Opinion ID: 2570265
Heading Depth: 2
Heading Rank: 5

Heading: Au's Motion for the Recusal or Disqualification of Chairperson Alston

Text: Six days later, on November 6, 2003, Au moved the hearing committee for the recusal or disqualification of Chairperson Alston and the designation of a new panel of members for the hearing committee. Au asserted that Chairperson Alston's and Au's pecuniary interests in two disputes created conflicts of interest that required Chairperson Alston's recusal or disqualification under Canons 2 and 3(E) of the Code of Judicial Conduct.
The first purported conflict of interest involved a dispute between Au and Chairperson Alston's law firm, Alston, Hunt, Floyd & Ing (AHFI), over the apportionment of an award of $176,287.80 in attorneys' fees that Alteka Co., Ltd. (Alteka), won in an appeal entitled Shanghai Investment Company, Inc., v. Alteka Co., Ltd., 92 Hawai'i 482, 993 P.2d 516 (2000) [1] (hereinafter referred to as the Alteka Matter). The Alteka Matter involved two consolidated cases and multimillion-dollar contract claims: (a) Alteka and Shanghai Investment Company, Inc. (Shanghai), in Shanghai Investment Company, Inc. v. Alteka Co., Ltd ., Civil No. 94-2683-07; and (b) Alteka and Windward Park, Inc. (Windward), in Alteka Co., Ltd. v. Windward Park, Inc., et al., Civil No. 95-3483-09. Au represented Alteka in these consolidated cases while they were pending before a trial court. According to Au, he had a contingent fee agreement with Alteka. Alteka prevailed in some, but not all, of the disputed claims. For example, although the trial court awarded Alteka $1,171,949.76 on Alteka's breach of contract claim against Windward, the trial court awarded Windward $5,000,000.00 on Windward's breach of contract counterclaim against Alteka. See Shanghai Investment Company, Inc., v. Alteka Co., Ltd., 92 Hawai'i at 491, 993 P.2d at 525. Furthermore, the trial court denied Alteka's motion for an award of attorneys' fees, even though Alteka successfully defended itself against all of Shanghai's claims. Id. Although Alteka intended to appeal from the judgment, Au withdrew as Alteka's counsel, and Chairperson Alston and his law firm, AHFI, appeared as Alteka's substitute counsel. On behalf of Alteka, Chairperson Alston and AHFI appealed to this court. On appeal, Chairperson Alston and AHFI succeeded in convincing us that the trial court erred in (1) awarding Windward $5 million in damages against Alteka; and (2) denying Alteka's request for attorney fees and costs in successfully defending against the claims made by Shanghai.... We therefore vacate the $5 million damage award to Windward and remand to the trial court with instructions to (1) enter judgment in favor [of] Alteka for $1,171,949.76 plus interest and (2) determine and award reasonable attorneys' fees to Alteka against Windward and Shanghai in accordance with this opinion.... Shanghai Investment Company, Inc., v. Alteka Co., Ltd ., 92 Hawai'i at 505, 993 P.2d at 539 (emphasis added). Because Alteka prevailed in the appeal, we awarded attorneys' fees in the amount of $176,287.80 to Alteka: Upon careful consideration of Defendant-Appellant Alteka Co., Ltd.'s First Request for Attorneys' fees, the papers in support and opposition, and the records and files in this case, IT IS HEREBY ORDERED that the motion is granted in part, and attorneys' fees totaling $176,287.80 are approved and awarded to Alteka. Said sum shall be imposed against Shanghai Investment Company, Inc. and Windward Park, Inc., jointly and severally. (Emphasis added.) Although Au had withdrawn as Alteka's counsel prior to the appeal, Au believed that he was entitled to a portion of Alteka's award of attorneys' fees pursuant to Au's contingent fee agreement with Alteka. Based on Alteka's refusal to give Au a portion of the award of attorneys' fees, Au asserted that he had a financial dispute with Chairperson Alston that warranted Chairperson Alston's disqualification in the ODC's disciplinary proceedings. In an attempt to show the hearing committee the alleged dispute between Au and Chairperson Alston, Au submitted, among other things, a photocopy of a letter that Au had written to Alston more than three and one-half years earlier, dated March 29, 2000, in which Au threatened to impose a lien on Alteka's award of attorneys' fees resulting from Alteka's successful appeal: Dear Mr. Alston: Have you had an opportunity to discuss our claims for attorney's fees in the Shanghai case[?] I am certainly open to any reasonable arrangement. If we cannot reach an agreement by Friday, March 31, 2000, I am compelled to file an attorney's lien on the case. I appreciate your personal efforts. May I hear from you[?] Sincerely, [Signature] RONALD G.S. AU (Emphasis added.) Au additionally submitted a letter from Chairperson Alston to Au, also dated March 29, 2000. In the March 29, 2000 letter, Chairperson Alston stated, on behalf of Alteka, (1) that the attorney-client agreement between Au and Alteka did not entitle Au to receive any additional attorneys' fees from Alteka and (2) that Au's mistakes as Alteka's trial counsel contributed to the trial court's initial judgment against Alteka: Dear Mr. Au: I have received your letter dated March 29[, 2000]. I still have not received any decision from Alteka about your demands, so I cannot promise it will be possible to reach any agreement by the end of the month (two days from now). In any event, you are not now owed any money based upon my reading of the agreements, so I am not sure what causes your sense of urgency. In addition, there are troublesome questions about how the failure timely to raise the penalty/liquidated damages issue in the trial court contributed to (1) the judgment against Alteka, and (2) the cost of the appeal. I do not think it is in your interest to provoke discussion of those issues. I will follow up with Mr. Matsumura tomorrow and report to you as soon as possible on the progress Alteka is making toward making a decision on your demands. PAUL ALSTON (Emphases added.) Despite the three-year delay between (1) the commencement of the purported conflict between Chairperson Alston and Au in the Alteka Matter and (2) Au's motion to disqualify Chairperson Alston in the disciplinary proceedings, Au explained that he did not raise the issue of Chairperson Alston's alleged conflict prior to, or during, the disciplinary hearings because Respondent [Au] had the highest degree of respect for the integrity and impartiality of ALSTON[.]
The second purported conflict of interest arose out of Au's August 2003 appearance on behalf of a client, Gary Shigemura, in a foreclosure action in which both Shigemura and AHFI's client, Beneficial Hawaii, Inc. (Beneficial), foreclosed on their respective mortgages against the same debtor, Donald Kida, and, inevitably, Shigemura and Beneficial disputed the priority of their respective mortgages (hereinafter referred to as the Kida Matter). The Kida Matter arose out of two consolidated cases: (a) Donald M. Kida v. Michele Kobayashi, et al., Civil No. 97-4838-11, and (b) Beneficial Hawaii, Inc. v. Donald Mueno Kida, et al., Civil No. 01-1-2275-08. Au did not initially represent any of the parties in the Kida Matter. For example, while the hearing committee was conducting the disciplinary hearings regarding Au on January 21, January 22, and April 29, 2003, Au was not yet involved in the Kida Matter. However, in August 2003, Au began appearing as legal counsel for Shigemura in the Kida Matter. At that time, the circuit court required Shigemura to hire an attorney because, after Shigemura had rendered several years of legal services on Kida's behalf, Kida had allowed Shigemura to obtain a second mortgage on Kida's real property in an amount equivalent to the attorney's fees that Kida owed Shigemura. Beneficial held the first mortgage on Kida's real property. When Shigemura's mortgage became an issue in the Kida Matter, the circuit court required Shigemura to hire an attorney to advocate on behalf of Shigemura's mortgage interest. On September 15, 2003, Au moved the circuit court (on Shigemura's behalf) to disqualify Chairperson Alston's law firm, AHFI, from representing Beneficial in the Kida Matter. Kida joined the motion. The circuit court denied Au's motion to disqualify AHFI and ordered the parties in the case to participate in mediation prior to trial. The mediation concluded with the parties agreeing to settle the litigation.
On November 26, 2003, the hearing committee denied Au's motion for the recusal or disqualification of Chairperson Alston.