There was a section down a ways in Ken Conklin’s essay referred to here yesterday yesterday was a brief description of the latest foreclosure flim-flam being sold to Hawaiians. It’s an important reference.
In summer 2011 people are reportedly paying $2900 to a real estate firm “Laulima LLC” which then gives them a slightly individualized printed standard document the size of a book which, the customers are told, they can submit in court as evidence that they own their property under the laws of the Hawaiian Kingdom with no need to pay any mortgage to modern “owners” whose land title is not valid, due to the overthrow of the monarchy.
Actually, as I read their materials, the company’s “research” is designed to support claims against title insurance policies based on alleged faulty title.
The company’s claims were described by its president, Kale Gumapac, in legislative testimony in February 2011.
Here’s the beginning and ending of their theory:
Deeds of conveyance of real property and mortgages afterJanuary 17, 1893 cannot be considered lawfully executed because the Registrar of Conveyances or notaries public were not lawfully vested with the authority to acknowledge the execution of deeds of conveyance and mortgages because they were insurgents and members of the so-called provisional government and its successor the Republic of Hawai’i–not officers of the Hawaiian Kingdom. Since August 12″ 1898, execution of deeds of conveyance of real estate and mortgages also cannot be considered lawfully executed because these insurgents were maintained under the Territory of Hawai’i government, and only Hawaiian subjects can serve as the Registrar of Conveyance and notaries public. Because Hawaiian Kingdom law was not being administered, it in effect, renders all conveyances of real estate and mortgages securing the repayment of loans within Hawaiian territory since January 17, 1893 to the present null and void. The notary public and Registrar of of Conveyances were not competent to execute deeds or mortgages.
It’s not a new theory. It was promoted by Perfect Title back in the 1990s, which led to criminal charges. Keanu Sai, one of the Perfect Title principals, is now a consultant to Laulima.
Recently Laulima has been crowing about several district court decisions in favor of owners fighting foreclosures, including a case involving Laulima president Kale Gumapac.
Gumapac writes on facebook:
I just received the signed order from Judge Harry Freitas that dismisses the foreclosure on my house and renders the writ of possession by Deutsche Bank moot. I have attached the order to this note at the bottom. Laulima Title and Search Claims LLC has won 3 precedent setting cases in Hawaii and this is one of them. Mahalo to Dr. Keanu Sai, Dexter Kaiama and Momi Kapahu-Glushenko for their dedication and hard work. We will submit a claim for a defect in title on my owner’s title insurance policy with this order order attached signed by the judge. The title insurance company will have to pay on 2 policies. One to the lender and one to the owner. “Pupukahi i holomua!”
The implication is that the courts have given some credence to the theory that all post-1898 land transactions are flawed, but a look at the details shows this isn’t true at all.
These recent district court decisions follow a ruling by the Intermediate Court of Appeals in May (DEUTSCHE BANK NATIONAL TRUST COMPANY v. WAYNE PEELUA).
In this case, the bank had been granted a writ of possession, and the owner appealed.
The court cited a statute providing, in part, that district courts do not have jurisdiction where there are questions about the validity of the title to the property are at issue. The appeal court didn’t address the specific claims. It’s limited finding was simply that the district court could not rule on the disputed title.
I’ll underscore that point. The court did not address whether any of the title claims raised were valid or not, but simply that they had been put forward. The appeals court concluded that, as a result, the district court should not have granted the writ of possession. The writ and judgement were vacated.
Although Gumapac and Laulima appear to be saying the court’s decision validates their claims, it appears that is far from the case. The decision was procedural only.
What’s also interesting here is the persistence of this kind of claim even while the criminal cases against another group which pushed a similar Kingdom-based theory are pending in federal court.
By the way, a superseding indictment was issued September 1 in the pending case against Mahealani Ventura-Oliver, John Oliver, and their co-defendants.
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The problem with Ken Conklin’s analysis, however, is that it makes assumptions and determinations about Hawaiian history that Sai’s followers will not accept.
A more insightful analysis that works towards communicating with his true believers would be to use Kingdom law as it existed before 1893 to demonstrate that even in the absence of a legally valid contract on Sai’s reading of international law, Kingdom courts, in equity, would still have required people who received a benefit in a bargained-for exchange, to be required to perform their promises (to pay or repay their debts).
That is to say, if you borrowed hundreds of thousands of dollars from a bank to buy land or build a house, you will still be required to pay them back in the absence of a validly perfected contract — if not on the express terms agreed by the parties, on terms reasonable to the court. See Hanuu v. Williams 2 Haw. 233 (1860) through Kaale v. Petero, 7 Haw. 180 (1887)
In this way, we can side step the disputes regarding Hawaiian history and get to the core legal issue (which was as true in 1860 as it is today) “that Courts of Justice are not to be used as means of working injustice, making fraud easy and successful.” Dowsett v. Smith, 6 Haw. 60 (1871) Because even if we were to assume that a transfer of property were invalid because of Kingdom law, that would not entitle the person claiming it invalid to remain in possession of that land. They would lose their right to the land as well. They would have to pay for the use and possession of the land to the true owner. Silva v. Lopez, 5 Haw. 594 (1886)
And the enitity that possesses a section of land, Makua Valley, without title, destroys and contamintates the land that prohibits any further occupation, are they subject to the law they defend? Same people, same money, same thiefs.
Makua Valley is a different question than privately held land and people borrowing money and refusing to repay their debts. Makua Valley was government land and subject to a number of Kingdom laws starting with the Act of June 7, 1848. Because ownership was vested in the government by the inherent power of the Mo’i, a resolution of the dispute regarding the illegal overthrow and annexation of Hawai’i would be necessary to properly resolve the question of Makua Valley.
However, most land that people live on and take out debts for are not government or crown lands and the resolution of issues of indebtedness, etc. do not require questions of the overthrow and annexation be answered to bring resolution between private parties whether one applies state law or kingdom law.
It appears Laulima title & claim’s want their clients to comply with the laws cited in this post. They are suggesting clients payoff the debt owed buy utilizing the title insurance you purchased in case there should be a defect in the title. If the title is defective this makes perfect sense. If one purchases car insurance and gets into an accident you file a claim, you don’t pay out of pocket.
First, whether there is valid title insurance or not does not obviate the need to repay ones debts. I am not as familiar with Laulima’s setup. The claim to defend and pay on behalf of is an insurance claim separate from this underlying claim. I suspect that if both the person purchasing the insurance policy and the insurance company were under a mutual mistake of law or fact like “all conveyances after 1893 are invalid”, I doubt a court would enforce such a policy in general although each insurance policy is different and one would have to look at the language of each policy. Regardless of coverage, the borrower is still obligated to their debts. The existence of an insurance policy doesn’t excuse performance even if the insurance policy refuses to defend in bad faith.
Someone who knowingly defaults on their mortgage to try to get to collect against an title insurance policy is taking a huge risk that won’t likely work and has no effect on the creditor-debtor relationship if it doesn’t work.
As for what Laulima is saying, if Ian’s quote is correct, they are not just making claims against title but claiming the debts are also “null and void” which is where my comment begs to differ. There is no legal reasoning under Kingdom law or current law that would support such a result.
I have not read anything from laulima saying the debt is null and void. Their position is to have the loan paid off with the title insurance.
I find it odd that those who did the title report remain silent and do not defend their report.
If there is a defect then it would not be fair for the borrower to keep paying out of pocket for something he will not have title to. It is not fair to the lender because a defect means no colateral to secure the loan.
The only equitable remedy for both parties would be the title insurance. I’m sure this would not be the first time an insurance company settled a defective title claim.
This is what Ian quoted Laulima’s president from legislative testimony: “Because Hawaiian Kingdom law was not being administered, it in effect, renders all conveyances of real estate and mortgages securing the repayment of loans within Hawaiian territory since January 17, 1893 to the present null and void. ”
There are two separate contractual relationships in this scenario. One is between the creditor and debtor. The other is between the insurer and insured. While the practical strategy is for the debtor to have the insurer pay the creditor, that is not a legal claim or remedy because the insurer and the creditor do not have privity of contract.
The debtor remains liable for the debt whether he buys an insurance policy or not. He can insist that an insurance company repay his debt. But if they don’t, he can’t simply walk away from the debt because someone else won’t pay it. That is the risk (in my mind unreasonable) that someone takes when they attempt this strategy.
And again, if the issue is that no title is valid after 1893 because of the legal consequences of events that took place in 1893, the insurer would be able to elect to void the contract for mutual mistake. (And if it was only the insurer that had the mistaken belief and the insured simply entered the insurance contract to have the insurer pay for the debt, you enter into the realm of bad faith and unclean hands where a court would not require the insurer to pay under the policy).
All of the legal and equitable doctrines I just mentioned mutual mistake, bad faith and unclean hands, were the law during the Kingdom period and have continued as the common law of Hawai’i until present.
The result of Laulima and similar approaches is really a legal suicide bomb. The title insurance company will likely walk away (and may or may not have to repay the premium). The creditor will recover a judgment for the monies owed against the debtor. The debtor will be out of a house. (I suspect that if a Court were to determine that Laulima’s arguments were valid and that titles could not be recorded and Kingdom law applied, almost everyone who has lived in a house for at least ten years under the belief of ownership, would have good title to their land and house by adverse possession (since acquiring title that way does not require any interaction with Bureau of Conveyance or any contract).
This legal mechanism, although much abused by the sugar planters and other foreigners over the last 100 years, was designed by the English common law over the last 1000 years (and adopted by Kingdom courts) to provide certainty and productivity in ownership and possession of land. While the 1978 ConCon changed the requirements to a minimum of 20 years and a limit of 5 acres, it was 10 years before that and unlimited acreage. (This of course only applies to lands other than crown or government lands since it is not possible to adversely possess against the sovereign.)
Anyone who has owned their house for more than ten years that then claims defect in title, under Kingdom law, would still be the lawful owner of the property (by adverse possession) and if there was a defect in the recording of the mortgage, a court under Kingdom law, would not hesitate to impose a constructive trust because of the issues of mutual mistake, etc., I mentioned above.
So its not so simple to say, well, defect in title, I don’t have to pay my debt, the insurance company will pay out and all will be well. The argument triggers all sorts of consequences legally which will likely keep the debtor subject to the debt, without the benefit of insurance coverage. The result would be less pleasant, under Kingdom law, for someone who owned their property for less than ten years (although again it would depend on a number of factors, whether their predecessor to title had lived on the land for ten years, etc.,.).
“Because Hawaiian Kingdom law was not being administered, it in effect, renders all conveyances of real estate and mortgages securing the repayment of loans within Hawaiian territory since January 17, 1893 to the present null and void. ”
He said…. mortages securing the repayment of loans…. null and void, not the loan itself.
The mortgage is the colateral securing the loan. Hence, if there is a defect in title the colateral (mortgage) is null and void and taken out of the equation for the repayment of the loan (promisory note) in a forclosure.
The borrower and lender are left with an unsecured (promisory note) loan that needs to be paid off.
Laulima’s most recent cases involved lenders winning both judical and non-judical forclosures. However the lenders could not take possesion of the homes because of issues regarding title.
The lenders petitioned District court to get orders for ejectment but the Judges dismissed their complaints for lack of jurisdiction. HRS § 604-5(d) provides, in relevant part, that “[t]he
district courts shall not have cognizance of real actions, nor actions in which the title to real estate comes in question[.]”
This also falls under Rule 12.1 District Court Rules of Civil Procedure “a defense to jurisdiction to the effect that the action is a real action, or one in which the title to real estate is involved.
I’m not sure how this would work out in a Circuit court under In Rem Jurisdiction. Maybe the Circuit court could grant an ejectment under Quasi In Rem Jurisdiction? Not sure.
This is a bold position to take but if these are the results then the lender should cash in on the insurance to get paid off.
Think of it this way, the borrower took out life insurance on his/her beloved title (colateral) so there would be no burden to the lender in case of death. Borrower named the lender sole beneficary. The colateral just died, do you sit there crying or collect on the policy?
This looks like a catch 22 for the lenders and that’s why they are reluctant to file the insurance claim. If they can’t get around this title issue then the insurance company may stop writing policies.
There is really no mystery here. The summary possession proceedings in the district court (and during the Kingdom the Police courts) was created to simply the process of reacquiring possession from a tenant or other instead of having to prove ejectment. Therefore, ousting the jurisdiction of the district court is really no victory, as Ian points out, because it just puts it back in the process it would have gone to had there been no summary procession process. No mystery here.
One of the problems with moving it to the circuit court is that in order to deny the bank its mortgage (based upon the nullity of recorded instruments), one has to deny himself his title and then would lose standing. Then the only remaining issue would be the debt. However, I don’t believe any of these finer points of law will ever be reached.
If they are, I suspect the court will impose a constructive trust upon the debtor to try to secure the mortgage as a security interest is something separate from the debt and part of the bargained-for exchange. All of this would be based upon Kingdom law.
I also don’t see any catch 22 for the lenders unless you overlook whole swaths of the courts equitable powers based upon Kingdom law (or even up until the current law). I don’t see any legal argument for how “the collateral died.” The recording of mortgages and titles is to stabilize the market for land and put innocent third parties on notice of transactions. If a mortgage is not properly recorded (or is defective), it doesn’t nullify or void a mortgage as to the mortgagor or mortgagee and an innocent third party purchaser would have actual notice that something is going on and sees a house on the property. Innocent third parties would also reasonably find a mortgage and deeds recorded regarding the property (however invalid it may be) and would not be able to rely on that provision to avoid its consequences.
So we end up back in the original position where the debtor owes the debt and the bank has an interest in the home.
Laulima’s tactics are procedural stalling tactics which is helpful if the point is to buy time to negotiate a settlement of some sort (just as other people have stopped foreclosures by demanding original documents). But these are just stalling tactics on procedure, they are not definitive or dispositive theories relating to the merits of the case. And that is the danger for people who do not understand any of this very well. They don’t understand the distinctions and rely on non-attorneys who only know parts of the law but are charismatic and wrongly believe they have an adequate understanding of the law and in the end fail to actually help homeowners with promises of relief that don’t exist.
The State of Hawaii Circuit court of the Ffith Circuit has ruled in favor of Laulima’s client based on the defect of title. It dismissed the bank’s complaint of summary possession, writ of possession and ejectment.
The colateral just died and has been taken out of the equation for resale to pay off the debt.The lender now has an unsecured loan with the borrower. The borrower is left with a defective title making it probably impossible to refinance or sell.
If these results from the District and Circuit courts continue for the rest of Laulima’s clients then it’s a catch 22 for the banks.File the insurance claims to get the debts paid off but run the risk no one will insure Hawaii’s titles for future loans.
Turning a blind eye to the problem for the last hundred something years led to it now staring us in the face.
Was quite intrigued by all coments made I love the knowledge of being able to use there own law against them.I know why I love school.