A Hawaii court has vacated a foreclosure judgment against homeowners Michael K. Taniguchi and Patricia Ann U. Moore. The Intermediate Court of Appeals ruled that the lender, MCH Sub I, LLC, failed to provide proper notice of default before initiating foreclosure proceedings. This decision affects the homeowners and could set a precedent for future foreclosure cases in Hawaii.
The case, MCH Sub I, LLC v. Taniguchi, CAAP-25-0000447, involved a dispute over a property in Keaʻau, Hawaii. The homeowners appealed a May 2025 decision from the Circuit Court of the Third Circuit, which had granted MCH's motion for summary judgment, allowing the foreclosure to proceed. The homeowners argued that MCH did not have the right to enforce the mortgage and that the notice of default was improperly served.
This is not the first time this case has been in court. It is a second appeal following a previous ruling in 2016 that vacated a summary judgment order related to an ejectment complaint filed in 2013 by MCH's predecessor, Citi Property Holdings, Inc. The initial complaint arose after a non-judicial foreclosure sale of the property. After the 2016 ruling, the case was remanded, and a new plaintiff, Mid-Pac Portfolio, LLC, was substituted before MCH took over the case.
After the substitution, MCH filed an amended complaint in 2017, which included requests for a declaratory ruling on the validity of the previous foreclosure and a judicial foreclosure if necessary. In 2024, MCH filed a motion for summary judgment related to its foreclosure claims, which led to the May 2025 judgment in favor of MCH.
The court's ruling focused on the notice of default issue, which the homeowners claimed was not properly executed. The court found merit in the homeowners' argument that MCH needed to send the notice of default before filing the complaint. The court stated, "MCH was required to send notice prior to filing the operative complaint. Consequently, we vacate the Circuit Court's grant of summary judgment and remand for further proceedings." Chief Judge Karen T. Nakasone presided over the ruling, with Judge Kimberly T. Guidry and Judge Daniel M. Gluck also on the panel.
This ruling is significant for homeowners facing foreclosure, as it underscores the importance of proper notice in foreclosure proceedings. The court's decision emphasizes that lenders must adhere to contractual obligations regarding notification before taking legal action to foreclose on a property. The ruling may encourage homeowners to challenge foreclosure actions when they believe proper procedures have not been followed.
The decision also raises questions about the future of the case. With the court vacating the prior judgment, the case will return to the lower court for further proceedings. This could involve a reevaluation of the foreclosure process and any additional claims made by the homeowners. The implications of this ruling could resonate in future foreclosure cases in Hawaii, as it reinforces the necessity for lenders to follow legal protocols.
As for what’s next, the case may continue to evolve in the lower courts. The homeowners' appeal has led to a remand, which means the court will review the case again. It is unclear if MCH will appeal this latest ruling or if there are related cases pending that could affect this situation.