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Mount v. Apao: Counterclaim Can Make Matters Worse

Mount v. Apao: Counterclaim Can Make Matters Worse

| Mar 12, 2015 | Counterclaim, Foreclosure, Real Estate

In Mount v. Apao, CAAP 13-0002610 (decided on January 9, 2015) the Hawaii Court of Appeals upheld the Circuit Court’s order entering a writ of possession before final judgment. It also upheld an award forcing a foreclosed homeowner to pay the bank’s attorneys’ fees for a mortgage-based counterclaim.

While it is not very common, the banks can ask the court to eject a foreclosed homeowner from their home even before the case is finished. And when the case is finished, if the homeowner loses on a counterclaim for violations of the mortgage contract, the court can order the evicted former homeowners to pay attorneys’ fees for the bank.

Why? Because some counterclaims are considered claims “in the nature of assumpsit”. In the other words, they are contract-based claims and H.R.S. § 607-14 allows the winning party to claim attorneys’ fees.

With many homeowners tempted to fight as long as possible, even if they have to fight pro se, this is a trap to be avoided. Avoid any boilerplate counterclaims based on your mortgage contract unless you are confident you will win (if you do, the bank will have to pay YOUR attorneys’ fees). While it is tempting to fight as hard as possible, you do not want to end up losing your home and still owing even more money.

If you are unsure if you have a good case and you do not know if your counterclaims are “in the nature of assumpsit” it makes sense to consult an attorney before asserting them. The Hawaii courts appear more and more poised to fast track cases that they feel lack merit, including dispossessing homeowners even before the case is fully over. As Mount v. Apao indicates, “it is unusual for a circuit court to enter a writ of possession before issuing a corresponding judgment… Even if the timing was in error [the court] holds it was harmless [error]”.

The moral of the story? If you are sure you have been wronged, fight it. But consult an attorney to make sure your efforts don’t backfire and leave you in a worse position than before you started your fight!