Electronically Filed Supreme Court SCWC-15-0000005 09-OCT-2018 07:59 AM

*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
Electronically Filed
Supreme Court
SCWC-15-0000005
09-OCT-2018
07:59 AM
IN THE SUPREME COURT OF THE STATE OF HAWAIʻI
---oOo---
________________________________________________________________
BANK OF AMERICA, N.A., SUCCESSOR BY MERGER TO BAC HOME LOANS

SERVICING, LP FKA COUNTRYWIDE HOME LOANS SERVICING LP,
Respondent/Plaintiff-Appellee,
vs.
GRISEL REYES-TOLEDO, Petitioner/Defendant-Appellant,
and
WAI KALOI AT MAKAKILO COMMUNITY ASSOCIATION;
MAKAKILO COMMUNITY ASSOCIATION; and
PALEHUA COMMUNITY ASSOCIATION,
Respondents/Defendants-Appellees.
________________________________________________________________
SCWC-15-0000005
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS

(CAAP-15-0000005; CIVIL NO. 12-1-0668)
OCTOBER 9, 2018
NAKAYAMA, ACTING C.J., MCKENNA, POLLACK, AND WILSON, JJ.,

AND CIRCUIT COURT JUDGE GARIBALDI,
IN PLACE OF RECKTENWALD, C.J., RECUSED
OPINION OF THE COURT BY McKENNA, J.
I. Introduction
This case returns to us after it was remanded to the
Intermediate Court of Appeals (“ICA”) by our February 28, 2017
opinion Bank of America, N.A. v. Reyes-Toledo, 139 Hawaiʻi 361,

390 P.3d 1248 (2017) (“Reyes-Toledo I”). In Reyes-Toledo I, we
vacated a foreclosure decree based on issues of fact regarding
whether Bank of America, N.A., a National Association, as
successor by merger to BAC Home Loans Servicing, LP FKA
Countrywide Home Loans Servicing LP (“Bank of America”) held the
note at the time the foreclosure lawsuit was filed. See 139
Hawaiʻi at 373, 390 P.3d at 1260.
Relevant to this certiorari proceeding, Reyes-Toledo I
remanded the case to the ICA for a determination of whether the
Circuit Court of the First Circuit (“circuit court”)1 erred by
dismissing Grisel Reyes-Toledo’s (“Homeowner[’s]”) four-count
counterclaim before granting summary judgment for foreclosure in
favor of Bank of America. See 139 Hawaiʻi at 373, 390 P.3d at
1260. On remand, the ICA ruled the circuit court properly
dismissed the wrongful foreclosure, declaratory relief, and
quiet title counts in Homeowner’s counterclaim, but that it
erred in dismissing the unfair and deceptive trade practices
count. See Bank of America, N.A., Successor v. Reyes-Toledo,
No. CAAP-15-0000005 (App. July 21, 2017) (SDO).
In sum, the ICA concluded the three counts were
appropriately dismissed pursuant to Hawaiʻi Rules of Civil
Procedure (“HRCP”) Rule 12(b)(6) because: (1) as Homeowner did
1
The Honorable Bert I. Ayabe presided.
2
not provide any authority to support “the proposition that a
wrongful foreclosure claim can be raised prior to foreclosure or
the sale of the property in judicial foreclosure,” no set of
facts would entitle Homeowner to relief, Reyes-Toledo, SDO at 6;
(2) the face of the Mortgage listed MERS as “mortgagee” and
“nominee,” and as such, Homeowner’s arguments in support of her
allegations that “MERS was nothing more than a strawman and a
conduit for fraud being practiced upon the Defendant and others”
lacked merit, Reyes-Toledo, SDO at 7; and (3) Homeowner’s quiet
title count does not allege that she paid, or was able to pay,
the outstanding debt on the Property “so as to demonstrate the
superiority of her claim,” Reyes-Toledo, SDO at 9. In so
concluding, the ICA applied the “plausibility” pleading standard
set forth in Bell Atlantic Corp. v. Twombly, 550 U.S. 544
(2007), which it had previously adopted in Pavsek v. Sandvold,
127 Hawaiʻi 390, 279 P.3d 55 (App. 2012). See Reyes-Toledo, SDO
at 2–4; see also Ashcroft v. Iqbal, 556 U.S. 662, 677–80 (2009)
(clarifying Twombly).
Homeowner timely filed an application for writ of
certiorari (“Application”), asserting the ICA erred in upholding
the dismissal of the other three counts as it applied the wrong
3
pleading standard.2 According to Homeowner, these three counts
should have survived dismissal because when a party moves to
dismiss a complaint pursuant to Hawaiʻi Rules of Civil Procedure
(“HRCP”) Rule 12(b)(6), the party admits the well-pleaded
allegations of fact.
This appeal raises two issues: (1) the standard a pleading3
must meet to overcome a HRCP Rule 12(b)(6) motion to dismiss;
and (2) whether a claim for wrongful foreclosure exists under
Hawaiʻi law.
As to the first issue, this court has never adopted the
Twombly/Iqbal “plausibility” pleading standard, and we now
expressly reject it. We reaffirm that in Hawaiʻi state courts,
the traditional “notice” pleading standard governs. This
provides citizen access to the courts and to justice.
As to the second issue, we hold that a party may bring a
claim for wrongful foreclosure before the foreclosure actually
occurs.
We therefore vacate the ICA’s judgment on appeal affirming
the circuit court’s dismissal of three counts of Homeowner’s
2
Bank of America did not apply for certiorari with respect to the ICA’s
reinstatement of the unfair and deceptive trade acts and practices count, so
that issue is not before us.
3
Pursuant to HRCP Rule 8(a), a “pleading” “sets forth a claim for
relief, whether an original claim, counterclaim, cross-claim, or third-party
claim[.]”
4
counterclaim, and remand the case to the circuit court for
further proceedings consistent with this opinion as well as our
opinion in Reyes-Toledo I.
II. Background
Only the factual and procedural backgrounds relevant to the
issues on certiorari are discussed below.4
A. Homeowner’s Answer and Counterclaim
In response to Bank of America’s complaint seeking
foreclosure (“Complaint”) of Homeowner’s property (“Property”),
Homeowner filed her Answer and Counterclaim on September 28,
2012, denying all of the allegations in the Complaint, except
those pertaining to her personal background, her September 24,
2007 execution of a promissory note made payable to Countrywide
Bank, FSB (“Note”), and the recordation of a mortgage on the
Property that secured the Note (“Mortgage”). She also asserted
the following defenses in her Answer: (1) failure to state a
claim upon which relief can be granted, (2) assumption of risk
and contributory negligence, (3) fraud, based on Homeowner’s
reasonable belief that Bank of America was not the real party-
in-interest and owner of the Note and Mortgage through any
claimed assignment by Mortgage Electronic Registration Systems,
Inc. (“MERS”), and (4) illegality, insofar as Bank of America
4
See Reyes-Toledo I for further details not relevant to the issues on
certiorari.
5
was not the owner and holder of the Note and Mortgage and
therefore not entitled to foreclose on the Mortgage. She also
contended that there was no valid interim assignment of the
Mortgage to Bank of America and no valid negotiation for value
of the Note to Bank of America. She further asserted MERS could
not be a lawful beneficiary of the Mortgage if it lacked
possession of the Note.
Homeowner also asserted the following defenses in the event
the Note and Mortgage had been transferred into a trust and
securitized: (1) the claimed assignment of the Note and Mortgage
into the trust may have violated the ninety-day closing date;
(2) the claimed Mortgage assignment to Bank of America in
October 2011 would be void as a violation of the express terms
of the trust; (3) the purported assignment by which Bank of
America claimed ownership of the Note and Mortgage may violate
the trust provisions for the closing-date rule; (4) the
purported transfers or assignments of the Mortgage after the
closing date of the trust would be void in violation of the
express terms of the trust and 26 U.S.C. § 860 et seq.; (5) the
purported transfers may violate New York trust law and would
therefore be void; (6) the Note may never have been transferred
into the trust; (7) MERS was not a lender, banker, or servicer
and therefore any transfers by MERS were void; (8) the purported
transfers into and out of the trust violated the Internal
6
Revenue Code, 26 U.S.C. § 860; (9) the claimed assignments into
and out of the trust may have violated the Pooling and Service
Agreement (“PSA”), together with the Underwriting Agreement for
the trust; (10) if there were transfers into a trust under the
PSA, the transfers were not performed according to the terms of
the trust and were therefore void; (11) the Note and Mortgage
may never have been deposited or transferred into the trust; and
(12) if the transfers were made into and out of a securitized
trust, the signatures may have been by unauthorized persons and
therefore void as forgeries, which would render the purported
transfers fraudulent and void.
Homeowner asserted four counts in the counterclaim filed
along with her Answer: (1) wrongful foreclosure; (2) declaratory
relief; (3) quiet title; and (4) unfair and deceptive trade acts
and practices (sometimes “UDAP”) under HRS § 480-1 et seq.
In the first count of her counterclaim, alleging wrongful
foreclosure, Homeowner incorporated by reference the defenses in
her Answer, and alleged that Bank of America’s conduct in
commencing the foreclosure action was willful, malicious, and
without just cause.
In the second count of her counterclaim, seeking
declaratory relief, Homeowner incorporated by reference the
allegations in the wrongful foreclosure count. She asserted she
was entitled to declaratory relief pursuant to HRS § 632-1 that
7
(1) Bank of America was not the owner of the Mortgage and Note;
(2) Bank of America was not entitled to foreclose on the
Mortgage and Note; and (3) MERS was not the mortgagee on the
Mortgage but rather was a “sham and fraud” that “acted only as a
strawman.” She also requested that the court determine the
identity of the mortgagee and award her costs and attorney’s
fees pursuant to HRS § 607-14.
In the third count of her counterclaim, requesting the
quieting of her title, Homeowner again incorporated by reference
the allegations in the wrongful foreclosure count. She asserted
she was entitled to have her legal title to the Property quieted
against Bank of America’s claims pursuant to HRS § 669-1 et
seq., and that she was entitled to recover her costs and
attorney’s fees pursuant to HRS § 607-14.
Finally, in the fourth count of her counterclaim, alleging
unfair and deceptive trade acts and practices, Homeowner again
incorporated by reference the allegations in the wrongful
foreclosure count. She alleged she was a consumer with respect
to the Mortgage and Note, and she asserted the acts and conduct
of Bank of America, its agents and predecessors, and MERS
constituted an unfair and deceptive trade practice by “either or
both mortgage lenders, mortgage servicers, mortgage holders,
claimants, debt collectors, and/or finance companies.”
Homeowner claimed she paid about $55,593 to Bank of America
8
based on erroneous information and billings, and on the
assumption that Bank of America was the rightful owner of the
Mortgage. She maintained Bank of America and MERS were
therefore subject to liability under HRS §§ 480-2 and 480-13 for
injuries and damages of not less than $1,000, or for treble
damages, plus attorney’s fees and costs. Additionally,
Homeowner asserted she was entitled to injunctive relief to
enjoin the unlawful practices of Bank of America, its agents and
predecessors, and MERS.
B. Motion to Dismiss Counterclaim
On October 22, 2012, Bank of America filed a Motion to
Dismiss Defendant Grisel Reyes-Toledo’s Counterclaim (“Motion to
Dismiss Counterclaim”). As to the wrongful foreclosure count,
Bank of America asserted Homeowner did not describe any
foreclosure that had actually occurred or what was wrongful
about the alleged foreclosure, and that therefore the count
should be dismissed. As to the declaratory judgment count, Bank
of America alleged the involvement of MERS in loan transactions
has been repeatedly approved by this court and that there was no
allegation that MERS exceeded its traditionally approved role in
Homeowner’s case.
As to the quiet title count, Bank of America alleged that
Homeowner failed to state a claim because she did not assert she
had fully paid off the underlying obligation or is able to
9
tender the full amount before seeking relief. Finally, Bank of
America asserted that although the unfair and deceptive trade
acts and practices count incorporated by reference the
allegations in the wrongful foreclosure count, Homeowner did not
describe the alleged unfair or deceptive acts or practices in
any detail.
In her Memorandum in Opposition to Bank of America’s Motion
to Dismiss Counterclaim, Homeowner argued that all counts of her
counterclaim, including the wrongful foreclosure count, were
sufficient to survive a HRCP Rule 12(b)(6) motion to dismiss.
She argued if she were to prove the facts alleged in her
counterclaim, which incorporated the allegations in her Answer,
she would be entitled to relief against Bank of America.
Homeowner also asserted that Bain v. Metro Mortgage Group, Inc.,
285 P.3d 34 (Wash. 2012) supports her claim that MERS is merely
a registration system and not a holder of the Note.
Additionally, Homeowner maintained sufficient facts were pled
for both the declaratory judgment and quiet title counts
pursuant to Amina v. Bank of New York Mellon, Civil No. 11–00714
JMS/BMK, 2012 WL 3283513 (D. Haw. 2012), in which the court held
that a borrower need not tender payment or allege that a note
10
and mortgage were satisfied to quiet title against a party who
is not a mortgagee.5
In its Reply Memorandum, Bank of America asserted that if
Homeowner believed Bank of America lacked authority to
foreclose, then her arguments were defenses, not affirmative
claims for relief. Bank of America also asserted that a claim
for wrongful foreclosure cannot arise before a foreclosure
occurs. Bank of America alleged that to the extent Homeowner’s
other counts relied upon allegations set forth in the wrongful
foreclosure count, they should also be dismissed.
On February 12, 2013, the circuit court entered an order
granting Bank of America’s Motion to Dismiss Counterclaim
(“Order Dismissing Counterclaim”). Homeowner filed a motion for
reconsideration contending she had sufficiently pled her
“compulsory” counterclaim as Bank of America was not the
mortgagee, had no right to bring a foreclosure action, and was
liable to her for over $160,000 based on her UDAP counterclaim.
In the alternative, she moved for entry of final judgment and a
HRCP Rule 54(b) certification allowing immediate appeal of the
order Dismissing Counterclaim. She also requested a stay
pending appeal pursuant to HRCP Rule 62(d) and (h).
After Bank of America filed its opposition,
5
The UDAP count was reinstated by the ICA and is not before us on
certiorari.
11
on December 31, 2013, the circuit court denied Homeowner’s
Motion for Reconsideration and Rule 54(b) Certification (“Order
Denying Defendant Grisel Reyes-Toledo’s Motion for (1)
Reconsideration of the February 12, 2013 Order Dismissing
Counterclaim; (2) HRCP Rule 54(b) Certification; and (3) HRCP
Rule 62(d) and (h) Stay Pending Appeal Filed on February 22,
2013”) (“Order Denying Motion for Reconsideration”).6
C. ICA’s Decision on Remand
Addressing the propriety of the dismissal of Homeowner’s
counterclaim for the first time on remand from Reyes-Toledo I,
the ICA affirmed in part and vacated in part the circuit court’s
Order Dismissing Counterclaim, entering its summary disposition
order (“SDO”) on July 21, 2017. See Reyes-Toledo, SDO at 12.
The ICA applied the following standard to evaluate Bank of
America’s HRCP Rule 12(b)(6) motion to dismiss:
6
The circuit court subsequently granted Bank of America’s motion for
summary judgment through its December 9, 2014 “Findings of Fact, Conclusions
of Law, Order Granting Plaintiff’s Motion for Summary Judgment Against All
Parties and Interlocutory Decree of Foreclosure Filed April 4, 2014”
(“Foreclosure Decree”), and entered a separate foreclosure judgment. In the
first appeal, Homeowner appealed this judgment. In a summary disposition
order, the ICA affirmed. As noted, on certiorari in Reyes-Toledo I, we held:
(1) genuine issues of material fact existed as to whether Bank of America was
entitled to enforce the Note at the time it commenced the foreclosure
proceedings, precluding summary judgment as to Bank of America’s standing to
institute the proceedings; (2) the assignment of the Mortgage was
insufficient to establish Bank of America’s standing to institute foreclosure
proceedings; and (3) the foreclosure judgment was a final appealable
judgment, and thus the ICA had appellate jurisdiction over the Order
Dismissing Counterclaim. We vacated the ICA’s April 13, 2016 Judgment on
Appeal and the Foreclosure Decree to the extent it granted summary judgment
in favor of Bank of America. We also remanded the case to the ICA to
determine whether the circuit court erred in dismissing Homeowner’s
counterclaim.
12
A complaint should not be dismissed for failure to state a

claim unless it appears beyond doubt that the plaintiff can
prove no set of facts in support of his or her claim that
would entitle him or her to relief. We must therefore view
a plaintiff’s complaint in a light most favorable to him or
her in order to determine whether the allegations contained
therein could warrant relief under any alternative theory.
For this reason, in reviewing a circuit court’s order
dismissing a complaint our consideration is strictly
limited to the allegations of the complaint, and we must
deem those allegations to be true.
Reyes-Toledo, SDO at 3 (quoting In Re Estate of Rogers, 103
Hawaiʻi 275, 280–81, 81 P.3d 1190, 1195–96 (2003)). The ICA went
on, however, to quote an excerpt from Twombly, 550 U.S. at 555,
which the ICA previously quoted in Pavsek, 127 Hawaiʻi 390, 279
P.3d 55 (App. 2012):
While a complaint attacked by [a HRCP] Rule 12(b)(6) motion

to dismiss does not need detailed factual allegations, a
plaintiff’s obligation to provide the “grounds” of his
“entitlement to relief” requires more than labels and
conclusions, and a formulaic recitation of the elements of
a cause of action will not do. Factual allegations must be
enough to raise a right to relief above the speculative
level on the assumption that all of the complaint’s
allegations are true (even if doubtful in fact).
Reyes-Toledo, SDO at 4 (quoting Pavsek, 127 Hawaiʻi at 403, 279
P.3d at 68).
Based on these standards, the ICA concluded the circuit
court did not err in dismissing three of the four counts of
Homeowner’s counterclaim.
First, with respect to the wrongful foreclosure count, the
ICA noted that although Homeowner alleged Bank of America’s
conduct in commencing the foreclosure was “willful, malicious,
and without just cause,” she failed to identify any other
13
specific acts that would make the foreclosure wrongful. Reyes-
Toledo, SDO at 4. Further, the ICA opined that Homeowner failed
to provide any authority to support her proposition that a
wrongful foreclosure claim can be asserted before the
foreclosure or sale of the property in a judicial foreclosure.
See Reyes-Toledo, SDO at 6. According to the ICA’s analysis,
only non-judicial wrongful foreclosure has been recognized in
Hawaiʻi, and other jurisdictions have held a wrongful foreclosure
claim does not arise until after the foreclosure occurs. See
Reyes-Toledo, SDO at 4–5 (citing Santiago v. Tanaka, 137 Hawaiʻi
137, 366 P.3d 612 (2016); Cervantes v. Countrywide Home Loans,
Inc., 656 F.3d 1034 (9th Cir. 2011)). As this case involved a
pending judicial foreclosure and Homeowner asserted her wrongful
foreclosure claim before any foreclosure or sale occurred, the
ICA concluded Homeowner could not prove a set of facts that
would entitle her to relief on the wrongful foreclosure count.
See Reyes-Toledo, SDO at 6.
Second, the ICA also concluded the circuit court did not
err in dismissing the declaratory judgment count. See Reyes-
Toledo, SDO at 7–8. The ICA disagreed with Homeowner’s argument
that pursuant to Bain, 285 P.3d 34, she was entitled to
declaratory relief under HRS § 632-1, ruling that Bain was
distinguishable as explained in its prior decision in Bank of
America, N.A. v. Hermano, No. CAAP 13-0006069, at 6-7 (App. June
14
22, 2016) (SDO), cert. denied, No. SCWC-13-0006069 (Sept. 22,
2016):
Bain was decided in the context of a non-judicial deed-of-

trust foreclosure, whereas the instant case is a judicial
foreclosure of a mortgage. Thus, the procedures and law in
Bain appear to be inapplicable here. The Bain decision was
limited to whether MERS is a “beneficiary” under the
language of Washington’s Deed of Trust Act, thus the
analysis is different. In addition, Bain is a Washington
State case; upon review, we are not inclined to depart from
the Hawaiʻi cases that have consistently recognized the
validity of assignments of mortgages by MERS where lenders
granted to MERS, as nominee for lenders and lenders’
successors and assigns, the right to exercise all of those
interests granted by a borrower, including the right to
foreclose and sell a property and to take any action
required of a lender.
Reyes-Toledo, SDO at 7 (quoting Hermano, SDO at 6–7) (citations
omitted). Here, MERS was listed in the Mortgage as “mortgagee”
and “nominee,” and the Mortgage’s terms granted MERS the right
to “exercise any or all of those interests, including, but not
limited to, the right to foreclose and sell the Property; and to
take any action required of Lender including, but not limited
to, releasing and canceling this Security Instrument.” Id.
Thus, the ICA concluded Homeowner’s argument was without merit
and the circuit court did not err in dismissing this count. See
Reyes-Toledo, SDO at 7–8.
Third, the ICA concluded the circuit court did not err in
dismissing Homeowner’s quiet title count. See Reyes-Toledo, SDO
at 9. The ICA reasoned that as with the counterclaimant in
Hermano, Homeowner’s reliance on Amina, Civil No. 11–00714
JMS/BMK, 2012 WL 3283513, to support her argument that a
15
“borrower does not need to tender payment to allege that the
promissory note and the mortgage were paid where the borrower
brings a quiet title action against a party, who, according to
the complaint, is not a mortgagee,” was misplaced. Id. To the
ICA, Amina provided a significant clarification:
To be clear . . . this is not a case where Plaintiffs

assert that Defendant’s mortgagee status is invalid (for
example, because the mortgage loan was securitized or
because Defendant does not hold the note). On their own,
such allegations would be insufficient to assert a quiet
title claim-they admit that a defendant is a mortgagee and
attack the weakness of the mortgagee’s claim to the
property without establishing the strength and superiority
of the borrower’s claim (by asserting an ability to
tender).
Id. (quoting Amina, 2012 WL 3283513, at *5).
The ICA concluded each of Homeowner’s arguments — that Bank
of America’s mortgagee status was invalid, the mortgage loan was
securitized, and Bank of America did not possess the Note — were
“specifically distinguished” in Amina. See id. The ICA
concluded the quiet title count therefore failed because
Homeowner did not “demonstrate the superiority of her claim” as
she did not allege she paid, or was able to pay, the outstanding
debt on the Property. Id.
As to Homeowner’s UDAP claim raised in the fourth and final
count of her counterclaim, however, the ICA concluded that
because of this court’s decisions in Santiago, 137 Hawaiʻi 137,
366 P.3d 612, Hungate v. Law Office of David B. Rosen, 139
Hawaiʻi 394, 391 P.3d 1 (2017), and Reyes-Toledo I, the circuit
16
court erred in dismissing the UDAP counterclaim. See Reyes-
Toledo, SDO at 10–11.
Finally, the ICA also concluded Homeowner was not entitled
to any further relief based on her request for reconsideration
of the circuit court’s dismissal of her counterclaim. See
Reyes-Toledo, SDO at 11–12. The ICA reasoned she failed to
present any new evidence or arguments in conjunction with her
motion for reconsideration that could not have been presented
during the earlier adjudicated motion to dismiss. See id.
The ICA thus affirmed in part and vacated in part the
circuit court’s Order Dismissing Counterclaim, and remanded to
the circuit court for further proceedings. See Reyes-Toledo,
SDO at 12. The ICA entered its Judgment on Appeal on October 5,
2017.
D. Application for Writ of Certiorari
Homeowner timely applied for a writ of certiorari
(“Application”) from the October 5, 2017 Judgment entered by the
ICA pursuant to its July 21, 2017 SDO, essentially arguing the
three remaining counts of her counterclaim should not have been
dismissed pursuant to HRCP Rule 12(b)(6). Bank of America filed
a response on November 2, 2017.
III. Standard of Review
A circuit court’s ruling on a motion to dismiss is reviewed
de novo. See Hungate, 139 Hawaiʻi at 401, 391 P.3d at 8 (quoting
17
Kamaka v. Goodsill Anderson Quinn & Stifel, 117 Hawaiʻi 92, 104,
176 P.3d 91, 103 (2008), as amended (Jan. 25, 2008 & Feb. 14,
2008)). Moreover, “[w]hen interpreting rules promulgated by the
court, principles of statutory construction apply.
Interpretation of a statute is a question of law which we review
de novo.” Ranger Ins. Co. v. Hinshaw, 103 Hawaiʻi 26, 30, 79
P.3d 119, 123 (2003) (quoting Molinar v. Schweizer, 95 Hawaiʻi
331, 334-35, 22 P.3d 978, 981-82 (2001) (citations and quotation
marks omitted)). Therefore, we also interpret the HRCP de novo.
See Sierra Club v. Dep’t of Transp. of State of Hawaiʻi, 120
Hawaiʻi 181, 197, 202 P.3d 1226, 1242 (2009) (citing Molinar, 95
Hawaiʻi at 335, 22 P.3d at 982).
It is further well established that:
a complaint should not be dismissed for failure to state a

claim unless it appears beyond doubt that the plaintiff can
prove no set of facts in support of his or her claim that
would entitle him or her to relief. The appellate court
must therefore view a plaintiff’s complaint in a light most
favorable to him or her in order to determine whether the
allegations contained therein could warrant relief under
any alternative theory. For this reason, in reviewing a
circuit court’s order dismissing a complaint . . . the
appellate court’s consideration is strictly limited to the
allegations of the complaint, and the appellate court must
deem those allegations to be true.
Kealoha v. Machado, 131 Hawaiʻi 62, 74, 315 P.3d 213, 225 (2013)
(citations and brackets omitted).
IV. Discussion
We accepted certiorari to address two issues: (1) the
clarification of the proper standard for a HRCP Rule 12(b)(6)
18
motion to dismiss, and (2) whether a wrongful foreclosure claim
exists in Hawaiʻi. We discuss them in turn.
A. HRCP Rule 12(b)(6) Standard
The first issue requires us to review the “plausibility”
pleading standard the ICA applied in affirming the dismissal of
three counts of Homeowner’s counterclaim pursuant to HRCP Rule
12(b)(6), which mirrors Federal Rules of Civil Procedure
(“FRCP”) Rule 12(b)(6). See Reyes-Toledo, SDO at 4. The ICA
adopted this standard in Pavsek v. Sandvold, 127 Hawaiʻi 390, 279
P.3d 55 (App. 2012), citing to the United States Supreme Court’s
adoption of the standard in Twombly, 550 U.S. 544, and Iqbal,
556 U.S. 662:
While a complaint attacked by a Rule 12(b)(6) motion to

dismiss does not need detailed factual allegations, a
plaintiff’s obligation to provide the “grounds” of his
“entitlement to relief” requires more than labels and
conclusions, and a formulaic recitation of the elements of
a cause of action will not do. Factual allegations must be
enough to raise a right to relief above the speculative
level on the assumption that all of the complaint’s
allegations are true (even if doubtful in fact).
Pavsek, 127 Hawaiʻi at 403, 279 P.3d at 68 (quoting Twombly, 550
U.S. at 555).
Prior to Twombly and Iqbal, the “notice pleading” standard
was applied in federal courts to determine whether a pleading
can be dismissed for “failure to state a claim upon which relief
can be granted” under FRCP Rule 12(b)(6). It is also the
standard this court has expressly adopted.
19
Although the “plausibility” pleading standard has not been
adopted by this court,7 the ICA has nevertheless relied on it in
evaluating HRCP Rule 12(b)(6) motions to dismiss filed in
unpublished cases subsequent to Pavsek. See, e.g., Bank of New
York Mellon v. Mazerik, No. CAAP-14-0001100, at 5 (App. Nov. 16,
2016) (SDO), cert. denied, No. SCWC-14-0001100 (Feb 24, 2017);
Abordo v. Dep’t of Pub. Safety, No. CAAP-13-0005534, at 4 (SDO)
(App. Feb 26, 2016); Klausmeyer-Among v. Honolulu City Council,
No. CAAP-13-00001184, at 3 (App. Nov. 29, 2013) (mem.), cert.
denied, No. SCWC-13-0000184 (Apr. 9, 2014); Hermano, SDO at 3.
Thus, to answer whether the ICA erred in affirming the circuit
court’s dismissal of three counts of Homeowner’s counterclaim
pursuant to HRCP Rule 12(b)(6), we must determine whether our
traditional “notice pleading” standard or the “plausibility”
standard cited in Pavsek governs. The answer turns on the
proper interpretation of HRCP Rule 8(a).
We begin with the plain language of HRCP Rule 8(a). HRCP
Rule 8(a) states, in relevant part, that “a pleading which sets
forth a claim for relief, whether an original claim,
7
We cited to Pavsek in Hungate v. Rosen, 139 Hawaiʻi 394, 401, 391 P.3d
1, 8 (2017), and Kealoha v. Machado, 131 Hawaiʻi 62, 74, 315 P.3d 213, 225
(2013), not with respect to the “plausibility” pleading standard, but with
respect to the proposition that “in weighing the allegations of [a pleading]
as against a motion to dismiss, the court is not required to accept
conclusory allegations on the legal effect of the events alleged.” Pavsek
cited to Marsland v. Pang, 5 Haw. App. 463, 474, 701 P.2d 175, 186 (1985),
for that proposition, which, in turn, cited to 5 Charles Alan Wright & Arthur
R. Miller, Federal Practice & Procedure: Civil § 1357 (1969). This legal
proposition is not at issue in this case.
20
counterclaim, cross-claim, or third-party claim, shall contain
(1) a short and plain statement of the claim showing that the
pleader is entitled to relief, and (2) a demand for judgment for
the relief the pleader seeks.” Since being promulgated and
adopted in 1953,8 we have amended HRCP Rule 8(a) only once, which
was to change gendered terms. See Order Amending the Hawaiʻi
Rules of Civil Procedure (Dec. 7, 1999) (eff. Jan. 1, 2000).
Noticeably absent from Rule 8(a) is any mention of requiring
“plausibility” of factual allegations, or that such allegations
be “enough,” or some variation of those terms.
We first interpreted HRCP Rule 8(a) in Hall v. Kim, 53 Haw.
215, 491 P.2d 541 (1971), where we explained the principles
underlying the rule and motions to dismiss:
H.R.C.P., Rule 8(a)(1) provides that a pleading for

claim of relief shall contain ‘a short and plain statement
of the claim showing that the pleader is entitled to
relief.’ It is also to be noted that Rule 8(f) reads: ‘All
pleadings shall be so construed as to do substantial
justice.’
. . . .
We believe that the mandate of H.R.C.P. Rule 8(f)

that ‘all pleadings shall be so construed as to do
substantial justice’ epitomizes the general principle
underlying all rules of H.R.C.P. governing pleadings, and
by the adoption of H.R.C.P. we have rejected ‘the approach
that pleading is a game of skill in which one misstep by
counsel may be decisive to the outcome’ and in turn
accepted ‘the principle that the purpose of pleading is to
facilitate a proper decision on the merits.’
Accordingly, under Rule 8(a)(1) ‘a complaint is

sufficient if it sets forth ‘a short and plain statement of
8
See Hawaiʻi Rules of Civil Procedure (adopted & promulgated by the
Supreme Court of the Territory of Hawaiʻi, Dec. 7, 1953) (eff. June 14, 1954).
21
the claim showing that the pleader is entitled to relief.’

. . . The rule is satisfied if the statement gives the
defendant fair notice of the claim and the ground upon
which it rests. . . . It is not necessary to plead under
what particular law the recovery is sought.’ . . .
. . . .
‘In appraising the sufficiency of the complaint we

follow, of course, the accepted rule that a complaint
should not be dismissed for failure to state a claim unless
it appears beyond doubt that the plaintiff can prove no set
of facts in support of his claim which would entitle him to
relief.’ . . . Though it may be improbable for the
plaintiffs to prove their claims, they are entitled to an
opportunity to make that attempt. It is not for a court to
circumvent a determination of an action upon the merits of
the case by accepting an assertion that the claim asserted
in the complaint is groundless.
Hall, 53 Haw. at 219-22, 491 P.2d at 544-46 (citations omitted).
In other words, “[HRCP] Rule 8(a)(1) does not require the
pleading of facts; it requires a complaint to set forth ‘a short
and plain statement of the claim showing that the pleader is
entitled to relief.’” Hall, 53 Haw. at 220, 491 P.2d at 545
(citations omitted)). Thus, we held whether a pleading states
evidence, facts, or conclusions of law was not dispositive. See
id.
We held to these principles in subsequent cases. See,
e.g., Au v. Au, 63 Haw. 210, 221, 626 P.2d 173, 181 (per
curiam), recon. denied, 63 Haw. 263, 626 P.2d 173 (1981) (“Thus,
Rule 8(a) H.R.C.P., requires a complaint to set forth a ‘short
and plain statement of the claim. . . .’ This requirement under
our pleading system provides defendant with fair notice of what
the plaintiff’s claim is and the grounds upon which the claim
22
rests.” (citing Conley v. Gibson, 355 U.S. 41, 47 (1957); Hall,
53 Haw. 215, 491 P.2d 541)). It is well established that Hawai‘i
is a notice-pleading jurisdiction. See, e.g., In re Genesys
Data Techs., Inc., 95 Hawai‘i 33, 41, 18 P.3d 895, 903 (2001)
(“Hawaii’s rules of notice pleading require that a complaint set
forth a short and plain statement of the claim that provides
defendant with fair notice of what the plaintiff’s claim is and
the grounds upon which the claim rests.” (citations omitted)).
Under Hawaii’s notice pleading approach, it is “[not] necessary
to plead legal theories with . . . precision.” Leslie v. Estate
of Tavares, 93 Hawaiʻi 1, 4, 994 P.2d 1047, 1050 (2000); see also
Perry v. Planning Comm’n, 62 Haw. 666, 685, 619 P.2d 95, 108
(1980) (“Modern judicial pleading has been characterized as
‘simplified notice pleading.’ Its function is to give opposing
parties ‘fair notice of what the . . . claim is and the grounds
upon which it rests.’” (citing Gibson, 355 U.S. at 47)).
Next, we examine the purpose and history of HRCP Rule 8(a).
The purpose of HRCP Rule 8(a)(1) is to “give[] the defendant
fair notice of the claim and the ground upon which it rests.”
Hall, 53 Haw. at 221, 491 P.2d at 545 (citation omitted).
Further, we have stated that “[w]e believe that the mandate of
H.R.C.P. Rule 8(f) that ‘all pleadings shall be so construed as
to do substantial justice’ epitomizes the general principle
underlying all rules of H.R.C.P. governing pleadings, and by the
23
adoption of H.R.C.P. we have rejected ‘the approach that
pleading is a game of skill in which one misstep by counsel may
be decisive to the outcome’ and in turn accepted ‘the principle
that the purpose of pleading is to facilitate a proper decision
on the merits.’” Id. (quoting Gibson, 355 U.S. at 48).
Finally, we turn to the context of HRCP Rule 8(a). See
Moana v. Wong, 141 Hawai‘i 100, 109, 405 P.3d 536, 545 (2017)
(“It is well established that the interpretation of rules
promulgated by the supreme court involves principles of
statutory construction.” (quoting State v. Bohannon, 102 Hawai‘i
228, 240, 74 P.3d 980, 992 (2003)); Cty. of Kaua‘i v. Hanalei
River Holdings Ltd., 139 Hawai‘i 511, 519, 394 P.3d 741, 749
(2017) (“When construing a statute, our foremost obligation is
to ascertain and give effect to the intention of the
legislature, which is to be obtained primarily from the language
contained in the statute itself. And we must read statutory
language in the context of the entire statute and construe it in
a manner consistent with its purpose.” (citation omitted)). As
previously discussed, HRCP Rule 8(a) is devoid of any mention of
facts, specificity, or plausibility. Moreover, when the HRCP
require a pleading to have specificity, they expressly state so.
For example, HRCP Rule 9, titled “Pleading Special Matters,”
offers examples of when specificity is required; HRCP Rule 9(b),
titled “Fraud, mistake, condition of the mind,” requires that
24
“[i]n all averments of fraud or mistake, the circumstances
constituting fraud or mistake shall be stated with
particularity. Malice, intent, knowledge, and other condition
of mind of a person may be averred generally.” Similarly, HRCP
Rule 9(c)9 and HRCP Rule 9(g)10 require specificity. In
contrast, HRCP Rule 8(a), as well as HRCP Rule 13 (governing
counterclaims and cross-claims), are devoid of any mention of
specificity or particularity.
In addition, the HRCP also provides a mechanism for dealing
with any lack of clarity resulting from our preference for
notice pleading under HRCP Rule 8. HRCP Rule 12(e), titled
“Motion for more definite statement,” states that “[a] party may
move for a more definite statement” if a pleading is “so vague
and ambiguous that a party cannot reasonably be required to
frame a responsive pleading.” The motion under HRCP Rule 12(e)
“shall point out the defects complained of and the details
desired.” HRCP Rule 12(e). Thus, under HRCP Rule 12(e), a
court may order that any “vague or ambiguous” pleadings be
cured; should a party fail to comply, the court may also strike
9
HRCP Rule 9(c), titled “Conditions precedent,” reads: “In pleading the
performance or occurrence of conditions precedent, it is sufficient to aver
generally that all conditions have been performed or have occurred. A denial
of performance or occurrence shall be made specifically and with
particularity.”
10
HRCP Rule 9(g), titled “Special Damage,” reads: “When items of special
damage are claimed, they shall be specifically stated.”
25
the pleading to which the motion was directed or issue other
orders as deemed just.
Lastly, the HRCP are to “be construed and administered to
secure the just, speedy, and inexpensive determination of every
action.” HRCP Rule 1. The framework for our rules of civil
procedure support notice pleading, as our rules contain a
variety of methods to determine the merits of a case. See Hall,
53 Haw. at 218, 491 P.2d at 544 (“Such simplified ‘notice
pleading’ is made possible by the liberal opportunity for
discovery and the other pretrial procedures established by the
Rules to disclose more precisely the basis of both claim and
defense and to define more narrowly the disputed facts and
issues.” (quoting Gibson, 355 U.S. at 47-48) (construing the
federal rule that is analogous to HRCP Rule 8(a)))). For
example, HRCP Rule 26 gives the trial court wide discretion in
managing discovery to “secure the just, speedy, and inexpensive
determination of every action,” HRCP Rule 1, as HRCP Rule
26(b)(2) “secure[s] the just, speedy, and inexpensive
determination of every action” by limiting the frequency or
extent of the discovery methods used.11
11
Limitations. By order, the court may alter the limits
in these rules on the number of depositions and
interrogatories or the length of depositions under Rule 30.
By order, the court may also limit the number of requests
under Rule 36. The frequency or extent of use of the
discovery methods otherwise permitted under these rules
(continued. . .)
26
Notably, our case law cites heavily to Conley v. Gibson,
355 U.S. 41, 47 (1957). For many years the Supreme Court of the
United States similarly interpreted FRCP Rule 8(a)(2), the
federal counterpart to HRCP Rule 8, as requiring a complaint to
provide notice of the plaintiff’s claim and the grounds upon
which it rests. But in 2007 with the issuance of Twombly, the
Court expanded the requirements imposed on a complaint by FRCP
Rule 8(a)(2). As the ICA in Pavsek cited to Twombly for its
standard, it is important that we discuss Gibson, 355 U.S. 41,
and its progeny.
In Gibson, the Court addressed what became known as the “no
set of facts” standard. See 355 U.S. at 44. The Supreme Court
held, among other things, the petitioners’ complaint containing
general allegations survived a motion to dismiss because the
FRCP did not require claimants to set out detailed facts for the
basis of their claim. See 355 U.S. at 47. The Court stated it
(. . .continued)
shall be limited by the court if it determines that: (i)
the discovery sought is unreasonably cumulative or
duplicative, or is obtainable from some other source that
is more convenient, less burdensome, or less expensive;
(ii) the party seeking discovery has had ample opportunity
by discovery in the action to obtain the information
sought; or (iii) the burden or expense of the proposed
discovery outweighs its likely benefit, taking into account
the needs of the case, the amount in controversy,
limitations on the parties’ resources, the importance of
the issues at stake in the litigation, and the importance
of the proposed discovery in resolving the issues. The
court may act upon its own initiative after reasonable
notice or pursuant to a motion under Rule 26(c).
HRCP Rule 26(b)(2).
27
followed the accepted rule that “a complaint should not be
dismissed for failure to state a claim unless it appears beyond
doubt that the plaintiff can prove no set of facts in support of
his claim which would entitle him to relief.” 355 U.S. at 45-46
(footnote omitted). Further, the Court reasoned the FRCP only
required a “‘short and plain statement of the claim’ that will
give the defendant fair notice of what the plaintiff’s claim is
and the grounds upon which it rests.” 355 U.S. at 47 (footnote
omitted). Following the “simple guide” of FRCP Rule 8(f) that
“all pleadings shall be so construed as to do substantial
justice,” the Court concluded the FRCP rejected the approach
that “pleading is a game of skill in which one misstep by
counsel may be decisive to the outcome and accept the principle
that the purpose of pleading is to facilitate a proper decision
on the merits.” 355 U.S. at 48 (citation omitted).
The Court abrogated Gibson in Twombly, however, holding
that a “plausibility” standard governed pleadings of a complaint
alleging an antitrust conspiracy. Twombly, 550 U.S. at 555–57.
In this context, the Court stated the pleading must contain
“enough facts to state a claim to relief that is plausible on
its face.” 550 U.S. at 570. Further, the Court stated it is
not sufficient for the pleading to contain mere “labels and
conclusions [or] a formulaic recitation of the elements of a
cause of action.” 550 U.S. at 555. To survive a motion for
28
dismissal, the “[f]actual allegations must be enough to raise a
right to relief above the speculative level.” Id.
Justice Stevens, joined by Justice Ginsburg, dissented in
Twombly. See 550 U.S. at 570-97. Pointing out that the
plausibility standard was an evidentiary standard, Justice
Stevens stated that the plausibility standard contradicted what
the FRCP intended to codify. See 550 U.S. at 580. He
explained: “Under the relaxed pleadings standards of the Federal
Rules, the idea was not to keep litigants out of court but
rather to keep them in. The merits of a claim would be sorted
out during a flexible pretrial process and, as appropriate,
through the crucible of trial.” 550 U.S. at 575. Justice
Stevens noted that twenty-six States and the District of
Columbia utilized the Gibson Court’s language of “whether it
appears ‘beyond doubt’ that ‘no set of facts’ in support of the
claim would entitle the plaintiff to relief.” 550 U.S. at 578
(footnote omitted).
Two years after Twombly, the Supreme Court clarified the
plausibility standard in Ashcroft v. Iqbal, 556 U.S. 662 (2009).
The Court held that the Twombly plausibility standard was not
limited to complaints in the antitrust conspiracy context, but
instead, was applicable to “all civil actions and proceedings in
the United States district courts.” Iqbal, 556 U.S. at 678-80,
684 (quoting FRCP Rule 1). The Court explained the two
29
principles in Twombly underlying the plausibility standard:
first, “the tenet that a court must accept as true all of the
allegations contained in a complaint is inapplicable to legal
conclusions,” and second, “only a complaint that states a
plausible claim for relief survives a motion to dismiss.”
Iqbal, 556 U.S. at 678–79 (citing Twombly, 550 U.S. at 555–56).
The Court explained that “[d]etermining whether a complaint
states a plausible claim for relief will . . . be a context-
specific task that requires the reviewing court to draw on its
judicial experience and common sense.” Id. (citation omitted).
Further, the Court stated that if “the well-pleaded facts do not
permit a court to infer more than the mere possibility of
misconduct, the complaint has alleged — but it has not ‘shown’ —
‘that the pleader is entitled to relief.’” Id. (quoting FRCP
Rule 8(a)(2)) (brackets omitted).
Although “[t]he advent of plausibility pleading in Twombly
and Iqbal was motivated in significant part by a desire . . . to
deter allegedly abusive practices . . . and to contain costs,”
when compared to the “notice pleading” standard, the
“plausibility” pleading standard is restrictive as it results in
decreased access to the courts for citizens. Arthur R. Miller,
From Conley to Twombly to Iqbal: A Double Play on the Federal
Rules of Civil Procedure, 60 Duke L.J. 1, 21 & n.67 (2010)
(“[T]he perception among many practicing attorneys and
30
commentators is that the grant rate [for motions to dismiss] has
increased, particularly in civil rights cases, employment
discrimination, private enforcement matters, class actions, and
proceedings brought pro se. Some initial empirical evidence
supports these impressions.”).
Indeed, when the FRCP was promulgated in 1938, “[t]he
rulemakers believed in citizen access to the courts and in the
resolution of disputes on their merits,” and therefore had
“established a relatively plainly worded, non-technical
procedural system.” Arthur R. Miller, Are the Federal
Courthouse Doors Closing? What’s Happened to the Federal Rules
of Civil Procedure?, 43 Tex. Tech. L. Rev. 587, 587–88 (2011)
(footnotes omitted); see also Twombly, 550 U.S. at 573 (Stevens,
J., dissenting) (“Rule 8(a)(2) of the Federal Rules requires
that a complaint contain ‘a short and plain statement of the
claim showing that the pleader is entitled to relief.’ The Rule
did not come about by happenstance, and its language is not
inadvertent. [In contrast to hypertechnical English pleading
rules, the Rule intended to set forth] a pleading standard that
was easy for the common litigant to understand and sufficed to
put the defendant on notice as to the nature of the claim
against him and the relief sought.” (emphasis added)). Just
like Hawaii’s “notice pleading” standard, “[t]he [Federal] Rules
had a notice pleading regime that abjured factual detail and
31
verboseness.” See Miller, 43 Tex. Tech. L. Rev. at 588 (citing
Gibson, 355 U.S. 41).
The “plausibility” pleading standard, i.e., “fact pleading
by another name,” however, has effectively “tak[en] federal
civil practice back toward code and common law procedure and
their heavy emphasis on detailed pleadings and frequent
resolution by a demurrer to the complaint or code motion to
dismiss.” Miller, 60 Duke L.J. at 21. Indeed, Twombly suggests
“parity between the level of scrutiny applied to claims at the
Rule 12(b)(6) and Rule 56 stages — with the only distinction
being that between alleged facts and evidenced facts . . . .”
A. Benjamin Spencer, Plausibility Pleading, 49 B.C. L. Rev. 431,
487 (2008); see also Twombly, 550 U.S. at 586 (Stevens, J.,
dissenting) (“Everything today’s majority says would therefore
make perfect sense if it were ruling on a Rule 56 motion for
summary judgment and the evidence included nothing more than the
Court has described. But it should go without saying . . . that
a heightened production burden at the summary judgment stage
does not translate into a heightened pleading burden at the
complaint stage.”). This “approach [is] wholly out of line with
the original liberal vision of the rules and would ultimately
saddle plaintiffs in disfavored actions like antitrust and civil
rights claims with burdens they will have difficulty meeting.”
Spencer, 49 B.C. L. Rev. at 488 (footnotes omitted).
32
Furthermore, “[s]ince Iqbal, what constitutes ample facts, and
whether those facts appear plausible, are matters left to the
presiding judge’s discretion — whereas one judge may
subjectively regard a claim as fanciful or implausible, another
may permit a similar claim to proceed.” Ramzi Kassem,
Implausible Realities: Iqbal’s Entrenchment of Majority Group
Skepticism Towards Discrimination Claims, 114 Penn St. L. Rev.
1443, 1465 (2010).
For all of these reasons, the ICA’s adoption of the Pavsek
“plausibility” standard is contrary to our well-established
historical tradition of liberal notice pleading and undermines
citizen access to the courts and to justice. Instead of deeming
the factual allegations as true as we have consistently held to
govern HRCP Rule 12(b)(6) motions to dismiss, the standard in
Pavsek results in factual weighing by the trial court, resulting
in inconsistent application.
For approximately seventy years, we have upheld our liberal
notice pleading standard. See, e.g., Kawakami v. Kahala Hotel
Investors, LLC, 142 Hawaiʻi 507, 518, 421 P.3d 1277, 1288 (2018)
(“Under our rules, a complaint is good if it contains a short
and plain statement of the claim showing that the pleader is
entitled to relief.” (quoting Yap v. Wah Yen Ki Tuk Tsen Nin Hue
of Honolulu, 43 Haw. 37, 39 (Haw. Terr. 1958)); Laeroc Waikiki
Parkside, LLC v. K.S.K. (Oahu) Ltd., 115 Hawaiʻi 201, 166 P.3d
33
961 (2007) (citing In re Genesys Data Techs., Inc., 95 Hawaiʻi at
41, 18 P.3d at 903; Au, 63 Haw. at 220–21, 626 P.2d at 181));
Hall, 53 Haw. at 221, 491 P.2d at 545; Midkiff v. Castle &
Cooke, Inc., 45 Haw. 409, 413–16, 368 P.2d 887, 890-92 (1962).
Courts should “not depart from the doctrine of stare decisis
without some compelling justification.” State v. Garcia, 96
Hawai‘i 200, 206, 29 P.3d 919, 925 (2001) (quoting Hilton v.
South Carolina Pub. Ry. Comm’n, 502 U.S. 197, 202 (1991))
(emphasis in original). Not once have we questioned, or found
ambiguous, our standards for HRCP Rule 8(a) and a motion to
dismiss. If a complaint meets the requirements of HRCP Rule
8(a), dismissal pursuant to HRCP Rule 12(b)(6) is appropriate
where “the allegations of the complaint itself clearly
demonstrate that plaintiff does not have a claim,” Touchette v.
Ganal, 82 Hawaiʻi 293, 303, 922 P.2d 347, 357 (1996), and in
weighing the allegations of the complaint as against a motion to
dismiss, the court “will not accept conclusory allegations
concerning the legal effect of the events the plaintiff has
[alleged].” 5B Charles Alan Wright & Arthur R. Miller, Federal
Practice and Procedure § 1357, at pp. 548–53 (3d ed. 2004).
Although Twombly and Iqbal are persuasive in interpreting
and applying HRCP Rule 8, we are not bound by the Supreme
Court’s interpretation of an analogous federal rule. See, e.g.,
Kawamata Farms, Inc. v. United Agri Products, 86 Hawaiʻi 214,
34
251-52, 948 P.2d 1055, 1092-93 (1997) (“[N]otwithstanding their
persuasiveness, interpretations of the FRCP by federal courts
are by no means conclusive with respect to our interpretation of
any rule within the HRCP.”); Roxas v. Marcos, 89 Hawaiʻi 91, 119,
969 P.2d 1209, 1237 (1998) (noting that although HRCP Rule 25
was “nearly identical to its federal counterpart,” the rules
“are not coextensive, and the federal court’s interpretation of
the federal rule is not binding on Hawaii’s interpretation of
its own rule”). See also Hawaiʻi Const. art. VI, § 7 (“The
supreme court shall have power to promulgate rules and
regulations in all civil and criminal cases for all courts
relating to process, practice, procedure and appeals, which
shall have the force and effect of law.”). We find no reason to
depart from our established precedent in evaluating an HRCP Rule
12(b)(6) motion to dismiss. Accordingly, we reject the ICA’s
standard in Pavsek and clarify that our well-established notice
pleading standard governs in Hawai‘i.
Having reaffirmed our traditional notice pleading standard,
we now turn to the issue of whether the ICA erred in affirming
the circuit court’s dismissal of three counts of Homeowner’s
counterclaim.
B. Wrongful Foreclosure Claim
In the following analysis, we first address whether the ICA
erred in concluding there must first be a foreclosure before a
35
wrongful foreclosure claim can be brought. We then apply the
traditional notice pleading standard to determine whether the
circuit court erred in dismissing Homeowner’s wrongful
foreclosure claim.
Although we have not previously squarely addressed whether
a wrongful foreclosure counterclaim may be brought in a judicial
foreclosure case when no foreclosure or sale of the property has
yet occurred, upon careful review, we hold that such a wrongful
foreclosure claim exists in Hawai‘i. We base our conclusion on
our past consideration of potential circumstances in which a
wrongful foreclosure claim may exist in non-judicial
foreclosures. See Hungate, 139 Hawaiʻi at 407, 391 P.2d at 14
(holding there was no need to create a cause of action against a
foreclosing mortgagee’s attorney under former HRS § 667-5
concerning non-judicial foreclosures as “the mortgagor can
protect its interest through filing a claim against the
mortgagee for wrongful foreclosure”); Santiago, 137 Hawaiʻi at
157-58, 366 P.3d at 632-33 (holding the mortgagee’s non-judicial
foreclosure of the mortgagors’ property after the mortgagors
cured their default was wrongful); Mount v. Apao, 139 Hawaiʻi
167, 180, 384 P.3d 1268, 1281 (2016) (concluding the mortgagee’s
non-judicial foreclosure violated former HRS § 667-5(c)(1) and
was, therefore, wrongful). We see no reason why a different
standard should exist for judicial foreclosures.
36
In Reyes-Toledo I, we recognized and discussed the problems
associated with modern mortgage securitization practices. See
Reyes-Toledo I, 139 Hawaiʻi at 369 & n.14, 390 P.3d at 1256 &
n.14. We noted that “[t]he requirement that a foreclosing
plaintiff prove its entitlement to enforce the note at the
commencement of the proceedings ‘provides strong and necessary
incentives to help ensure that a note holder will not proceed
with a foreclosure action before confirming that it has a right
to do so.’” Id. (citations omitted). “Basic requirements of
Hawaii’s Uniform Commercial Code and our law on standing should
not be modified, especially in light of the widespread problems
created by the securitization of mortgages, because a
requirement that seems to be merely technical in nature may
serve an essential purpose.” Id. “[T]he possession
requirement, which applies unless a specific statutory exception
exists, protects the maker of an instrument from multiple
enforcements of the same instrument.” Id. (citing Hanalei, BRC
Inc. v. Porter, 7 Haw. App. 304, 308, 760 P.2d 676, 679 (1988)).
Accordingly, a foreclosing plaintiff must prove “the existence
of an agreement, the terms of the agreement, a default by the
mortgagor under the terms of the agreement, and giving of the
cancellation notice,” as well as prove entitlement to enforce
the defaulted upon note. Reyes-Toledo I, 139 Hawai‘i at 367–68,
390 P.3d at 1254–55.
37
It follows that if a foreclosing plaintiff does not prove
the aforementioned elements and commences a foreclosure action,
the mortgagor should be able to challenge the lawsuit without
having to await a foreclosure decree. Indeed, other
jurisdictions have held that a party may not foreclose without
having the legal power to do so.12 See, e.g., Barrionuevo v.
Chase Bank, N.A., 885 F. Supp. 2d 964, 974 (N.D. Cal. 2012)
(holding the mortgagors stated a claim of wrongful foreclosure
against the bank, trustee under a deed of trust, and others by
alleging the defendants were not current beneficiaries under the
deed of trust); 100 Lakeside Trail Trust v. Bank of America,
N.A., 804 S.E.2d 719, 725 (Ga. App. 2017) (noting that under
Georgia law, “an attempted wrongful foreclosure claim exists
when, in the course of a foreclosure action that was not
completed, a defendant makes a knowing and intentional
publication of untrue and derogatory information concerning the
debtor’s financial condition, and damages were sustained as a
direct result of the publication” (citation and brackets
omitted)); Fields v. Millsap & Singer, P.C., 295 S.W.3d 567, 571
12
Generally, if a foreclosure is conducted negligently or in bad faith to
the detriment of the mortgagor, the mortgagor may assert a claim of wrongful
foreclosure by establishing the following elements: (1) a legal duty owed to
the mortgagor by the foreclosing party; (2) a breach of that duty; (3) a
causal connection between the breach of that duty and the injury sustained;
and (4) damages. See James Buchwalter et al., 59 C.J.S. Mortgages § 650
(2009). However, an action for damages against the mortgagee “lies . . .
only when the mortgagee had no right to foreclose at the time foreclosure
proceedings were commenced.” Id. (footnote omitted).
38
(Mo. Ct. App. 2009) (stating “[a] tort action for damages for
wrongful foreclosure lies against a mortgagee only when the
mortgagee had no right to foreclose at the time foreclosure
proceedings were commenced,” but “[i]f the right to foreclose
existed, no tort cause of action for wrongful foreclosure can be
maintained” (citation omitted)); Gregorakos v. Wells Fargo Nat’l
Ass’n, 647 S.E.2d 289, 292 (Ga. App. 2007) (stating that in
Georgia, “a plaintiff asserting a claim of wrongful foreclosure
must establish a legal duty owed to it by the foreclosing party,
a breach of that duty, a causal connection between the breach of
that duty and the injury it sustained, and damages” (citation
and brackets omitted)); McKnight Family, L.L.P. v. Adept Mgmt.,
310 P.3d 555, 559 (Nev. 2013) (stating a wrongful foreclosure
claim challenges the authority behind the foreclosure, not the
foreclosure act itself). Thus, we hold that a mortgagor may
bring a wrongful foreclosure claim before a foreclosure decree
is entered.
Therefore, to assert a wrongful foreclosure claim, the
foreclosing plaintiff must have failed to establish its standing
as required by Reyes-Toledo I and the mortgagor must have
suffered an “injury in fact” and damages as a result. As
explained above, a mortgagor need not wait for a foreclosure
decree to assert a wrongful foreclosure claim. If a party with
no authority or standing files a foreclosure action, no
39
foreclosure decree would result, yet the mortgagor would have
spent time and incurred expenses to defend against such a
lawsuit. Allowing a mortgagor to bring a wrongful foreclosure
counterclaim without awaiting an actual foreclosure benefits
judicial economy and efficiency, as a foreclosure defendant
should not have to institute a separate legal action after the
pending foreclosure case is decided. Accordingly, a mortgagor
should be able to assert a counterclaim for wrongful foreclosure
based on the underlying facts of the pending foreclosure case.
However, we emphasize this does not mean a mortgagor must assert
the wrongful foreclosure claim as a compulsory counterclaim.
Here, it remains an issue of fact whether Bank of America
attempted to foreclose on Homeowner’s Property without standing
to do so. See Reyes-Toledo I, 139 Hawai‘i at 371, 390 P.3d at
1258 (“A foreclosing plaintiff’s burden to prove entitlement to
enforce the note overlaps with the requirements of standing in
foreclosure actions as ‘[s]tanding is concerned with whether the
parties have the right to bring suit.’” (citation omitted)). As
a result of defending against Bank of America’s lawsuit,
Homeowner alleged she incurred costs and expenses. Thus, the
ICA erred when it concluded Homeowner did not yet have a claim
for wrongful foreclosure against Bank of America.
We next address whether Homeowner’s wrongful foreclosure
count was properly dismissed by the circuit court, which the ICA
40
affirmed applying the incorrect “plausibility” pleading
standard. By incorporating the defenses in her Answer into her
wrongful foreclosure count, Homeowner asserted Bank of America
was not the real party-in-interest, owner, holder, or holder in
due course of the Note and Mortgage. She also asserted there
was “no valid negotiation for value of [her] promissory note to
[Bank of America].” She argued that, therefore, “[Bank of
America]’s conduct in commencing this case was willful,
malicious, without just cause,” and she was entitled to
“general, special, and punitive damages in an amount to vest
this Court with jurisdiction.”
Taking Homeowner’s allegations as true, as we must in
evaluating a Rule 12(b)(6) motion to dismiss, the wrongful
foreclosure count within her counterclaim satisfies HRCP Rule
8(a) and our traditional notice pleading standard. There is an
issue of fact regarding whether Bank of America had standing
prior to commencing the lawsuit, and Homeowner has provided
notice through her allegations that, if not, Homeowner has been
injured, establishing a claim for damages. Thus, Homeowner’s
wrongful foreclosure count should not have been dismissed.
C. Declaratory Judgment Claim
Homeowner’s declaratory judgment count, which incorporated
by reference the allegations set forth in her wrongful
foreclosure count, asserted she was entitled to declaratory
41
relief under HRS § 632-1. On remand, it appears the ICA based
its analysis on the Pavsek standard, and seemed to assume as
true the assertions with respect to the parties and assignment
documents contained in Bank of America’s Complaint, as opposed
to the Counterclaim filed by Homeowner. Additionally, the ICA
focused solely on issues regarding MERS raised in Bain, and
disregarded Homeowner’s remaining assertions in her declaratory
judgment count of her counterclaim.
As Homeowner argues, the declaratory judgment count also
asserted: (1) Bank of America was not the owner and holder of
the Mortgage and Note; (2) Bank of America was not entitled to
foreclose on the Mortgage and Note; (3) MERS was not the
mortgagee on the Mortgage but rather was a “sham and fraud” and
MERS “acted only as a strawman”; (4) the court should decide who
is the mortgagee on the Mortgage and the Note; and (5) Homeowner
can recover costs and attorney’s fees pursuant to HRS § 607-14.
Applying HRCP Rule 8(a)’s notice pleading standard, Homeowner’s
declaratory judgment count provided sufficient notice of her
claim and should not have been dismissed pursuant to HRCP Rule
12(b)(6). Taking the allegations asserted by Homeowner as true,
it does not appear beyond doubt that Homeowner could not prove a
set of facts entitling her to relief. Thus, the ICA erred in
affirming the circuit court’s dismissal of the declaratory
judgment count within Homeowner’s counterclaim.
42
D. Quiet Title Claim
Homeowner also incorporated by reference the allegations in
her wrongful foreclosure count into her quiet title count.
Stating she was the owner of the Property, she sought to quiet
title to the Property against Bank of America’s adverse claim,
asserting Bank of America was not the mortgagee. Accepting
Homeowner’s allegations as true, she has satisfied HRCP Rule
8(a)’s pleading requirements by asserting that she has a
substantial interest in the Property, and that her interest in
the Property is greater than Bank of America’s. See Kaʻupulehu
Land LLC v. Heirs & Assigns of Pahukula, 136 Hawaiʻi 123, 137,
358 P.3d 692, 706 (2015) (“While it is not necessary for the
plaintiff to have perfect title to establish a prima facie case,
he must at least prove that he has a substantial interest in the
property and that his title is superior to that of the
defendants.” (quoting Maui Land & Pineapple Co., 76 Hawaiʻi at
408, 879 P.2d at 513)). If Bank of America is indeed not the
mortgagee, Homeowner’s quiet title count states a claim upon
which relief can be granted. Thus, we conclude the ICA erred in
affirming the circuit court’s dismissal of the quiet title count
within her counterclaim.
V. Conclusion
For the foregoing reasons, the ICA erred in affirming the
circuit court’s dismissal of the remaining three counts of
43
Homeowner’s counterclaim because the assertions satisfied our
traditional notice pleading standard. Accordingly, we vacate
the ICA’s Judgment on Remand. We also vacate the circuit
court’s Order Dismissing Counterclaim and Order Denying Motion
for Reconsideration to the extent it denied reconsideration of
the Order Dismissing Counterclaim,13 and we remand to the circuit
court for further proceedings consistent with this opinion.
R. Steven Geshell /s/ Paula A. Nakayama

for petitioner
/s/ Sabrina S. McKenna
Jade Lynne Ching,
Nakashima Ching LLC /s/ Richard W. Pollack
for respondent
/s/ Michael D. Wilson
/s/ Colette Y. Garibaldi
13
In light of Reyes-Toledo I setting aside the grant of summary judgment
of foreclosure in favor of Bank of America, our holding to reinstate the
remaining three counts of Homeowner’s counterclaim, and the ICA’s decision to
reinstate the UDAP count, which was not challenged by Bank of America, we
need not address the remaining issue in Homeowner’s Application regarding the
circuit court’s refusal “to allow [Homeowner] to use her home as the
supersedeas bond.”
44

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What was the main issue being decided in this case?

What was the main issue being decided in this case?

What did the ICA rule on remand regarding the dismissal of counts in the defendant's counterclaim?

What did the ICA rule on remand regarding the dismissal of counts in the defendant's counterclaim?

*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***

IN THE SUPREME COURT OF THE STATE OF HAWAIʻI

BANK OF AMERICA, N.A., SUCCESSOR BY MERGER TO BAC HOME LOANS

CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS

NAKAYAMA, ACTING C.J., MCKENNA, POLLACK, AND WILSON, JJ.,

OPINION OF THE COURT BY McKENNA, J.

This case returns to us after it was remanded to the

Intermediate Court of Appeals (“ICA”) by our February 28, 2017

opinion Bank of America, N.A. v. Reyes-Toledo, 139 Hawaiʻi 361,

390 P.3d 1248 (2017) (“Reyes-Toledo I”). In Reyes-Toledo I, we

vacated a foreclosure decree based on issues of fact regarding

whether Bank of America, N.A., a National Association, as

successor by merger to BAC Home Loans Servicing, LP FKA

Countrywide Home Loans Servicing LP (“Bank of America”) held the

Hawaiʻi at 373, 390 P.3d at 1260.

Relevant to this certiorari proceeding, Reyes-Toledo I

remanded the case to the ICA for a determination of whether the

Circuit Court of the First Circuit (“circuit court”)1 erred by

dismissing Grisel Reyes-Toledo’s (“Homeowner[’s]”) four-count

counterclaim before granting summary judgment for foreclosure in

favor of Bank of America. See 139 Hawaiʻi at 373, 390 P.3d at

1260. On remand, the ICA ruled the circuit court properly

dismissed the wrongful foreclosure, declaratory relief, and

quiet title counts in Homeowner’s counterclaim, but that it

erred in dismissing the unfair and deceptive trade practices

count. See Bank of America, N.A., Successor v. Reyes-Toledo,

No. CAAP-15-0000005 (App. July 21, 2017) (SDO).

In sum, the ICA concluded the three counts were

appropriately dismissed pursuant to Hawaiʻi Rules of Civil

Procedure (“HRCP”) Rule 12(b)(6) because: (1) as Homeowner did

not provide any authority to support “the proposition that a

wrongful foreclosure claim can be raised prior to foreclosure or

the sale of the property in judicial foreclosure,” no set of

facts would entitle Homeowner to relief, Reyes-Toledo, SDO at 6;

(2) the face of the Mortgage listed MERS as “mortgagee” and

“nominee,” and as such, Homeowner’s arguments in support of her

allegations that “MERS was nothing more than a strawman and a

lacked merit, Reyes-Toledo, SDO at 7; and (3) Homeowner’s quiet

the outstanding debt on the Property “so as to demonstrate the

superiority of her claim,” Reyes-Toledo, SDO at 9. In so

concluding, the ICA applied the “plausibility” pleading standard

set forth in Bell Atlantic Corp. v. Twombly, 550 U.S. 544

(2007), which it had previously adopted in Pavsek v. Sandvold,

Homeowner timely filed an application for writ of

certiorari (“Application”), asserting the ICA erred in upholding

the dismissal of the other three counts as it applied the wrong

pleading standard.2 According to Homeowner, these three counts

should have survived dismissal because when a party moves to

dismiss a complaint pursuant to Hawaiʻi Rules of Civil Procedure

(“HRCP”) Rule 12(b)(6), the party admits the well-pleaded

This appeal raises two issues: (1) the standard a pleading3

must meet to overcome a HRCP Rule 12(b)(6) motion to dismiss;

and (2) whether a claim for wrongful foreclosure exists under

As to the first issue, this court has never adopted the

* FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER *