Case Title: Brooks v. Dana Nance & Co. Dissenting Opinion by J. Acoba [pdf]. S.Ct. Order Denying Motion for Reconsideration, filed 01/31/2007 [pdf], 113 Haw. 372. J. Acoba would grant reconsideration.

Citation: 113 Haw. 406

Docket Number: 

State: hawaii

Court: Hawaii Supreme Court

Date: 2007-01-12T00:00:00Z

Document:
Y LIBRARY

 

YOR PUBLICATION IN WEST'S HAMAr'T REPORTS AND PACIFIC REPORTER

 

IN THE SUPREME COURT OF THE STATE OF HAWAI'I

 

00 ==-

 

CHARLES BROOKS and DONNA BROOKS, Plaintiffs-Appellees,
DANA NANCE & CO. and FIDELITY NATIONAL FIELD SERVICES, INC.,
successor to CHICAGO TITLE CO., INC., Defendants-
Appellant s/Cross-Claimants-Appellants/Cross-Claim Defendants,

and

SEASONS MORTGAGE, INC., Defendant~Appellee/Cross-Claim Defendant~
Rppellee/Cross-Claimant,

and

ACS GOVERNMENT SERVICES, INC. fka COMPUTER DATA SYSTEMS, INC. aka
COSI, Defendant.

 

 
 

No. 26736 Pr
APPEAL FROM THE SECOND cracurT cour the first amended complaint also named CSI as 9 defendant, but
the company wes later Gismiesed from the action as to all four counts.

 

5
 

OR PUBLICATION IN WEST! HAMAI'T REPORTS AND PACIFIC REPORTER #4
of state or federal constitutional rights.” On November 20,
2003, Fidelity filed a cross-claim against Seasons for
contribution and indemnification. On December 8, 2003, Seasons
responded with a cross-claim against the Appellants for
contribution and indemnification for the actions undertaken on
its behalf, apparently in part alleging bad faith on the
Appellants’ part in carrying out the inspections.‘

Seasons entered into settlement negotiations with the
Brookses, overseen by the Honorable E. John McConnell (Retired).
In their April 15, 2004 settlement conference statement, the
Brookses (1) asserted danages in excess of $1,800,000.00,
including property losses totaling $126,000.00, $500,000.00 in
clains of lost profits from lost business opportunities resulting
fron the seizures, and $200,000.00 in connection with the IZED
claims and (2) demanded a minimun settlement of $500,000.00 plus
$150,000.00 in attorney’s fees. By April 22, 2004, the
settlement demand had fallen to $200,000.00 and, after Seasons
tendered a settlement offer of $100,000.00 on May 12, 2004 én
return for a release of all clains against Seasons and for
indemnification by the Brookses in favor of Seasons for all
claims arising from the matter, the Brookses evidently accepted
because, on June 21, 2004, Seasons filed a petition with the
circuit court for a determination of 2 good faith settlenent.
on June 29, 2004, the circuit court conducted @ hearing

on Seasons’s petition. With regard to the good faith

+ by August 12, 2003, Seasons had become insolvent, and ite
representation had evidently been assumed by its insurance carrier, Wontgonery
Insurance Group.
 

04 FOR PUBLICATION IN wES3

 

RAAT'T REPORTS AND PACIFIC REPORTER

determination, the court observed:

T have looked at Trover vw. Adams, 102 Hawai'i
399, 77 Psd 83 (2003)), whieh talks about the
Eotality of the circumstances waich the court is
Supposed to look at to determine whether a settlement
Was made in good faith... [T]his 1s up to the
Ulecretion of the court to nake this determination,
but they list 2 number of sample criteria...

‘had, quite frankly, T think the realistic
approximation of the total damages has been one of the
Giese aisticuitics in this casey because there nas

in, 1 think, very Little in terns of hard evidence
Berto anat the special Gamages ore, and F think that's
Gieticuit for everyone.

ere, 1 don't think we have an issue of
collusion or anything like that.

‘and some other evidence that the settlenent is
aimed at injuring the interests of = non-settiing
forefeasor or notivated by wrongful purpose. 1
certainly don’t see any evidence of that.

With regard to the ancunt, given how difficult
At nas been to come up with hard evidence of special
Garages... ~~ and given the last demand of the
Brookses, which I'think, Under the circumstances, w.
cioeisgaite reasonable in Light of shat sone of the
possibilities are if a verdict se in their favor{-*) T
Son't think thet the amount that is being proposed
here is improper or inedequate in any way.

 

 

   

 

 

«. . 2 don't have a problen with the hundred
thousand’ doLiars being # reasonable amount in Light of
ALL the totality of the circumstances

So I’m basically finding that this settlement
was made in good faith.

In reaching its conclusion, the circuit court
considered the relative degree of fault borne by Seasons,

remarking that
I know that there is a dispute anong the

 

 

tortfeagors about the . . . question of who's at fault
here, if anybody is. .'.” [Blut . . . the key issue
here is... we have, co far as the court can see
from the documents, |. . a mutual indennity

agreenent. And to'me, ‘that is the key issue, because

rermyou have gots section of the iaw which talks
About preserving the rights of an indeanity agreement
in (HRs §) 663-15.5((d) 1), ga aunza note 1).

T don’ think there is really any question here
that there is an indemnity agreement betwoen the two)
Alleged joint tortfeasors. And uhen I looked at (HRS
$} €63-13,5(4), it's very clear that

avermine that 'this aettlenent ia nade in aoed taith

     
‘+4 FOR PUBLICATION IN WEST'S HAWAI'I REPORTS AND PACIFIC REPORTER

 

sp itdoos not bar any claims snone the toint
Soctfeassrs based on 2 written indemnity ecreenent,
bane ona uritten indemnity earessent.

Now, "Tunderstand that an argument has been made
here about the fact that... df the parties ected in
Bad faith, then you don’t have to worry about the
indemnity’ agreement. Sut the question about whether
someone has acted in bad faith or not is really @ Jury
question.

 

LE don’t know waat the jury's going to

85 1 can't go ahead and make a ruling that

‘throws out the indemnity clause and makes that

ineffective in Light of the current circunstances.
Tolnce the jury has made a decision, then

the court ultimately is going to have to make a final

Gecision about the effect of the indemnity clause, but

ect

 

T'can't do ehat now

(Emphasis added.) Seasons’s counsel made it clear, however,

that, without dismissal of the Appellants’ cross-claims against

Seasons, there would be no settlement. The court then struggled

to balance the factors weighing in favor of a determination of

good faith with what it recognized were reasonable argunents made

by the Appellants’ counsel, Michael Lam, that, pursuant to HRS

§ 663-15.5(d) (1), the Appellants’ cross-claims could not be

dismissed as part of the good faith settlenen:

‘the court:

 

Well, look. I can decide that it’s unconditional at
this point. Okay? “But if the Jury cones in and decide
negligence, then you have got —~ the court will then deal, T
suppose, with -- if they bring in sone kind of a motion for
their attorney's fees and costs, ‘the court Will deal with
that in light of the fact that the court is making a finding

this Settlenant was sade in good faith, and the amount
you paid out, and in light of the fact that there 1s =
Sutual indemnity clauae, I'm not saying how t would rule
Bot I would take all that into sccoune

 

   

 

Well, I think -- in Light of the fact that the only
clains that are still alive in this case are intentional
forts, I think -- you know, the more the court has thought
about’ that, the sore appropriate it would be to make this
Snconditional. And depending on what findings are made by
the jury, (the Appellants} may then be bringing motions
before the court with regard £0 the isaue of indemnity
after tesa.

 

 
‘404 FOR PUBLICATION IH WEST'S KAWAI'T REPORTS AND PACIFIC REPORTER **#

Mr. Lam: ALL right, your Honor. So long as the order or the decision
by the court's clear chat our cross-claim still existe,
The Court: well, I'm making it unconditsonal ag this point
?

 

Mr, Lam: So are you barring our cross-clai
he court: to.

Mr. Lan: Weil, that's what 1'm saying, 19 that you ean ~~

The Court: Well! they are borred . Subject to sone motions made

 

fter the findings.» . unless there are findings which are
Rade by the jury which would cause the court to reverse its
Secision later ones

‘$0 I'm basically finding that this settlement was made
in good faith, and... there are no... active crass
claims

 

on July 20, 2004, the circuit court entered an order
granting Seasons’s petition, determining that the $100,000.00
settlement was made in good faith, and discharging and dismissing

with prejudice the Appellants’ cross-claim against S

 

Evidently, soon thereafter, the Appellants settled with the
Brookses for $125,000.00.

‘The Appellants filed two timely notices of appeal on
July 28, 2004, one, filed pursuant to HRS § 663-15.5(e), see
supra note 1, appealing the order determining that the settlement
was made in good faith, and the other, filed pursuant to HRS
Ling the circuit court's

 

§ 641-1, see supra note 2, api
dismissal of their cross-claims against Seasons.

II. STANDARDS OF

A, Determination Of A Good Faith Settlenent

[t]he determination of whether a settlement is
in gooa faith [1s left] to the sound discretion of the
trial court in Light of the totality of the
Circumstances surrounding the settlement. +. . On
appeal, the trial court's determination will be
reviewed for abuse of discretion.

 

Drover, 102 Hawai'i at 427, 77 P.3d at 111, An appellate court
should consider the decision “in light of all of the relevant
 

‘+14 FOR PUBLICATION INU WEST'S HAMAT' REPORTS AND PACIFIC REPORTER +1
circumstances extant at the time of settlement.” Id, at 402, 77
P.3d at 86.

“An abuse of discretion occurs when the decisionnaker
‘exceeds the bounds of reason or disregards rules or principles

of law or practice to the substantial detriment of a party."” In

ze Water Use Permit Applications, 94 Hawai'i 97, 183, 9 P.3d 409,
495 (2000) (quoting Bank of Hawaii v, Kunimoto, 91 Hawai'i 372,

387, 984 P.2d 1198, 1213 (1999)), quoted in State v, Wilmer, 97
Hawai'i 238, 243, 35 P.3d 755, 760 (2001); State v. Viiet, 95
Hawai'i 94, 108, 19 P.3d 42, 56 (2001).

B. Appellate Jurisdiction

[2]t is exionatic that ve are “under an obligation to
ensure that (we have] jurisdiction to hear and
Getermine each case and to dismiss an appeal on [ovr]
‘own motion where {we} conelude [wel 1ack(
Jurisdiction.” BOM, inc. v, Sageeo, Inc., 57 Haw. 73,
43, $49. P.2d 1147, 1148 T1378) ‘perceive 2
Jurisdictional defect in an

monte, dismiss that appeal.”

 

 

 

(388, 369), 718 Pe2d 936, 937 (1586)

Bacon_v. Karlin, 68 Haw. 648, 650, 727 P.2d 1127, 1129 (1986)

(some brackets added and some in original).

TIT. DISCUSSION
A. This Court Lacks Jurisdiction To Address The Dismissa
Of The Appellants’ Cross-Clains Brought Under HRS
Sali.
As noted supra in section 1.8, the Appellants filed
their appeal of the circuit court's dismissal of their cross-
claims pursuant to HRS § 641-1, see supra note 2. The July 20,

2004 final order, however, was not reduced to a separate judgment

10
 

‘10+ yon PUBLICATION IN MEST’ S HAMAI'T REPORTS AND PACIFIC REPORTER +
as required by Hawai'i Rules of Civil Procedure (HRCP) Rule 58°
and is, therefore, not appealable under HRS § 641-1. See Jenkins
vs Cades Schutte Fleming & Wright, 76 Hawai"i 115, 119, 869 P.26
1334, 1338 (1994) (holding that “[aJn appeal may be taken from
circuit court orders resolving claims against parties only after
the orders have been reduced to 2 judgment and the judgment has
been entered in favor and against the appropriate parties
pursuant to HRCP (Rule) 5” and announcing that “{a)n appeal from
an order that is not reduced to a judgment in favor of or against
the party by the time the record is filed in the supreme court
will be dismissed”). Therefore, we lack appellate jurisdiction
to address any of the Appellants’ points of error aside from the
determination of good faith, which was brought pursuant to HRS
§ 663-15.5(e), see supra note 1.

Wie note that the plain language of HRCP Rule 58, see
supra note 5, requires that the court enter judgment, which
“shall be set forth on a separate document,” (1) upon the verdict

of a jury, (2) when a court “directs that a party recover only

 

+ RCP Rule $8 provides:

Unless the court otherwise directs and subject to the
provisions of Rule S¢(b), Jusgent upon the verdict of a jury
Shell be entered forthwith by the clerk; bat the court shall
Gltece the appropriate judgnent to be entered upon a special
Verdict or upon a general verdict accompanied by answers to
Interrogetories returned by a Jury pursuant to Rule (3. When the
Glurt directs that a party recover only money or costs or that all
felief be denied, the clerk shall enter Judgment forthwith upon
Elcelgt ty hin of the direction; bat shen the court directs entry
Gf judgeent for other relief, the judge shall promptly settle or
Spprove the form of the judgnent and direct that it be entered by
ihe clerk. the filing of the Judgment in the office of the clerk
Constitutes the entry of the judgaent? and the Judgment is not
Sffective before such entry. ‘The entry of the judgment shall not
Ee delayed for the taxing of coste. Every judgment shall be set
forth on a seperete docunent.

 

 

uu
 

‘S04 FOR PUBLICATION IN WEST’ 8 HAWAI'T REPORTS AND PACIFIC REPORTER +++

money or costs or that all relief be denied,” or (3) “when the
court directs entry of judgment for other relief.” Inasmuch as
the circuit court, in making its determination of good faith, did
not “deny” any relief at all (but rather allowed the settlement
to proceed) nor, as it pertains to the good faith settlement, did
it direct entry of judgment for other relief, but merely made a
determination of the settlement’s good faith character, none of
the three categories in HRCP Rule $8 apply. The requirement,
therefore, pursuant to HRCP Rule 58 and Jenkins, that the order
oF judgment “be set forth on a separate document” is inapplicable
to the good faith determination process described in HRS
§ 663-15.5. Rather, the right of appeal' under HRS § 663-15.5(e)
is distinct and independent under that statutory authority.”
Finally, insofar as a review of the good faith

determination entails analysis of the indemnification clause and

the use of the word “may” in the language of HRS § 663-15.5(6),
see guora note 1, clearly denotes that the choice of appealing the
Getermination rests, as it should, with the parties to the laweutt

> indeed, as we noted in Travan, the legislature’ purpose behind

enacting HAS § 665-15-5 was, inter alia, **t0 simplify the procedures. snd
Feduce the costs associated with claime involving joint tortfeasors by
Telstablisning s good faith settlenent procedure for joint tort fe.

wc '102 Hawaii at 414,77 P3d at 98 (quoting Hise. Stand. Comm.
Jie! i2io, in 2001 House Journal, at 1599) (emphasis omieted). Fart of th
new good faith settlement procedure was the creation, ‘through HAS
$'663-15.5(@), of an independent right of appeal of a good faith determination
Separate from’ HRS § 641-1"

 

 

 

           

   

12
‘444 FOR PUBLICATION IN WEST'S RAAT REPORTS AND PACIFIC REPORTER +++

the strength and vitality of the Appellants’ cross-claim against
Seasons, this court has jurisdiction under HRS § 663-15.5(e) to

do so.

8. Good Faith Settlements And The Trover Test

In Troyer, this court confronted, as a matter of first
impression, the question whether a settlement was made in good
faith pursuant to the requirements of the newly enacted HRS

§ 663-15.5, and concluded

that the legislature's goals of simplifying the
precedures and reducing the costs associated with
Elaine involving joint tortfeasors, while providing
Courts with the opportunity to prevent collusive
Settlenents aimed st injuring pon-settling
forefeasors’ inter ving the
Ueterminstion of whether s settlement is in good faith
fo the sound discretion of the trial court in light of
the totality of the circumstances surrounding the
settlenent

   

102 Hawai'i at 427, 77 P.3d at 111. With respect to assessing

the totality of the circumstances, we stated that

the trial court may consider the following factors to
the extent that they are known at the tine of
Settlement: (i) the type of case and difficulty of
proofat trial... ; (2) the realistic approximation
Se total danagea thie the plaintiff seexs) (3) the
Strength of the plaintiff's claim and the realistic
Likelihood of his oF her success at terial; (4) the
predicted expense of litigation? (5) the relative
Sogroe of fault of the settling tortfeasors: (6) the
fanount of conaideration paid te settle the clains; (7)
the insurance policy limits and solvency of the joint

(8) the relationantp among the parties
and whether it i¢ conducive to collusion or wrongful
Conduct; and (9) any other evidence that the
Settlement is aimed at injuring the interests of a
Ron-gettling tortfeasor or motivated by other wrongful purpos
The foregoing List is not exclusive, and the court my consi
any other factor that is relevant tO whether @ settienent has besn
Given in good faith.

 

  

 

 

 

 

 

 

 

 

Drover rejected the good-faith test articulated in

Tech=Bilt, Inc, v, Woodward-Clyde & Assocs,, 698 P.2d 159 (Cal.
3
[FOR PUBLICATION TK WEST'S HAWAI'I REPORTS AND PACIFIC REPORTER ***

 

1985), that would “require that trial courts conduct
‘mini-trials’ in order to determine the parties’ likely
proportionate liability,” Trover, 102 Hawai'i at 426, 77 P.3d at
110, in part because “the [Hawai'i] legislature expressly
declared its intent to ‘simplify the procedures and reduce the
costs associated with claims involving joint tortfeasors,'" id.
(quoting Hse. Stand. Comm. Rep. No. 1230, in 2001 House Journal,
at 1599 and noting that “(t]his legislative purpose would be
difficult to accomplish” under the Tech-Bilt test).

Analyzing the structure and history of Act 300, which
became HRS § 663-15.5," and comparing it to the law that preceded
it, we observed that, in passing Act 300, “our legislature
abandoned a statutory scheme that afforded a non-settling joint
tortfeasor greater protection,” 102 Hawai'i at 426, 77 P.3d at
110, Rather, we concluded, the legislature was “more interested
in encouraging settlements than making an attempt of doubtful
effectiveness to prevent inequitable settlements” because the
history and structure of HRS § 663-15.5 suggested that “the
legislature[] . . . was more interested in encouraging
settlements than ensuring the equitable apportionment of

liability.” 1

 

Therefore, while, under the totality of the
cixcunstances test, “‘courts are free to police collusive
settlements that unfairly saddle one tortfeasor with a
disproportionate share of Liability,’" by “*enabl{ing] the trial
court to consider the potential proportionate liability of the

parties in cases where such determinations are appropriate,'* the

 

© gee 2001 Haw. Sess. L. Act 300, $$ 1 and 7 at 875-77.

uu
‘10+ FoR PUBLICATION IN WEST'S HAWAI'T REPORTS AND PACIFIC REPORTER **#
test “‘does not require the court to consider it in every case.'”
Drover, 102 Hawai'i at 424, 77 P.3d at 108 (quoting Mahathirai ve
Columbia Gas of Ohio, Inc., 617 N.E.2d 737, 741-42 (Ohio Ct. App.

1992)).
c. The Parties’ nts Reaardin:

Good Faith Determination

‘The Appellants argue that the relative degree of fault
between Seasons and the Appellants, the total damages sought by
the Brookses, and the final consideration paid by Seasons
demonstrate, in combination, that the circuit court abused its
discretion in approving the settlement. They assert that,
because the Appellants’ actions giving rise to the Brookses’
lawsuit were undertaken as a result of “strict instructions” from
Seasons, Seasons would, in the end, be liable for any damages
arising from its failure to convey to Fidelity the VA's
Angtructions to refrain from entering the property. In addition,
the Appellants note that the Brookses initially prayed for
$25, 000,000.00 in their first amended complaint and sought
$650,000.00 in their April 15, 2004 settlement conference
statement and, apparently relying on settlement documents,
contend that, at trial, the Brookses would have asked the jury
for “no less than a million dollars in damages,” whereas, shortly
after May 12, 2004, they accepted an offer to fully release
Seasons from all claims in return for $100,000.00. They contend
that the granting of Seasons’s petition for settlement drove
them, in turn, to settle with the Brookses for $125,000.00° and
maintain that the fact that they had to settle for more than

* seasons contends that the settlement was for $135,000.00,

1s
 

YOR PUBLICATION IN WEST'S HAMAI'T REPORTS AND PACIFIC REPORTER *+#
Seasons supports their contention that Seasons’s settlement with
the Brookses was not in good faith because, despite having merely
done Seasons’s express bidding, in the end they “had to bear the
majority of the amounts paid in settlement.”

construing its argument liberally, Seasons responds
that the Brookses’ remaining intentional tort claims, if based on
a theory of racial discrimination, were groundless because no
agent of Seasons ever knew that the Brookses were African-
American and, by implication, that the Brookses, having failed to
allege any other motive for the intentional acts of conversion
and ITED, would necessarily lose at trial. Seasons apparently
argues that, therefore, any dispute between the Appellants and
Seasons over relative fault would be irrelevant.

Seasons also contends that, given the Brookses’ chances
at trial, $100,000.00 was a reasonable settlement sun. Seasons
asserts that, in order to prevail at trial on both the conversion
and the ITED claims, the Brookses would, inter alia, have to
establish the value of the property converted as well as the
value of the enotional danage they suffered as a result of
Seasone’s actions. Seasons asserts that, as of the time of
settlement shortly before trial, the Brookses had not named any
experts either (1) to value the property lost or damaged in the

incident or (2) to assess their emotional distress claims.!°

 

he Brookses, in their final list of witnesses filed on February
20, 2003, did nane, snter alig, four individuals uno arguably could testify to
Senages:| three individuals who would testify “(ae to the facts and
Circumstances of [the] case and [the Brookses") lo(s)ses” and Mr. Brooks's
poychiaterst, with whon he “discussed” the incident. As an aside, “while we
Rave stated in the past that... . supporting expert or medical testimony” is
fot a prerequisite to. claim of infliction of omctional distress, such
evidence “say nevertheless be gelavant to establishing the existence of

(continued.

   

   

 

 

   

16
 

[FOR PUBLICATION IN WEST’ § WANAI'T REPORTS AMD PACIFIC REPORTER

 

Seasons notes, furthermore, that, by April 22, 2004, the
Brookses’ settlement demands had dropped to $200,000.00 and that
the Brookses themselves, in a report to their insurance company,
estimated the value of their property at the time of its loss to
be $116,000.00. Seasons contrasts that estimate with its
settlement payment of $100,000.00, arguing that it was both
significant, given that Seasons contested both liability and
damages, and reasonable, given foreseeable litigation costs at
trial and the fact that, by the time of settlement, Seasons wa:
insolvent.

Finally, Seasons contends that, under Hawai'i law,
there is no right of contribution or indemnity between joint
intentional tortfeasors, citing Whirlpool Corp. v. CIT Group/Bus.
Credit, Inc., 293 F. Supp. 24 1144 (D. Haw. 2003), and,
accordingly, the only two remaining claims for relief in the
lawsuit sounding in intentional torts, that the Appellants’

cross-claim was groundless.

 

(..-continved)

sserious’ ‘emotional distress as a response to 2 tortious event.” fi
Slark-tquies coy, #5 awass 336, 361-62, 984 P.24 1273, 1304-05 (1997)
(eaphasis in original]; see also ‘e Asimal Quix: ‘son, 63

How. $87, $64, 632 P.24 1066, 1071 (1961) (approving proposition that “medical
tettanony [is] not necessary to substantiate plaintiffs’ claims of serious
emotional distress”)

 

& gseagons cites erroneously to an opinion by the same nane, 258 F.
Supp. 24 1140°(D, law, 2003), announced eix months earlier, but quotes from
258 F. Supp, 22 14

 

vv
 

FOR PUBLICATION IH WEST'S HAWAI'I REPORTS AND PACIFIC REPORTER *

 

 

D. The Circuit Court Abused Its Discretion In Determining
That The Settlement Between Seasons And The Brookses
Was In Good Faith.
‘The _amoui wi ble
hi r7 s
slaima.

In order to establish Seasons’s liability for
conversion, the Brookses would have to prove, inter alia, that
Seasons had “a constructive or actual intent to injure” the
Brookses’ interest in the property by entering the lot and
removing the items, See Iddings v, Mee-Lee, 82 Hawai'i 1, 9, 919
P.2d 263, 271 (1996) (“the commission of an intentional tort
includes a constructive or actual intent to injure”) (quoting
Pleasant v. Johnson, 325 $.£.2d 244, 249 (N.C. 1985)); Pac. Mill
Co. v. Enter, Mill Co., 16 Haw. 282, 284, 286 (1904) (approving a
jury instruction that “conversion is the exercise of dominion
over an article with intent to repudiate the ownership of the
true owner and in defiance of his rights”).

An ITED claim requires the plaintiff to establish
“[(J1) that the conduct allegedly causing the harm was
intentional or reckless[; (J2) that the conduct was outrageous{;}
and [(]3) that the conduct caused [(]4) extreme emotional
distress to another.” Hac v. Univ. of Hawai'i, 102 Hawai'i 92,
95, 73 P.3d 46, 49 (2003) (adopting the elements of ITED

 

prescribed by the Restatenent (Second) of Torts). “*{T]ntent’ is
used throughout the Restatement . . . to denote that the actor
desires to cause [the] consequences of his act, or that he
believes that the consequences are substantially certain to

result from it.” Restatement (Second), supra, § 8A.

18
AWWAL'T REFORTS 280 PACIFIC REPORTER ++4

 

+ FOR FUBLICARION IN WES
In our view, the record reflects that the Brookses’
case against Seasons for both conversion and ITED was
reasonably strong, even absent proof of racial motivation.
There is evidence in the record tending to establish that
Seasons was aware of the VA’s instructions, but that Seasons
nevertheless ordered Fidelity to enter and secure the property,
arguably denonetrating at least (1) recklessness with respect
to the Brookses’ resulting emotional state and (2) a
constructive intent to take possession of the property in
defiance of the Brockses’ rights. Moreover, the items seized
from the property, including several vehicles, apparently could
not be located and returned to the Brookses once the error had
been recognized. Nevertheless, both the value of the itens
seized and the effect the seizure had on the Brookses’ future
income were vigorously disputed, and the extent of the
Brookses’ damages was subject to considerable uncertainty.
Considering the totality of the circumstances, the
$100,000.00 paid by Seasons to settle the Brookses’ clains
against it was not an insignificant sum and was consistent with
the avoidance of foreseeable future litigation expenses. The
amount that Seasons paid to settle the Brookses’ claims against

it was therefore reasonable.

18
 

‘104 FOR PUBLICATION IN WEST’ S HAWAI'I REPORTS AND PACIFIC REPORTER
2. Nevertheless, the circuit court abused ite

HRS § 663-15.5(d) (1) plainly states that “Lal
determination by the court that a settlement was made in good
faith shall . . . (blar any other joint tortfeasor . . . from any
further claims against the settling tortfeasor . . . » except
hose based on a written indemnity agreement.” (Emphasis added.)
Seasons and the Appellants do not contest the validity of the
mutual indemnity agreement between them; what is in dispute is
the extent to which the agreement binds Seasons in the present
matter. Therefore, by the plain language of the statute, any
cross-claims brought under the indeanity agreement between then
would survive a good faith settlement. To the extent that the

claims had merit, therefore, Seasons, through

 

Appellants’ cros:
its settlement, sought to employ the circuit court to eliminate
those cross-claims expressly preserved under HRS

§ 663-15.5 (4) (1).

Considered in the context of a good faith settlement
determination, Seasons’s arguments that the cross-claims lacked
merit are unpersuasive. Holding aside the fact that Whirlpool is
@ federal decision and therefore not a precedent of this court,

Seasons misapprehends key differences between the application of

 

contribution and indemnity to joint intentional tortfeasors. In
Whirlpool, the United States District Court for the District of
Hawai'i determined that this court, when faced with statutory
silence and a question of first impression, often mines the

Restatement (Second) for guidance and, hence, relied on the

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* FOR PUBLICATION I WEST’ 5 HAWAI'T REPORTS AND PACIFIC REPORTER ++
Restatement (Second) of Torts to forecast how this court might
rule on the question of contribution among joint intentional
tortfeasora. 293 F. Supp. 2¢ at 1147-50. The Whirlpool court
correctly noted that Restatement (Second) of Torts § 886A(3)
states that “[elhere is no right of contribution in favor of any
Sortfeasor who has intentionally caused the harm,” 293 F. supp.
24 at 1148, but, in our view, mistakenly included indemnity in
that rule. See 293 F. Supp. 24 at 1151 (finding “that the
General rule, as set forth in the Restatement, applies here to
ber contribution and indemnity claims anong joint intentional
tortfeasors”) (emphasis added)

The Whizipool court failed to note that § 886A(4)
states that “(wlhen one tortfeasor has a right of indennity
against another, neither of them has a right of contribution
against the other,” because, “[wJhen there is a right of
‘ndennity, it controls." Restatement (Second), § e86A(4) and
cnt 1. Indennity 1s expressly addressed in § 8868, which states
in relevant part that:

(2) 1£ two persons are Liable in tort to 2 third

for the sane harm and one of then dischscges
scents ic Phu’ Beate sates to

(3) instances In which ingeanity 1s grantee Toe this
Principle include the followiey?

 

i} he indennites acted pursuant to directions
Gf the indennitor and reasonably bel reved eos
directions to be lawfully or]

 

(e) [Bhe indemnitee was induced to act by a
misrepresentation on the part of the indeaniter® upon
Which he justifiably reliba
Ad. (Emphasis added.) Restatement (Second) § 8868 does not
Gistinguish between intentional and other forns of tort.
Accordingly, the Restatement (Second) does not foreclose a right

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{FOR PUBLICATION Tif WEST’ HAWAI'T REPORTS 280 PACIFIC REPORTER ++
of indennity for intentional torts in the present matter. See
also Restatement (Third) of Torts: Apportionment of Liability
§ 22 (1999 & Supp. 2006):

(a) hen two or nore persons are or may be
auabie forthe same harm and one of then discharges
the Liability of another in whole or in part by
Settlement... , the person discharging the
{iabiliey 42 entitied eo recover indemnity in the
anount paid to the plaintiff, plus reasonable legal
expenses, if

(a) the indemnitor has agreed by contract

to indemnify the indeanitee . +s

 

 

 

id.

In addition, by its express terms, the indemnification
agreement covers Seasons’s negligent actions, see supra section
I.A. Therefore, the Appellants’ cross-claim against Seasons for
indemnification would be invalidated only in the event of bad
faith on the part of Fidelity or Nance in carrying out the
inspections. The record appears to be devoid of any evidence to
that effect.

In adopting and applying the totality of the
circumstances test in Zrover, this court relied in part on two
decisions of the Illinois Supreme Court, Dubina v. Mesirow Realty
Devis Inc., 756 N.E.2d 836 (111. 2001), and In xe Guardianship of
Babb, 642 N.£.2d 1195 (T11. 1994). In both Dubina and Babb, the
Illinois Supreme Court concluded that 2 settlement agreement that
allowed a settling tortfeasor to accomplish indirectly what
governing law expressly forbade was collusive and, hence, not in
good faith. Dubina, 756 N.E.2d at 842-43 (noting that, in
addition to allowing the settling joint tortfeasor to evade the
letter of the law, the settlement did not encourage the Illinois

acts purpose of “equitably distributing among all joint

2
 

‘t+ FOR PUBLICATION IN WEST'S HAWAI'T REPORTS AND PACIFIC REPORTER *
tortfeasors the burden of compensating the injured plaintiff”):
Babb, 642 N.E.2d at 1204-05 (noting that neither the objectives

of equitable distribution nor encouraging settlements was

furthered by the agreement); see also Int’] Action Sports, Inc
ve Sabellice, $73 So. 2d 928, 930 (Ela. Dist. Ct. App. 1991)

(concluding that a settlement agreement was not in good faith in
part because the agreement neither encouraged settlements nor
equitably apportioned liability), cited in Trover, 102 Hawai'i at
425, 77 P.3d at 109. We hereby adopt the reasoning of the
Illinois Supreme Court and hold that a settlement, wherein a
party seeks to accomplish indirectly that which it is expressly
barred by applicable law from accomplishing directly, is not in
good faith.

By the plain language of HRS § 663-15.5(d), see supra
note 1, a good faith settlement agreement between Seasons and the
Brookses would not have disturbed the Appellants’ cross-claims

sons, however, caused an integral condition

 

against Seasons. 5
of settlement to be that those cross-claims against it be
dismissed, see supra section I.B., which thereby “allow{ed] the
settling defendant (] to accomplish indirectly that which [it]
could not do dixectly.” Dubina, 766 N.E.2d at 642.

The record demonstrates that the circuit court strove
to balance the competing policy interests at stake and the
unresolved factual issues upon which the indemnity agreenent’s
applicability would be ascertained. Nevertheless, by
acknowledging that HRS § 663-15.5(d) (1) expr

under the written indemnity agreement, any cross-claims brought

 

ly preserved,

by the Appellants but, nevertheless, acquiescing in a settlement,

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FOR PUBLICATION I WEST’ S HAWAI'T REPORTS AND PACIFIC REPORTER **¢
@ central condition of which was the extinguishment of the cross-

claims, the circuit court abused its discretion by

“disregard[ing] rules or principles of law. . . to the
substantial detriment of a party,’” see In re Water Use Permit
Applications, 94 Hawai'l at 183, 9 P.3d at 495. Absent that

offending provision, however, the agreement would otherwise have
been a good faith settlement, and the circuit court would not

have abused its discretion in so determining.

IV. CONCLUSION
In Light of the foregoing, we vacate the circuit

court’s July 20, 2004 order determining that the settlenent was

made in good faith and remand this matter for further proceedings

consistent with this opinion.

on the briefs:
Michael L. Lam, Lauren
R. Sharkey, Seth R.

Harris (of Case Bigelow
& Lonbarai) for ne

defendant s-appellants/

cross-claimants-appel lants/
cross-claim defendants Rica coraaay amie
Dana Nance & Co. and Fidelity

National Field Services, Vamen &, Duby:

Ine. tts be

Elton John Bain and
E. Mason Martin III

(of Kessner Duca

Unebayashi Bain 6

Matsunaga) for defendant-
appellee/cross-claim defendant-
appellee/cross-claimant
Seasons Mortgage, Inc.

24