $3,264 in unpaid maintenance fees but vacated the award of $13,542.02 in attorneys’ fees. The court held that although Hawaii law (HRS § 421J-10) permits associations to recover “reasonable attorneys’ fees” in foreclosure actions, and the statute requires courts to determine their reasonableness, the Association provided no evidence—no hourly rates, hours worked, or itemized billing—supporting the reasonableness of the claimed amount. The Circuit Court abused its discretion by granting default judgment on this amount without such supporting proof. Under established Hawaii precedent, even defaulted defendants retain the right to contest the amount of their liability at proof hearings.
Additionally, the court vacated the deficiency judgment provision in the judgment as premature. The judgment had authorized the deficiency amount to be determined “through the submission of supplemental declarations and/or affidavits,” but the court found this procedure was not supported by the record and would require reconsideration on remand consistent with Hawaii law regarding deficiency judgment hearings and fair market value determinations.
Key Takeaways
- HOA associations seeking to recover attorneys’ fees in foreclosure must present evidence of the reasonableness of those fees at the summary judgment stage if requesting a specific dollar amount, even when seeking default judgment.
- Default judgments do not preclude defendants from contesting the amount of liability; courts must permit defaulted parties to challenge damages at proof hearings.
- Appellate courts will overturn default judgments where the underlying amount is not supported by adequate factual proof.
- Prospective procedural provisions for deficiency judgments in foreclosure orders may be vacated as premature when not grounded in the current record.
Why It Matters
This decision clarifies that Hawaii courts cannot award attorneys’ fees in HOA foreclosures absent evidence supporting their reasonableness—a requirement that constrains associations’ ability to charge contested fee amounts. The opinion reinforces that default judgments, while resolving liability, do not insulate claimed amounts from judicial scrutiny. Associations pursuing foreclosure must come to summary judgment proceedings with detailed billing records and fee documentation if they seek to recover specific attorneys’ fee amounts, or they risk vacatur and remand.
The decision also signals that deficiency judgment procedures must be established on a fully developed record, not prospectively prescribed in initial foreclosure judgments. For Prentice, this likely means the case will return to the circuit court where the Association will need to present evidence of attorneys’ fees reasonableness and the parties will address deficiency judgment procedures consistent with the court’s guidance.