Case Title: Ching v. Valencia

Citation: 

Docket Number: 

State: hawaii

Court: Hawaii Supreme Court

Date: 2008-08-26T00:00:00Z

Document:
LAW LIBRARY

 

HAWAI REPORTS AND PACIFIC REPORTER

 

NOT FOR PUBLICATION IN WEST’

 

Wo, 27331

  
 
 
  

IN THE SUPREME COURT OF THE STATE OF HAMA‘

DONALD S. K. CHING,
Plaintiff-Appellant /Cross~Appellee,

qa

vs.
MARK G. VALENCIA, JAMES C. McWHINNIE, S| |}
DAMON KEY LEONG KUPCHAK’HASTERT, a Law Corporatibn,
Defendants-Appellees/Cross-Appellants,
and

JOHN DOBS 1-50, et al., Defendants.

APPEAL FROM THE FIRST CIRCUIT COURT
(crv, NO, 04-1-2270)

tay: ‘Noon Cae and Nakayama, 99.)
circuit Judge Sakamoto, in place of Levinson, ‘J., recused,
Giccult Judge Wilson, ‘in place of Actba, I." recused and
Circuit sudge Ahn, in place of Ovfty, J. recused)
Plaintiff-appellant/crose-Appelles Donald 8. K. Ching
("Plasnes££*) appeals and Defendants-Appellees/Cross-Appellants
Mark G, Valencia, Janes C. MeWhinnie, and Damon Key Leong
upchack Hastert, a Law Corporation (collectively referred to as
“pefendants*) cross-appeal from the first circuit court's! May 3,
2008 order granting in part and denying in part Defendants!
motion for sunnary Judgment and June 3, 2005 judgment in favor of
on appeal, Plaintitt argues that the circuit court

erred in granting summary judgment on his malicious prosecution

{the Honorable Sabrina S. MeKenna presided
   

NOT FOR PUBLICATION IN WEST'S HAWAN REPORTS AND PACIFIC REPORTER
claim inasmuch as (1) judicially enforceable arbitration

proceedings satisfy the “prior proceeding” eler

 

nt required of
malicious prosecution and (2) he lacked a reasonable opportunity
for discovery prior to the court's finding that “there is no way
The) can prove lack of probable cause.” Plaintiff also contends
that the circuit court erred in granting summary judgment on his
defamation claim because the litigation privilege does not apply
to lawyers’ statements made in arbitration proceedings.
on cross-appeal, Defendants argue that the circuit

court abused its discretion (1) by failing to award then

 

attorneys’ fees and costs under Hawai'i Revised States (“HRS”) §

607-14.5 (1993)? because Plaintiff brought frivolous claims and

2 es § 607-14.5,
actions,” provides as follow

Js and costs in civil

 

titled, “Attorneys” fe

 

 

(a) In any civil action in this State where a party seeks
noney damages of injunctive relief, or both, against another
Party, and che case is subsequently decides, the court ma. ag it
Seams ust assess againat either Carty, whether or not the party
tee a prevatling party, and enter az pact of sts order, for unsch
execution may issue, a ceasonable sum for attosmes’” {ees and

‘Soate._in on apount’ tobe determined by the court uno a apecitic
‘Eindina that all ora portion of the party's claim or defense was
‘tcivolens as broviged io aubsection Tb.

{b] in determining the award of actorneys’ fees and costs

and the amounts to be suarded, the court must find in writing that

     

 

Tain the clad -accion- in determining whether claims or
defenses are frivolous, the court may consider whether the party
Slieging that the claims or defenses are frivolous had submitted

 

fo the garty asserting the claiss of defense: :
sithdtaual az cravided in aobesction (ol it-the court desemings
hat only anor

‘axe frivolous. the court shall delermane a ceascnabe sul for
‘iorneve" fee and costs in relation to the frivolous claias or

Te) A party alleging that claims or defenses are frivolous
may subait to the party asserting the claims or defenses a request
for withdrawal of the frivolous claims of defenses, in writing,
identitying those claims or defenses and the reasons they are
believed to be frivolous. If the party withdraws the frivolous

 

 

2
*** NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER ***
(2) by declining to consider the exhibits submitted in support of
Defendants’ motion for sunmary judgment.

upon carefully reviewing the record and the briefs
submitted by the parties and having given due consideration to
the argunents advanced and the issues raised, we hold that:

(1) In light of this court’s policies (1) to avoid the

chilling effect of possible subsequent litigation? and (2) in

elaine or defenses within s reasonable length of tine, the court
Shall not award attorneys’ fees and costs based on those claine or
Gefences under this secvion.

 

MRS § 607-14.5 (emphases added).

>We nave declared that courts “serve an important role in resolving
conflicts and defining rignes” thus ans enpnasized “che importance of
Reaningful access to (courts].” Matauuca <, E.1, du Pont de Nemours and Co.,
102 Hawai": 149, 156, 73 P.34 687, 684 (2003). In the context of protecting
communications ‘uring judicial proceedings, we quoted an ICA opinion that
cautioned that the threat of subsequent litigation affects access to the

 

 

We do not wish to open the door to a second lawsuit being filed by
the defendant every tine the plaintiff loses a previous lawsuit,
folloned, we suppose, by a third lawsuit if the plaintiff in the
Second lawsuit loses that one and so on ad infinitium. We chink
that one of the things chat distinguishes cur scciety is the
citizen's relative freedom of access to the court:

 

Ide at 157, 73 2.3d at £95 (quoting Brodie v, Hawai'i Auto, Retail Gasoline
Dednere Aai'n., inc., 2 Maw. App. 316, 321, 631 Prza 600, Coe (1981), zev"g on
ther arqunde, 65 "nay. 598, 658 P.2a B€3 (1982)).\ Permitting partied of

tration to'bring a malicious prosecution claim in court based
ion proceeding may prevent honest plaintiffs from raising thelr

     

clains in arbitration. See laing t. Shanberg, 13 F.Supp. 2d 1186, 1189 (0.
Kan. 1996); Olckinson v.-Eshals, 576-80. 24-1287, 1258 (Ala. 1981) (explaining

that *"(p)ublie pelicy fequires that ali persone’ shall [be able to] resort,
freely to the courts for redress of wrongs and to enforce their rights, and
that this may be done without the peril of 2 suit for damages in the event of
an unfavorable judgnent by jury or judge’")7 Wong vs Tabox, 422 N.E.2d 1279,
I2e3" (Ind. Ce. App. 1981) (The tort of malicious prosecution is ot generally
Eavorea in our legal systen, and this its requsrenents are construed strictly’
agsinse the party bringing the action.) Paul v Nat'l Educ, ‘Asa’n, 459 8.20
1213; i21¢ (ia. Super. 1983) (noting that malicious prosecution suite tend to
chill free access to the courte); W. Page Keeton, Prosser 4 Kastan on the Law
BE Torts § 120, at 889-90 (Sth ed. i984) (observing that Malicious prosecution
Elaine Rave a chilling effect on honest litigants) «

 

 

 

3
 

0+ NOT _FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER
favor of arbitration as a means of dispute resolution,‘ a private
contractual arbitration will not support a subsequent claim for
malicious prosecution.’ Accordingly, the circuit court did not
err in granting surmary judgment for Plaintiff’s malicious

prosecution claim

 

+ Soe Tatibouet v. Ellsworth, 99 Hawai'i 226, 234, 54 P.26 397, 405
(2002) ("the Legistature overuhelmingly favors arbitration as a seans of
dispute resolyeion.” (citation omiteed) }7 Leeward Bus Co. vs Honolulu, 38 Haw,
G4, 71 564 F.28 445, 449 (1977) ("(z]he prociasmed public policy of our

Tegislature is to encourage arbitration a a means Of settling differences and
thereby avoid 2itigation.”) (quoting Grega Kendall ¢ Assocs. <. Kaubi, $3 Haw:
be, 93, #88 P.2d 136, 140 (2971)); Schade v, Fac, Benetit Sere. inc, 119
Havai's 161, 168, 250 P.34 £10, 417 (*[flartiee resort to arbitration tS
settle disputes more expediticusly and inexpensively than by a court ction.
Tt must be dened that the primary
Lisiaation.” (quoting
Hussar, Led., “7a naw, 210, 225-26, 847 B-Za €b2, GS-65 (1992) [block quote
formatting omitted)) emphasis added)

Permitting parties uno arbltrated their dispute to
nether the arnitration was brought without probable cause and naliciously,
Nould subvert the pareses’ intention to avoid Litigation. See Sagsnawsny y
More, G4 Cal. App. 4th 122, 132, 75 Cal. Aper. 2d 118, 133 1998) (ooserving
Uhet permitting malicious prosecution claims based on’ private contractual,
arbitration would “increase litigation and (] undermine the finality of
Gispote resolution to which the parties agreed”); Sxonnan ‘. Trance, Tne, 25
Gals ath 310, 314, 20 P.3a 2086, 1086, 105 Cal. ptr. 2a 750, 792-95 (2001)
(holding that 2 person say not sue for the nalicious prosecution of an action
that the parties resolved through contractual arbitration even where the
Ungerlying action began in court in light of I) the trend against creating or
expanding derivative tort renesies, including malicious prosecution? and (2)
the trend in favor of allowing the parties voluntarily to choose binding,
private arbitration to end the entire dispute”); af, Tatibouet, 99 Hawsil'i at
Ebay "se Peas at 408 (eieations omitted) (declaring that the legislature
Strictly limits judicial review in arbitration awards because ef the policy
favoring arbitration and the parties’ intent to avoid litigation)

 

 

+ A. malictous prosecution clain involves three elements “(1) the
prior procesdings mist have been terminated in the plaintif!'s favor; (2) the
Bricr proceedings must have been initiated without probeble cause) and (3) the
Prior proceedings mist have been initiated with malice.” Nong ¥. caveteng,
Ti Hawai'i 462, 476, 143 F.3d 1, 17 (2006) (citing

Wonoluig, 76 Hewai's' 213, 230, 833 .24 98, 109 (195)}— This claim 19
Gesigned to “naintain{] the integrity of the judicial system, providiel
injured persons with sone form of redress, and preserv(e] an individual's
Fight co petition tne court and tos jury trial." Chuns v. Mecebe Wamilton &
Renny Cou itd, 109 Hawai's $20, $32, 128 P.34 833, 645 (2006)

 

 

4
 

NOT FOR PUBLICATION IN WEST'S HAWAI REPORTS AND PACIFIC REPORTER,

(2) Because the absolute litigation privilege!

includes attorneys’ statements made during arbitration,” the

 

< the Litigation privilege states, “an attorney at law is absolutely
privileged to publish defamatory matter concerning another in conminications
preliminary toa proposed judicial proceeding, or in the institution of, oF
Suring the course and as a part of, a judicial proceeding in which he
participates as counsel, if'it has sone relation to the proceeding.”

Ge venauka, S Haw. App. 45, 48-49, 6782.24 11, 1¢ (1964). (quoting Restatement
(Second) of Torts § ("Restatement §"] SE6 (1977)). The absalute privilese
applies where the statements. (1) "were made in the course of a jusicial
preceeding" ana (2) "were related, ‘material, and pertinent to that
Proceeding.” id. at 42-49, 678 P.2d at 14.” Gee Mccarthy, 5 Haw. App. at (@-
45, 61@ Poéa atta (euling that the “course of a Judicial proceeding’ includes
“the snetitution of the proceesings of in the conduct of litigation before 2
josietal tetbunal,” in conferences, and "other communications preliminary eo
the proceeding” (quoting Restatement § S86 comment a)).

“lawa'i courts have applied an absolute Litigation pcivilecs in
defamation actions.” Matsuura, 102 Hawai at 134, 73 P-30 at @92 (citations
omitted) (emphasis added); sas Ferry v. Carlamith, 23 Haw. 363, $91 (1917)
(h(t]he protection is complete irrespective of the motive prompting the use of
the words or writings, but the privilege does not extend to matters having no
materiality or pertinency to the question snvelved in the suit.");— The
Ebsolute privilege “protects the storey from liability in an action for
Gefanation irrespective of his purpose in publishing the defanatory matter,
his Belief in its truth, or even his knowledge of its falsity.” Restatement §
586 comment a.

       

 

 

>. Seg Kahala Roval com, v, Goodsil) anderson Quinn s stifel, 113
nawas's 251, 292-73, 151 P-3d 132, 752-53 (2007) {holding that, inthe ‘context
Of intentisnal interference with ‘contractual relations and intent icnal
Interference with prospective economic advantage, the Litigation privilege
applies to an attorney's representation of 2 client in arbitration) (esting Hy

783 8.24 398, 403 (RAT
2001] (stating thet quasi-judicial proceedings such as arbitration ‘proceedings
are “judicial proceedings,” and, thus, statements in arbitration proceesings
are privileged against suits for defamation) gee ales Kanaka v.”Goodss1l
Fe 317 Hawai's 82, 106 nie, 176.30 91, 105 n.18
(2008); Restatement § 286 comment d (“Judicial proceedings include all
proceedings before an officer er other tribunal exercising 2 jusieisl
Function, on which ge § 505, Comnente cand f. Ae indicated there, on
arbitration proceeding aay bé incluged.”)

Tn Kohala Roval Corp., this court observed that “the scope of any
privilege 1s based upon policy considerations, and listed the “interrelated
Policies associated with the litigation privilege” as follows:

 

(2) promoting the candid, objective, and undistorted disclosure of
evidence; (2) placing the burden of testing the evidence upon the
Ueignes during erial; 13) avoiding the chilling effect resulting
from the threat of subsequent litigations (4) reinforcing the
Hinaity of Judgments; (3) limiting collateral attacks upon
judgments; (6) promoting zeslous advocacy: (7) discouraging
Abusive Litigation practices) and. (8) encouraging settlement

 

5
 

+ NOT FOR PUBLICATION IN WEST'S HAWAM REPORTS AND PACIFIC REPORTER
circuit court did not err by granting summary judgment for
Plaintiff's defamation claims

(3) The circuit court did not err by failing to find
that Plaintiff's claims were frivolous* and denying Defendants
attorneys’ fees and costs. At the time Plaintiff filed the
complaint, the lawsuit involved novel malicious prosecution and
defamation legal concepts.’ Although the circuit court properly
granted summary judgment, Defendants did not establish that
Plaintiff's claims were made in bad faiths"

(4) Inasmuch ag Plaintiff’s claims were not

 

Ad. at 268, 152 P.34 at 749 (quoting Matauura v. B.t, du Pont de Nemours
E55,"102"navai's ‘149, ‘155,73 P-3d 667, 693 (2003)) (Same citations, brackets,

and’ internal quotation marks omitted).

+ “tn determining the award of attorneys’ fees and costs and the
amounts to be avarded (under HRS § 607=14.8], the court

that all ors portion of the clains or defenses made by the party are
frivolous ond sre not Feascnably supported by the facts and the law in the
Givil action.”" HRS § 607-1¢.5(B) (emphasas added). “A frivolous claim has
been defined as ‘a clain so manifestly and palpably without merit, so as to
indicate bed faith on the pleader’s part such that argument to the court was
fot required./” 72 Haw. 20, 28, 804 P20 881, 887 (1931)
(internal quotetion marke omitted); gee Canalezv. Bob's hee Serv. Cer.,
9 dawai'i 292, 300, 972 P.24 295, 303 (1999). The court nay consicer whether
the "party alleging that the clains or defenses are frivolous had submitted to
the offending party a request for their withdeawal” HRS § 607-1¢-5 (b) and
(el.

  

 

 

 

> see tacmae ve ingle, 110 Mawai't 327, 332, 132 F.3d 1238, 1243
[conciuding thet Defendants did not act frivolously and that Plaintiff was not
entitled te BRS § 607-14.5 attorneys’ fees and costs because “the legal
principles addressed in this case were not firmly established”).

"See WiLLis ve Suain, 112 Mawai's 164, 188, 245 7.34 727, 732
(2006) ("[slunmary judgrent is appropriate Lf the pleadings, depositions,
angwars to interrogatories, and admissions on file, together with the
Geelganste, if any, show that there is no genuine issue ae to'any moverial
fact and that the moving party ss entitled to judgment as a matter of lax.”).

6
 

+ NOT FOR PUBLICATION IN WEST'S HAWAI REPORTS AND PACIFIC REFORTER +++
frivolous" even when taking inte account Defendants’ exhibits,
the circuit court's failure to consider Defendants’ exhibits is
deemed harmless. therefore,

17 18 HEREBY ORDERED that the first circuit court’s
May 3, 2005 order granting in part and denying in part
Defendants’ motion for surmary judgment and dune 3, 2005 judgment
in favor of Defendants are affirmed in all respects.

DATED: Honolulu, Hawai'l, August 26, 2008.
on the brief
peter Van Name Esser and x
Stephen T. Hioki fp
for Plaintief-appellant/

Cross-Appellee
Donald SK. Ching Pate, OMe oe Abe

 

 

Sidney K. Ayabe and
Steven L. Goto of Ayabe,
Chong, Nishinoto, Sia « :
Nakamura, for Defendants- D>,
Appellees/Cross-Appeliants,

Mark G, Valencia, James C. /
Melihinnie, and Damon Key

Leong Kupchack Hastert, a Law

corporation

8 the circuit court's failure to consider Defendanta’ exhibits with
regards to the issue of granting sunmary judgment ie haruless because it ruled
in favor of Defendants

See HRS § 6£1-16 (2993) ("No order, judgment, or sentence shall be
reversed or modified unless the court is of the opinion that error uae
Committed which injuriously affected the substantial rights of the
Appellant"); Scate v, Rivera, 106 Hawai'i 146, 165-66, 102 P.3d 1044, 3062-64
(2504) "(sig}eeer te aot to be’ viewed in isolation or] considered purely in
et. Consistent with the harmless efror doctrine, we have frequently
‘thet error must be examined in light of the entire proceedings and
Given effect to which the whole record ehous it se entities.” (eitetions and
Gostation marks onittes) |; Maksbavashi v, Herts Cory,, 66 Haw. 265, 272, 660
P.2a 1308, 1334 ("Even an erroneous exclusion of relevant evidence doesnot
necessarily call for reversal of the trial court, if no prejudice results.”)

 

 

 

 

 

 

 

   

7