ORDER AFFIRMING BANKRUPTCY COURT'S DENIAL OF DEFENDANT-APPELLANT DEUTSCHE BANK NATIONAL TRUST COMPANY'S MOTION TO DISMISS

J. MICHAEL SEABRIGHT, District Judge.

I. INTRODUCTION

This is an interlocutory appeal under 28 U.S.C. § 158(a)(3) of a March 30, 2015 Order of the U.S. Bankruptcy Court for the District of Hawaii ("Bankruptcy Court") that denied Deutsche Bank National Trust Company's ("Deutsche Bank") Motion to Dismiss claims brought by Bankruptcy Trustee Dane S. Field and Lucia Malit Sumbillo (collectively "Field") in an adversary proceeding pending in Bankruptcy Court. Based on the following, the Bankruptcy Court's March 30, 2015 Order is AFFIRMED.

II. BACKGROUND

This appeal presents a question of law regarding the four-year statute of limitation set forth in Hawaii Revised Statutes ("HRS") § 480-24(a), which provides:

(Emphasis added). In particular, the issue concerns the date that Field's claims under HRS Chapter 480 for unfair or deceptive acts or practices ("UDAP") "accrued." Because the appeal turns on legal questions, the court only summarizes the factual allegations of the underlying adversary Complaint (which the court assumes as true for purposes of Deutsche Bank's Motion to Dismiss) as necessary to establish the context for the legal question.1

A. Factual Background

As alleged in the First Amended Complaint ("FAC"), on or about August 9, 2006, Debtor Joseph Dullas Sumbillo ("Debtor") executed a $348,000 promissory note, secured by real property located in Wahiawa, Hawaii (the "subject property"), in favor of MortgageIt, Inc., as Lender. Doc. No. 3 (Bankr. Ct. Adv. No. 14-90052), FAC ¶ 16. A corresponding August 2006 mortgage (with Debtor and Plaintiff-Appellee Lucia Malit Sumbillo as mortgagors) incorporated a "power of sale" clause allowing the mortgagee to use the non-judicial foreclosure procedures in the former HRS § 667-5 (repealed in 2012) in the event of default. Id. ¶¶ 17-19, 28. In April 2010, the mortgage was assigned to Deutsche Bank, which invoked the mortgage's power of sale clause, and commenced non-judicial foreclosure proceedings after Debtor defaulted. Id. ¶ 19.

On April 21, 2010 Deutsche Bank recorded a "Notice of Mortgagee's Intention to Foreclose Under Power of Sale" (the "April 21, 2010 Notice"), which was published in the Honolulu Star Advertiser on May 4, 11, and 18, 2010. Id. ¶¶ 20, 22. The April 21, 2010 Notice stated that Deutsche Bank "will hold a sale" of the subject property at noon on June 24, 2010 at the front entrance of the First Circuit Court of the State of Hawaii. Id. ¶ 21. It also listed eight terms of sale, and referenced additional terms on a website. Id. ¶¶ 40, 42. The auction was not held on June 24, 2010, but was postponed to August 26, 2010, and was held at a different location off court property (and such changes were not advertised in any public notice). Id. ¶¶ 34-37. At the August 26, 2010 auction, Deutsche Bank obtained the subject property for a credit bid of $303,138.63, which was less than the assessed value of $399,000.00. Id. ¶¶ 57-58. After Deutsche Bank recorded a quitclaim deed on October 8, 2010 (deeding the subject property to itself), the subject property was sold for $390,000, with closing on February 1, 2011. Id. ¶¶ 55, 60-61.

B. Procedural Background

As part of Debtor's chapter 7 bankruptcy proceedings, Field commenced an adversary proceeding against Deutsche Bank on August 25, 2014. Doc. No. 1 (Bankr. Ct. Adv. No. 14-90052), and filed the FAC the next day. The FAC alleges violations of HRS § 480-2(a),2 claiming three categories of UDAPs:

(1) "Unfair and Deceptive Statements About `Date' and the Change in Date," id. at 11, (2) "Unfair and Deceptive Statements About `Location' and the Change in Location," id. at 15, and (3) "Other Unfair and Deceptive Aspects of the Notice of Sale." Id. at 17.3 Field alleges that the terms of the April 21, 2010 Notice contained several false and misleading statements about, for example, (1) the type of conveyance the high bidder would receive (i.e., a quitclaim as opposed to a limited warranty deed); (2) the deadline to close the sale (stating that successful bidders must close their sales within thirty days, when they "virtually always" were permitted to close in a longer period); and (3) the liquidated damages provision, which stated that Deutsche Bank would retain a bidder's ten percent deposit, when such a provision was "rarely, if ever, enforced against a third-party bidder and was in any event unenforceable." Id. ¶¶ 48-50. These allegedly false and misleading statements "had the effect of discouraging bidders." Id. ¶¶ 50-51.

The alleged UDAPs violated Deutsche Bank's duty to obtain the best possible price for the benefit of the Sumbillos, and enabled Deutsche Bank to obtain the subject property for a credit bid much less than the tax-assessed value of the subject property. Id. ¶¶ 47, 54, 57, 58. The FAC describes Field's injury, in part, as follows:

Id. ¶¶ 14, 62, 63.

On December 18, 2014, Deutsche Bank filed a Motion to Dismiss in the Bankruptcy Court, arguing that this action is barred by the four-year statute of limitation in HRS § 480-24(a). It invoked the "occurrence rule," which it contends has been applied by Judges in this District Court for the past thirty-five years in determining when a cause of action accrues under Chapter 480. See, e.g., Doc. No. 10, Opening Br. at 9. The "occurrence rule" states generally that the four-year period in § 480-24(a) "begins to run from the date of the occurrence of the violation, as opposed to the discovery of the alleged violation." Rundgren v. Bank of N.Y. Mellon, 2010 WL 4066878, at *6 (D. Haw. Oct. 14, 2010) (citing McDevitt v. Guenther, 522 F.Supp.2d 1272, 1289 (D. Haw. 2007)).

Deutsche Bank argued that the "violations" for Field's § 480-2 claims "occurred" on April 21, 2010 — the date that the allegedly unfair and/or deceptive "Notice of Mortgagee's Intention to Foreclose Under Power of Sale" was published. Because the action was not filed until August 25, 2014, Deutsche Bank argued that the action was time-barred.

The Bankruptcy Court denied Deutsche Bank's Motion. Doc. No. 2-3.4 Its March 19, 2015 oral ruling reasoned that there was no "occurrence" until a UDAP claim under § 480-2(a) was actionable, and that requires an "injury." Doc. No. 2-7, Tr. (Mar. 19, 2015) at 15. The Bankruptcy Court explained that for Field's claims based on the April 21, 2010 notice, there could be no "injury" until (at the earliest) the foreclosure auction was actually held. Id. Because the auction was held on August 26, 2010, the action was timely — having been filed on August 25, 2014, within the four-year limitation period. The Bankruptcy Court also concluded that a "continuing violation" theory applied, reasoning that "[t]his is an occurrence that took place over a period of a couple of months. There was a notice, and a sale, and the fact that they weren't compressed [at] the same instant, doesn't mean that there were two occurrence[s]." Id. at 16.

On April 14, 2015, Deutsche Bank filed a Motion for Leave to Appeal under 28 U.S.C. § 158(a)(3), Doc. No. 2-1, which this court granted on May 5, 2015. Doc. No. 7. Deutsche Bank filed its Opening Brief on June 15, 2015. Doc. No. 10. Field filed an Answering Brief on June 29, 2015, Doc. No. 11, and Deutsche Bank filed a Reply on July 6, 2015. Doc. No. 12. Oral argument was held on July 20, 2015. After the hearing, Deutsche Bank filed a Supplemental Memorandum on July 31, 2015, Doc. No. 16, and Field filed a Supplemental Memorandum in Reply on August 11, 2015. Doc. No. 17.

III. DISCUSSION

Despite some posturing in their briefs, the parties now agree that the "occurrence rule" applies — the remaining question is how it applies. That is, a cause of action under Chapter 480 accrues for purposes of § 480-24(a), and the four-year period begins to run, "from the date of the occurrence of the violation, as opposed to the discovery of the alleged violation." Rundgren, 2010 WL 4066878, at *6 (citing McDevitt, 522 F. Supp. 2d at 1289).5 The harder question, however, is determining when a "violation" actually "occurs," and this often depends on specific facts. See Lizza v. Deutsche Bank Nat'l Trust Co., 1 F.Supp.3d 1106, 1121-22 (D. Haw. 2014) ("[T]he appropriate date for the accrual of a UDAP claim depends on the specific UDAP alleged.").

The court concludes (consistent with the Bankruptcy Court's Order) that a "violation" does not "occur" until all the elements of a claim have occurred — and this includes "injury" and "damages."6 Most, if not all, of the FAC's claims based on the April 21, 2010 Notice could not have been actionable until the alleged § 480-2 violations caused injury and damages to the Sumbillos (and thus to Field, in his capacity as Bankruptcy Trustee). And — contrary to Deutsche Bank's argument that the injury and damages both occurred when the notice was published — the Sumbillos could not have been injured or damaged at least until the date of the auction on August 26, 2010.

In this regard, although the FAC alleges a variety of § 480-2(a) violations, Field's claims are actually brought under HRS § 480-13(b), which provides a "consumer" a private remedy for such violations. Section 480-13(b) provides in pertinent part:

"To obtain relief under section 480-13(b)(1), a consumer must establish three elements: `(1) a violation of [§] 480-2; (2) injury to the consumer caused by such a violation; and (3) proof of the amount of damages.'" Compton v. Countrywide Fin. Corp., 761 F.3d 1046, 1053 (9th Cir. 2014) (quoting Davis v. Wholesale Motors, Inc., 86 Haw. 405, 417, 949 P.2d 1026 (Haw. App. 1997) (other quotation omitted) (emphasis added); see also Gurrobat v. HTH Corp., 133 Haw. 1, 21, 323 P.3d 792, 812 (2014) (reiterating elements of a § 480-13 claim as "(1) a violation of HRS Chapter 480; (2) which causes an injury to the plaintiff's business or property; and (3) proof of the amount of damages") (citation omitted). That is, a plaintiff must have "suffered an injury resulting in damages." Compton, 761 F.3d at 1056 (citing § 480-13(b)(1), and Zanakis-Pico v. Cutter Dodge, Inc., 98 Haw. 309, 316, 47 P.3d 1222, 1239 (2002)) (emphasis added). An injury must be "fairly traceable to the defendant's actions." Flores v. Rawlings Co., 117 Haw. 153, 167 n.23, 177 P.3d 341, 355 n.23 (2008) (internal citation omitted).

Deutsche Bank argues that "actual damages are not a prerequisite to a UDAP damages claim because the statutory damages remedy [`a sum not less than $1,000'] exists as soon as there has been a UDAP and injury." Doc. No. 16, Deutsche Bank Supplemental Mem. at 3. But this argument is contrary to Hawaii law. For example, Robert's Hawaii School Bus, Inc. v. Laupahoehoe Transportation Co., 91 Haw. 224, 982 P.2d 853 (1999), superseded by statute on other grounds as stated in Davis v. Four Seasons Hotel Ltd., 122 Haw. 423, 435, 228 P.3d 303, 315 (2010), explained:

Id. at 254 n.30, 982 P.2d at 883 n.30 (quoting Ai v. Frank Huff Agency, Ltd., 61 Haw. 607, 618, 620-21, 607 P.2d 1304, 1312-13 (1980)) (other citations omitted) (emphasis added).7

Indeed, in interpreting the same Hawaii statute at issue here (the former HRS § 667-5), In re Kakauoha-Alisa, 674 F.3d 1083, 1092 (9th Cir. 2012), observed that "[the] conclusion that Lenders' improper postponement [of the auction] amounted to a deceptive practice [under § 480-2] does not automatically entitle Debtor to monetary damages"). Instead, In re Kakauoha-Alisa reiterated that "consumers are entitled to damages for a violation of HRS § 480-2 only if they show that those acts cause private damage." Id. (citations and internal quotation marks omitted). See also Zanakis-Pico, 98 Haw. at 317, 47 P.3d at 1230 ("[T]he $1,000.00 assured minimum recovery [in § 480-13] was intended to be available to all consumers who could demonstrate damages."); Sambor v. Omnia Credit Servs., Inc., 183 F.Supp.2d 1234, 1244-45 (D. Haw. 2002) (denying statutory damages under § 480-13, where plaintiff did not suffer actual damages resulting from a § 480-2 violation).

In other words, a viable § 480-13(b)(1) claim must allege non-speculative damages that are "fairly traceable" to the violation. See, e.g., In re Kakauoha-Alisa, 674 F.3d at 1093. Furthermore, Robert's Hawaii emphasized that "injury" and "damages" are "two distinct elements of HRS § 480-13." Robert's Hawaii, 91 Haw. at 254 n.31, 982 P.2d at 883 n.31.

This well-settled interpretation is consistent with analogous federal law, which is persuasive in analyzing provisions of Chapter 480. See HRS § 480-3 ("This chapter shall be construed in accordance with judicial interpretations of similar federal antitrust statutes, except that lawsuits by indirect purchasers may be brought as provided in this chapter."). In particular, recent Ninth Circuit law explains that:

Oliver v. SD-3C LLC, 751 F.3d 1081, 1086 (9th Cir. 2014) (emphasis added).

And, contrary to Deutsche Bank's arguments, this result is consistent with decisions from this District that have applied the occurrence rule to time-bar Chapter 480 claims in a mortgage foreclosure context that arose out of loan origination (such as being wrongfully induced to enter into a refinancing transaction, see, e.g., Teaupa, 836 F. Supp. 2d at 1088, 1099, or by changing a loan's terms at closing, see, e.g., Au v. Republic State Mortg. Co., 2013 WL 1339738, at *13 (D. Haw. Mar. 29, 2013)). In such cases, a borrower is injured and damaged in a non-speculative manner when the borrower becomes contractually bound to the terms of the loan that was obtained by unfair or deceptive means. See, e.g., Ramos v. Chase Home Fin., 810 F.Supp.2d 1125, 1129, 1139 (D. Haw. 2011) (reasoning that a § 480-2 claim "accrued" on the date the loan transaction was consummated and was thus time-barred under § 480-24(a)); Au, 2013 WL 1339798, at *13 ("Plaintiff . . . testified that he expected to get a `loan modification' with a 7.5% initial rate within the month after closing [in February 2007]. . . . That is, Plaintiff knew in February 2007 that he had not gotten the terms that [were] allegedly promised him[.]").

Here, the Sumbillos could not have suffered injury and ascertainable damages until, at minimum, the auction occurred — that is, until the consequences of the defective April 21, 2010 Notice caused them actual harm (i.e., private damages). And this did not occur until the point when Deutsche Bank obtained the subject property for a credit bid ($303,138.63) that was allegedly substantially less than the tax-assessed value. Until then, they were not injured and damages were speculative. Even assuming that the terms of the April 21, 2010 Notice were unfair or deceptive, prior to the auction date, Deutsche Bank might have issued a new notice that was not a violation (with no ascertainable injury or damages to the Sumbillos). See Saiki v. LaSalle Bank Nat'l Ass'n, 2011 WL 601139, at *4 (D. Haw. Feb. 10, 2011) ("Cal-Western rendered the Notice of Foreclosure void by rescinding it. . . . Further, although Cal-Western appears to admit it did not comply with the requirements of § 667-5, Plaintiff cannot seek equitable relief because the Notice of Foreclosure is void, and Plaintiff is not otherwise entitled to damages for this defect.") (citations omitted). Indeed, a high bidder might have appeared at the actual auction and offered $400,000 or more. In the language of Robert's Hawaii, "the mere existence of a violation [on April 21, 2010] is not sufficient ipso facto to support [a claim]; forbidden acts cannot be relevant unless they cause some private damage." 91 Haw. at 254 n.30, 982 P.2d at 883 n.30 (square brackets omitted). That is, this injury alleged in the FAC (¶¶ 14, 62-63) did not occur until the foreclosure (at a below-market price) actually took place. See Nottage v. Bank of N.Y. Mellon, 2012 WL 5305506, at *9 (D. Haw. Oct. 25, 2012) ("BONY's foreclosure of Plaintiffs' home — if wrongful — would cause damages to Plaintiffs [under § 480-13.]"). And this did not occur until the August 6, 2010 auction (at the earliest).8

In short, the Bankruptcy Court properly concluded that, based on the allegations of the FAC, the statute of limitation in § 480-24(a) has not expired. The action was timely filed.9

IV. CONCLUSION

Because the action was timely filed, the court AFFIRMS the Bankruptcy Court's May 30, 2010 Order Denying Deutsche Bank's Motion to Dismiss.

IT IS SO ORDERED.