Opinion ID: 783032
Heading Depth: 2
Heading Rank: 5

Heading: Award of Attorneys' Fees and Prejudgment Interest

Text: 17 We affirm the district court's award of attorneys' fees to EBI. Under Hawaii law, attorneys' fees are available in all actions in the nature of assumpsit. Haw.Rev.Stat. § 607-14. In Hawaii, assumpsit is an action that allows for the recovery of damages arising from quasi-contractual obligations. See Schulz v. Honsador, Inc., 67 Haw. 433, 690 P.2d 279, 281 (1984). EBI's claim for breach of Riley and Kunimitsu's duty of loyalty is such an action because it arises from and is a breach of their contractual employment relationship with EBI. See Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 886 (9th Cir.2000) (under Hawaii law, a breach of fiduciary duty claim is in the nature of assumpsit when based on the non-performance of contractual obligations); Blair v. Ing, 96 Hawai'i 327, 31 P.3d 184, 189-90 (2001) (concluding that an action is in the nature of assumpsit where the claim arises out of the contractual relationship); Schulz, 690 P.2d at 282. Here, the implied employment contract creates the duty that gives rise to the cause of action. The duty breached is not a duty that would exist independent of the terms of any contract. Moreover, as we have previously discussed, the Restatement provides that an employer has a cause of action either in tort or for breach of contract for a breach of the duty of loyalty by his employee. This case is therefore unlike TSA International Limited v. Shimizu Corporation, 92 Hawai'i 243, 990 P.2d 713 (1999). There the court held the action was not in the nature of assumpsit because the fraud and breach of fiduciary duty claims merely related to a contract and did not involve any breach of contract. See id. at 734. 18 The employees argue that this is not an assumpsit action because the remedy awarded, disgorgement, is not a proper remedy for a breach of contract. Hawaii law recognizes, however, that its law of assumpsit evolved in part to prevent defendants' unjust enrichment. See Hong v. Kong, 5 Haw.App. 174, 683 P.2d 833, 841 (1984). It is widely recognized that disgorgement is a remedy intended to prevent a wrongdoer from unjust enrichment. See, e.g., SEC v. Huffman, 996 F.2d 800, 802 (5th Cir.1993); 1 Dan B. Dobbs, Law of Remedies § 4.5(5) (2d ed.1993) (stating that disgorgement is limited to the amount of the unjust enrichment). We therefore hold that the district court did not err in awarding EBI attorneys' fees. 19 We also affirm the district court's award of prejudgment interest to EBI. Hawaii law authorizes the court to award interest commencing with the date the injury first occurred in tort cases, and the date the breach occurred for contract cases. See Haw.Rev.Stat. § 636-16. It is also within the court's discretion to award prejudgment interest where the issuance of the judgment is materially delayed. See Kalawaia v. AIG Haw. Ins. Co., 90 Hawai'i 167, 977 P.2d 175, 180 (1999). The district court found that EBI was injured from January 1996, when the employees first breached their duty of loyalty, through June 1996. Judgment was not entered in this case for four years. Under Hawaii law, the district court has broad discretion in awarding prejudgment interest, and an award must be upheld unless it clearly exceeded the bounds of reason. Schmidt v. Bd. of Dirs. of Ass'n of Apartment Owners of Marco Polo Apartments, 73 Haw. 526, 836 P.2d 479, 483-84 (1992). This award was not unreasonable.