Opinion ID: 870353
Heading Depth: 1
Heading Rank: 7

Heading: attorneys' fees and costs and prejudgment interest issues associated with condemnation 1 in coupe's second appeal

Text: With respect to Coupe's attorneys' fees and cost arguments, Coupe argues that the court erred when it concluded, as a matter of law, that (1) the Coupes were not entitled to recover damages under [HRS §] 101-27 for their efforts to obtain ... attorneys' fees for preparing the damages motions and litigating the same[,] and (2) the Coupes were not entitled to prejudgment interest, that is, the damages [Coupe] incurred in not having the free use of [its] money for the nine years in which the defense of Condemnation 1 tied up [its] funds.
As discussed supra, Coupe's March 20, 2009 Motion requested additional damages that were not included in its initial October 11, 2007 Motion. On May 14, 2009, the court issued an Order granting Coupe's March 20, 2009 Motion but excluded $75,384.00 in attorneys' fees, which were associated with the preparation of billing records for [Coupe's] fee petition and/or preparation of [Coupe's] fee petitions[.] Coupe challenges the court's denial of these attorneys' fees. According to Coupe, the court's determination is contrary to the holding in Coupe I which awarded Coupe damages including attorneys [sic] fees and costs which were incurred in applying for the damage award[.] Also, Coupe challenges the court's reliance on Hawai'i Ventures, arguing that it [wa]s not an eminent domain case, and did not involve [HRS §] 101-27, and thus has nothing to say about whether [it] ... is entitled to recover all the attorneys [sic] fees and costs it incurred[.] In its answering brief, the County maintains that [g]enerally, there shall be no recovery for fees and expenses incurred in litigating the propriety of the fees to be awarded pursuant to [ Hawai'i Ventures ]. In its reply brief, Coupe essentially reiterates the arguments made in its opening brief.
The trial court's grant or denial of attorneys' fees and costs is reviewed under the abuse of discretion standard. Kamaka v. Goodsill Anderson Quinn & Stifel, 117 Hawai'i 92, 105, 176 P.3d 91, 104 (2008) (quoting Kahala Royal Corp. v. Goodsill Anderson Quinn & Stifel, 113 Hawai'i 251, 266, 151 P.3d 732, 747 (2007) (citation omitted)) (brackets omitted). Generally, under the American Rule, each party is responsible for paying his or her own litigation expenses[,] however, attorney's fees are chargeable against the opposing party when so authorized by statute, rule of court, agreement, stipulation, or precedent. Sierra Club v. Dep't of Transp. of State of Hawai'i, 120 Hawai'i 181, 218, 202 P.3d 1226, 1263 (2009) (quoting Fought & Co. v. Steel Eng'g & Erection, Inc., 87 Hawai'i 37, 50-51, 951 P.2d 487, 500-01 (1998)) (internal quotation marks and brackets omitted). In Coupe II, this court was presented with the threshold question of whether `all such damage' under HRS § 101-27 provide[d] adequate authority for [Coupe's] request for attorneys' fees and costs on appeal and, if so, to what extent. 120 Hawai'i at 404, 208 P.3d at 717. This court stated that, [b]y its plain language, HRS § 101-27 appears to provide a sufficient basis for the award of damages in the form of costs and attorney's fees sustained as a result of [Coupe's] appeal of the automatic denial of fees in Condemnation 1. Id. at 404-05, 208 P.3d at 717-18. Further, it was concluded that HRS § 101-27 encompassed damages sustained in seeking fees and costs owed: The statutory language all such damage... sustained ... by reason of the bringing of the proceedings, on its face would appear to encompass what [Coupe] seeks herein.... Had the County not brought the unsuccessful proceedings in Condemnation 1, [Coupe] would never have had cause to move for fees and to subsequently appeal. Therefore, the damage sustained by [Coupe] in seeking the fees and costs owed and in appealing the denial of such fees and costs, was part of the damage resulting from the County having brought the unsuccessful proceedings in Condemnation 1. Consequently, under HRS § 101-27, the County should be held liable for such damage. Id. at 405, 208 P.3d at 718 (emphasis added) (brackets and footnote omitted) (some ellipsis in original and some added). Similar to the reasoning in Coupe II, had the County not brought the unsuccessful proceeding in Condemnation 1, Coupe would not have had cause to move for fees or to litigate the amount of fees on remand. Thus, the expenses Coupe sustained in seeking those fees and costs resulted from the County having brought the unsuccessful proceeding in Condemnation 1. Consequently, the County is liable for these damages under HRS § 101-27. This court's discussion of whether Coupe was entitled to attorneys' fees and costs for its Coupe II Request and Coupe II Response further supports this position. [23] As discussed in Coupe II, Coupe did not request the damages it incurred in filing or preparing the [ Coupe II ] Request and [the Coupe II ] Response in its Coupe II Request but waited until its Coupe II Response to do so. Coupe II, 120 Hawai'i at 414, 208 P.3d at 727 (brackets omitted). While Coupe's request was ultimately denied, it was not because this court concluded that there was no recovery for fees and expenses incurred in litigating the propriety of the attorneys' fees and costs claimed. Rather, this court stated that Coupe did not expressly request attorneys' fees for preparing the [ Coupe II ] Request in its original Request, nor did it provide supporting documentation; upon filing the [ Coupe II ] Response and requesting fees for preparing that Response, [Coupe] again did not provide any supporting documentation as required by HRAP Rule 39(d)(1); [24] and although Coupe later filed the requisite itemized account of attorneys' fees in its Errata, [Coupe] d[id] not provide this court with any rationale as to why it should be permitted to essentially raise new substantive arguments for the first time in an Errata. Id. at 414, 208 P.3d at 727 (citing Taomae v. Lingle, 110 Hawai'i 327, 333, 132 P.3d 1238, 1244 (2006)). As apparent from this court's discussion in Coupe II, that decision left open the possibility that damages sustained in preparing and litigating the propriety of fees could be recovered under HRS § 101-27.
The court, in its May 14, 2009 order granting in part Coupe's March 20, 2009 Motion, and the County in its answering brief, rely on Hawai'i Ventures for the proposition that fees and expenses incurred in litigating the propriety of the fees to be awarded cannot be recovered. In Hawai'i Ventures, a receiver was appointed to manage a hotel pending a foreclosure sale. 116 Hawai'i at 468, 173 P.3d 1125. The circuit court appointed a special master to review the receiver's final report, and entered a deficiency judgment. Id. All parties appealed the circuit court's decision and challenged the actions taken by the receiver. Id. On appeal, this court affirmed the circuit court's final judgment in part but vacated `the awards of fees to the [r]eceiver and her professionals reflected in certain of the circuit court orders' and remanded the fee orders to the circuit court `for clarification and, if necessary, a redetermination of the amount[.]' Id. at 469, 173 P.3d at 1126 (brackets omitted). The receiver then filed a request for reimbursement of fees and costs she incurred on appeal. This court stated, inter alia, that the [r]eceiver and her professionals are not entitled to compensation for work performed in relation to the defense of fees issue. Id. at 476, 173 P.3d at 1133. To support this position, this court quoted United States v. Larchwood Gardens, Inc., 420 F.2d 531, 534 (3d Cir.1970), which stated that, the law imposes on a party the duty to pay [her] own fees and expenses in vindicating [her] personal interests.... It is our understanding that services necessarily involved in preparing [fee] application [sic] to the district court and defending them are not compensable. Id. (brackets and ellipsis in original). While, as indicated in Hawai'i Ventures, receivers in foreclosure proceedings are not entitled to recover fees and expenses associated with litigation involving the propriety of the fees to be awarded to them, 114 Hawai'i at 497-98, 164 P.3d at 755-56, the specific question here is whether Coupe is entitled to fees and costs for litigating the propriety of fees under HRS § 101-27. Hawai'i Ventures was not an eminent domain case, and it did not decide whether HRS § 101-27 may entitle a landowner to attorneys' fees expended because of the government's unsuccessful attempt to condemn property. As discussed supra, Coupe II did not bar Coupe's ability to seek damages sustained by [Coupe] in seeking the fees and costs [it is] owed[.] 120 Hawai'i at 404-05, 208 P.3d at 717-18. Our holding herein is limited to the specific circumstances of HRS § 101-27 involved in litigating disputes as to fees and costs recoverable because of a failed condemnation. Because the court incorrectly determined that there shall be no recovery for fees and expenses incurred in litigating the propriety of fees under HRS § 101-27, the court based its ruling on an erroneous view of the law and, therefore, abused its discretion in failing to consider whether Coupe was entitled to these attorneys' fees. Because the court did not reach the question of the reasonableness of these fees, the case must be remanded to the court to determine the extent to which the $75,384 of attorneys' fees associated with preparing the billing records and Coupe's fee petitions were reasonable and should be awarded.
As to argument (2), Coupe asserts that the County never argued that [prejudgment] interest [wa]s not properly awardable under [HRS §] 101-27, never contested [Coupe's] calculation of an approximate award nor the applicable rate, and, therefore, has waived any arguments not made[.] Coupe thus contends that [t]he court should not have interposed its own objection [to awarding prejudgment interest], when [the] County made none. (Citing Wong v. Takeuchi, 88 Hawai'i 46, 53, 961 P.2d 611, 618 (1998).). Coupe also maintains that COL 33 [25] of the court's Supplemental FOFCOL on Statutory Damages is erroneous because HRS § 101-27 must include the cost of funds encumbered by a failed condemnation attempt; [t]he loss of the use of [Coupe's] money over nine years of Condemnation 1 must be a recoverable element of [HRS § ] 101-27 damages or else it prevents [Coupe] from being made truly whole (citing Lucas v. Liggert & Myers Tobacco Co., 51 Haw. 346, 348, 461 P.2d 140, 143 (1969)); the governing statute for prejudgment interest in this case is HRS § 101-27 and not the prejudgment interest statute, HRS § 636-16 (1993); [26] even if HRS § 636-16 does apply, the court wrongly rejected[] Coupe's damage claim, because nine years is by any reasonable measure a substantial delay in the proceedings and issuance of judgment (citing Ditto v. McCurdy, 86 Hawai'i 93, 114, 947 P.2d 961, 982 (App.1997)); and that [the court] wrongly placed the burden on [Coupe] to allege `undue delay by Plaintiff County' [27] (quoting COL 33 of the court's Supplemental FOFCOL on Statutory Damages). In reply to the County, Coupe contends that the court's Supplemental FOFCOL on Statutory Damages demonstrate that the County has waived any objection on the issue of encumbered funds [28] and an award will not result in a windfall because [t]he loss of use of funds is per se damage under [HRS §] 101-27, and the Coupes are entitled to be made whole.
Coupe first argues that the denial of prejudgment interest damages cannot be reconciled with FOF 37 [29] and 38 [30] and COL 7 [31] in the court's Supplemental FOFCOL on Statutory Damages, which, according to Coupe, reveal [that the] County waived [the] objection to Coupe's request for prejudgment interest. Coupe urges this court to conclude that the first sentence in Supplemental FOF 38, which states that the County has [] never argued in this [c]ourt that such interest is not properly awardable as damages under [HRS §] 101-27[,] shows that the County has waived its objection. However, Supplemental FOF 38, when read in its entirety, indicates that while the County did not argue that [prejudgment] interest [was] not properly awardable as damages under [HRS §] 101-27[,] the County did instead argue that ` any award under HRS § 101-27 should be limited to amounts paid for the improper delegation of condemnation power defense in the first case.' (Emphasis added.) (Citation omitted.) Thus, the County challenged Coupe's prejudgment interest claim inasmuch as the prejudgment interest was not an amount[] paid for the improper delegation of condemnation power defense in the first case. Consequently, the County's argument that it did object to Coupe's prejudgment interest claim is correct.
Coupe interprets HRS § 101-27 as mandating the recovery of prejudgment interest via the phrase all such damage as may have been sustained by the defendant by reason of the bringing of the proceedings. However, the plain language of HRS § 101-27 indicates that the recovery of damages under HRS § 101-27 is not mandatory, as Coupe asserts, but subject to a reasonableness requirement. Coupe II, 120 Hawai'i at 411, 208 P.3d at 724. As explained in Coupe II, the words in HRS § 101-27, includ[ing] the defendant's costs of court, a reasonable amount to cover attorney's fees paid by the defendant in connection therewith, and other reasonable expenses[]... is essentially a list of items that are to be included in the damage award. Thus, the phrase and other reasonable expenses, assumes that the previous items listed are also types of reasonable expenses[,] ... [because interpreting HRS § 101-27 as commanding the grant of] all costs actually incurred, regardless of reasonableness, renders the term other superfluous. Id. (citing Carlisle v. One (1) Boat, 119 Hawai'i 245, 255, 195 P.3d 1177, 1187 (2008)) (emphases omitted). Hence, a request for prejudgment interest under HRS § 101-27 may be granted if it is an other reasonable expense[]. See HRS § 101-27; Coupe II, 120 Hawai'i at 411, 208 P.3d at 724. However, the plain language of the provision does not clarify whether prejudgment interest is an other reasonable expense[]. Nor does the statute define the term. Therefore, this court may look to the legislative history in construing the statute. See Hawaii Providers Network, Inc. v. AIG Hawaii Ins. Co., 105 Hawai'i 362, 369, 98 P.3d 233, 240 (2004) (recognizing that [w]hen there is doubt, doubleness of meaning, or indistinctiveness or uncertainty of expression used in a statute[,] an ambiguity [exists,] and, thus, courts may take legislative history into consideration in construing a statute) (internal quotation marks, brackets, and citations omitted). The legislative history recognized that, at times [when] condemnation proceedings are instituted but are not prosecuted to final judgment, the owners of the property involved thereby suffer[] loss for which there is no means now provided [by] which they may be compensated. H. Stand. Comm. Rep. No. 622, in 1929 House Journal, at 1400. To remedy this situation, the legislature amended the eminent domain statutes for the purpose of giv[ing] to persons whose property is sought to be condemned, a right of action to recover damages if the condemnation proceedings are dropped before final judgment is reached. Id. Generally, this court has recognized that prejudgment interest at common law is [i]nterest on claims awarded for delay in payment  which is measured from the accrual of the claim for relief to the time of rendition of the judgment[.] Rodrigues v. State, 52 Haw. 156, 168, 472 P.2d 509, 518 (1970) (emphasis added). This court has defined prejudgment interest as `an element of complete compensation[,]' Kalawaia v. AIG Hawai'i Ins. Co., 90 Hawai'i 167, 172, 977 P.2d 175, 180 (1999) (quoting W. Virginia v. United States, 479 U.S. 305, 310, 107 S.Ct. 702, 93 L.Ed.2d 639 (1987) (citation omitted)), that serves to compensate for the loss of use of money due as damages ..., thereby achieving full compensation for the injury those damages are intended to redress[,] id. (quoting W. Virginia, 479 U.S. at 310 n. 2, 107 S.Ct. 702 (citing Comment, Prejudgment Interest: Survey & Suggestion, 77 Nw. U.L.Rev. 192 (1982))) (emphasis added). Thus, it follows that prejudgment interest can be recovered as an other reasonable expense under HRS § 101-27. Our holding as to such prejudgment interest is limited to the specific circumstances of a failed condemnation contemplated by HRS § 101-27.
This court must next address whether the court erred in denying Coupe's request for prejudgment interest under the circumstances of the case. Prejudgment interest is awarded at the discretion of the court. Rodrigues, 52 Haw. at 169, 472 P.2d at 518; see Metcalf v. Voluntary Employees' Benefit Ass'n of Hawai'i, 99 Hawai'i 53, 61, 52 P.3d 823, 831 (2002) (recognizing that it is clearly within the discretion of the circuit court to deny prejudgment interest where appropriate). Accordingly, an award of prejudgment interest under HRS § 101-27 should be reviewed for abuse of discretion. Cf. Tri-S Corp. v. W. Worlds Ins. Co., 110 Hawai'i 473, 489, 135 P.3d 82, 98 (2006) (recognizing that in the context of HRS § 636-16, [a]n award of prejudgment interest is reviewed for an abuse of discretion) (citing Amfac, Inc. v. Waikiki Beachcomber Inv. Co., 74 Haw. 85, 136, 839 P.2d 10, 36 (1992)). `[T]o constitute an abuse [of discretion,] it must appear that the court clearly exceeded the bounds of reason or disregarded rules or principles of law or practice to the substantial detriment of a party litigant.' Id. (quoting State v. Sacoco, 45 Haw. 288, 292, 367 P.2d 11, 13 (1961)) (brackets in original). Similar to the situation here, Coupe in Coupe II contended that it [was] entitled to [prejudgment] interest from the date of each invoice for attorneys' fees and costs as a form of damage, pursuant to HRS § 101-27 because the purpose of a damage award is to put a party in the position they [sic] would have been in had not harm occurred and that Coupe suffered damage each time it had to pay its lawyers. 120 Hawai'i at 410, 208 P.3d at 723 (brackets and internal quotation marks omitted). In Coupe II, Coupe argued that `[i]nterest from the date of harm is an element of damage and this [c]ourt is authorized to award pre-judgment interest in all civil actions' under HRS § 636-16.  Id. (footnote omitted) (emphasis added). After considering Coupe's arguments, this court denied Coupe's request for prejudgment interest. Id. at 411, 208 P.3d at 724. It was recognized that [p]re-judgment interest may be awarded under HRS § 636-16 in the court's discretion `when the issuance of judgment is greatly delayed for any reason.' Id. (quoting Tri-S Corp., 110 Hawai'i at 498, 135 P.3d at 107) (emphasis in original). However, this court denied Coupe's request for prejudgment interest on its attorneys' fees, costs, and excise tax related to Condemnation 1 claimed on appeal under both HRS §§ 101-27 and 636-16 because [Coupe] ha[d] not asserted ... any lengthy delay in the issuance of the judgment of attorneys' fees or costs[.] Id. Similarly, in the instant appeal, it appears that Coupe did not assert any lengthy delay in the issuance of the judgment of the attorneys' fees or costs at the trial level. Coupe, in its October 11, 2007 Motion, moved for statutory damages pursuant to HRS § 101-27, in the amount of $1,547,748.80 and costs in the amount of $200,226.58, plus tax and prejudgment interest, incurred in [Condemnation 1]. Coupe's only assertion with regard to prejudgment interest in its supporting memorandum stated, Prejudgment interest (10% per annum from date of each bill) on those fees, and the associated costs is [sic] proper because those fees are `damages' under [HRS] § 101-27.  (Emphasis added.) No claim was made in Coupe's October 11, 2007 Motion for statutory damages or in Coupe's supporting memorandum that there had been any undue delay in the proceedings. Accordingly, the court in the instant case properly cited to Coupe II in COL 33 of its Supplemental FOFCOL on Statutory Damages as support for its conclusion that there [wa]s no legal or factual basis for the $276,762.41 in prejudgment interest sought as damages under HRS § 101-27[.] [32] As in Coupe II, Coupe again has not asserted ... any lengthy delay in the issuance of judgment[,] 120 Hawai'i at 411, 208 P.3d at 724, and therefore, Coupe's request for prejudgment interest was properly denied. This denial of prejudgment interest under HRS § 101-27 is also consistent with this court's interpretation of HRS § 636-16. HRS § 636-16, which applies in all civil cases, vests a court with discretion to award prejudgment interest. HRS § 636-16 (stating in part that [i]n awarding interest in civil cases, the judge is authorized to designate the commencement date to conform with the circumstances of each case); Coupe II, 120 Hawai'i at 410, 208 P.3d at 723 (Pre-judgment interest may be awarded under HRS § 63-16 in the court's discretion[.]). Consistent with the general definitions of prejudgment interest stated supra, the purpose of prejudgment interest, in the context of HRS § 636-16, is to `correct injustice when a judgment is delayed for a long period of time for any reason, including litigation delays[,]' Coupe II, 120 Hawai'i at 411, 208 P.3d at 724 (quoting Tri-S Corp., 110 Hawai'i at 498, 135 P.3d at 107 (internal quotation marks and citation omitted)), and to permit more equitable results and to more speedily resolve cases[,] Wiegand v. Colbert, 68 Haw. 472, 477, 718 P.2d 1080, 1084 (1986). According to Tri-S Corp., a finding of fault by one of the parties is not necessary, and a review of an award of interest rests on three factors: (1) if fault is found on the part of the party seeking interest, denial of interest will not be considered an abuse of discretion; (2) if fault is found on the part of the party opposing interest, an award of interest will not be considered an abuse of discretion; and (3) where no fault is found on either side, the trial court may still award or deny prejudgment interest in its discretion, depending on the circumstances of the case. 110 Hawai'i at 498, 135 P.3d at 107 (emphasis added). Moreover, `[a] trial court's denial of prejudgment interest is usually affirmed' if the requesting party caused the delay or the opposing party did not cause the delay. Id. (quoting Page v. Domino's Pizza, Inc., 80 Hawai'i 204, 209, 908 P.2d 552, 557 (App. 1995) (citations omitted)) (brackets in original). However, `a trial court can award prejudgment interest for any substantial delay in the proceedings, and [] no purposeful delay on the part of the non-moving party is required. ' Id. (quoting Ditto, 86 Hawai'i at 114, 947 P.2d at 982) (emphases in original). In any event, because there is no fault found on the part of either Coupe or the County, the court had discretion to deny Coupe's prejudgment interest claim under the circumstances of the case. See id. As discussed above, the record reflects there was no argument to the court below or to this court, that there has been a delay attributable to the County's fault. Moreover, the County did not argue that there has been any delay caused by Coupe. Hence, neither party argued to the court that there was a purposeful delay on the part of any party, nor did the court find such purposeful delay. [33] Furthermore, Coupe did not assert specifically where in the span of nine years the substantial delay occurred. Given the circumstances, it cannot be said that the court clearly exceeded the bounds of reason or disregarded the rules or principles of law or practice to the substantial detriment of [Coupe.] Id. (quoting Sacoco, 45 Haw. at 292, 367 P.2d at 13). The court's denial of Coupe's request for prejudgment interest was not an abuse of discretion, and thus, the court did not err in denying Coupe's request for prejudgment interest under HRS § 101-27.