Case Title: Tokairin v. Kameda

Citation: 109 Haw. 468

Docket Number: 

State: hawaii

Court: Hawaii Supreme Court

Date: 2006-01-31T00:00:00Z

Document:
1 ORARY

 

A
4+ Nor FOR PUBLICATION +#+ Be z

no. 24700 #; 2 -

rw THE surRewe courn of te stare or munsgle =F &
w

 

BERT S. TOKAIRIN, individually and on behalf of all other
stockholders in Nuuanu Onsen, Inc.; HAROLD YAMADA, individually
‘and on behalf of all other stockholders in Nuuanu Onsen, Inc.7

adninistrator of the Estate of Haruko Hirasa,

and MICHAEL HIRASA,
deceased, individually and on behalf of all other stockholders in
Nuuanu Onsen, Inc., Plaintiffs-Appellees,

DOROTHY FUMIKO KANEDA, aka DOT KAMEDA, aka FUMIKO KAMEDA;
KATSUNORI TOKAIRIN, aka KATS TOKAIRIN, aka KATSUNORI TOKAIRIN:
JANET BTSUKO TOKITA, aka JANET ITSUKO TOKITA; DAVID KAMEDA, aka
‘TOSHI KANEDA; KATHERINE SAKUDA; GEORGE TOKITA; REIKO M. MATSUURA,
personal representative of the Estate of Shigeo Matsuura,
deceased; and MARION ISHINOTO, Defendants-Appellants,

and

ROLAND

NUUANU ONSEN, INC., Hawai'i corporation; JOHN AND MARY
DOES 1-20; and DOE CORPORATIONS, PARTNERSHIPS, AND OTHER
ENTITIES 1-20, Defendants.

eee

APPEAL PROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(Civ. No. 96-3689)

MEMORANDUM OPINION
(By: Moon, C.J., Levinson, Nakayama, Acoba, JJ., and
Circuit Judge Wong, in place of Duffy, J., recused)

‘The defendants-appellants Dorothy Kameda, Roland

David Kameda, Katherine Sakuda, George

Janet Tokita,
and Marion Ishimoto (hereinafter,

Tokairin,

Tokita, Reiko Matsuura,
collectively, “the Appellants”) appeal from the August 6, 2001

order of the first circuit court, the Honorable Dan T. Kochi
presiding, ruling “that Exhibit B of the settlement and mutual
release agreement” (hereinafter, “the agreement], entered into

among the Appellants and the plaintiffs-appellees Bert S.
‘+48 NOT FOR PUBLICATION *#*

Tokairin, Harold Yamada, and Mich

 

1 Hirasa (hereinafter,
collectively, “the Appellees”}, “shall include the total sum of
$123,928.26." On appeal the Appellants contend that the circuit
court erred in (1) “failling] to include properly payable loans
to... Dorothy . . . for the time period before January 1,
1997, in the amount of $175,124.60,” and (2) “denying [the
Appellants] October 24, 2001 ‘Motion for Reconsideration or for
Clarification of the (circuit court’s August 6, 2001 order]’",
We believe that the material terms of the agreement are facially
ambiguous and that the Appellants’ interpretation of extrinsic
evidence of the parties’ intentions is unavailing. Moreover, we
believe that, of the two arguable constructions of the disputed
contractual language, the one advanced by the Appellants is
irrational, improbable, and inequitable, while the appellees’
construction is “fair, rational and probable.” See Amfac, Inc
Ms Wiaikiki Beachcomber, 74 Haw. 85, 110, €39 P.2d 10, 25 (1992).
Nevertheless, we agree with the Appellants that the language of
the circuit court's August 6, 2001 order is impermissibly
ambiguous, Accordingly, we vacate the circuit court’s August 6,
2001 order and remand for entry of a clear order consistent with

this opinion.

I. BACKGROUND
‘The present matter arose out of a shareholder

derivative suit filed by the Appellees on September 9, 1996
‘44 NOT FOR PUBLICATION *#*
against, inter alia, the Appellants.* It is undisputed that
Dorothy made personal loans to Nuuanu Onsen, Inc. (NOI) (a
corporation that had operated a Nu'uanu Valley teshouse since
August 23, 1968), some before and some after January 1, 1997. In
‘their first amended complaint, the Appellees alleged that
Dorothy, Roland, Janet, and David, on behalf of NOI, as its
directors, (1) breached their fiduciary duty to NOI’s owners, (2)
managed negligently, (3) were unjustly enriched, (4) and
converted the Appellees’ property by: (a) selling Dorothy an
empty lot for a price that was approximately $200,000 less than
ite fair market value of approximately $275,000; and (b) “[iln or
about 1994, without notifying the shareholders, having a
stockholders’ meeting, or . . . voting on the sale of corporate
assets, . . . conspir[ing] to sell NOI’s only remaining asset and
use part of the proceeds to satisfy” debts arising out of
Dorothy's personal loans to NOI. Apparently, in September 1998,

the parties agreed to settle.*

 

+ on august 20, 1998, the circuit court partisily granted sumary
judgment in fovor ef Dorothy, Roland, Janet, and Devic, thereby dismissing
Bert's clains.

2 Notwithstanding the parties’ citations to their own briefs!
‘appendices, the Fecord oh sppeal does not properly circunscribe which
Sersion(s) of any agreanent is/are controlling. Neither the circuit court's
August €, 2001 ofder or oral rolings nor the parties’ written enoranda
Eivarly‘oentity « particular vereion ae binding. For purposes of this
Gppeal, the circuit court and the parties seem to have acknowledged during the
Chreuit court proceedings that « draft of the relevant language prepared by
the Appellees is printed in Exhibit 8, attached to the Appellants’ motion to
thforee settlenent, and Exiibit F, attached to the Appellees’ memorandum in
‘opposition; anc thats leter red-lineo Graft was prepared by the Appellees’
Tenyer, Wendy Uesuni, which reflects no changes to paragraph 2,(2) and (4)
Soreover, the versions affixed as eppendices to the Appellants’ opening brie!
find the Appellees’ answering brief sre textually identical to each other and
fC utsuni's rec-lined draft, Consequently, we presume that paragraph 2.8 (2
{continced.

 

 

 

 

 
‘*#* NOT FOR PUBLICATION ***

on December 6, 2000, the Appellants filed @ motion to
enforce the settlement. On January 3, 2001, the Appellees filed
their menorandun in opposition thereto. On January 16, 2001, the
circuit court conducted a hearing end orally ruled as follows:

I think the three crucial docurents are... the.
agreement that wae prepared by (the Appellees) in the first
{netance; the September 15, 1996 letter by . - (nediator
Lbsie Le C.] chang; and .  . the red Line Copy prepared by
(wendy! Utsuri(, ee gupta note 2]
wie you Look at [pareerach 2.a(2) of the

aratt, ee gupca note 2), it stat

Establishment of = fund. . . . [UJpon closing

of the sale of the NOI real estate asset. .
Sccount will be established in the books of Wor in the

 

 

Appelie

 

   

oe mancunt ‘Of $275,000, minus $75,000, and
hiked £0 percent ofthe loans pevable to iDersthy.

"The aceoent will be funded by Dorothy
thteua ta her distributer’ share of NOI upon its
Gadeoiution

and if you look at paragraph (2.a(4)1, © says:
*  {A)ll NOt loane properly payable te Dorothy
Snail be pasd to her upon dissolution, notwithstanding
ine éstablishsent of the settlement fund.

 

Then if we go to. . . Ghana's letter, he requested
dollars bated Geen tI sn BO)

‘odalsc. that. .
seg OS *iStoTaced in’ an Exbibit Bes. And he goes on

te say that he expects that those ancusts will be shortly
soreed upon by the partie

 

So in essence, here was a settlenent with regard to
the claine and the iosn-ancunts AnLit up between prior (tol
say) i Sanuae i

Then if we go to +7. Uraumi's red Line copy,

there was an enous established as to the amount of loan{3]

    

*(,..continved)
and (4), ea printed in Uteuns's draft and attached to the briefs on appeal,
Control, providing as follow:

(2) Establishment of the Fund... (Alm account will be

 

Established on the books of NOI in the following
Sount:. the sum of $275,000 minus $75,000 and minus
$140,099.68; ‘The account will be funded by Dorothy...

 

ial “ala nor 1oans properly payable to dorothy . . . as set
forth in Exhibit. B" attached hereto shail be paid to her
fort [Mootuiehstanding the establishnent of the Settlement

bone.
‘+48 NOT FOR PUBLICATION ***

effective [at] the end of [1996]. And ££ you do the math
PtSyou come out to $175,124.60 as the Leans that were
hhade’ up [ehrosgh 1996).
vu 'with regard to Exhibit 8, . . . there was not an
established amount... . And that was to be... worked
ut by the parties, which Se consistent with the original
offer

 

{Bo ald we have today Le the issue of the. .
ancunt ‘of the loans which would be payable to
Tborothy] after: - . 1996.

 

(Emphases added.) In its February 23, 2001 order, the circuit
court granted the Appellants’ motion but reserved the amount of

post-1996 loans for later adjudication:

 

(2) All of the loans... before (2997) were
adéressed under paragraph 2.a(] (2) 2. +f

(3) “Under: paragraph 2.8()(2)".".". the amount of the
Loans effective at the end of issei) was aiscounted to
5140, 059.687

(4). Paragraph 2.3() (4) addressed the leans
ss afters. 1996;

tS)" Pavagtapn 2-20) (4) provides that the anount
of the loans sussequent to... 1996... would Be.

Placed on Exhibit By and

(6) The parties have not yet established the ancunt
of the loans subsequent to (i986) thet are to be
included tn ExRIBLe

Therefore, it is hereby ordered, adjudged and decreed
thee.

‘al ".'. . (r)ne loans... before . . . 1997 shall be
discounted to the sum of $140,099.66, and credited againat
tthe sum of $200,000.00 to create the’ Settlement Fund as set
foreh in’ (paragraph 2.0(2)]1

[t]he properly proven Loans . . . which were
nade afier’ {1996} thal! be listed on Exhibit Bs. y and
then the amount of these loans has Seen established and
Placed in Exhibit B, there shall be a Global settienent(.)

(Capitalization altered.) At an April 20, 2001 status

 

conference, the parties agreed to submit additional evidence of
the amount of the post-1996 loans, which they did.

on July 18, 2001, the circuit court held a hearing to
resolve the amount of post-1996 loans, The circuit court found
that “Exhibit B should include a total of $123,928.36.
1 ss [O]ne particular item . . . which occurred in. . . 1996,

it may have been missed, but the . . . agreement indicates that

5
 

NOT FOR PUBLICATION *#*

everything was settled up to the end of . . . 1996, . . . and

therefore the [circuit clourt is also excluding that amount.”
‘The Appellants’ counsel, Lyle Hosoda, asked for clarification as
follows:

HosopA: . .. What we're talking about
paragraph 2tvall4)s and’ Your Honor just gave us the preci
Eigure that you're’ ruling on for today, but that figure
would be added co the amount that was already ruled
pen ‘op through Decenber ist, 1997 [sic]?

‘rie’ COURT: 5140, 000, something like that.

WOSODA: “Right, it would be added. (T]he

5223, od0'woula be added to’ that “anount?

‘THE COURT! That's correct,

 

 

 

The circuit court ruled in its August 6, 2001 order
“chat Exhibit B of the . . . [algreement shall include the totel
sum of $123,928.26." (Emphasis added.)

on August 14, 2001, the Appellants filed motion for
reconsideration or clarification of the circuit court’s August 6,
2001 order. On October 24, 2001, the circuit court denied the
Appellants’ motion. On Novenber 20, 2001, the Appellants timely

filed their notice of appeal to this court.

IT. STAND) REVI
A, Appellate Jurisdiction

[at is axionatic that we are “under an obligation to ensure
that. [we navel Jurisdiction to Rear and determine each case
Gnd to dismiss an appeal on [our] own motion where. (we)
Gonclode (wel lack{) Jurisdiction.” Bt, Inc. v. Seqecos
Hane, 3) mows 23,73, 549 Pad 1167, 1148 (1976). “When we
ferteive 0 Juriedictional aefect in’an appeal, we must, sua
Hoehte, dismiss thst appeal.”

eat ler a
Piza o36, 957 (gee) >

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

 

 

Fapilian NOL, Toc, ue
aides 68 Haw. Sb, ses, 714
NOT FOR PUBLICATION *#*
B. Construction Of A Settlement Agreement

A settlement agreement is in the nature of a contract.

Standard Mamt,, Inc, v, Kekona, 99 Hawai'i 125, 133, 53 P.3d 264,

272 (App. 2001); see also Amantiad v. Odum, 90 Hawai'i 152, 162,

977 P.2d 160, 170 (1999), “*As @ general rule, the construction

 

 

and legal effect to be given a contract is a [conclusion] of law
[(CoL}] freely reviewable by an appellate court.’ The
determination whether a contract is ambiguous is likewise a [COL]
that is freely reviewable on appeal.” Brown v, KPC Nat’) Mamt.
Cox, 82 Hawai'i 226, 239, 921 P.2d 146, 159 (2996) (quoting Cho
Mark Oriental Food, Ltd, v. K é K Int'l, 73 Haw. 509, 519, 836
P.2d 1057, 1063 (1992)) (internal citations omitted). “Hawai'i
appellate courts review [COLs] de novo, under the right/wrong
standard. ‘Under the right/wrong standard, this court
“examine[s] the facts and answer[s] the question without being
required to give any weight to the trial court’s answer to it."""
Robert’s Hawaii Sch. Bus, Inc. v. Laupahoehoe Transp. Co., 91
Hawai'i 224, 239, 982 P.2d 853, 868 (1999) (quoting In re Estate
of Marcos, 88 Hawai'i 148, 153, 963 P.2d 1124, 1129 (1998)) (some

 

internal citations omitted).

TIT. DISCUSSION

A. The Circuit Court's August 6, 2001 Order Is Appealable
Under The Collateral Order Doctrine,

We first consider whether the circuit court’s August 6,
2001 order is appealable under the collateral order doctrine.
The Appellees urge this court to dismiss the present

appeal as premature pursuant to Hawai'i Rules of Civil Procedure
 

+ NOT FOR PUBLICATION **

(ARCP) Rules 54(b) and 58.”
‘This court has stated that

[Jludgments, orders, oF decrees need not be final
gudgnests to be appealable, if they are collateral orders
Rgttecting rights which are independent of, and separable
ftony the rights asserted in the main action.” The
Eollatersl order doctrine is narrowly construed: thus, to
ist. {1] conclusively.

 

 

    
 

     

Gesue completely sepa:
[3] be effectively unrevieusble on appeal from a final
Sodgment.”

Knauer v. Foote, 101 Hawai'i €1, 85, 63 P.3d 389, 393 (2003)

(quoting Siangco v. Kesadate, 77 Hawai'i 187, 161, 883 F.2d 78,

61 Haw. $52,

 

82 (1994); Chu st. Fire 6 Marine I
555, 606 P.2d 1320, 1323 (1980)). Applying the same
Intermediate Court of Appeals (ICA), in Cook v. Sur, Life Ins.
Gos, 79 Hawai'i 403, 407-08, 903 P.2d 708, 712-13 (App. 1995),

determined, as the Appellants correctly note, “that an order

 

st, the

enforcing @ settlement agreement is a collateral order which is

> WRCP Rule S4(b) provides in relevant part:

hen nore then one claim for relief is presented in an
action” °)"or"wmen sultipie parties are involved, the court
Roy direct ihe entry of a final judgnent as to one of more But
Teter than oll ef the claims or parties only upon an express
Gsterminaticn that there is no just reason for delay and upon an
Shpreas direction for the entry of Judgment. In the absence of
Such determination and direction, any order... which
Sdjudicates fewer than ail the clains er the rights and
SS2es70ehes Sf"ewer chan all the perties shell not terminate the
action 2 to any of the claims or parties...

RCP Rule 58 provides:

Unless the court otherwise directs and subject to the
provisions of Role 54(bl, . . « (w)hen the court directs thet =
Petty decover only money ef costs or that all relief be denied,
Phe‘Liere shall enter sedgnent forthwith upon receipt by hin of
the direction sss

 

   

 

 
‘¢4* NOT FOR PUBLICATION

 

appeaiable.”*

Here, the circuit court's August 6, 2001 order (1)
“conclusively determine(d]” that the agreement was enforceable
and (2) resolved the details of a compromise among the parties
without adjudicating the merits of the underlying claims.

With respect to the third prong of the collateral-order
test, the parties agreed that they would “effectuate the
dismissal with prejudice of the remaining claims.” Consequently,
there would be no “final judgment” to “review”; as the ICA noted
in Cook, **{a} voluntary dismissal by stipulation is effective
immediately upon filing and does not require judicial approval.’”
79 Hawai'i at 407-08, 903 P.2d at 712-13 (quoting 9 Charles Alan
Wright @ Arthur R. Miller, Feder] Practice and Procedure § 2363
(4995)

Accordingly, this court has jurisdiction over the
present appeal by virtue of the collateral order doctrine.

B. The Terms Of The Aoreenent Are Arbiquous, And Exhibit &
Ref 1897 Loan Amount.

1. The Appellants’ araunents
In their opening brief the Appellants imply that the
plain language of the settlenent or, in the alternative, the
intentions of the parties as manifested in the conduct of the
Appellees and Chang, require the Appellees to repay Dorothy's

pre-1997 loans pursuant to paragraph 2.a(4), in addition to and

 

«Moreover, we agree with the Appellants that Jenkins v. Cades
Schutte Plenine «weight, "76 Hawai's 115, 669 P.2d 1334 (19st), Tis not
[itended to apply... co appealable colleterel orders” inasmuch as this
court's opinion expressly contemplated snd excluded then, See 76 Hawai'i at
LP n.d, Be9 Pzd at 1336 1

 

 
‘4# NOT FOR PUBLICATION *#*

notwithstanding those loans’ arguable inclusion in paragraph
2.a(2).
3. terms of the agreement

‘The Appellants note that paragraph 2.a(4) provides that
*[aJ1 NOI loans properly payable to Dorothy . . . as set forth
in Exhibit ‘B’ attached hereto shall be paid” and does not
provide for any “Limit{ation)” or “reduction” of any loans. ‘The
Appellants further note that the Appellees thenselves drafted the
settlement language.

‘The Appellants further contend that paragraph 2.a(2)'s
establishment of the settlenent fund is no bar to the Appellees’
obligation to repay the pre-1997 loans pursuant to paragraph
2.a(4), inasmuch as paragraph 2.a(4) “explicitly provides
+ + + (that] [a]11 NOE loans . . . shall be paid «
notwithstanding the establishment of the Settlement Fund.”

 

+ me Appellants further employ flawed inductive reasoning to
vprove” why the settlenent fund cannot subsune the pre-1997 loans. The
Appellants reason as follows; the basis for the settienent fund was the
Windfall eliegedly received by Dorothy. Tae anount that Dorothy saved by
Bilegediy buying the lot for s below-narket price lay sonewhere between $0
(the Appellants” position) and $200,000, (the Appellees” position). the
Appellants assume that the “compronise” Value represented by the settlenent
fond must therefore £511 Between those endpoints’

 

 

  

HL _Lthe Anoelants) are ojso denied renayment of $175,124.60 of
Togng SSAA Tbe Coal would De $59,900-02 plus $175,124.60 for a
total of $835,024.62, This would exceed the maximum anount
Glained by the Appellees]. +... Repayment of all loens. .
Ss the only way to schieve 2 Compromise payment between $0 and
15200, 000.00

(Emphasis added.) This argunent is meritless

Whetever the Appellant mean by implying that this illogical result

would obtain “Af [they] are. -- denied repaynent,” (enphasis added), further
Teductio ad abaurcum exposes the argunent’s fallacy. rf the Appellants we

Eitrects the "fix" would be to reduce the amount of pre-1997 loans by at least
$35,024.62 =~ to no greater than $140,099.98 ~~ in order to “back up" the

Feauleing “compromise payment” into the proper range. Reduction of Dorothy's
(cont inved!

 

 

 

»

 

10
 

NOT FOR PUBLICATION *#*
(Emphases omitted.) Finally, the Appellants urge that “the
agreement is definite and unambiguous” and, as such, “should be
interpreted according to its plain, ordinary meaning and accepted
use in common speech.”
b. Ghana's September 15, 1998 letter
The Appellants argue that Chang’s letter to the
parties’ attorneys,‘ inasmuch as it “did not say that only loans
made after . . . 1996 should be repaid, nor that loans made
through . . . 1996 should not be repaid,” “confirm[s}” that all
loans, including those made before 1997, should be repaid.
Moreover, the Appellants argue, Chang's request for an “updated
total of loans” reveals the parties’ intention to repay the
earlier loans “because if the . . . loans through 1996 were not
to be repaid, they would not need updating as they would not be
repayable.”
c. the parties’ course of conduct
The Appellants contend that the Appellees did not
object to the Appellants’ proposed Exhibit B, notwithstanding its

°(, .-continued)
entitienent 1s surely not the Appellants’ intended result. In any case, the
Specific anount of pre-i997 loans ia irrelevant to the issue on appeal, which
ie"sinply whether of not any pre-1997 leans belong in the Exhibit = sum,
according to the terme of the agreement

 

‘© chang’s letter states in relevant part:

‘he changed paragraph 2.2{] (4) will reference payment to Dorothy
Sand contenplates the attachment of an Exhibit "B" which
Snail 1se"2i1°C8 the ean snounce to Septemper 1998. .

1. Ao Exhibit “B," listing the updated total of 2oans
eutstanding between Dorothy - . . and [NOF] needs to be provided
fo... Utsumi. May T ask Hosoda... to obtain and
provide the updated 1ist of ioans to.» Utsum sss =

 

 

 

a
‘#* NOT FOR PUBLICATION *#*

Inclusion of the pre-1997 loans: “There was considerable

correspondence between the parti

 

+ attorneys regarding Exhibit
B, yet it was never once questioned that the loans through 1996
should be repaid.”

‘The Appellants emphasize that the Appellees wrote to
them multiple times, “expressly acknowledg[ing] that the loans in
question” included the earlier loans. That is, “[iJ£ the. . ~
agreenent called for the repayment of loans made only after 1996,
[the Appellees] would (neither) have ‘expected that [Dorothy]
would be able to prove’ loans prior to 1997 nor have
“specifically asked for numerous documents related to those
n 1984 and 1996 would have

 

loans,” inasmuch “as the loans betw

 

been irrelevant.”

Moreover, the Appellants assert that, on July 8, 1993,
they provided copies of eleven missing cancelled checks to the
Appellees’ counsel, of which nine corresponded to the specific
amounts of various pre-1997 leans.

d.  {nconsistency between the circuit court's
‘{al_culing and its August 6, 2001 order

The Appellants argue that the circuit court's
statenents during the July 18, 2001 hearing are inconsistent with
its August 6, 2001 orde
ruling... that the . . . pre-1997 loans should be added to the

 

“Despite the [circuit c]ourt’s oral

« . . loans from 1997 on, the (circuit cJourt signed and filed
[the Appellees)’ order that included only the post-1996

doans .. 5.”
‘The Appellants also contend that their “motion for

reconsideration should have been granted to correct the error of

a2
‘+#* NOT FOR PUBLICATION ***

failing to include the $175,124.60 of loans to be repaid to
Dorothy . . . » and to prevent manifest injustice.”

2. The Appellees’ arauments

‘The Appellees counter that the plain language of the
agreement provides that “*[a]11 NOI loans . . . as set forth in
Exhibit ‘Bt. . . shall be paid’” and that “[bJoth parties
understood that (plaregraph 2.a(4) and Exhibit B. . . would
reflect only (plost-1996 (1]oans.” (Emphasis omitted.)

With respect to the circuit court's denial of the
Appellants’ motion for reconsideration, the Appellees argue that
the circuit court properly exercised its discretion pursuant to
NRCP Rule 58, inasmuch as the Appellants merely “attempted to
relitigate the same matters, without any . . . new facts or law,
and without showing any clear legal error in the [circuit
clourt’s . . . February 23 and August 6, 2001 [olrders . .

[nlor . . . manifest injustice.” (Citations omitted.) In
addition, the Appellees argue that the Appellants’ August 14,
2001 motion for reconsideration was untimely pursuant to HRCP
Rule 59(e) ("Any motion to alter or amend a judgment shall be
filed no later than 10 days after entry of the judgment.”),
inasmuch as it asked the circuit court to revisit its February
23, 2001 order.

‘The Appellees further assert that the settlement fund
already incorporated the repayment of the pre-1997 loans,
represented by paragraph 2.a(2)'s discounting the settlement fund
by the amount of $140,099.68, “a compromise as many of [the]

Appellants’ alleged loans prior to 1997 were not verifiable.

a3
‘#* NOT FOR PUBLICATION *#*
Finally,’ the Appellees state that the circuit court’s
August 6, 2001 order was clear notwithstanding the Appellants’

argument that “the term ‘shall include’ was ambiguous. . . «

(The) Appellants previously had used the same language . . - +
indicating that they knew . . . what ‘shall include[]’ meant.”
3. Th lants!

In their reply brief, the Appellants state that “[oJnce

 

the [circuit] court ruled the settlement enforceable, st w:
required to enforce the . . . agreement's terms.” (Citations
omitted.) The Appellants further argue that the Appellees “do()
not dispute nor even address any of” the Appellants’ “reasons why
the settlement included repayment of both pre-1997 and post-1996
loans.”

‘The Appellants further seek to rebut the Appellees’
argument that they “should have objected to the February 23, 2001
order when it was entered.” They argue that the circuit court's
statement in its order that “[t}he parties hald] not yet
established the amount of the leans subsequent to. . . 1996 that
are to be included in Exhibit B* is reasonably construed to mean
that pre-1997 loan amounts already belonged, and would remain, in
the Exhibit B figure, rather than being excluded.

Finally, the Appellants counter that the Appellees’
presentation of the facts is incorrect and lacks support in the

record on appeal. (Citations omitted.)

 

+ tye Agpeliees also state that “the [circuit court used «
rational, reassnobie and fair process” to calculate the anount of post-1996
Jeans, “this argunent is irrelevant to the dispute, which concerns not the

ictive ancunts of the two categories of loans, but rather the yes-or-t
Son whether they should have been included in the Exhibit B anount at
‘consequently, we disregard it.

   

     

     

ua
‘+#* NOT FOR PUBLICATION *#*

4, Analveie

A court construing a settlement agreement, or any other
written contract, must start within the four corners of the
agreement -- and stop there as well, where the parties’ intent is
expressed in unambiguous language, viewing the document as a
whole. See Found, Int'l, Inc. v. £.1. Ige Constra, Inc., 102
Hawai'i 487, 496-97, 78 P.3d 23, 32-33 (2003); Cho Mark Oriental
Food, Ltd., 73 Haw. at $20, 836 P.2d at 1064 (“Absent an
ambiguity, contract terme should be interpreted according to
their plain, ordinary, and accepted sense in common speech.”).

Here, the relevant terms of the agreement are
ambiguous, warranting consideration of extrinsic facts to
determine which of two arguable outcomes the parties intended to
bring about. Compare Kaiser Hawaii Kai Dev. Co. v. Murray, 49
Haw. 214, 228 n.12, 412 P.2d 925, 932 n.12 (1966) (“The contract
not being susceptible of two constructions, the ‘rule of
reasonableness of construction’ is inapplicable.”), with Amfac.
Inc., 74 Haw, at 110, 839 P.2d at 25 ("Where the language of a
contract is ‘susceptible of two constructions, one of which makes
it fair, customary and such as prudent men would naturally
execute, while the other makes it inequitable, unusual, or such
as reasonable men would not likely enter into, the interpretation
which makes a fair, rational and probable contract must be
preferred.’) (quoting Momt. Sys, Assocs. v. McDonnell Douolas
Corp., 762 F.2d 1161, 1172 (4th Cir. 1985).

Wie note that $140,099.68, the dollar amount
conspicuously enumerated in paragraph 2.a(2)'s formula, is

precisely eighty percent of $175,124.60, the pre-1997 loan amount

as
‘#4 NOT FOR PUBLICATION ***

according to the Appellees’ ledger. It is possible that this is
purely coincidence, but we doubt it. Especially in light of the
circuit court's (1) observation during the January 16, 2001
hearing that the $140,099.68 figure was derived from a
compromised percentage (eighty percent) of the pre-1997 Loan
amount, and (2) finding in its February 23, 2001 order that
“[a]11 of the loans . . . before [1997] were addressed under
paragraph 2.a[](2)," we favor the “fair, rational and probable”
interpretation, see Anfac, Inc., 14 Haw. at 110, 839 P.2d at 25,
that the parties intended to discount Dorothy’s contribution to
the fund by a negotiated portion of the pre-1997 loans, while
enabling her to recover the balance of the loans, ise, the post
1996 loans, and no more, pursuant to paragraph 2.a(4). The
Appellants bear the burden of overcoming this interpretation and
have failed to do so.

‘The record on appeal contains no extrinsic evidence to
resolve the agreement’s ambiguity in favor of the Appellants,

Lies, to indicate that the parties intended for Exhibit B to

 

incorporate loans already accounted for elsewhere, effectively
doubling Dorothy's recovery of the overlapping loans. Nor does
the Appellees’ apparent silence with respect to the pre-1997
loan imply their acquiescence to repaying them twice. Nor does
Chang's letter’s failure to expressly exclude the pre-1997 leans
prove that the Appellees expected to repay them twice.

To endorse the Appellants’ interpretation of the

agreement would be to ignore the parties’ intentions and spring a

 

jemantic trap upon the Appellees. In light of the foregoing

analysis, we apply the more equitable construction, namely that

16
+*4 NOT FOR PUBLICATION ***
the Exhibit B amount equals $123,928.26, which the circuit court
found to be the amount of post-1997 loans.

Cc. The Cireuit Court's August 6, 2001 is Impermissibly
unclear

Notwithstanding the foregoing, we agree with the
Appellants that the circuit court’s August 6, 2001 order is
misleading insofar as it rules “[tJhat Exhibit B . . . shall

include . . . $123,928.26." (Emphasis added.)

IV. CONCLUSION

Accordingly, we vacate the circuit court’s August 6,
2001 order and remand for the entry of an order consistent with
this opinion and clearly establishing $123,928.26 as the total
amount of Exhibit B loans.

DATED: Honolulu, Hawai'i, January 31, 2006.
on the briefs:

ceyatel K. Rose, WT
of Bays, Deaver, Lung, Rose,
& Baba, for the plaintiffs- 5
appellees Bert S. Tokairin, PAP Rianne
Harold Yamada, and Micheel
Hirasa Nuts as

Lyle S. Hosoda,
‘of Lyle S. Hosoda & Associates,
for the defendants-appellants

Dorothy Kaneda, olen oxaitin,
Sanet Tokita, bavad Kaneda,
Zeorge Tokita, Reiko M. Matsuura, “

and Marion Ishimoto

Bert S. Sakuda,
of Cronin, Fried, Sekiya,
Kekina & Fairbanks,
for the defendant-appellant
Katherine Sakuda

a