Louis Robert SANTIAGO, as Trustee of the Louis Robert Santiago Revocable Living Trust dated November 17, 1999, as amended, and Yong Hwan Santiago, as Trustee of the Yong Shimabukuro Revocable Living Trust dated July 25, 1996, as amended, Petitioners/Plaintiffs–Appellants/Cross–Appellees, v. Ruth TANAKA, Respondent/Defendant–Appellee/Cross–Appellant.
RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, and WILSON JJ. Gary Victor Dubin and Frederick J. Arensmeyer, for petitioner. Robert Goldberg, for respondent.
This case involves the adequacy of disclosures that were made to the buyer during the sale of a commercial property and the seller's subsequent nonjudicial foreclosure and sale of the property when the mortgage payments were briefly interrupted because of an underlying dispute regarding mediation concerning the property. Two issues are presented: (1) whether the seller's failure to disclose certain facts regarding the property's sewer system is actionable under the common-law causes of action of nondisclosure and misrepresentation and (2) whether the seller's nonjudicial foreclosure of the property and ejectment of the Santiagos were wrongful under the facts of this case. We answer both questions in the affirmative.
In November 2005, Louis, represented by realtor Glenn Takase (Takase) of Coldwell Banker, submitted an offer to purchase the Tavern for $1,000,000.00, in the form of a “Deposit Receipt Offer and Acceptance” (DROA) to Tanaka's property manager and realtor, Wayne Richardson (Richardson).3 Tanaka did not accept Louis' initial offer, and the parties exchanged multiple counteroffers, all of which referenced and incorporated the DROA.
In January 2006, Tanaka submitted a counteroffer with an attached “Agreement of Sale Addendum to the DROA” (Agreement of Sale Addendum). In her Agreement of Sale Addendum, Tanaka made representations with respect to certain “Monthly Installments (based on current estimates; exact figures to be determined and adjusted at closing),” including “Sewer Fee & Assessments” in the amount of $150.00.4 The Santiagos rejected Tanaka's January 2006 counteroffer.
Ultimately, after further negotiations, Louis accepted a subsequent counteroffer from Tanaka (Accepted Counteroffer). The Accepted Counteroffer expressly provided that Tanaka and Louis “agree[ ] to sell/buy the [Tavern] on the terms and conditions set forth in the DROA as modified by this Counter Offer.” The Accepted Counteroffer set the purchase price of the Tavern at $1,300,000, $800,000 of which was to be paid as a down payment, with the remaining $500,000 secured by a sixty-month “Mortgage, Security Agreement and Financing Statement” (Mortgage) financed by Tanaka. Attached to the Accepted Counteroffer were two addenda: a “Purchase Money Mortgage Addendum” (Mortgage Addendum) setting forth the provisions of the Mortgage and an “Existing ‘As Is' Condition Addendum” (“As Is” Addendum).
The stated purpose of the “As Is” Addendum was to note that the “Property [was] being sold in its existing condition” and that “[e]xcept as may be agreed to elsewhere in [the] DROA, [Tanaka] will make no repairs and will convey [the Tavern] without any representations or warranties, either expressed or implied.” The addendum stated, however, that “[b]y selling Property in Existing ‘As Is' Condition, [Tanaka] remains obligated to disclose in writing any known defects or material facts of Property or improvements.” (Emphases added).
The Disclosure Statement further noted, “It is very important that the Seller exercise due care in preparing responses to questions posed in the Disclosure Statement, and that all responses are made in good faith, are truthful and complete to the best of Seller's knowledge,” because “Seller's agent, Buyer and Buyer's agent may rely upon Seller's disclosures.” Finally, the Disclosure Statement instructed Tanaka, in her capacity as the Seller of the Tavern, to answer all questions and explain all material facts known to her.
5. Tanaka agrees to pay Jasper monthly maintenance charges in the amount of One Hundred Fifty Dollars ($150.00) per month, payable on or before the fifteenth day of every month, commencing the month immediately after this Agreement is executed by the parties hereto. Jasper reserves the right to adjust the deposit annually in a sum not exceeding twenty percent (20 percent) of the amount paid in the year immediately preceding.
7. Tanaka agrees to pay Jasper the sum of One Hundred Fifty Dollars ($150.00) as a bi-monthly cleanout charge for the Jasper STP .[ 7] Such payments shall commence sixty (60) days after the execution of this Agreement by the parties, and shall be payable on or before the fifteenth day of every other month thereafter. Jasper reserves the right to adjust the deposit annually in a sum not exceeding twenty percent (20 percent) of the amount paid in the year immediately preceding.
8. Tanaka agrees to pay Jasper the sum of Three Hundred Dollars ($300.00) as a deposit for those charges provided for in paragraphs 5 and 7 hereinabove. Such amount shall be paid upon the execution of this Agreement by the parties. The deposit shall be refunded to Tanaka in the event the Jasper STP is transferred or conveyed to the County.
Based on Tanaka's disclosures and the $150 estimated monthly installment for sewer fees and assessments represented in the Agreement of Sale Addendum, Takase and Louis believed the costs associated with the Tavern's private sewer system were the amounts listed in the Wastewater Agreement—$150 for a monthly maintenance fee and $150 for a bi-monthly cleaning fee. After reviewing the disclosures with Takase and believing that Tanaka had provided all documentation, Louis accepted the disclosed documents.
As noted, to finance a portion of the purchase price of the Tavern, the Santiagos obtained a mortgage from Tanaka. In the Mortgage, the Santiagos covenanted to pay the $500,000 loan pursuant to the terms of a Promissory Note.
The Promissory Note provided that payment of $9,724.63 was due on the tenth day of each month, commencing on August 10, 2006, until the satisfaction of the debt on August 10, 2011. It additionally stated that the failure to pay “any sum” due under the Promissory Note constitutes an “Event of Default” and that “[i]f any Event of Default shall occur and be continuing, the entire principal sum and accrued interest thereon” shall “immediately become due and payable.” (Emphasis added).
At the beginning of October 2006, Jay Geffert (Geffert), the Santiagos' property manager for the Tavern, received a bill from Jasper in the amount of $3,467.43–$2,267.77 past due from August's sewer maintenance fees and $1,153.23 for September's sewer maintenance fees, inclusive of taxes.10 Geffert, believing Jasper's bill to be a mistake—at the time, he had been paying the Tavern's utility bills, including county sewage bills, since 1998—contacted Jasper to inquire about the bill. In response, Jasper wrote to Louis, noting that Tanaka had previously paid the sewer fees and that the fees had increased twenty percent a year, every year, since 1995.11 Jasper stated that the Tavern could choose an alternative method of sewage disposal but that, until then, the Santiagos had to continue paying pursuant to the Wastewater Agreement.
Louis' counsel wrote to Tanaka to further inquire about the bill that Louis received from Jasper. Counsel maintained that although the Agreement of Sale Addendum listed a $150.00 sewer assessment fee, Tanaka did not disclose the fact that the sewer fees could, and in fact did, increase by twenty percent per year. Counsel asserted that Tanaka never disclosed the true amount of the fees for the Tavern's sewer service. In conclusion, counsel stated that had Louis known about the possibility that the sewer maintenance charges could be increased by twenty percent per year, he would not have agreed to pay the amount that he agreed to for the Tavern.
Louis' counsel also wrote to Jasper, stating that the Wastewater Agreement was never assigned to the Santiagos when Tanaka conveyed the Tavern to them. Counsel also requested from Jasper an accounting of his cost and expenses in the maintenance of the sewage system and suggested that the costs charged to the Santiagos should be adjusted depending upon the parties' usage of the system. In a forceful response, Jasper intimated no interest in negotiating for a lower price because “the price ․ was agreed to be paid by ․ Tanaka” and because the Wastewater Agreement “does not just provide for the recovery of a pro-rated portion of costs.”12 Jasper also threatened that if the Santiagos did not “want to be bound by the long standing Agreement,” he would “arrange for [the] Tavern to be immediately disconnected from the sewage disposal system.” Finally, Jasper outlined three alternatives to which he was open: (1) the Santiagos pay the total amount owing and agree to be bound to the Wastewater Agreement; (2) the Santiagos accept a 50% deferral of the amount due while they commence an action to recover damages from Tanaka; or (3) the Santiagos disconnect the Tavern from his sewer system and start building their own.
On March 12, 2008, Tanaka's mortgage servicer sent the Santiagos a payment notice indicating an amount due of $10,250.86–$9,764.63 for the principal and interest payment due on March 10, 2008, and a late fee in the amount of $486.23. In a subsequent letter dated April 3, 2008, Tanaka clarified that she intended to foreclose under power of sale pursuant to HRS § 667–5 through 667–1015 at a public auction on May 9, 2008.
On May 5, 2008, a mediation session was scheduled for June 12, 2008. However, on the same day, because Tanaka did not cancel the scheduled auction sale of the Tavern but only postponed it subject to two conditions, the Santiagos commenced an action against Tanaka asserting several claims. On May 7, 2008, the Santiagos filed a Motion for Temporary Restraining Order and a Motion for Preliminary Injunction, both seeking to “prevent and preclude” Tanaka from proceeding with the foreclosure auction. The circuit court denied the Motion for Temporary Restraining Order and scheduled a hearing on the Santiagos' Motion for Preliminary Injunction for June 17, 2008.
Upon learning of the Santiagos' lawsuit, Tanaka's counsel informed the Santiagos' counsel, on May 15, 2008, that the postponement offer was being withdrawn, the note and mortgage “ha[d] been duly accelerated,” and the “entire debt ․ [wa]s due and payable immediately.” On June 3, 2008, the Santiagos and Tanaka agreed to engage in mediation and to postpone the foreclosure auction during the pendency of mediation, subject to the Santiagos' “full compliance with their payment obligations” and withdrawal of their Motion for Preliminary Injunction. Subsequently, on July 14, 2008, Tanaka filed a mediator's declaration of impasse and announced that she was “proceed[ing] with the public auction” on August 14, 2008.
On August 27, 2008, the parties stipulated that the Santiagos would withdraw without prejudice their Motion for Preliminary Injunction and that Tanaka would postpone the foreclosure sale pending the circuit court's ruling on Tanaka's yet to be filed motion to dismiss. The motion to dismiss was subsequently filed, and after conducting a hearing on October 15, 2008, the circuit court granted in part and denied in part Tanaka's motion.
Two days later, on October 17, 2008, Tanaka sent the Santiagos a letter informing them that the public auction of the Tavern was to be held on October 24, 2008. On October 24, 2008, the Santiagos filed a new Motion for Preliminary Injunction, and Tanaka filed her Answer to the Santiagos' First Amended Verified Complaint and asserted eleven counterclaims.20 On the same day, Tanaka held a public foreclosure auction at which she purchased the Tavern by submitting the highest bid of $365,000.00.
The court concluded that after Tanaka “disclosed the private sewer system,” “she [was] not required to do anything more.” In fact, according to the court, Tanaka “was not required to disclose the Wastewater Agreement” in the first instance because that agreement “does not affect [the Santiagos].” Instead, the circuit court concluded that the Santiagos “had access to all material information” and that Tanaka “provided timely and appropriate disclosures of all material facts.” Accordingly, the circuit court ordered judgment entered in favor of Tanaka on the Santiagos' claim for negligent misrepresentation and nondisclosure.
With respect to Tanaka's counterclaims and the Santiagos' defenses thereto, the court concluded that HRS § 6675 does not require that the Mortgage contain “any particular words” to effectuate a power of sale and further concluded that the following language in the Mortgage gave Tanaka the ability to foreclose by power of sale: “The mortgagee may ․ foreclose this Mortgage, (1) by court proceeding ․ or, (2) as now or then provided by law, by advertisement and sale of the mortgaged property ․ at public auction․” The court additionally concluded that the Santiagos did not have a right to cure the default under the loan documents or Hawai‘i law.
Accordingly, the circuit court ordered judgment entered in favor of Tanaka and against the Santiagos on Tanaka's counterclaims for “Breach of Note,” “Breach of Mortgage,” “Breach of Covenant of Good Faith and Fair Dealing,” and “Ejectment.” The court additionally ordered that Tanaka be awarded reasonable attorney's fees and costs in the amount of $152,246.61. By its rulings, the circuit court determined that ownership and possession of the Tavern lawfully belonged to Tanaka, who was at the same time allowed to keep the approximately $1.4 million that the Santiagos paid to her pursuant to the Mortgage and the Promissory Note.
On June 28, 2011, the circuit court filed its Entry of Judgment (Judgment) and issued a Writ of Ejectment ordering the Santiagos to vacate the Tavern. The Santiagos subsequently vacated the premises pursuant to the court's order.
In their reply, the Santiagos asserted that they were entitled to restitution, not rescission of the purchase contract. Relying on In re Parish, 2010 WL 1372387, at *2 (Bankr.D.Haw. Apr. 6, 2010), the Santiagos also argued that the right to cure is an equitable right recognized in Hawai‘i. On August 4, 2011, the circuit court issued an Order Denying the Santiagos' Motion for Reconsideration.
The Santiagos appealed to the ICA.23 The Santiagos argued that the trial court erred in entering judgment for Tanaka on their claims of nondisclosure and negligent misrepresentation. Specifically, the Santiagos claimed that Tanaka failed to disclose material facts during the course of the negotiations for the sale of the Tavern, including the $1,160.94 monthly sewer maintenance fees and the $1,160.94 bi-monthly sewer cleanout charges that Tanaka had been required to pay.
Alternatively, the Santiagos contended that Tanaka failed to disclose that, if the Santiagos were to buy the Tavern, they would be required either to negotiate with Jasper for future sewer service or to build their own sewage disposal system necessary to operate the Tavern. According to the Santiagos, they were misled by the documents, included in Tanaka's Agreement of Sale Addendum to the DROA, that represented $150 monthly sewer fee and assessment.
Additionally, the Santiagos asserted that the trial court erred in entering judgment in favor of Tanaka on her counterclaims of breach of note, breach of mortgage, and ejectment, and in denying the Motion for Reconsideration. The Santiagos maintained that the Mortgage did not accord Tanaka the power of non-judicial foreclosure of the Tavern because the Mortgage allowed such power only as “now or then provided by law.” Hawai?i law, according to the Santiagos, does not independently provide the power of non-judicial foreclosure, and the Mortgage did not contain a power of sale.
Further, the Santiagos argued that the circuit court erred because “the Santiagos cured the alleged default under the note and [Mortgage] pursuant to” HRS § 667–5(c) over six months before the foreclosure auction. The Santiagos also contended that the right to cure exists as an “equitable right” in Hawai? i.
Additionally, Tanaka argued that the Santiagos' claims were moot because the Tavern had since been sold to a third party.24 Tanaka also maintained that she did not act in bad faith by exercising her contractual right to accelerate the Mortgage and foreclose upon the Santiagos' default. Finally, Tanaka argued that Hawai?i law does not provide for the “right to cure” and maintained that she never consented to allow the Santiagos the ability to cure their default.
The Santiagos further argued that the “plain reading of [the Wastewater Agreement] establishes fees in the amount of $150, and allowed only for an increase of the $300 ‘deposit.” ’ In conclusion, the Santiagos maintained that the Judgment “resulted in a forfeiture of the entire $1,412,790.79” that they paid.
On November 28, 2014, the ICA issued its memorandum opinion (Opinion) in which it affirmed the circuit court's Judgment; Trial Order; Writ of Ejectment; Order Denying the Santiagos' Motion for Reconsideration; and the Order Granting Tanaka's Fees in the circuit court.
In evaluating the Santiagos' nondisclosure claim under Section 551 of the Restatement (Second) of Torts, the ICA concluded that the Restatement “only requires a party to correct a prior representation when the party knows clarification is necessary to prevent the representation from being misleading.” The ICA found that the Santiagos did not “make [any] argument regarding Tanaka's knowledge” and that “there is no evidence suggesting that Tanaka knew clarification was necessary.” Thus, in finding that the Wastewater Agreement “provided actual notice that the Jasper charges were separate from the County fees,” the ICA concluded that the circuit court did not erroneously rule in favor of Tanaka on the nondisclosure and misrepresentation claims.
As to the Santiagos' claim that Tanaka's retention of the Tavern and payments would amount to a windfall, the ICA concluded that the Santiagos were unable to demonstrate their entitlement to relief because they remained in possession of the Tavern for almost three years after foreclosure and because they did not proffer any evidence to establish the value of the Tavern at the time of default or foreclosure so “as to provide support for an assertion that Tanaka reaped a windfall.” The ICA concluded that the circuit court did not abuse its discretion in denying the Santiagos' Motion for Reconsideration.
Accordingly, the ICA affirmed the Judgment and issued its Judgment on Appeal on January 6, 2015. The Santiagos filed an application for writ of certiorari to this court on February 5, 2015.
A trial court's findings of fact are reviewed under the “clearly erroneous” standard of review. Beneficial Haw., Inc. v. Kida, 96 Hawai‘i 289, 305, 30 P.3d 895, 911 (2001). A finding of fact is determined to be clearly erroneous when “the record lacks substantial evidence to support the finding,” or “despite evidence in support of the finding, the appellate court is left with a definite and firm conviction ․ that a mistake has been committed.” Id. (first quoting Alejado v. City & Cty. of Honolulu, 89 Hawai‘i 221, 225, 971 P.2d 310, 314 (App.1998); and then quoting State v. Kane, 87 Hawai‘i 71, 74, 951 P.2d 934, 937 (1998)). The circuit court's conclusions of law are reviewed de novo, under the right/wrong standard. Haw. Nat'l Bank v. Cook, 100 Hawai‘i 2, 7, 58 P.3d 60, 65 (2002).
Restatement (Second) of Torts § 551 (1977) (emphases added).
A statement that is partial or incomplete may be a misrepresentation because it is misleading, when it purports to tell the whole truth and does not. So also may a statement made so ambiguously that it may have two interpretations, one of which is false. When such a statement has been made, there is a duty to disclose the additional information necessary to prevent it from misleading the recipient. In this case there may be recovery either on the basis of the original misleading statement or of the nondisclosure of the additional facts.
Restatement (Second) of Torts, § 551 cmt. g (emphasis added).
In this case, Tanaka's disclosure duties to Santiago under the DROA required Tanaka to “fully and accurately disclose in writing to [the Santiagos] any fact, defect, or condition, past or present, that would be expected to measurably affect the value of the Property to a reasonable person.”26 (Emphases added). In disclosing these facts, Tanaka was expected to, and indeed was required to, prepare the disclosures “in good faith and with due care” and ensure that she “disclose[d] all material facts relating to the Property that [ ] [were] within [her] knowledge or control.” (Emphasis added). The DROA further provided, “At closing, Escrow shall prorate the following, if applicable, as of the date of closing: real property tax, lease rents ․ maintenance, private sewer, marina, and/or association fees, tenant rents, and ANY OTHERS.” (Emphases added).
Attached to the Accepted Counteroffer were a Mortgage Addendum, which set forth the provisions of the seller-financed Mortgage, and an “As Is” Addendum. Pursuant to the “As Is” Addendum, Tanaka “remain[ed] obligated to disclose in writing any known defects or material facts of [the Tavern].” (Emphasis added).
As required by her duty under the DROA and “As Is” Addendum, on April 4, 2006, Tanaka sent the Santiagos her Disclosure Statement. The Disclosure Statement provided that Tanaka, “[p]ursuant to Hawaii Revised Statutes, Chapter 508D (for residential real property), and under common law (for all other real estate transactions),” was “obligated to fully and accurately disclose in writing to a buyer all ‘material facts' concerning the property.” (Emphases added). It also defined “material facts” as “any fact, defect, or condition, past or present, that would be expected to measurably affect the value to a reasonable person of the residential real property being offered for sale.” (Emphasis added). The Disclosure Statement underscored that the “Seller's agent, Buyer and Buyer's agent may rely upon Seller's disclosures.” (Emphasis added).
Roughly a week after sending her Disclosure Statement, Tanaka provided the Santiagos the Wastewater Agreement dated May 16, 1995. The Wastewater Agreement provided that Tanaka agreed to pay Jasper $150 per month for monthly maintenance charges and $150 as a bi-monthly cleanout charge. Also indicated in the Wastewater Agreement was Jasper's reservation of “the right to adjust the deposit annually in a sum not exceeding twenty percent (20%) of the amount paid in the year immediately preceding.” (Emphasis added).
After the Santiagos reviewed Tanaka's Disclosure Statement and other disclosed documents with Takase, the Santiagos signed off on the disclosures, believing that Tanaka “provided all of the documentation.” Based on Tanaka's disclosures, specifically the Wastewater Agreement, and representations during negotiations—namely, Tanaka's estimate of monthly expenses provided in her Agreement of Sale Addendum—Takase and the Santiagos believed that the costs associated with the private sewer system were $150.00 per month for maintenance and $150.00 bi-monthly for cleanout charges.
At closing, pursuant to paragraph C–10 of the DROA,27 escrow prepared an HUD Statement, based on information provided by Tanaka, that itemized the fees and prorated amounts due from the Santiagos to complete the sale, including prorated property taxes and partial month rent due under the Santiagos' former lease agreement. However, the HUD Statement did not include prorated private sewer fees even though the sale closed in the middle of the month and the DROA expressly required such an itemization. Takase testified that had the sewer fees been prorated on the HUD statement, he and the Santiagos “would have found out” about the actual amount due for Jasper's private sewer service.
The foregoing facts clearly establish that Tanaka did not disclose to the Santiagos the true amount of the private sewer fees while they were negotiating for the sale of the Tavern in 2006. Further, the uncontroverted evidence demonstrates that Tanaka paid the private sewer fees prior to the Santiagos' purchase of the Tavern and, thus, knew not only the amount of the monthly and bi-monthly charges but also that the fees had increased each year by 20%.
Despite her knowledge, Tanaka never informed the Santiagos that the amount due under the Wastewater Agreement was (1) the single largest ownership expense of the Tavern, approximately equal to 20% of the agreed-to monthly mortgage payments,28 or (2) subject to an increase of 20% each year, which Jasper had implemented annually since the inception of the Wastewater Agreement in 1995. Further, although Richardson testified that the Santiagos were “not bound by [the] agreement,” Tanaka did not disclose that if the Santiagos chose not to accept the terms of the Wastewater Agreement, they would be required to (1) attempt to negotiate a new agreement with Jasper or (2) construct their own sewer system.
It cannot be seriously disputed that the difference between a sewer service fee of $225 monthly and the true price of approximately $1,700 per month,29 and the possibility of having to build a completely new sewer system if the Santiagos were to refuse binding themselves to the Wastewater Agreement, are facts that “may justifiably induce” the Santiagos, or any reasonable person standing in their shoes, to “act or refrain from acting” in the purchase of the Tavern, Restatement (Second) of Torts § 551(1), by seeking to renegotiate the terms of the Promissory Note and Mortgage, recalibrating the agreed-upon price, or walking away from the transaction altogether. Indeed, Louis testified that he and his wife would not have purchased the Tavern for $1.3 million had they known the actual sewer fees and the terms under which those fees could be increased annually. The substance and significant character of the undisclosed facts, and the incomplete and misleading nature of the disclosed facts, leave little room for doubt that they may have “justifiably induce[d]” the Santiagos to “act or refrain” from taking actions in their purchase of the Tavern. Id.
Tanaka's knowledge that these facts would cause justifiable inducement on the Santiagos' part was established by Tanaka's awareness of the actual, non-disclosed price for Jasper's sewer service, the disparity between the actual price and the disclosed price, the failure to clarify that the price had been actually subject to significant annual increases although the Wastewater Agreement provided that the increase was to be applied only to the deposit, and the fact that the Disclosure Statement that Tanaka completed unequivocally stated that the Santiagos and Takase may rely upon her representations therein. See Jones v. Great Am. Life Ins. Co., No. 2:13–CV–02153, 2015 WL 417909, at *5 (W.D.Ark. Jan. 30, 2015) (inferring from the facts and circumstances the defendant's knowledge of the falsity of the representation). The aggregate of these facts demonstrates Tanaka's knowledge that her inaccurate and incomplete disclosure could have been relied upon by, and thus may have justifiably induced, the Santiagos to act or to refrain to act.
Additionally, Tanaka's representation in the Agreement of Sale Addendum—that “based on current estimates,” the “Sewer Fee & Assessments” were $150—proved to be a partial, ambiguous, and misleading statement.30 Richardson testified that the amount reflected under “Sewer Fee & Assessments” constituted the county sewer fees, not the private sewer fees. But Geffert, who had been paying county sewer fees for eight years at the time the parties were negotiating for the sale of the Tavern, testified that county sewer fees were more than double the amount under “Sewer Fee & Assessments.” Further, based in part on the size of the Tavern and the Santiagos' knowledge of the building and expenses paid during their seven-year tenancy, the Santiagos believed Tanaka's estimate of $150 reflected the amount of the private sewer fees.
Tanaka subsequently disclosed the Wastewater Agreement that, on its face, appeared to confirm the Santiagos' interpretation of Tanaka's “Sewer Fee & Assessments” estimate. The Wastewater Agreement provided that Tanaka paid Jasper $150 in monthly private sewer maintenance charges and $150 in bimonthly sewer cleanout charges, the same numerical amount indicated in Tanaka's estimate. Consequently, Tanaka's representation on the Agreement of Sale Addendum appeared to confirm that the fees listed within the Wastewater Agreement were accurate.
Tanaka's contention throughout this case, that the express terms of the Wastewater Agreement provided that Jasper could increase the monthly and bi-monthly fees by up to 20% annually and that the Santiagos therefore had adequate notice that the sewer fees may be greater than $150, is unavailing; the plain language of the Wastewater Agreement provides that Jasper only “reserve[d] the right to adjust the deposit annually in a sum not exceeding twenty percent (20%).” Thus, contrary to Tanaka's argument, the Wastewater Agreement provides a reservation to increase the deposit, not the monthly sewer maintenance fees or the bi-monthly sewer cleanout fees.
Tanaka's contention is further refuted by trial testimony supporting the conclusion that the terms of the Wastewater Agreement were, at best, ambiguous and misleading. Richardson acknowledged that the plain terms of the agreement did not state that the monthly and bi-monthly fees could be increased by 20% per year. Richardson specifically testified that “perhaps the people who drafted [the agreement] made an error” by providing that the “deposit” rather than the “maintenance fee” could be increased by up to 20% a year.
On the other hand, the Santiagos' realtor, Takase, testified that based on all the disclosures he received, he believed that the sewer fees were “$150 for a maintenance fee, and $150 cleaning fee,” as stated on the face of the Wastewater Agreement. Thus, if in fact the Wastewater Agreement provided that Jasper had the ability to increase the monthly and bimonthly fees by 20% a year, the drafting “mistake” rendered the otherwise plain and clear provisions of the Wastewater Agreement ambiguous and misleading. Thus, Tanaka had a “duty to disclose the additional information necessary to prevent” the Wastewater Agreement from misleading the Santiagos. Restatement (Second) of Torts § 551(2)(c).
An additional opportunity for Tanaka to apprise the Santiagos of the true price for Jasper's sewer service arose at closing, when Tanaka was contractually bound, in accordance with paragraph C–10 of the DROA, to direct escrow to complete the HUD form to reflect, among other things, private sewer fees. At this juncture, Tanaka again failed to clarify the ambiguity and inaccuracy of her previous disclosures by not specifying the appropriate proration of Jasper's sewer fees, which, according to Takase, could have alerted the Santiagos to the true costs.
Thus, under Section 551 of the Restatement, to prevent her partial and ambiguous statements from being misleading, Tanaka had a duty to disclose the monthly amount of the sewer fees. By failing to disclose the amount of the Tavern's monthly sewer fees, Tanaka breached this duty.
Accordingly, for the reasons discussed, the circuit court's Trial Order was based on multiple erroneous findings and misapprehension as to the applicable law. First, contrary to the circuit court's findings and conclusions that the Santiagos' alleged failure to conduct due diligence barred their claims for nondisclosure and misrepresentation, “[the] duty to avoid misrepresentations is so strong that the deceived party is not charged with failing to discover the truth.” V.S.H. Realty, Inc. v. Texaco, Inc., 757 F.2d 411, 415 (1st Cir.1985) (citing Snyder v. Sperry & Hutchinson Co., 333 N.E.2d 421 (Mass.1975)) (“[I]f the seller's representations are such as to induce the buyer not to undertake an independent examination of the pertinent facts, lulling him into placing confidence in the seller's assurances, his failure to ascertain the truth through investigation does not preclude recovery .”); see also Yorke v. Taylor, 124 N.E.2d 912, 916 (Mass.1955) (“The recipient in a business transaction of a fraudulent misrepresentation of fact is justified in relying on its truth, although he might have ascertained the falsity of the representation had he made an investigation.”). Thus, Tanaka's partial and ambiguous disclosures are not excused by any alleged failure on the Santiagos' part to further investigate the information provided to them.32 The circuit court's contrary conclusions and findings are therefore erroneous.
Tanaka also had an affirmative duty, based on the clear contractual terms of the DROA, “As Is” Addendum, and Seller's Disclosures, to “fully and accurately disclose in writing” “all material facts” to the Santiagos prior to finalizing the sale of the Tavern. Therefore, Tanaka's failure to disclose material facts, standing alone, clearly violated her duty to disclose, and the circuit court's conclusion that Tanaka “was not required to disclose the Wastewater Agreement” is erroneous.
For these reasons, the circuit court and the ICA both erred in concluding that Tanaka did not have a duty to disclose, and did not breach her duty to disclose, the actual monthly fees of the private sewer system and the fact that the Santiagos, if they chose not to accept the terms of the Wastewater Agreement, would be required to negotiate a new private sewer contract or otherwise construct their own sewer system. See Restatement (Second) of Torts § 551(1). Additionally, once Tanaka made partial or ambiguous statements as to the amount of the private sewer fees, she breached her duty by subsequently failing to disclose the additional information necessary to prevent her disclosures and statements from misleading the Santiagos. See Restatement (Second) of Torts § 551(2)(b), cmt. g.
The foregoing facts also establish proof of the Santiagos' negligent misrepresentation cause of action. Negligent misrepresentation has the following elements: “(1) false information be supplied as a result of the failure to exercise reasonable care or competence in communicating the information; (2) the person for whose benefit the information is supplied suffered the loss; and (3) the recipient relies upon the misrepresentation.” Blair v. Ing, 95 Hawai‘i 247, 269, 21 P.3d 452, 474 (2001) (citing Restatement (Second) of Torts § 552); Zanakis–Pico v. Cutter Dodge, Inc., 98 Hawai‘i 309, 321, 47 P.3d 1222, 1234 (2002); see also Chun v. Park, 51 Haw. 462, 468, 462 P.2d 905, 909 (1969) (“We believe § 552 of Restatement (Second) of Torts ․ is a fair and just restatement of the law on the issue of negligent misrepresentation.”).
As discussed, Tanaka provided false information regarding the sewer charges to the Santiagos by only disclosing that Jasper's sewer fees were $150.00 per month for maintenance and $150.00 bi-monthly for cleanout charges when in fact Tanaka had been paying Jasper $1,153.23 for monthly private sewer maintenance and the same amount for bi-monthly sewer cleanout. Further, Tanaka did not clarify that the express terms of the Wastewater Agreement, which allowed Jasper to increase the deposit every year, was inaccurate because the contractual annual increase was actually being applied to the sewer fees. With respect to the loss element, the Santiagos were required to pay substantially more for sewer fees than what Tanaka represented and what the Wastewater Agreement reflected. The reliance element is also established by Louis' testimony that he and his wife would not have bought the Tavern had they known the true amount of sewer fees associated with ownership of the Tavern. Accordingly, the uncontroverted evidence established that Tanaka is liable for negligent misrepresentation, and the circuit court and the ICA erred in entering judgment against the Santiagos on this claim.
In 2008, Tanaka conducted a nonjudicial foreclosure under the provisions of HRS § 667–5 (Supp.2008). The circuit court held that Tanaka “complied with applicable foreclosure statutes” and that the Santiagos “did not establish any defense to foreclosure.” Specifically, the circuit court determined that the Santiagos' arguments related to their defense of wrongful foreclosure to Tanaka's ejectment counterclaim-that there was no power of sale in the Mortgage and that they cured their default-were without merit.33 Accordingly, the court issued a writ of ejectment, which the ICA later affirmed.
Prior to its repeal in 2012,34 HRS § 667–5 authorized the non-judicial foreclosure of mortgaged property only “[w]hen a power of sale is contained in a mortgage.” HRS § 667–5(a).35 This court examined HRS § 667–5 in Lee v. HSBC Bank USA, 121 Hawai‘i 287, 218 P.3d 775 (2009), and found that that it “authorize[d] nonjudicial foreclosure under a power of sale clause contained in a mortgage.” Id. at 289, 218 P.3d at 777 (emphases added). In Lee, the plaintiffs argued, and this court agreed, that “no state statute creates a right in mortgagees to proceed by non-judicial foreclosure; the right is created by contract.” Id. at at 292, 218 P.3d at 780.
Thus, this court has held that HRS § 667–5 does not provide the nonjudicial power of foreclosure but only allows its creation, if the parties choose to do so, within the four corners of a contract. See id.; see also Apao v. Bank of N.Y., 324 F.3d 1091, 1095 (9th Cir.2003) (finding that HRS § 667–5 “did not confer the power of sale, but merely authorized the parties to contract for the express terms of foreclosure upon default”).
Under principles of contract interpretation, an agreement should be construed as a whole and its meaning determined from the entire context and not from any particular word, phrase, or clause. Ching v. Hawaiian Rests., Ltd., 50 Haw. 563, 565, 445 P.2d 370, 372 (1968). “Since an agreement is interpreted as a whole, it is assumed in the first instance that no part of it is superfluous.” Restatement (Second) of Contracts § 203 (1981), cmt. b. Contract terms should be interpreted according to their plain, ordinary, and accepted sense in common speech. Found. Int'l, Inc. v. E.T. Ige Constr., Inc., 102 Hawai‘i 487, 495, 78 P.3d 23, 31 (2003). Where a term or a clause remains open to more than one reading, we construe any ambiguity “against the party who drafted the contract.” Luke v. Gentry Realty, Ltd., 105 Hawai‘i 241, 249, 96 P.3d 261, 269 (2004).
The Mortgage—the relevant contract in this case—states that “upon any default ․ the Mortgagee may with or without taking possession, foreclose this Mortgage ․ as now or then provided by law ․“ (Emphasis added). As written, HRS § 667–5 is the only source from which the Mortgage's power to foreclose may be derived. However, HRS § 667–5 does not independently provide for a power of sale, and, as noted, it only authorizes a sale where such a power is contained in a mortgage. Lee, 121 Hawai?i at 289, 218 P.3d at 777. Thus, the Mortgage does not provide for a power of sale that would have authorized Tanaka's nonjudicial foreclosure.
Alternatively, the clause “as now or then provided by law” at a minimum creates an ambiguity for two reasons. First, as noted, the Mortgage defers to the statute, but the statute similarly defers to the Mortgage. The plain language of the Mortgage creates a chicken-and-egg situation where it is not clear whether the power of sale is created within the document (as required by the statute) or created within the statute (as contemplated by the Mortgage). Second, the meaning of the clause “as now or then provided by law” is unclear. The Santiagos have represented that the phrase only “allows” foreclosure as otherwise provided by law. Another meaning could be that the phrase “the Mortgagee may ․ foreclose this Mortgage” creates the power of sale, and the succeeding phrase “as now or then provided by law” sets forth the manner in which the power of sale must be exercised.
Where there is an ambiguity, the ambiguity is construed against the drafter—Tanaka. Luke, 105 Hawai?i at 249, 96 P.3d at 269. Thus, if “as now or then provided by law” is interpreted as an ambiguity, the clause should be given the meaning that the Mortgage only allows nonjudicial foreclosure as provided by law. Since HRS § 667–5, the section under which the nonjudicial foreclosure sale was conducted, requires a power of sale to be contained in a mortgage, Lee, 121 Hawai?i at 289, 218 P.3d at 777, a power that the Mortgage in this case did not provide, Tanaka's nonjudicial foreclosure was unlawful. Thus, the conclusions of law of the circuit court in its Trial Order—that Tanaka “complied with the applicable foreclosure statutes,” that the Santiagos “did not establish any defense to foreclosure,” and that the Santiagos' “ ‘power of sale’ argument is meritless”—are incorrect.
The Santiagos have asserted that there is a statutory right to cure default under HRS § 667–5 and that, pursuant to that statutory right, they cured any default under the Mortgage, making the ensuing foreclosure wrongful. When construing a statute, courts are bound to give effect to all parts of a statute, and no clause, sentence, or word shall be construed as “superfluous, void, or insignificant” if a construction can be legitimately found that will give force to and preserve all words of the statute. Fagaragan v. State, 132 Hawai‘i 224, 241, 320 P.3d 889, 906 (2014).
HRS § 667–5(c) provides that “[u]pon the request of any person entitled to notice ․ the mortgagee ․ shall disclose to the requestor ․ the amount to cure the default ․“ Thus, subsection (c) clearly imposes certain disclosure requirements on the mortgagee intending to foreclose. The fact that, upon the mortgagor's request, the mortgagee must disclose the amount to cure the default, together with the related obligation to disclose such amount before the auction sale, implies a right of the defaulting party to cure in order to prevent foreclosure. Construing HRS § 667–5(c) as not providing a right to cure would essentially render meaningless the express statutory requirement that “[t]he amount to cure the default” be disclosed upon a mortgagor's request. Under such a construction, the requirement that a mortgagee should disclose the amount to cure would be superfluous, since that requirement would have no practical application if there were no predicate right to cure. Viewed another way, it is plainly illogical to have a statutory requirement mandating disclosure of the amount to cure if, in actuality, there is no statutory right to cure. See HRS § 667–5(c) (utilizing the word “shall” to signify an imperative command instead of the permissive modal verb “may”).
Additionally, unlike a power of sale, which HRS § 667–5 explicitly required to be “contained in a mortgage,” the amount to cure that a mortgagee must disclose upon the mortgagor's request was not statutorily required to have an independent contractual source. If the legislature intended a right to cure to be agreed upon contractually, it could have added to HRS § 667–5(c)(1) the qualifier “when contained in a mortgage,” as it did in the power of sale provision. The absence of such a qualifier is supportive of the interpretation that the right to cure is statutorily provided by HRS § 6675(c)(1).
Finally, our interpretation is consonant with HRS § 677–5(c)'s codification of the common-law right to cure a default. The purpose that prompted the addition of HRS § 6675(c) to the foreclosure statute in 2008 was to “ensure that the different nonjudicial foreclosure processes include provisions for interested parties to receive sufficient notice and obtain information about the intent to foreclose [and] amounts to cure the mortgage default.” Conf. Comm. Rep. No. 3–08, in 2008 House Journal at 1710, 2008 Senate Journal at 793 (emphases added). Evident from the legislative history of HRS § 667–5(c) is the recognition that the right to cure a default is intrinsic in the law and that, therefore, HRS § 677–5(c) merely codified this right to ensure that interested parties were adequately apprised of it.
Based on the statutory right provided in HRS § 667–5, the Santiagos had a right to cure the default occasioned by their non-payment. Thus, the circuit court's conclusion of law that there is no right to cure in Hawai?i law is incorrect.
Although the Santiagos indicated on March 10, 2008, that they were halting payment to the mortgage servicer based on concerns regarding mediation, they were continuing to set aside payment. The record further indicates that the Santiagos cured any event of default as of May 8, 2008, some four months prior to the sale.
Default is a necessary precondition for nonjudicial foreclosure under HRS § 667–5. Lee, 121 Hawai?i at 290, 218 P.3d at 778 (“This section specifically requires breach of a condition of the mortgage as a condition precedent to foreclosure.”) Lee found that a sale pursuant to HRS § 667–5 was invalid where a breach of a mortgage contract had been cured because, in that instance, the mortgagors “were no longer in breach of a condition of the mortgage” and, thus, the mortgagee “could not invoke the mortgage's power of sale clause.” Id. at 291, 218 P.3d at 779. A foreclosure sale conducted when the default had already been cured, according to Lee, “did not comply with the requirements of HRS section 667–5 and was, thus, invalid.” Id. at 291, 218 P .3d at 779 (emphasis added).
Where it is determined that the nonjudicial foreclosure of a property is wrongful, the sale of the property is invalid and voidable at the election of the mortgagor, who shall then regain title to and possession of the property. See Ulrich v. Sec. Inv. Co., 35 Haw. 158, 168 (1939) (holding that where a self-dealing mortgagee fails to exercise its right to non-judicial foreclosure in a manner that is fair, reasonably diligent, and in good faith and to demonstrate that an adequate price was procured for the property, the resulting sale is void); Lee v. HSBC Bank USA, 121 Hawai‘i 287, 292, 218 P.3d 775, 780 (2009) (concluding “that an agreement created at a foreclosure sale conducted pursuant to HRS section 667–5 is void and unenforceable where the foreclosure sale is invalid under the statute”). Voiding the foreclosure sale at this time, however, has been rendered impracticable because the Tavern has already been resold by Tanaka to a third party. See 123 Am.Jur. Proof of Facts 3d § 31 (2011) (“It has long been held that if the property has passed into the hands of an innocent purchaser for value, an action at law for damages is generally the appropriate remedy.”). Thus, based on our power to fashion an equitable relief in foreclosure cases, see Beneficial Haw., Inc. v. Kida, 96 Hawai‘i 289, 312, 30 P.3d 895, 918 (2001) (reiterating that mortgage foreclosure is a proceeding equitable in nature), we consider appropriate relief.
Jenkins v. Wise, 58 Haw. 592, 574 P.2d 1337 (1978), is instructive. In that case, even though this court found the purchaser to be in default, we disapproved of the circuit court's disposition that essentially effectuated a total forfeiture of the purchaser's interest, in part because the seller's “security interests in the property were never in jeopardy.” Id. at 598, 574 P.2d at 1342. In this context, the court found that “where no injustice would thereby result to the injured party, equity will generally favor compensation rather than forfeiture against the offending party.” Id. at 597, 574 P.2d at 1341. Thus, instead of cancelling the purchase contract and depriving the purchaser of the property and the significant amount of money that she already paid, this court ordered the purchaser of the property to pay the seller the entire unpaid balance of the purchase price and accrued interests in exchange for specific performance by the seller under the purchase contract. Id. at 604, 574 P.2d at 1345.
In cases involving fraud or deceit, which includes nondisclosure claims, this court has previously stated that the measure of damages “is usually confined to either the ‘out-of-pocket’ loss or the ‘benefit of the bargain.’ “ Ellis v. Crockett, 51 Haw. 45, 53, 451 P.2d 814, 820 (1969); Zanakis–Pico v. Cutter Dodge, Inc., 98 Hawai‘i 309, 320, 47 P.3d 1222, 1233 (2002) (same). Under the out-of-pocket rule, “the damages are the difference between the actual value of the property received and the price paid for the property, along with any special damages naturally and proximately caused by the fraud prior to its discovery, including expenses incurred in mitigating the damages.” B.F. Goodrich Co. v. Mesabi Tire Co., 430 N.W.2d 180, 182 (Minn.1988); see generally 37 Am.Jur.2d Fraud and Deceit § 434 (2013). In contrast, the benefit-of-the-bargain rule “allows the [recipient of the fraud or deceit] to recover the difference between the value of the property received and the value to plaintiff that the property would have had if the representation had been true.” Id.; see generally 37 Am.Jur.2d Fraud and Deceit § 432 (2013).41 It is unnecessary to decide the applicable measure of nondisclosure damages due the Santiagos because, based on the trial record, the total amount of damages to which the Santiagos are entitled on their nondisclosure claim is included within the $1,412,790.79 amount that this court has already awarded to them.
Zanakis–Pico, 98 Hawai‘i at 322, 47 P.3d at 1235 (2002) (alterations and emphasis omitted) (quoting Restatement (Second) of Torts § 552B (1977)). Although the Santiagos are entitled to damages for negligent misrepresentation, similar to the damages for nondisclosure, we need not decide the applicable amount due the Santiagos because based on the trial record, the total amount of damages to which the Santiagos are entitled on their negligent misrepresentation claim is included within the $1,412,790.79 amount that they have already been awarded.
Based on the foregoing, we vacate the ICA Judgment on Appeal and the circuit court's Judgment, Writ of Ejectment, Order Denying the Santiagos' Motion for Reconsideration, and Order Granting Tanaka's Fees. The circuit court's Trial Order, which incorporates the FOF and COL, is vacated insofar as it is inconsistent with this opinion; otherwise, it is affirmed. The case is remanded to the circuit court (1) for entry of judgment in favor of the Santiagos on their negligent misrepresentation and nondisclosure causes of action; (2) for entry of judgment in favor of the Santiagos on Tanaka's breach of note, breach of mortgage, breach of covenant of good faith and fair dealing, and ejectment causes of action; and (3) for determination of interest, attorneys' fees, and costs in favor of the Santiagos, as appropriate.
2. It does not appear that Tanaka personally participated in the negotiations. All actions, unless otherwise noted, were taken by her real estate agent, Wayne Richardson (Richardson) or her attorney.
3. The DROA contained standard terms, including the following pertinent provisions:C–10 Prorations and Closing Adjustments. At closing, Escrow shall prorate the following, if applicable, as of the date of closing: real property tax, lease rents ․ maintenance, private sewer, marina, and/or association fees, tenant rents, and ANY OTHERS.․SELLER'S DISCLOSURES (Required by Hawaii Statute for residential real property)C–44 Seller's Obligation to Disclose. Under Hawaii law, Seller is obligated to fully and accurately disclose in writing to Buyer any fact, defect, or condition, past or present, that would be expected to measurably affect the value of the Property to a reasonable person․ Such Disclosure shall be prepared in good faith and with due care and shall disclose all material facts relating to the Property that: (i) are within the knowledge or control of Seller; (ii) can be observed from visible, accessible areas; or, (iii) which are required by Section 508D–15 of the Hawaii Revised Statutes.․C–47 Buyer's Remedies If Seller Fails to Comply with Paragraphs C–44 or C44A․ If Seller negligently fails to provide the required disclosure statement or amended disclosure statement, Seller shall be liable to Buyer for the amount of actual damages suffered as a result of the negligence. In addition to the above remedies, a court may also award the prevailing party's attorneys' fees, courts costs, and administrative fees.
5. In full, the purpose of the Disclosure Statement is described as follows:Purpose of Disclosure Statement: Pursuant to Hawaii Revised Statutes, Chapter 508D (for residential real property), and under common law (for all other real estate transactions, including the sale of vacant land) a seller of residential real property is obligated to fully and accurately disclose in writing to a buyer all “material facts” concerning the property. “Material facts ” are defined as “any fact, defect, or condition, past or present, that would be expected to measurably affect the value to a reasonable person of the residential real property being offered for sale.” This Disclosure Statement is intended to assist Seller in organizing and presenting all material facts concerning the Property.(Emphasis added).
6. After Takase received and reviewed the Disclosure Statement, Takase made a handwritten notation—“✓ on →”—in the margin next to Tanaka's reference to the private sewer system. Takase testified that his “notation meant ‘Check on this private sewer line.’ “ Thereafter, Takase and Louis reviewed the disclosed documents that related to the private sewer system.
7. “Jasper STP” is the short-form used in the agreement for Jasper's Anchor Cove Sewage Pump Station.
8. See note 3 for the full text of paragraph C–10 of the DROA.
9. The $17,518.31 in excess of the agreed-upon purchase price of $1.3 million constitute settlement charges, which included title and recording charges, that the Santiagos had to pay at closing.
10. Less than two weeks after the Santiagos closed on the sale of the Tavern, Jasper sent a bill to Tanaka totaling $2,314.20, $1,153.23 for monthly private sewer maintenance and $1,153.23 for bi-monthly sewer cleanout, plus excise taxes. Tanaka notified Jasper that the Tavern had been sold and instructed that the bill, and all future billings, be sent to the Santiagos.
11. In his letter, Jasper outlined the extent to which the monthly maintenance charge and bimonthly cleanout charge had been increased since the Wastewater Agreement was executed: in 1995, Jasper charged $156.25 for monthly maintenance and the same amount for bimonthly cleanout, and in 2006, he was charging $1,160.94 for monthly maintenance and the same amount for bimonthly cleanout.
12. Jasper also questioned the Santiagos' right to demand an accounting since, at the outset, they were not assigned the Wastewater Agreement.
13. All circuit court proceedings in this case were presided over by Judge Kathleen N.A. Watanabe.
15. See note 35 for the complete text of HRS § 667–5.
16. A small amount, $15.49, remained due on the account, which Louis paid several days later, on April 15, 2008.
18. The Santiagos additionally asserted claims for “breach of agreement,” “breach of good faith and fair dealing,” “breach of duty of good faith mediation,” and “violation of HRS § 667–42.” These claims were dismissed by the circuit court.
19. The Santiagos filed a series of motions for temporary restraining orders and motions for preliminary injunctions seeking to “prevent and preclude” Tanaka from proceeding with the foreclosure auction, all of which were denied by the circuit court.
21. The evidence at trial established that the Santiagos paid Tanaka $585,161.60 in principal, interest, and fees pursuant to the Promissory Note and Mortgage as of May 6, 2011, in addition to the $800,000 down payment, $17,518.31 closing charges, and $10,110.88 in taxes after Tanaka transferred title to the Tavern back to herself.
22. The Santiagos reduced the total amount they had paid by $80,355.99 to offset any actual damages Tanaka had incurred because of the foreclosure sale: $2,323.64 principal, $12.04 interest, and $78,000.00 as estimated costs to resell the property, which assumed a six percent broker's commission and a sale price of $1.3 million. The reduction was apparently in light of the trial court's ruling that the foreclosure had been lawfully conducted.
23. The Santiagos appealed from the Trial Order; the circuit court's Judgment, filed June 28, 2011; the Writ of Ejectment, filed June 28, 2011 (Writ of Ejectment); Order Denying “Plaintiffs' Ex Parte Motion for a Temporary Stay Pending the July 19, 2011 Hearing on Plaintiffs' ‘Emergency Motion for a Temporary Stay of Enforcement of the Court's Writ of Ejectment Pending Disposition of Plaintiffs' Motion to Reconsider, Alter, or Amend the Judgment and Pending Disposition of Plaintiff's Motion for Stay Pending Appeal,’ “ filed July 14, 2011 (Order Denying the Santiagos' Motion for a Stay); Order Denying Plaintiffs' Emergency Motion for a Temporary Stay of Enforcement of the Court's Writ of Ejectment Pending Disposition of Plaintiffs' Motion to Reconsider, Alter, or Amend the Judgment and Pending Disposition of Plaintiffs' Motion for Stay Pending Appeal, filed August 4, 2011 (Order Denying the Santiagos' Motion to Stay Ejectment); Order Denying Plaintiffs' Motion for a Stay Pending Appeal, filed August 4, 2011; Order Denying Plaintiffs' Motion to Reconsider, Alter, and/or Amend the Court's Findings of Fact, Conclusions of Law and Order, and Judgment Thereon, filed August 4, 2011 (Order Denying the Santiagos' Motion for Reconsideration); and Order Granting in Part and Denying in Part Defendant/Counter–Plaintiff Ruth Tanaka's Motion for Fees and Costs, filed August 22, 2011 (Order Granting Tanaka's Fees).The Santiagos also challenged the circuit court's judgment on Tanaka's counterclaims of breach of note, breach of mortgage, and ejectment, and in denying the Motion for Reconsideration.Tanaka filed a cross appeal, which is not before this court and, thus, will not be discussed.
24. Tanaka moved to dismiss the Santiagos' second point of error as moot because according to Tanaka's declaration in support of her dismissal motion, the Tavern had been resold to a third party on May 1, 2012, after the circuit court rendered its Judgment. On May 24, 2012, the Santiagos filed a memorandum in opposition to the motion. Subsequently, on June 6, 2012, the ICA issued an order denying the motion.
25. The allegations supporting the Santiagos' negligent misrepresentation claim are fundamentally the same as those supporting the nondisclosure cause of action. For negligent misrepresentation, the Santiagos assert that Tanaka misrepresented the true amount of sewer fees that she was paying Jasper, stating that the amount was only $150 when in fact it had increased to $1,160.94 for sewer maintenance and the same amount for bi-monthly cleanout charges. For their nondisclosure claim, the Santiagos allege that Tanaka failed to disclose the true amount of sewer fees based on her agreement with Jasper.
26. Although the parties exchanged numerous counteroffers, there was only one DROA, dated November 23, 2005. Each counteroffer referenced and incorporated the DROA's terms, unless otherwise expressly amended by the counteroffer.
27. See supra note 3.
28. Richardson acknowledged that the Jasper sewer fees were the highest operating expense for the Tavern.
29. Because the disclosed sewer fees are composed of $150 for maintenance fees per month and $150 bi-monthly (or $75 per month) for cleanout charges, the total monthly sewer fees based on Tanaka's disclosures is $225. The $1,700 per month figure is the sum of the $1,160.94 monthly maintenance fees and half of the $1,160.94 bi-monthly cleanout charges (or approximately $600 per month) that Jasper was actually charging for his sewer service.
30. Although the Agreement of Sale Addendum was part of a rejected counteroffer and thus did not become part of the contract between the parties, her representations therein are relevant to the Santiagos' claims for nondisclosure and misrepresentation.
31. Additionally, “[t]his court has affirmed the general rule that, in interpreting contracts, ambiguous terms are construed against the party who drafted the contract.” Luke v. Gentry Realty, Ltd., 105 Hawai‘i 241, 249, 96 P.3d 261, 269 (2004).
32. Despite the circuit court's finding that the Santiagos failed to exercise appropriate due diligence because they “did not take care to protect their own interest, or obtain professional advice,” the Santiagos were represented throughout the purchase by Takase, an experienced professional broker, who guided and assisted them in their purchase of the Tavern. Thus, the court's contrary finding is clearly erroneous.
33. On appeal, the ICA did not reach these two issues after determining that the Santiagos' challenges to the circuit court's decision on Tanaka's counterclaims were rendered moot by the resale of the Tavern to a third party, making it impossible to return title and possession to the Santiagos. Santiago v. Tanaka, No. CAAP–11–0000697 (App. Nov. 28, 2014) (mem).The ICA may have concluded that any challenge to ejectment and the underlying nonjudicial foreclosure had been rendered moot because it was not possible to award the classic remedy for such a cause of action: return of title and possession. However, money damages, which the ICA found were within its purview to award, may be substituted for title and possession in certain instances pursuant to the equitable powers of a court in adjudicating a case arising from a mortgage foreclosure, see infra. Thus, the ICA should have addressed the Santiagos' argument as to their right to cure a default and the lack of a nonjudicial power of sale in the Mortgage.
34. HRS §§ 667–5 to 667–10 governed the process of foreclosure by power of sale (i.e., non-judicial foreclosure) and were within Part I of Chapter 667. HRS §§ 667–5 to 667–8 were repealed by the legislature in 2012. 2012 Haw. Sess. Law Act 182, § 50 at 684.
35. In 2008, HRS §§ 667–5 provided in relevant part as follows:(a) When a power of sale is contained in a mortgage, and where ․ any person authorized by the power to act in the premises, desires to foreclose under power of sale upon breach of a condition of the mortgage, the ․ person shall be represented by an attorney who is licensed to practice law in the State and is physically located in the State․․(c) Upon the request of any person entitled to notice pursuant to this section and sections 667–5.5 and 6676, the attorney, the mortgagee, successor, or person represented by the attorney shall disclose to the requestor the following information:(1) The amount to cure the default, together with the estimated amount of the foreclosing mortgagee's attorneys' fees and costs, and all other fees and costs estimated to be incurred by the foreclosing mortgagee related to the default prior to the auction within five business days of the request; and(2) The sale price of the mortgaged property once auctioned.
36. Federal law recognizes an equitable right of redemption and cure. In re Parish, 2010 WL 1372387, at *1 (“The right of redemption is an equitable interest that is included in the bankruptcy estate under section 541(a)(1).”).
37. The circuit court's citation to Weinberg v. Mauch, 78 Hawai‘i 40, 52, 890 P.2d 277, 289 (1995), for the proposition that there is no “right to cure” is incorrect. That case is inapposite because it did not concern a statutory or common-law right to cure but only whether an assignment of a right to cure was consented to in the contract.
38. The Santiagos argue that the circuit court should have granted their Motion for Reconsideration because its decision “resulted in an over $1.3 million cash forfeiture as a result of [the Santiagos'] purchase of the subject property and their full performance” under the Mortgage. In light of our disposition of this case, it is unnecessary to reach this argument.
39. The Santiagos suggested to both the circuit court and the ICA that Tanaka's “actual damages,” which they estimated at $80,335, should be deducted from their gross damages. This deduction proceeded upon the premise that the nonjudicial foreclosure was valid and that the purchase price at the foreclosure sale would be $1.3 million. Because both assumptions are incorrect, the proposed deduction is not applicable.
40. Relatedly, because unlawful foreclosure is an action in the nature of assumpsit, see Sharp v. Hui Wahine, Inc., 49 Haw. 241, 243, 413 P.2d 242, 245 (1966), the Santiagos, who should have been the prevailing parties, are also entitled to attorneys' fees and costs they incurred at the circuit court. HRS § 607–14 (Supp.1997). Conversely, because Tanaka should have been the losing party, the circuit court's award of attorneys' fees and costs to her, based on HRS § 607–14, is erroneous. We therefore remand this case to the circuit court for a determination of the amount of attorneys' fees and costs due the Santiagos.
41. Inherent in the foregoing formulations is the presupposition that the recipient of fraud or deceit retains some value as a result of the transaction in which the fraud or deceit was made. Where the recipient of fraud or deceit is left with no value whatsoever, the proper measure of damages is “the amount ․ paid with interest from the date of payment, plus incidental losses and expenses suffered as a result of the seller's misrepresentations.” Salmon v. Brookshire, 301 S.W.2d 48, 54 (Mo.Ct.App.1957); accord Kerr v. Vatterott Educ. Ctrs., Inc., 439 S.W.3d 802, 813–14 (Mo.Ct.App.2014); see Anderson v. Heasley, 148 P. 738 (Kan.1915).


Erin O'CONNOR, Plaintiff-Appellant, v. NATIONWIDE CHILDREN'S HOSPITAL, Defendant-Appellee.
Erin O'Connor suffered an injury while working for Nationwide Children's Hospital (NCH). When NCH discharged her after she had exhausted her FMLA leave, O'Connor sued for, among other claims, wrongful termination in violation of Ohio public policy. The district court dismissed the claim, and we AFFIRM.
O'Connor once worked as a perioperative technician at NCH in Columbus, Ohio. After an NCH elevator allegedly closed on her shoulder, O'Connor initiated a workers' compensation claim and was placed on FMLA leave. NCH terminated her employment after O'Connor had exhausted her leave.
O'Connor sued NCH on four grounds in state court. After removal, the district court dismissed three counts following NCH's motion to dismiss for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure and granted summary judgment to NCH on the fourth. She appeals the dismissal of only one claim—wrongful discharge in violation of Ohio public policy, also known as a “Greeley claim.” See Greeley v. Miami Valley Maint. Contractors, Inc., 49 Ohio St.3d 228, 551 N.E.2d 981, 987 (1990).
We review de novo the district court's dismissal of O'Connor's complaint for failure to state a claim under Rule 12(b)(6). See Robbins v. New Cingular Wireless PCS, LLC, 854 F.3d 315, 318 (6th Cir. 2017). We must accept the complaint's allegations as true, draw all reasonable inferences in favor of O'Connor, and determine whether the complaint presents sufficient facts to state a facially plausible claim to relief. Id. at 319.
Ohio is generally an employment-at-will state. Wiles v. Medina Auto Parts, 96 Ohio St.3d 240, 773 N.E.2d 526, 529 (2002). That is, an employer and employee may end their employment relationship for any reason, and the employee may not sue for wrongful discharge. Id. But Ohio courts recognize an exception when an employer has wrongfully discharged an employee in violation of the state's public policy. Greeley, 551 N.E.2d at 986; see also Painter v. Graley, 70 Ohio St.3d 377, 639 N.E.2d 51, 56 (1994) (noting that public policy may be discerned based on common law).
1. That [a] clear public policy existed and was manifested in a state or federal constitution, statute or administrative regulation, or in the common law (the clarity element).
2. That dismissing employees under circumstances like those involved in the plaintiff's dismissal would jeopardize the public policy (the jeopardy element).
3. The plaintiff's dismissal was motivated by conduct related to the public policy (the causation element).
4. The employer lacked overriding legitimate business justification for the dismissal (the overriding justification element).
Jermer v. Siemens Energy & Automation, Inc., 395 F.3d 655, 656 (6th Cir. 2005) (quoting Collins v. Rizkana, 73 Ohio St.3d 65, 652 N.E.2d 653, 657–58 (1995) ). The first two elements present questions of law; the second two, questions of fact. See Collins, 652 N.E.2d at 658.
[A]lthough complaining employees do not have to be certain that the employer's conduct is illegal or cite a particular law that the employer has broken, the employee must at least give the employer clear notice that the employee's complaint is connected to a governmental policy. It must be sufficiently clear from the employee's statements that he is invoking governmental policy that a reasonable employer would understand that the employee relies on the policy as the basis for his complaint.
395 F.3d at 656; see also Trout v. FirstEnergy Generation Corp., 339 Fed.Appx. 560, 567 (6th Cir. 2009) (emphasizing Jermer's “clear notice” rule regarding the jeopardy element). In Jermer, an employee alleged that he was terminated for complaining to his supervisor about the air quality at his worksite. 395 F.3d at 655. This court affirmed the dismissal of Jermer's Greeley claim because Jermer “never connected his statements about air quality to governmental policy or mentioned or in any way invoked governmental policy as the basis of his complaint” and, therefore, failed to show that his termination would “jeopardize” Ohio public policy. Id. at 656.
O'Connor comes up short too. In her complaint, O'Connor alleges only that NCH retaliated against her because she “complained to [NCH]'s managers that the elevator caused her injury and was unsafe.” She pleads no facts indicating that she gave NCH “clear notice” of her intent to vindicate a governmental policy favoring workplace safety vis-à -vis her workers' compensation claim. Although an Ohio employee is not required to cite a specific law or statute under siege, “his statements must indicate to a reasonable employer that he is invoking governmental policy in support of, or as the basis for, his complaints.” Id. at 659. Complaining generally about a precarious elevator on the premises is not enough to clearly notify employers “that they are no longer dealing solely with an at-will employee, but with someone who is vindicating a governmental policy.” Id.
The dissent would also cast aside Jermer based on Sutton v. Tomco Machining, Inc.—an Ohio Supreme Court decision that determined an employee satisfied the jeopardy element by notifying his employer about an injury one hour before the employer fired him. 129 Ohio St.3d 153, 950 N.E.2d 938, 946–47 (2011). But Sutton is inapposite here because it presented a different issue, namely whether a Greeley claim encompasses situations where “an injured employee suffers retaliatory employment action after injury on the job but before the employee files a workers' compensation claim or institutes, pursues, or testifies in any workers' compensation proceeding.” Id. at 941 (emphasis added). Because the remedy provisions in the Ohio workers' compensation statute could not be accessed by the Sutton plaintiff—who, having been fired before filing a workers' compensation claim, was not an eligible claimant under the statute—the court held the jeopardy element was satisfied. Id. at 947. That test for the jeopardy element has no application here, however, as O'Connor was fired only after she filed a workers' compensation claim and after she had exhausted her FMLA leave.
Nor are we swayed by O'Connor's contention that the district court should not have analyzed the jeopardy element because NCH did not argue it in moving to dismiss the complaint. NCH raised (albeit cursorily) the argument in its motion, and elaborated further in its reply.
Accordingly, we AFFIRM the district court's judgment.
Since this court's decision in Jermer v. Siemens Energy & Automation, Inc., 395 F.3d 655 (6th Cir. 2005), the Ohio Supreme Court decided Sutton v. Tomco Machining, Inc., 129 Ohio St.3d 153, 950 N.E.2d 938, 941, 946–47 (2011), which determined that an employee satisfied the jeopardy element when he notified his employer about an injury one hour before his employer fired him. In light of Sutton, notification of an injury is enough to satisfy the jeopardy element.1 See 950 N.E.2d at 941, 946–47. Because O'Connor alleged that she “complained about being injured by the Defendant's unsafe workplace prior to her constructive termination of employment,” she adequately pleaded this element of jeopardy. R. 8 (Compl. ¶ 19) (Page ID #63). See also Himmel v. Ford Motor Co., 342 F.3d 593, 599–601 (6th Cir. 2003) (analyzing jeopardy element and holding employee complaint about employer's conduct believed to violate law satisfies jeopardy element).
Moreover, NCH's motion to dismiss discussed the jeopardy element in a one-sentence footnote, see R. 3 (Mot. at 6 n.1) (Page ID #20), but this court has stated that “[i]ssues adverted to in a perfunctory manner, unaccompanied by some effort at developed argumentation, are deemed waived.” Barany-Snyder v. Weiner, 539 F.3d 327, 331 (6th Cir. 2008) (alteration in original) (quoting McPherson v. Kelsey, 125 F.3d 989, 995–96 (6th Cir. 1997) ). And “[r]aising the issue for the first time in a reply brief does not suffice.” Scottsdale Ins. Co. v. Flowers, 513 F.3d 546, 553 (6th Cir. 2008) (quoting Novosteel SA v. United States, 284 F.3d 1261, 1274 (Fed. Cir. 2002) ).
1. NCH argues that O'Connor neglected to allege facts sufficient to satisfy the clarity element. But we need not—and do not—reach that question given our conclusion regarding the jeopardy element. We find unpersuasive, however, NCH's assertion (and the district court's conclusion) that Ohio Rev. Code § 4123.90 somehow precludes O'Connor's wrongful discharge claim. O'Connor does not allege that NCH retaliated against her because she filed a workers' compensation claim; therefore, it is immaterial to this case that § 4123.90 “provides the exclusive remedy for employees claiming termination in violation of rights conferred by the Workers' Compensation Act.” Bickers v. W. & S. Life Ins. Co., 116 Ohio St.3d 351, 879 N.E.2d 201, 207 (2007).
1. The majority asserts that Sutton is inapplicable because O'Connor did file a workers' compensation claim. See Majority Op. at ––––. However, the majority also states that it “find[s] unpersuasive ․ NCH's assertion (and the district court's conclusion) that Ohio Rev. Code § 4123.90 somehow precludes O'Connor's wrongful discharge claim” because “O'Connor [did] not allege that NCH retaliated against her because she filed a workers' compensation claim.” Id. at 5 n.1. As the majority acknowledges, whether O'Connor filed a workers' compensation claim is irrelevant for this issue of jeopardy. Because O'Connor asserted that “[t]he Defendant retaliated against the Plaintiff because she made complaints and was injured by the unsafe workplace by terminating her employment in violation of the public policy of Ohio,” she adequately pleaded jeopardy in satisfaction of Sutton. R. 8. (Compl. ¶ 20) (Page ID #63) (emphasis added).


On April 22, 1999, Joanne Batdorf was walking to her house in Peru, Indiana, after renting some movies. Stafford emerged from between two parked cars holding a rope. He put the rope around Batdorfs neck and dragged her to the trunk of his car. He then tried to shove Batdorf into his trunk, slamming the trunk lid on her arms and legs several times. When Batdorfs screams alerted nearby witnesses, Stafford dropped Batdorf, momentarily knocking her unconscious. He then drove away.
Witnesses described Stafford and the vehicle he was driving. A license plate search revealed Staffords employer owned the vehicle, and Batdorf identified Stafford from a lineup.
At the request of a party, the court shall order witnesses excluded so that they cannot hear the testimony of or discuss testimony with other witnesses, and it may make the order on its own motion. This rule does not authorize the exclusion of (1) a party who is a natural person, or (2) an officer or employee of a party that is not a natural person designated as its representative by its attorney, or (3) a person whose presence is shown by a party to be essential to the presentation of the party's cause.
As our supreme court noted in Hernandez v. State, 716 N.E.2d 948, 950 (Ind. 1999), rehg denied, the adoption of this rule of evidence changed prior case law, as it took decisions to grant these motions from the trial courts discretion and requires the trial court to grant such motions unless one of the three listed exceptions applies. See also Smiley v. State, 649 N.E.2d 697, 699 n.5 (Ind. Ct. App. 1995).
There is a long-standing Indiana tradition of permitting a police officer to remain in the courtroom at counsels table even though the officer may also be called as a witness. Heeter v. State, 661 N.E.2d 612, 615 (Ind. Ct. App. 1996). This tradition is continued as the second exception in Evid. R. 615 by designating this person as the States representative. Id.
An officer may also be allowed to remain in the courtroom pursuant to the third exception if the officer is designated as an essential witness. To qualify as an essential witness, a witness must have such specialized expertise or intimate knowledge of the facts of the case that a partys attorney could not effectively function without the presence and aid of the witness. 4 Jack B. Weinstein & Margaret A. Berger, Weinstein's Federal Evidence § 615.04[b] (2d ed. 1999) (discussing the showing required for exemption under the federal version of the rule). In Hernandez, our supreme court found that a prison guard was an essential witness when the State had demonstrated that only he would be able to assist in the cross-examination of other inmates, who as defense witnesses would testify that Defendant's attack was in self-defense. 716 N.E.2d at 951.
Here, by contrast, the trial court erred in allowing two police representatives to remain in the courtroom despite a witness separation order and without any designation that the second officers presence was required as an essential witness. The State asserts, without citation to authority, that more than one officer should be able to serve as the States representative. It contends the purpose of the rule would be frustrated by artificially limiting the number of party representatives. (Br. of Appellee at 7-8.) We disagree. The purpose of Rule 615 is to authorize the trial court to exclude witnesses from the courtroom so that they cannot hear the testimony of other witnesses and to thereby prevent the witnesses from basing their testimony, consciously or unconsciously, on the testimony of other witnesses. See Weinstein, supra, § 615.02 (addressing the federal version of Evid. R. 615). The rule is not intended to offer a mechanism by which one party may defeat the other partys separation of witnesses order.
We believe Evid. R. 615 permits the designation of only one person as a representative of the State. The Rule provides that an officer or employee of a party that is not a natural person designated as its representative may not be excluded from the courtroom. This is in the singular -- there is no indication that more than one officer, employee or representative is allowed when a separation of witnesses motion has been granted. And see Heeter, 661 N.E.2d at 615 (noting the tradition of permitting a police officer to remain in the courtroom at counsels table (emphasis supplied)).
The language of the rule does not preclude, however, the designation of a second individual as an essential witness. In Bell v. State, 610 N.E.2d 229, 233 (Ind. 1993), a case tried prior to the effective date of the rule, the trial court granted the States request that two witnesses remain in the courtroom during the trial. Our supreme court affirmed on the ground Bell was not prejudiced by the presence of the two witnesses, but suggested the trial court may properly allow one witness as a representative of the State (now the second exception to Rule 615) and another witness to assist counsel (now the third exception to Rule 615 for essential witnesses). It stated each party has a right to have one person in the courtroom to assist counsel. Further, a police officer may remain in the courtroom even though he is also a witness. Id. (citation omitted) (emphasis supplied).
We thus hold that it is not error under Evid. R. 615 to permit one witness to remain in the courtroom under the second exception as a partys designated representative and to permit one witness to remain under the third exception when a party can show that witness is essential to the presentation of the partys cause. In light of our supreme courts statements that the State may have one person in the courtroom to assist counsel and may further have a police officer in the courtroom even though the officer is a witness, we must decline to adopt the States proffered interpretation of the rule, which interpretation would potentially permit every witness to remain in the courtroom throughout a trial despite a separation of witnesses order.
In the present case, there was no showing that the police officer who was not designated as the States representative was an essential witness and that second officer thus should not have been permitted to remain in the courtroom. As a result, we are faced with the question whether Stafford was prejudiced by the trial courts error. He was not.
There are three standards in federal courts and courts of other states addressing errors in witness separation orders under rules identical or similar to our Rule 615. The majority of federal courts require the party objecting to the decision to show prejudice occurred as a result of the error. See United States v. Sykes, 977 F.2d 1242, 1245 (8th Cir. 1992); United States v. Prichard, 781 F.2d 179, 183 (10th Cir. 1986); Virgin Islands v. Edinborough, 625 F.2d 472, 474 (3d Cir. 1980); United States v. Warren, 578 F.2d 1058, 1076 (5th Cir. 1978) (en banc), modified on other grounds, 612 F.2d 887 (5th Cir. 1980). Other courts require the party supporting the erroneous decision to show that the error was harmless. In other words, there is a presumption of prejudice that must be overcome before the erroneous decision may stand. See United States v. Jackson, 60 F.3d 128, 136-37 (2d Cir. 1995); United States v. Brewer, 947 F.2d 404, 411 (9th Cir. 1991); United States v. Pulley, 922 F.2d 1283, 1286 (6th Cir. 1991); United States v. Farnham, 791 F.2d 331, 335 (4th Cir. 1986); State v. Roberts, 126 Ariz. 92, 612 P.2d 1055, 1057 (1980). Finally, at least one court has suggested that a violation of Rule 615 should result in an automatic reversal. See United States v. Burgess, 691 F.2d 1146, 1157 (4th Cir. 1982).
Justice Boehm opined that the correct approach to a violation of Rule 615 is to presume prejudice, which presumption can be overcome if the non-movant can show there was no prejudice. We agree.
Stafford was not prejudiced by the presence of the two officers. Officer Steve Hoover testified about his photographs of the crime scene and of Stafford at the police station. Staffords photographs were later used in a lineup, which Officer Jeff Butts prepared. Officer Butts testified that Batdorf identified Stafford in the photo lineup. Officer Hoover testified that he checked the license plate number an eyewitness provided to him and that he subsequently identified Stafford as the driver of the vehicle bearing that plate.
The testimony of these two police officers was primarily background and foundational. The identification of Stafford as the assailant was made by Batdorf. Under these circumstances, although the trial court erred in allowing the second police officer to remain in the courtroom absent a finding that he was an essential witness, there was no prejudice to Stafford.
Staffords convictions of criminal confinement and battery with a deadly weapon violate the Indiana Constitutions prohibition of double jeopardy. Because the same actions involving the use of a rope as the deadly weapon established the elements of both crimes, we conclude the jury must have utilized the same facts to establish the essential deadly weapon element for each of the counts.
In Richardson v. State, 717 N.E.2d 32 (Ind. 1999), our supreme court developed a test for determining whether a defendant has been subjected to double jeopardy. A double jeopardy violation occurs when "the State . . . proceed[s] against a person twice for the same criminal transgression." Id. at 49. Under Richardson, "two or more offenses are the 'same offense' . . . if, with respect to either the statutory elements of the challenged crimes or the actual evidence used to convict, the essential elements of one challenged offense also establish the essential elements of another challenged offense." Id. (emphasis in original). When we examine the actual evidence presented at trial, we will reverse one of the convictions if there is "a reasonable possibility that the evidentiary facts used by the fact-finder to establish the elements of one offense may also have been used to establish the elements of a second challenged offense." Id. at 53.
There is a reasonable possibility that the State proceeded twice against Stafford for the same criminal transgression because the same conduct on Staffords part  putting a rope around the victims neck  served to establish the elements of both Class C felony battery and Class B felony criminal confinement. See footnote To convict Stafford of criminal confinement as a Class B felony the State was obliged to prove the confinement was committed while Stafford was armed with a deadly weapon. Ind. Code § 35-42-3-3(2). To convict him of battery as a Class C felony the State was obliged to prove the battery was committed by means of a deadly weapon. Ind. Code § 35-42-2-1(a)(3).
Stafford was charged with committing battery by placing the rope around Batdorfs neck. He was charged with confining Batdorf being armed with a deadly weapon, to wit: a rope, (R. at 11), and the only conduct amounting to confinement and involving the rope was placing the rope around Batdorfs neck.See footnote Stafford was therefore subjected to double jeopardy because the elements of both offenses were satisfied by the placement of the rope around Batdorfs neck.
We accordingly vacate Staffords conviction of battery as a Class C felony and remand to the trial court for further proceedings.
Stafford did not object to the courts instruction on criminal confinement, thus waiving this allegation of error. Echols v. State, 722 N.E.2d 805, 807 (Ind. 2000). He argues, however, that fundamental error was committed when this instruction was given.
A fundamental error is a substantial, blatant violation of basic principles of due process that renders the trial unfair to the defendant. Taylor v. State, 717 N.E.2d 90, 93 (Ind. 1999). This doctrine is very narrowly applied and is available only when the record reveals blatant violations of due process and when the harm or potential for harm cannot be denied. Id. In order to constitute fundamental error, a mistake must be so prejudicial to the rights of a defendant as to make a fair trial impossible. Barany v. State, 658 N.E.2d 60, 64 (Ind. 1995). To justify reversal where an erroneous jury instruction was given, the error must be of such a nature that the whole charge of which it forms a part misleads the jury as to the law of the case. Hill v. State, 615 N.E.2d 97, 99 (Ind. 1993).
A person who knowingly confines another person without the other persons consent commits criminal confinement, a Class D felony. However the offense is a Class B felony if it is committed while armed with a deadly weapon.
(3) and while committing it the Defendant was armed with a deadly weapon.
(R. at 136.) Stafford contends that fundamental error occurred because the jury was not specifically instructed that the State had to prove the confinement was without consent. We disagree.
The first part of the instruction explicitly provided that criminal confinement was confinement without the other persons consent. The jury was instructed to consider all the instructions as a whole, and not to single out any sentence or individual point. The jury was properly instructed that the victim must not consent to the confinement and the evidence at trial overwhelmingly established that Batdorf did not consent to her confinement by Stafford. Stafford has not shown that fundamental error was committed. See Warren v. State, 701 N.E.2d 902, 905 (Ind. Ct. App. 1998), trans. denied, 714 N.E.2d 165 (Ind. 1999) (no fundamental error when instruction contained words the jury could understand as including the disputed element of the crime and where the instruction did not preclude the defense from proving the element was not satisfied).
Stafford argues that there was insufficient evidence he was the perpetrator of the offenses of which he was convicted. When reviewing a claim that the evidence was insufficient to support a criminal conviction, we consider only the evidence that supports the verdict and we draw all reasonable inferences from that evidence. We do not reweigh the evidence or judge the credibility of the witnesses, and we will uphold a conviction if the record supports it with substantial evidence of probative value from which the trier of fact could reasonably infer guilt beyond a reasonable doubt. Bryant v. State, 644 N.E.2d 859, 860 (Ind. 1994).
Batdorf testified that Stafford was her assailant. Marie Fouts, a passerby, observed the type of car Stafford was driving and its license plate number. Laura Green, a passenger in Fouts car, identified the vehicle Stafford drove as the car driven by the assailant. Stafford contends the evidence against him was insufficient because only three of the four eyewitnesses could identify him as the assailant. He disputes Batdorfs identification, arguing, among other things, that she failed to tell police officers that her assailant had a mustache, while Stafford had a very noticeable, bushy mustache. However, the descriptions of the assailant by the eyewitnesses were not inconsistent with Staffords appearance. Stafford is requesting that we reweigh the evidence and rejudge the credibility of the witnesses, which we will not do. Burk v. State, 716 N.E.2d 39, 43 (Ind. Ct. App. 1999). The State presented sufficient evidence of Staffords identity to support his convictions.
Stafford argues, and the State agrees, that the separate thirty-year sentence he received for his habitual offender conviction is error. When a defendant is convicted of multiple offenses and found to be an habitual offender, the resulting habitual offender penalty enhancement must be imposed upon only one of the convictions, and the court must specify the conviction to be so enhanced. McIntire v. State, 717 N.E.2d 96, 102 (Ind. 1999). The trial court failed to do so in this case, and therefore we instruct the trial court to properly impose on remand the habitual offender enhancement.
DARDEN, J., and BROOK, J., concur.
Footnote: Ind. Code § 35-42-3-3(1).
Footnote: Ind. Code § 35-42-2-1(a)(3).
Footnote: Ind. Code § 35-45-2-1(a)(1).
Footnote: Because we vacate one of Staffords convictions and remand for resentencing, we need not address Staffords argument that the length of his consecutive sentences exceeded the limit imposed by statute. We note, however, that Ind. Code § 35-50-1-2(c) provides that for crimes which are not crimes of violence, the total of the consecutive term of imprisonment . . . to which the defendant is sentenced for felony convictions arising out of an episode of criminal conduct shall not exceed the presumptive sentence for a felony which is one (1) class of felony higher than the most serious of the felonies for which the person has been convicted. As Staffords convictions arose out of a single episode of criminal conduct and his crimes were not crimes of violence as described in the statute, the length of Staffords consecutive sentences should not have exceeded thirty years, which is the presumptive sentence for a Class A felony. Stafford was sentenced to a total of thirty-six years on his three convictions.
However, the double jeopardy protections are not implicated by the intimidation conviction because the evidence that supported the charge and conviction of intimidation, i.e., threatening Batdorf while drawing a deadly weapon, was not the same evidence the supported the charges and convictions of confinement and battery, i.e., placing the rope around her neck. As we noted in Hart v. State, 671 N.E.2d 420, 428 (Ind. Ct. App. 1996), double jeopardy is not violated by the elevation of multiple felony charges on the basis that the defendant was armed with a deadly weapon while committing separate and distinct crimes.
We note that had the State charged and proven at trial that the conduct supporting the confinement charge was the act of stuffing Batdorf into the trunk of the car, Staffords double jeopardy protections would not have been implicated.