Opinion ID: 770794
Heading Depth: 3
Heading Rank: 1

Heading: Nature of Assumpsit

Text: 23 It is well settled under Hawai'i law that an action in the nature of assumpsit includes `all possible contract claims.'  Leslie v. Estate of Tavares, 994 P.2d 1047, 1051 (Haw. 2000) (quoting Healy-Tibbitts Constr. Co. v. Hawaiian Indep. Refinery, Inc., 673 F.2d 284, 286 (9th Cir. 1982)).  `Assumpsit is a common law form of action which allows for the recovery of damages for the non-performance of a contract, either express or implied, written or verbal, as well as quasi contractual obligations.'  Id. (quoting Schulz v. Honsador, Inc., 690 P.2d 279, 281 (Haw. 1984)). `The determination of when an action is in the nature of assumpsit should be based on whether the actual factual allegations are such that historically the action would have been brought in assumpsit.'  Helfand, 105 F.3d at 537 (quoting HealyTibbitts, 673 F.2d at 286). The focus of this analysis is thus on the substance of the action, rather than [on] the formal language employed or the form of the pleadings. Schulz, 690 P.2d at 282 (internal quotation marks and citation omitted). Hence, the mere use of tort language in a complaint does not control the characterization of the action as either in assumpsit or in tort. Instead, [t]he character of the action should be determined from the facts and issues raised in the complaint, the nature of the entire grievance, and the relief sought. Leslie, 994 P.2d at 1052 (citing Schulz, 690 P.2d at 282). 24 Here, the learned district judge ruled that [p]laintiffs' Complaint constituted an action `in the nature of assumpsit'  and for this reason awarded defendants attorneys' fees for the action as a whole. Kona Enter., Inc. v. Estate of Bishop, No. CV-94-00858 DAE, at 8 (D.C. Haw. Apr. 6, 1999) (mem. order). While noting that plaintiffs had allege[d] various tort claims and also assert[ed] contractual violations, the district court analyzed the nature of plaintiffs' action as a whole and resolved any doubts in favor of finding the suit to be in the nature of assumpsit. Id. at 6-8. In so ruling, the court properly relied on our circuit's interpretation of Hawai'i law set forth in Healy-Tibbitts 7 that: When there is doubt as to the nature of the suit [under Hawai'i law], the presumption is that it sounds in assumpsit and not in tort. 673 F.2d at 286 (citing Osorio, 29 Haw. at 385); see also Helfand, 105 F.3d at 537 (reaffirming this presumption). Indeed, as the district court correctly noted, under then-prevailing Hawai'i law,in a suit with mixed claims, . . . the existence of contract claims result[ed] in a finding that the action is in the nature of assumpsit unless those `contract claims are merely decorative . . . and not germane to the genuine dispute being litigated[.]'  Kona, No. CV-94-00858 DAE, at 6 (quoting HealyTibbitts, 673 F.2d at 286) (alteration in original). Here, the district court determined that [p]laintiffs'`tort' claims necessarily require resolution of [the] underlying contractual issues. Id. For this reason, the court ruled that it was unable to conclude that [plaintiffs'] `contract claims are merely decorative . . . and not germane to the genuine dispute being litigated.'  Id. at 7 (quoting Healy-Tibbitts, 673 F.2d at 286) (alteration in original). Moreover, because plaintiffs, as the part[ies] opposing the taxation of fees under[Haw. Rev. Stat.] 607-14, had the burden of showing that all claims alleged are not in the nature of assumpsit, Schulz, 690 P.2d at 282, the district court applied the Healy-Tibbitts presumption and concluded that plaintiffs had failed to show that the nature of their action as a whole consisted of non-assumpsit claims. 25 But eight months after the district court rendered its decision -while this appeal was pending -the Hawai'i Supreme Court effected a sea change in the law governing the application of Haw. Rev. Stat. 607-14. In TSA Int'l Ltd. v. Shimizu Corp., 990 P.2d 713 (Haw. 1999), the Hawai'i Supreme Court held that: 26 in awarding attorneys' fees in a case involving both assumpsit and non-assumpsit claims, a court must base its award of fees, if practicable, on an apportionment of the fees claimed between assumpsit and non-assumpsit claims. 27 990 P.2d at 734 (emphasis added); see also Shanghai Investments Co., Inc. v. Alteka Co., Ltd., 993 P.2d 516, 536 (Haw. 2000) (stating same). Moreover, the Hawai'i Supreme Court recently stated again that [w]here there is doubt as to whether an action is in assumpsit or in tort, there is a presumption that the suit is in assumpsit. Leslie, 994 P.2d at 1052 (concluding that [w]hen the recovery of money damages is not the basis of a claim factually implicating a contract, the action is not `in the nature of assumpsit' ) (citing Healy-Tibbitts, 673 F.2d at 286). TSA and Shanghai Investments also make clear that a court must determine whether each individual claim alleged in a complaint sounds in assumpsit or in tort and apportion fees between the assumpsit and non-assumpsit claims if practicable. 28 Here, plaintiffs plead six claims: (1) breach of fiduciary duty; (2) breach of the covenant of good faith and fair dealing; (3) interference with corporate opportunity and economic advantage; (4) interference with corporate governance; (5) constructive trust; and (6) punitive damages. In connection with claims 1 through 5, plaintiffs sought money damages and attorneys' fees. 8 When the district court awarded fees to the defendants, it did not analyze each of plaintiffs' claims separately and then, if practicable, apportion the fees claimed between the assumpsit and non-assumpsit claims because Hawai'i law as interpreted by our court in Healy-Tibbitts did not require the district court do so at the time it made the award. 29 Moreover, the district court did not have the benefit of the Hawai'i Supreme Court's substantive analysis in TSA concerning whether a claim alleging breach of fiduciary duty was in the nature of assumpsit for purposes of an attorneys' fee award under Haw. Rev. Stat. 607-14. Historically, under Hawai'i law, whether a claim alleging a breach of duty is in the nature of assumpsit or in tort depends on whether the duties arose from a promise or by operation of law: 30 Black's Law Dictionary states that the term assumpsit is a Latin term meaning [h]e undertook; he promised. The dictionary defines the term in various ways, all of which have some relationship to a promise or engagement. The term tort is defined as a legal wrong committed upon the person or property independent of contract, and the dictionary states that [t]here must always be a violation of some duty owing to plaintiff, and generally such duty must arise by operation of law and not by mere agreement of the parties. 31 Larsen v. Pacesetter Sys., Inc., 837 P.2d 1273, 1298 (Haw. 1992) (alterations in original). 32 In TSA, the Hawai'i Supreme Court specifically addressed the question whether and in what circumstances a breach of fiduciary duty claim should be characterized in the nature of assumpsit or in tort for purposes of attorneys' fees under Haw. Rev. Stat. 607-14. The Court held that a breach of fiduciary duty claim sounds in tort where the duties allegedly breached arise as a matter of law from the fiduciary relationship between partners and not from a contractual agreement. See TSA Int'l Ltd. v. Shimizu Corp. , 990 P.2d 713, 733-34 (Haw. 1999). In TSA, the parties were general partners in a partnership who entered workout agreements to resolve the partnership's debts. See id. at 718-19. The plaintiffs argued that their breach of fiduciary duty and fraud claims were predicated on these agreements and on defendants' related promises. See id. at 720, 734. But plaintiffs did not seek monetary damages based on the non-performance of either agreement or any promise; nor did they allege the breach of either agreement. See id. at 734. Rather, TSA plaintiffs alleged that their general partner Shimizu had fraudulently induced them to enter into one of the agreements by failing to disclose allegedly material facts. See id. at 727, 734. The Hawai'i Supreme Court held that plaintiffs' action was not in the nature of assumpsit under Haw. Rev. Stat. 60714. Instead, the Court concluded that: The mere fact that TSA's claims relate to a contract between the parties does not render a dispute between the parties an assumpsit action. Id.; see also Leslie, 994 P.2d at 1052 (holding that a claim challenging the validity of a settlement agreement and seeking its rescission in order to revive an underlying tort action was clearly not `in the nature of assumpsit' ). Conversely, where a party's breach of fiduciary duty claim is based on the nonperformance or breach of contractual obligations and the complaint seeks damages flowing from that non-performance or breach, the claim would sound in assumpsit. See TSA, 990 P.2d at 734; see also Helfand, 105 F.3d at 538 (holding that a claim for legal malpractice is in the nature of assumpsit for attorneys' fees purposes under Haw. Rev. Stat.S 607-14 because it primarily arises out of a contractual relationship between the parties (quoting Higa v. Mirikitani, 517 P.2d 1, 4 (Haw. 1973)); Schulz, 690 P.2d at 282 (holding that [a]n action for breach of warranty clearly is in the nature of assumpsit, inasmuch as a warranty arises from the contractual relationship between buyer and seller). 33 Absent manifest injustice . . . we generally apply the law as it exists when we render our decision. Rubin v. Belo Broad. Corp., 769 F.2d 611, 614 (9th 1985) (citing Bradley v. Richmond Sch. Bd., 416 U.S. 696, 711 (1974)). Indeed, because we owe deference . . . to state court decisions which alter existing law . . . we will follow appropriate precedent even if it is announced after the district court has ruled. Plyler v. Wheaton, 640 F.2d 1091, 1093 (9th Cir. 1981) (citing Vandenbark v. Owens-Illinois Co., 311 U.S. 538, 543 & n.21 (1941)). Accordingly, in light of the change in Hawai'i law effected by TSA, we must remand this matter to the district court to determine whether each of plaintiffs' claims is in the nature of assumpsit, and if the court determines that a claim is not in the nature of assumpsit, whether it is practicable to apportion the award of attorneys' fees between the assumpsit and non-assumpsit claims. 9 34