Title: In re Estate of Damon.

State: hawaii

Issuer: Hawaii Supreme Court

Document:

*** FOR PUBLICATION IN WEST'S HAWAI REPORTS AND PACIFIC REPORTER ***

IN THE SUPREME COURT OF THE STATE OF HAWAI‘T

 

IN THE MATTER OF THE ESTATE

oF 8
SAMUEL H. DAMON, Deceasea <, &
(P. No. 8664) c3 8

 

ons

‘TRUST CREATED UNDER THE WILL

  

oF

SAMUEL M. DAHON, Deceased
(EQUITY NO. 2816-8)

 

No. 27132
court

 

APPEAL FROM THE FIRST CIRCI
DECEMBER 30, 2008

MOON, C.J., NAKAYAMA AND ACOBA, JJ..
IN PLACE OF LEVINSON, J., RECUSED,

CIRCUIT JUDGE ‘AYABE,
AND CIRCUIT JUDGE NISHIMURA IN PLACE OF DUFFY, J., RECUSED
QPINION OF THE COURT BY NAKAYAMA, J,

("Haig”)

Respondent-Appellant Christopher Damon Haig

appeals from the first circuit court's (“probate court’ s”)
2005 judgment in favor of Petitioners-Appellees

January 12,
("the Trustees”).! on

‘Trustees of the Estate of Samuel M. Damon

as best as we can discern, Haig asserts seven points of

 

appe
error that may be combined into two general points of error, as

follows: (1) the probate court abused its discretion by denying
his request to disqualify James Kawachika, Esq. as master

‘The Honorable Colleen K. Hirai preside
ILICATION IN WES!

   

HAWAII REPORTS AND PACIFIC REPORTER.

 

("Kawachika” or “Master”) of a petition that was filed by the
Trustees for approval of the 1993, 2000, 2001, 2002, and 2003
income and principal accounts (“Petition”), and (2) the probate
court erred in granting the Petition as recommended by the
Master’s report. For the reasons that follow, we hold that the
probate court abused its discretion when it denied Haig’s request
to disqualify the Master because a conflict of interest existed
between Kawachika and the Trustees. Accordingly, we vacate the
probate court’s January 12, 2005 judgment, and remand for further
proceedings consistent with this opinion.

T. BACKGROUND

A. Factual

 

ekground

On November 10, 1914, a testamentary trust was created
by the Last Will and Testament of Samuel M. Damon (“Trust”).
Samuel M. Damon died on July 1, 1924.

During the 1999-2003 accounting period, the Trustees
managed the Trust's agsets with roughly half of its value in
publicly traded securities and the other half in real estate.

‘The securities portion of the Trust's assets consisted mostly of
2138 interest in Bancliest Corporation’ common stock. The real
estate portion of the Trust’s assets consisted primarily of prine

industrial and commercial lands in Honolulu under long-term

* ancllest Corporation was formed 2a 2 result of the 1998 merger
between First Hawaiian, Ine. and Bank of the West

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leases, a sizeable cattle ranch on the island of Hawai'i, two
walnut ranches located in California, and an industrial property
located in California.

In 2001, the Trust sold its entire 13% interest in
BancWest Corporation common stock. In 2003, the Trust sold its
prime industrial and commercial land in Honolulu, tvo walnut
ranches, and a significant portion of real estate located on the

island of Hawai'i, The net proceeds from these transactions has

 

been reinvested into a diversified securities portfolio that is
being advised and managed by Goldnan, Sachs & Company.
B. Procedural Background

The relevant procedural background for this case is as
follows. On April 30, 2004, the Trustees filed the Petition in
Equity No. 2816-A and Probate No. 6664.

on May 4, 2004, the probate court filed an order
appointing James Kawachika, Esq. as Master for the Petition.
The probate court's order was filed pursuant to an “Amended order
of Pre-Petition Reference,” which was filed on July 17, 2003, and
stated that Kawachika “shall be appointed as Master for the
petition and respond thereto, upon the filing of the petition.”

On August 3, 2004, Haig filed a “Response” to the
Petition. Therein, Haig raised several concerns, which included
having “not been provided with a disclosure of potential or

actual conflicts of interest as required by a formal written

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conflict of interest policy” that was ordered by the probate
court in its amended “Order Granting Petition for Approval of
Income and Principal Accounts for the Period January 1, 19[)95
through December 31, 1997[.]” Haig also contended that “{t]he
duty of the beneficiary requires a comprehensive legal review of
potential or actual conflicts of interest . . . so they can be
reported and resolved in a formal manner pursuant to” the probate
court's amended order.

On November 3, 2004, the Master filed his “Report of
Master On Petition For Approval Of 1999, 2000, 2001, 2002, and
2003 Income and Principal Accounts.” In his report, the Master
stated, inter alia, that “[w)hile no interested person has
directly raised an issue regarding the implementation of the
Trust's conflicts of interest policy, your Master independently
does so now.” The Master then expressed his “concern about the
manner in which the Trustees’ individual conflicts of interest
are identified, disclosed, resolved and reported.”

on November 23, 2004, Haig filed a “Response” to the
Master's report for approval of the Petition. In his response,
Haig disagreed with the Master’s statement that “no interested
person has directly raised an issue regarding the implementation
of the Trust’s conflicts of intezest policy[.]” Additionally,
Haig asserted that the Trustees and Master failed “to disclose a

potential conflict of interest arising from the appointment of
   

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the Master,” inasmuch as the Master's law firm represented the
Trustees in two lawsuits “involving leases in the Mapunapuna

properties” while the instant Petition was being considered by
the probate court, Because Haig believed that the Master's law
firm's representation of the Trustees manifested a conflict of

interest, Haig as

 

ted at a hearing held on December 17, 2004,
that the “conflict of interest should disqualify the (Mjaster
from serving further in this matter.”

On January 12, 2005, the probate court filed its “order
Granting Petition For Approval Of 1999, 2000, 2001, 2002, and
2003 Income and Principal Accounts.” Therein, the probate court,
Anter alia, granted the “Accounts Petition . . . as recosmended
in the Master's Report, which is approved and adopted{.]”
Additionally, the probate court made the following pertinent
conclusions:

2. All requests for instructions, requests for
determisations, and objections raised in response to the
Recounts Petition, including with ¥e

potential conflict of interest by the Master,
Eeviewed by the (probate court] and are resected and denied,
except as set forth in paragraph 4 below,

   

 

4." As'recommended by the Master, the Trustees are
instructed to consider{} and consult with the Beneficsaries
regarding, whether the Oanon Estate's Conflicts af interest
Policy should be amended and inplenented in the following
respects:

8, To provide that all conflicts of interest
Gisclosures and the resolution of the
be fully reported in the Minutes of the
Trustess’ meeting: and

b. To provide that in the uritten
disclosures of any conflict of
interest, the Trustees may, in their
absolute’ discretion snd if they deem
Af to be prudent and advisable to do

 

 

 

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so, withhold from disclosing any
information about pending Trust
matters?

5. As recommended by the Master, the Trustees are
cavtioned to be more circumspect in the waiver of disclosed
Conflicts of interest of any Trustee, especially where
Trustee nay be an officer or director of the corporation oF
entity which Ls doing business, oF proposes to do business,
With dr de otherwise negotisting with the Trust ox on the

   

 

 

Judgment was filed on the same day.
on February 11, 2005, Haig timely filed nis notice of
appeal.
IT, STANDARD OF REVIEW
A probate court has discretion to “appoint a master to
review any petition or dispute before the court and to report the

recommendations of the ma

 

x to the court.” HPR Rule 28 (a)
(2004) ("The court may appoint a master to review any petition or
dispute before the court and to report the recommendations of the
master to the court.” (Emphasis added.)). Accordingly, a
probate court's appointment of, and subsequent refusal to
disqualify, a master is reviewed under the abuse of discretion
standard. See TSA Int'] Ltd. v. Shimizu Corp., 92 Hawai'i 243,
252, 990 P.2d 713, 722 (1999) (stating that this court has
“adopt (ed) the abuse of discretion standard for reviewing a
judge’s denial of @ motion for recusal or disqualification”
(Block format and citation omitted.)). An abuse of discretion
occurs where the probate court “bases its ruling on an erroneous

view of the law or on a clearly erroneous assessment of the

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evidence.” Id, (quotation marks and citation omitted).
IIT. DISCUSSION
A. Notwithstanding Haig’s Technical Non-compliance with Hawai'i

Rules of Appellate Procedure Rule 28(b) (4) (D), We Will
Consider the Merits Of His Conflict Of Interest Argument.

 

Preliminarily, the Trustees assert that Haig’s points
of error are in non-compliance with Hawai'i Rules of Appellate
Procedure (HRAP) Rule 28(b) (4) (2005) because they do not cite to
where in the record the alleged error was objected to, and, where
appropriate, include a quotation of the objection to the Master's
report. The Trustees further assert that, in light of these
errors, this court need not consider the merits of Haig’s
arguments, and should consequently affirm the probate court’s
judgment .

Haig's “STATENENT OF POINTS ON APPEAL” merely quotes,
with a single record citation to, six conclusions of the probate
court that he is assigning as error, as follows:

1. The Erobate Court erred in finding:

*. . . The Court hereby enters this Order Appointing
Master and Appoint Janse Fawachika, Geq. ae the taster
for the Petition who shall respond to auch Petition,
Sn accorcance with the farther order of the court.”

(4 May 2004) Ry at P.v. It, pp. aed
2, The Brobate Court erled in’ finding

 

TALL requests for instructions, requests for
determinations, and objections’ raises in response to
the Accounts Petition, including with respect to. an
sileged potential conflict of interest by the Master,
have been reviewed by the Court and are ejected and
Senied, except ae set forth in paragraph ¢ below
wv Rat Pus 16, pps 96-100.

3. fhe Probate Court effed ta fading

she Accounts Petition is granted, as recommended in
the Master's Report, which ie approved and adopted,
land the Response of the Guardian Ad Lites, which 19
approved and adopted to the extent that i¢ is
Consistent wien the Masters Report...” R. at P.V.

 

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26, pp. 96-100.
4. The Probate Court erred in finding:

‘Te _incone and principal accounts and inventory of
the Samuel Mills Damon Estate are settled, allowed and
approved for the calendar years 1999, 2000, 2001,
2002, and 2003 5." R. at Pov. 16, pp, 96-100-

5, The Probate Court erred in finding:

TAs recomended by the Master, the Trustees are
instructed to consider{] and consult with the
Beneficiaries regarding, whether the Danon Estate's
Conflicts of Interest Policy should be amended and
implemented in the following respecte,
enP'TO provide that all conflicts ef interest
disclosures and the resolution of the sane be
fully reported in the Minutes of the Trustees’
meeting? and

b, Te'provide that in the written disclosures of
any conflict of interest, the Trustees ray, in
these absolute discretion and if they deem st to
be prugent and advisable to do so, withhold from
Gigelosing any sensitive or confidential
information about pending Trust matters
Re at P.V. 16, pp. 36-100.

6. Te Probate Court erred sn Ending:

   

 

DAs recommended by the Master, the Trustees are
cautioned to be more circumspect in the waiver of
Gisclosed conflicts of interest of any Trustee,
Gopecially where # Trustee may be an off

 

 

 

ctherwise negotisting with the Trust of on the Trust
Batters.” Re at P.V. 16, pp. 36-100.

RAP Rule 28(b) (4) (C) and (D) instructs that the

opening brief “shall” contain:

(4) A concise statenent of the points of error set
forth in separately numbered paragraphs. Each point ahalL

state: (i) the alleged error conmitted by the court oF

agency; (ii) where in the record the alleged error occurred:

na’ (14) wherein the record the alleged error uas opiectes
Dor agency. where applicable,

‘each pount ahali also include the following:

ic) non the point involves a finding or conclusion of
the court or agency, a quotation of the finding oF
conclusion urges as error
2)
her a aust the resort

(Emphases added.)
 

'* FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER *

All of Haig’s points of error do not comply with RAP
Rule 28(b) (4) (ii) inasmuch as they do not state “where in the
record the alleged error was objected to . However, with
regard to his first point of error, the required citation is in
fact located in his “STATEMENT OF THE CASE” section of his
opening brief. Therefore, although the required citation is
misplaced, Haig does include a citation to the record showing
“where . . . the alleged error was objected tof, )” which
sufficiently satisfies the requirements of HRAP Rule
28 (b) (4) (444).

With regard to his remaining points of error, Haig also
includes @ citation to the record showing “where . . . the
alleged error was objected to[,)” although these citations are
also located in the wrong section of his opening brief. See HRAP
Rule 28(b) (4) (444) However, Haig's remaining points of error
appear to dispute the probate court's approval of the Master’s
report, inasmuch as his record citation to “R. at P.V. 16, pp.
96-100" is the probate court’s “Order Granting Petition For
Approval Of 1999, 2000, 2001, 2002, and 2003 Income and Principal
Accounts.” Among other things, the probate court’s “order”
“approved and adopted” the “Accounts Petition . . . as
recommended in the Master's Report|.)" As such, Haig’s remaining
points of error trigger the additional requirement enunciated in
RAP Rule 28(b) (4) (D); namely, “when the point [of error]
involves a ruling upon the report of a master, a quotation of the
objection to the report” “shall” be included. The required
quotations have not been provided for in Haig’s opening brief.

In fact, in his reply brief, rather than attempt to cure this
{++ FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER ***

error that was raised by the Trustees in their answering brief,

Haig attempts to justify his non-compliance by stating simply

 

that his objections “were too voluminous to quote but are cited .

This court has consistently held that failure to comply
with the requirements of HRAP Rule 28(b) (4) is alone sufficient
to affirm the circuit court's judgment. Morgan vy. Planning
Dep't, County of Kauai, 104 Hawai'i 173, 180, 86 P.3d 982, 989
(2004). Nonetheless, without expressing an opinion in regard to
Haig’s third through sixth points of error, his second point of
error on appeal appears to raise the same conflict of interest
issue as his first point of error. Because this court has
Yadhered to the policy of affording litigants the opportunity to
have their cases heard on the merits, where possible(,]” and the
misplaced record citations point to the conflict of interest
argument that Haig raised before the probate court, we will
consider the merits of this argument. Id, at 180-81, 86 P.3d at
983-90 (citation and quotation marks omitted) .

B. The Probate Court Abused Its Discretion By Denying Haig’
Request To Disqualify the Master Because It Clearly Erred In
Its Assessment Of the Evidence That Indicated That a
Conflict Of Interest Existed Between Kawachika and the
‘Trustees.

1. Aconflict of interest existed between Kavachika and

 

Haig asserts that the probate court erred in denying
his request to disqualify Kawachika as the Master of the Petition

because a conflict of interest existed between Kawachika and the

 

Trustees. Specifically, Haig asserts that Kawachika should have

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been disqualified as the Master because of his firm's
representation of the Trustees in tvo unrelated cases while the
Petition was pending approval before the probate court.

At a hearing held on Decenber 17, 2004, the probate
court determined that, “{blased on the circumstances presented,

. no evidence has been presented to demonstrate that the
master’s impartiality might reasonably be questioned.” The
probate court reasoned further: “The master . . . conducted a
thorough and an independent review of the accounts and prepared
[hi]. . . report{] that assisted the (probate) court in its
review of the petition.” Although we do not question Kawachika’ s
performance of his duties as Master, we respectfully disagree
with the probate court's assessment of the evidence and its
determination that “no evidence has been presented to denonstrate
that the master’s impartiality might reasonably be questioned.”

In Straub Clinic & Hospital v. Kochi, 81 Hawai'i 410,
422, 917 P.2d 1284, 1286 (1996), an attorney in the “Torkildson
firm” represented Straub, Kapiolani Information Systems, and
Infotech in connection with the finalization of a joint venture
agreement between these three entities. Eventually, Straub,
through the “Torkildson firm,” filed a complaint against Pest
Marwick, who was engaged as @ consultant by Straub and the
“Kapiolani entities.” Id, During the litigation, Peat Marwick

filed a third party complaint against, inter alia, the “Kapiolani

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entities.” Id, at 413, 917 P.2d at 1287. The “Kapiolani
entities” then filed a motion to disqualify the “Torkildson firm”
from continuing to represent Straub because the “Torkildson firm”
had formerly represented the “Kapiolani entities” and had been
counsel for them in matters substantially related to the subject
matter of the complaint against Feat Marwick. Id, This court
ultimately held that the circuit court’s “*basis upon which [it]
rested its order of disqualification’ is not ‘clearly
insufficient’” inasmuch as the “substantial relationship test”
applied, the former representation of the “Kapiolani entities” by
the “Torkildson firm” was “substantially related” to the Peat
Marwick litigation, and the “Torkildson firm's” present and
former clients were “materially adverse” in that case. Id. at
415-17, 917 P.2d at 1289-91 (quoting Chuck v. St, Pau) Fire &
Marine Ins. Co., 61 Haw. 552, 558, 606 P.24 1320, 1324 (1980)).
Although the “substantial relationship” test does not
apply to this case, Straub Clinic £ Hospital is similar in
principle. Therein, this court discussed thoroughly the

distinction between the holding of Alleaaert v. Perot, 565 F.2d
246 (2d Cir. 1977) and HRPC Rule 1.9(a).? Straub Clinic & Hosp.,

81 Hawai's at 415-17, 917 P.2d at 1289-91. Pursuant to the

 

) REC Rule 1.3(a) provides that “[a] lawyer who has formerly
represented a client in'a matter shell not thereafter represent sncther persct
in the same or a substantially rel

are materially adverse to the int
Client consents after consultation.”

   

   
 

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Allegaert holding, “before the substantial relationship test is
even implicated, it must be shown that the attorney was in a
position where he could have received information which his

former client might reasonably have assumed the attorney would

 

withhold from his present client.” id, at 415, 917 P.2d at 1289
(quotation marks and citation omitted) (emphasis in original).
REC Rule 1.9(a), however, affords “broad{er] protections” than
the Alleaaert rule, inasmuch as “Rule 1.9(a), by its terms, is
not limited to situations where the former client would be harmed
by the possible divulgence of confidential information. It
imposes an ethical obligation irrespective of harm.” Id. at 416,
917 P.2d at 1290 (citing Koch v. Koch Indus., 798 F. Supp. 1525,
1535 (D. Kan. 1992) (block format and brackets omitted).

(RJules identical with BREC 1.9(a) () . . . prevent
even the potential that 9 former client's confidences and
Secrets may be used against his. Without such a rule,
clients may be reluctant to confide completely in thelr
attorneys. Second, the rule ss important for the
Maintenance of public confidence in the integrity of the
bar. Finsily, and importantly, a client has the right to
expect the loyalty of bis attcmney in the matter fer which
he is retained,

Id. (citation omitted). Therefore, by adhering to a standard
that prevents the mere “potential” for a breach of a former
client’s confidences, “Rule 1.9 is designed to address not only
the narrow need to protect a client's confidences, but also to
establish broader standards of attorney loyalty and to maintain
public confidence in the legal system.” Id, (citation omitted);
see Tione v. Smith, 621 F.2d 994, 999 (9th Cir. 1980) ("It is the

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possibility of the breach of confidence, not the fact of breach,

that triggers disqualification.”

 

A similar standard of preventing a mere “potential” of
a conflict of interest applies to masters in a probate
proceeding. Pursuant to the Hawai'i Probate Rules, a court~
appointed master “serve(s] as a representative of the court(,]”
Hawai's Probate Rules (HPR) Rule 28(a) (2004), whose role is to,
“[u]nless otherwise ordered by the court, . . . review the
operations of the fiduciary in light of the terms of the
controlling document, as well as the financial transactions of
the trust or estate.” HPR Rule 29 (2004). Additionally, “the
master shall submit a written report of the master’s findings to
the [probate] court and serve a copy on all interested persons.”
Id, It is in this capacity that the master essentially “serves
as the eyes and ears of the court,” id, cmt., and “shall be a
person who has no conflict of interest with any party or issue in
the proceeding.” HPR Rule 28(a). However, Hawaii's Probate
Rules do not indicate which conflict of interest rules would

apply to a master in a probate proceeding.‘

 

+ ie note that MPR Rule 42 (2004), entitled “Conflicts of interest,”
explains the attorney-client relationship where the client is a fiduciary for
anestate, guardianship, or trust. HPR fule 42 does not explain the conflict
Of interest rules applicable to a master, inasmuch az a master "shall serve ss
2 representative of the court...” APR Rule 28(2). Conteastingly, che
Mayai'i Rules of Professionel Conduct’ (HRPC) provides that (a) lawyer ‘ie @
representative of cliente, an officer of the legal system, and s public
citizen having special reaponeibiiity for the quality of justice.” BRFC publ.
(2004)

 

 

 

continue...

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Haig suggests that we apply the conflict of interest
rules applicable to federal judges, inasmuch as a master has been
characterized by the federal courts as “an officer of [the]

judicial systen (who) perform(s] judicial functions(.1” Jenkin
VeSterlacci, 849 F.2d 627, 630 (D.C. Cir. 1988) (quoting CODE OF
JUDICIAL CONDUCT FOR UNITED STATES JUDGES 1-58) (quotation marks

omitted). Notwithstanding what the federal courts have held,’ we

 

continue
HER Rule 42 provides, in its entirety

 

(a) Fiduciary as Attorney's Client. An attorney
employed by a fiduciary for an estate, guardianship, OF
trust represents the fiduciary as client as defined in Rule
503(a) of the Hawaii Rules of Evidence and shall have all
the Fights, privileges, and obligations of che attorne:
Eliont relationship wich the fiduciary insofar as the
Eisueiary is acting ina fiducsary role for the Benefit of
one of more beneficiaries oF a ward.

(®) Reletionsnip to Beneficiaries, An attorney for an
estate, guardianship, or trust does not have an attorney~
Elient’ relationship With the beneficiaries of the estate or
Erust of the ward of the guardisnship, but shall owe a duty
to notity such beneficiaries or ward of activities of the
Hieuciary actually know by the attorney to be illegal that
threaten the security of the assets under aduinistration oF
the interest of the Beneficiaries

(c) Officer of Court. fn attorney for an estate,
guardianship, of trust 1s an officer of the court and

 

         

 

 

 

 

al

 

assist the court in securing the efficient and effective
‘an obligation to

  

actions auch as accountings and closing a probate estate are
performed timely. The attorney, after prior notice to the
igueiary, ahall have an obligation to bring te the
attention of the court the nonfeasance of the fiduciary.

(a) Sanctions. The court shall have the power and
authority £2 impose sanctions upon any attorney who fails to
properly carry sut the attorney's duties to the fiducsary,
Ehe beneficiaries or ward, and the court.

 

(stalies in original.)

+ We note that the federal circuits appear to apply two distinct

conflict of Interest standards to a court-appointed master. Whether a. federal

circuit applies either one standard of the sther appears £0 depend on the
continue.

   

 

 

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believe that the rules and case law of this jurisdiction are
sufficient to adequately address the conflict of interest issue
in this case.

‘The section entitled “Application Of the Code Of

 

+. .continue
Gscunt of contvol that a trial court has in ite review of a master’s findings

‘on one level, several federal circuits have utilized an "actual Biss”
standard, as follows: "[D]isqualification [of a special master] is a matter
for the exercise of discretion by the (federal) district Judge, unless actual
bias has been denonstrated beyond reasonable possibility of disagreenent.”
Rigs J Enter, Ase’o Stegutitters Local Union €s8 of VAs, 860 F-2a 1168, 1174
(2a Car. 1968) (quoting Unised States v. Certain Parcels of Land, 364 F.2d
677, é8i [4en cir, 1967)) {quotation marks omitted) (brackets addled). Under
this standard, “[a] balancing of all considerations and probabilities should
be the function of the district court and, in review of its action, the test
should be wether abuse appears.” Jd, at 1174-75 (quoting United States
Lgeig, 308 F.2d 453, 457 (sth Cir, 1962)) (quotation marks omitted) (brackets
2dsed). The reasoning behind this standard is that “[slince masters and
Guperts are subject to the control of the court and since there is a need to
hie individuals with expertise in particular subject matters, masters snd
Oeperts nave mot been hela to the serice standards of Imparsialsey that are
Spplies to judges.” Zak at 1174. (quoting Moraan e, Kersigan, $30 F.24 401,
ibe (ist Cir.), sere. aenied, (26 U-S. 938 (1976) quotation marks omitted)
(brackets. added) ~

(Ga a separate level, in Jenking, the D.C. Circule disagreed with
Morgan’s reasoning and determined that, "at iesst insofar as special mestere
perform duties functionally equivalent to those performed by a judge, they
must be hela to the same standards ss Judges for purposes of
Gisqualification.” 643 F.2d at 631 n.1) ges Uniced Stateg 2, Werner, 916 F.2d
175, 177-78 (deh Cir. 1980), (qualifying ‘t= Certain Farcel® of Land decision
in Ligne of an amendment to a federal statute, and using Jenkins to explain
the disqualification standards enunciated in the statute) the Jenking
court's determination appears to be based primarily on (1) the American Sar
Association Code of Judicial Conduct for United States Judges, and (2) the
fact that the “special master’s factval findings . . . were seviswed by che
Gistrict court only for ‘clear error,’ as required by Rule $3(e) (2) of the
Feceral Rules of Civil Procedure.” See Jenking, £49 F-24 at 630-31

 

 

 

 

 

 

 

 

Given the complexities of the issues special masters
are frequently called upon to sort out, the closely disputed
Ensues of fact they must resolve... , and the “clear
error” standard governing the courte" review of their
Hindings, the district court's oversight of a special master
falls far short of plenary “control”; there is s range
within shich 2 special saster's partiality nay operate
Unchecked and uncheckable by the district court

   

Eds at 631, Because our rules and case Lew are sufficient to address the
Contlict of interest issue in this case, we need not exprass an opinion with
regard to the standards usea by the federal courts

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Judicial Conduct” of the Revised Code of Judicial Conduct (RCJC)

(1992) provides, in pertinent part, as follows:

A, Anyone, whether or not @ lawyer, who is an officer
of a judicial system and who performs judicial functions,
Sneluaing an officer such'ss 8 magistrate, court

 

 

commissioner, special aaster or re! ‘but not including
arbitrators, ig-a sudde within the meaning of this Code.
All iudass hall comply with this Code exceot ar provided
below.

'B. Continving Part-time Judge. A continuing part~
tine judg

 

(2) is not required to comply
a) ‘except while serving as a judge, with
Section s(B) (3); ana
(B) at any tine with Sections 4C(2),
403), SEL), 48, 4G, 4H SAi2), and 5B
(2) shall ngt practice tay’ in the court on which
the judge serves.
©. time far Compliance, A person to whem this Code
becomes applicable shail comply imediately with all
provisions of this Code except Sections 40/2), #D(3) and 4E

 

 

 

(Emphases added.) Inasmuch as a “master” falls within the RCJC’s
definition of a “judge,”* the conflict of interest rules in the
Revised Code of Judicial Conduct applies to masters in a probate
Proceeding, which provides in part that “[a] judge must avoid all
impropriety and appearance(s) of impropriety.” RCJC Canon 2(A)
cont.

witIhere are certain fundanentals of just procedure
which are the same for every type of tribunal and every type
of proceeding.” R. Pound, Administrative Law 75 (1542)
(concedealy, 2 ‘fair trial ina fair tribunal is\a basic
Fequirenent of due process.’ in re Murchinson, 349 0.8.
133, 136... (198s). ss. Ofcourse, va Based
decisionnaker (is) constitutionally unscceptable(s]” Id. at

 

 

* __Elaborating further on those “who perform[] judicial funct ions [+]
the commentary states that “[t]he categories of judicial service in other than
a full-time capacity are ne:
warving # (Enpaasis edged.) in this
snd in Light of Rules 28 and 29 of the Hawai'l Probate Roles, we
that there is a substantive distinction betueen a “special
master," as that tern is used in the Revised Code of Jusicis! Condoct, end @
Snaster,""as that term is used in the Hawai’ Probate Rul

 

    

 

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47... But “ne one would argue seriously that the
diequatitication of (decteion-nakers] on grounds of actual
bigs. . . prevents unfairness in all cages.” State y
Bian, 70\#aw. 459, 467, 776 P.2d 1182, 1187 (1989) So
SGur syster of (justice) has sivaya endeavored to prevent
even the probability of unfairness.” in re Murchinson,

 

‘The Suprene Court teaches us too that justice can
sperform its high functson in the best, way (only if it
satisfies) “the appearance of Justice.'” Offutt 'v, United

Skates, 348 0.5. 11, 14 ‘Iie vurchinson, supra.
For in’ popular goverment, ‘justice must ot only be done

but must manifestly be seen to be done... =
y 1947] 2 KB. 321, 325.* "JosneAneLe
bar’ u.s. 123, 172 B13

Terankfurter, Ji, concurfiag) (1951)

Sussel_v. City & County of Honolulu Civil Serv, Comm'n, 71 Haw.
101, 107-08, 784 P.2d 867, 870 (1989) (brackets added and in

original) (ellipsis added and in original). Accordingly, “Iwle
have held that the test for disqualification due to the
tappearance of impropriety’ is an objective one, based not on the
beliefs of the petitioner or (adjudicator), but on the assessment
of a reasonable impartial onlooker apprised of all the facts.”
Inte Water Use Permit Applications, 94 Hawas's 97, 122, 9 P.34
403, 434 (2000) (quoting State v. Ross, 89 Hawai'i 371, 380, 974
P.2d 11, 20 (1998) (brackets in original and some quotation
marks omitted).

As such, the commentary to Canon 2(A) of the RCJC
provides that “[tJhe test for appearance of impropriety is
whether the conduct would create in reasonable minds a perception
that the judge’s ability to carry out judicial responsibilities
with integrity, impartiality and competence is impaired.”

Moreover, pursuant to Canon 3(8) (1) of the RCJC, “a judge shall

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disqualify himself or herself in a proceeding in which the

 

judge's impartiality might reasonably be questioned(
In the instant case, it is undisputed between the
parties that, on January 20, 2004, a complaint was filed in civil
no. 04-1-0106-01, which is entitied “Ronald Tadashi Uemura and PH
Corporation, dba Hawaii Performance Warehouse and Ron’ s

Performance Center, a Hawaii Corporation v. Estate of Samuel

 

Mills Damon, aka Estate of Samuel M. Damon{.]*? On March 5,
2004, @ complaint was filed in civil no. 04-1-0421-03, which is
entitled “Island Demo, Inc., a Hawait Corporation v.
Trustees of the Estate of Samuel M. Damon, deceased{.]””
Apparently, Kawachika’s law firm was “being retained and paid by
First Insurance Company of Hawaii, Ltd. . . . to defend its
insured, the Estate, in [these] cases.” Additionally, the firm
“is on the approved panel of attorneys retained by First
Insurance and regularly defends insureds of First Insurance.”
Further, it appears from the record that these cases were being
litigated while the Petition was pending approval before the
probate court.*

>to resterate, the Trustees flied the instant Petition on April 30,

2008. On May 4, 2004, the probate court filed an order appointing Janes
Kawachika, Esq. as Master for the Petition

 

* the Trustees admit that Arthur Reinwald of the same law firm
represented Haig in the past. However, it does not appear that Haig is
asserting that a conflict of interest exists because of arthur Reinwald’s
Prior representation of his. instead, he ig asserting that a conflict of
[nterest exists because of Sawachila’s law firm's representation of the
cont nue.

 

 

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The Trustees assert that the Master did not have a
conflict of interest because the “Trustees’ interests were
aligned with the interests of the beneficiaries with respect to
the defense of Damon Estate’s interests.” However, the issue in
this case is not whether the Trustees’ and beneficiaries’
interests are “aligned” with one another, but whether Kawachika’s
“representa[tion] of the court” as Master of the Petition, ase
HPR Rule 28(a), and his law firm's simultaneous representation of
the Trustees in civil nos. 04-1-0106-01 and 04-1-0421-03
constituted a conflict of interest under the Revised Code of
Judicial Conduct warranting Kawachika’s disqualification as
Master of the Petition.

Although a master in a probate proceeding is neither a
“decision-maker” nor an “adjudicator,” see Sussel, 71 Haw. at
107-08, 781 P.2d at 870, a master's role is to assist the probate
court in the disposition of the proceeding. Sea HPR Rule 28(a);
HPR Rule 29. As such, a master provides, at the probate court's
discretion, see HPR Rule 28(a), needed services within Your
system of [justice], which “has always endeavored to prevent
even the probability of unfairness.” Sussel, 71 Haw. at 107, 782
P.2d at 870 (block format and citation omitted). In this regard,
“justice must not only be done but must manifestly be seen to be
continue

‘Tustees in two unrelated cases while the Petition was pending approval by the
probate court.

 

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done... ." Id, at 108, 781 P.2d at 870 (block format and
citation omitted). For these reasons, a master “shall be a
person who has no conflict of interest with any party or issue in
the proceeding[,]” HPR Rule 28(a), and, consequently, a master
shall be disqualified “in a proceeding in which [his]

impartiality might ©

 

sonably be questioned{.)” RCJC Canon
aie) (a).

The Trustees filed the instant Petition on April 30,
2004, which sought the probate court’s approval of the 1999,
2000, 2001, 2002, and 2003 income and principal accounts.

However, ag explained above, while the Petition w:

 

pending
approval before the probate court, Kawachika’s law firm was
“being retained and paid by” an insurer “to defend its insured,”
the Trustees, in civil nos, 04-1-0106-01 and 04-1-0421-03.
During the probate proceedings, Kawachika was appointed by the
probate court as Master of the Petition. In this capacity,
Kawachika’s role, “as a representative of the court,” HER Rule
28(a), is to “serve[] as the eyes and ears of the court” by
objectively “xeview(ing] the entire scope of the fiduciary’s
performance during the accounting pericd pursuant to the
governing instrument.” HER Rule 29 ont. Inasmuch as “our system
of [justice] has always endeavored to prevent even the
probability of unfairness,” Sussel, 71 Haw. at 107, 781 P.24 at

870, we hold that Kawachika’s law firm's representation of the

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Trustees in civil nos. 04-1-0106-01 and 04-1-0421-03 while the
Petition was pending approval before the probate court “would
create in reasonable minds a perception” that Kawachika's
“impartiality might reasonably be questioned.”* RCJC Canon 2(A);
RCJC Canon 3(E) (1); see Sussel, 71 Haw. at 107-08, 781 P.2d at
870; see also Straub Clinic 4 Hosp,, 81 Hawai'i at 415-17, 917
P.2d at 1289-91. Therefore, the probate court abused its
discretion by denying Haig’s request to disqualify the Master
because a conflict of interest existed between the Master and the
Trustees. See HPR Rule 28 (a).

2. The Trustees’ assertions are without merit.

The Trustees also assert that Haig neither (1) made a
sufficient objection to the Master’s report, (2) “demonstrate(d]”
that the Master was “bias(ed), prejudice[d], or partial{],” nor
(3) filed an “affidavit” for disqualification of the Master.

‘The applicable standard, as discussed above, is as follows:
“(t]he test for disqualification due to the ‘appearance of
impropriety’ is an objective one, based not on the beliefs of the

petitioner or [adjudicator], but on the assessment of a

+ Both before the probate court and on appeal, the Trustees aver
‘that, curing the “pre-Petition stage” in 2003, an wethical wall” was “erected
between the Master and other menbers of his fizm with respect to banon Estate
matters.” However, a2 expresses by this court in Otaka, tne. v Klein 71
Haw. 376, 387 4 nyé, 29% Ped 713, 719 & ned. (L990) e MTaTeras Foe PRR he
“Chinese' wail! defense to iaw firm cisqualification'{s applicable” in a case
auch as this where, “(olnce the attorney 18 found to be disqualified...
Both the attorney and the attorney's firm (must be] disqualified

(Brackets omitted end in original-)=

 

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reasonable impartial onlooker apprised of all the facts.” in re
Water Use Permit Applications, 94 Hawai'i at 122, 9 P.3d at 434

(citation and quotation marks omitted) (brackets in original)
(emphasis added) .

Prior to July 1, 2004, HPR Rule 3 provided, in
pertinent part, as follows:

(a) Form.
For purposes of these ules,

Sh epplication in an informal proceeding ia 3

petition, unless the context of the rule indicates

Stherwise

sbiection Persons may file

Sr their plessings.

(b) Filings in Response co Petition. opposition
to any or all of the relief prayed for ina petition
Shall be sn the form of a written objection.
Opposition to an application in an informal proceeding
shall also be made by filing a petition for formal
proceedings ue 2
wuitten response toa petition if they donor
Recessarily object Tos petition but desire to s!
on the record their position, or if they desire to
xalse additional issues chat are related to the

penition-

 

‘memorandum in support

 

(Emphases added and italics in original.)
HPR Rule 3 vas amended on May 17, 2004, with the

amendaents becoming effective on July 1, 2004. As amended, the

pertinent portions of HPR Rule 3 provides, as follows:

(a) Form. There shall be a petition anda
For parpores of these Poles,

En application in an tnformal proceeding 22 3

Betition, uniess the context of the rule indicates

Sthervise. Persons nay tile s icinder, response, ob

 

abiect: pesser
Persons nay Tile a-nencrandon in support of their
pleadings

(b) Filings in Response to Petition ox Master's
Revoxt. "Goposition to any or all of the relie!

prayed for in a petition,

Shall be in the form of a -eritreneeiestioe

Opposition to an application in an informal proceeding

shall also be made by filing a petition for formal

23
{++ FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER ***

proceedings. Interested persons aay aleo file a

auart Uf they do not necessarily object to a petieicn
1 ut desire to state on

ee esonad savas hat ase elated to the oexition or
(Emphases added and italica in original.)

On Novenber 23, 2004, Haig filed a “Response . . . To
Report Of Master On Petition For Approval Of 1999, 2000, 2001,
2002, and 2003 Income and Principal Accounts.” Therein, Haig
brought to the probate court's attention facts pertinent to
Kawachika’s law firm's representation of the Trustees in civil
nos. 04-1-0106-01 and 04-1-0421-03, Because of these facts, Haig
asserted that the Master had a conflict of interest with the
Trustees. Therefore, contrary to the Trustees’ assertion that
Haig failed to “demonstrate” that the Master was “bias(edl,
prejudice(d], or partial (1,” Haig has alleged sufficient facts
for a “reasonable impartial onlooker” to reach a determination
regarding whether @ conflict of interest existed between
Kawachika and the Trustees. See In re Water Use Permit
Applications, 94 Hawai'i at 122, 9 P.3d at 434.

Additionally, although Haig did not file an “affidavit”
to disqualify the master, HPR Rule 3(b) provides that an
“interested person” may file a “response” “to raise additional
issues that are related to the petition.” A master’s

impartiality is clearly an issue that would be “related to .

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* FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER.

the master’s . . . report.” See HPR Rule 3(b). Tnasmuch as
Haig’s cbjection was included in his “response” to the Master's
report, Haig was essentially asserting that the probate court
should not accept the Master’s report because the Master had a
conflict of interest with the Trustees." See HPR Rule 28(a)
("The master... shall be a person who has no conflict of
interest with any party or issue in the proceeding.”); HPR Rule

3(b). Logically, the Master would have b

 

fn disqualified had the
probate court concluded that a conflict of interest existed. see

HPR Rule 28(a). Therefore, the Trust:

 

" assertions that Haig
neither made a sufficient objection nor filed an “affidavit” for
disqualification are without merit.

Haja's conflict of interest argument was timely made,

‘The Trustees assert that Haig’s conflict of interest

 

argument is untimely because (1) six months elapsed between his
objection and the time that he vas informed of the Master’s law
firm's representation of the Trustees, and (2) his objection was
made only after the Master filed his report and “conducted
several months of investigation.” The Trustees contend that a
May 7, 2004 letter that contained the “Minutes of Trustees’
Meetings,” which were held on nunerous days, “noted that First
Insurance had retained Mr. O'Conner[, who is an attorney in

% We note that both the Master and the Trustees f41ea, on December

4, 2008, 2 “reply” to the “responses” to the Master's report, ‘Therein, Doth
the Master and the Trustees rebutted Haig’s conflict of interest argument

 

25
   

"OR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER,

Kawachika’s law firm,] to defend the Estate.”

Haig responds that the Trustees’ purported notification
through the May 7, 2004 letter is insufficient to constitute
notice. Haig also contends that the earliest day that he was
sufficiently notified of Kawachika’s law firm's representation of
the Trustees was by a letter dated November 17, 2004, or five
days before he filed his “response” to the Master's report. In
this November 17, 2004 letter, Kawachika, in response to a prior
letter sent. by Haig, informed Haig of civil nos. 04-1-0106-01 and
04-1-0421-03.

This court has held that “(aj party asserting grounds
for disqualification must timely present the objection, either at
the commencement of the proceeding or as scon as the
disqualifying facts become known.” In re Water Use Permit,
Applications, 94 Hawai'i at 122, 9 P.3d at 434, Further to this
point, “[t)he unjustified failure to properly raise the issue of
disqualification . . . forecloses any subsequent challenges to
the decisionmakers’ qualifications on appeal." Id.

Assuming arguendo that the May 7, 2004 letter is
sufficient to constitute notice of “the disqualifying facts{,]”
the facts of this case do not indicate that the timing of Haig's
objection constituted “a matter of deliberate and strategic
choice.” See id, at 123, 9 P.3d at 435 (“Despite its awareness

of Wilson's dual status, WWCA, apparently as a matter of

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deliberate and strategic choice, never sought Wilson's
disqualification. WWCA cannot now raise the matter as grounds

for overturning the Commission’s decision.”).

 

Indeed, “[t)he
requirement of timeliness prohibits knowing concealment of an
ethical issue for strategic purposes.” Id. (citation and
quotation marks omitted).

In this case, Haig filed his “response” to the Master’s
report on November 23, 2004, which included his conflict of
interest objection. Both the Master and the Trustees filed, on
December 7, 2004, a “reply” that responded to Haig’s conflict of
interest objection. At a hearing held on December 17, 2004, the
probate court considered the conflict of interest arguments and
responses made by each party. On January 12, 2005, the probate
court filed its order granting the Petition and denying Haig’ s
conflict of interest objection. In light of the procedural
history of this case, we cannot say that “knowing concealment”
occurred. See Office of Disciplinary Council v. Au, 107 Hawai'i
327, 339, 113 P.3d 203, 215 (2005) (*Litigants cannot take the
heads-I-win-tails-you-lose position of waiting to see whether
they win and if they lose moving to disqualify a judge who voted
against them.” (Citation and quotation marks omitted.)).

Finally, on July 17, 2003, Kawachika’s appointment as
Master was conditioned by the probate court “upon the filing of

the [Pletition.” Civil nos, 04-1-0106-01 and 04-1-0421-03 were

20
 

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filed on January 20, 2004, and March 5, 2004, respectively. The

 

Petition was filed on April 30, 2004. At the earliest, the
Trustees admit that the “disqualifying facts” of Kawachika’s law
firm's representation of the Trustees in civil nos. 04-1-0106-01
and 04-1-0421-03 becane known to Haig on May 7, 2004, which is
three days after the probate court filed its order appointing
Kawachika as Master of the Petition.

Although Haig made his objection after both the probate
court's May 4, 2004 order appointing Kawachika as Master and the
Master’s completion and filing of his report, the “disqualifying
facts” must have been known to Kawachika’s law firm prior to the
filing of both the Petition and the May 4, 2004 order. Yet,
these facts were not disclosed to Haig until after the probate
court filed its order appointing Kawachika as Master of the
Petition. Consequently, we also cannot say that Haig “knowingly

 

ed” his objection for “strategic purposes” in order to
disqualify the Naster as a “heads-I-win-taile-you-lose
position[.)" See id.; in re Water Use Permit Applications, 94
Hawai'i at 123, 9 P.3d at 435.
IV. concLusroN

Although we do not question Kawachika’s capability to
effectively perform his responsibilities as Master of the
Petition, for reasons discussed above, the facts of this case

reasonably give rise to a perception that Kawachika’s

28
 

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impartiality might reasonably be questioned. Therefore, based

upon the foregoing analysis, we vacate the probate court's

January 12, 2005 judgment, and remand for further proceedings

consistent with this opinion.”

on the briefs

Frederick. G. Riecker
and John L, McDermott

for Appellant Christopher
Damon Haig

J. Thomas Van Winkle,
Katherine G. Leonard’ and

Joanne L. Grimes of Carlsmith
Ball LLP, for Appellees Trustees
of the Estate of Samuel M.
Damon, Deceased

 

renati

 

1g poines of error 18 unnece:

 

ey:

29

In light of the foregoing disposition,

Bese np
Hiedin~

 

sideration of Haig’s