Opinion ID: 578000
Heading Depth: 2
Heading Rank: 2

Heading: Substantial Pecuniary Damages

Text: 59 In addition to the four elements of fraud, the injured party must also prove he suffered substantial pecuniary damage. Hawaii's Thousand Friends, 768 P.2d at 1301. This damage must be proximately caused by the fraud ( Chun v. Park, 51 Haw. 462, 51 Haw. 501, 462 P.2d 905, 907 (1969)) and must be established with reasonable certainty ( Tanuvasa v. City and County of Honolulu, 2 Haw.App. 102, 626 P.2d 1175, 1184 (1981)). 60 a) Proximate Cause 61 The Hawaii Supreme Court has accepted the doctrine of proximate cause to limit liability and damages in tort cases. Chun, 462 P.2d at 907. 62 In the present case, the district court held that Katayama's fraudulent representations were not the proximate cause of Heller's damage because Heller could have entertained other offers to purchase the Ilikai until [Katayama's] representations were borne out, notwithstanding the impact of IBJ's right to match any offer. (CL 87) 63 Heller argues that uncontradicted trial testimony established that Heller did entertain other offers and did continue to talk to other buyers, but that the potential buyers themselves elected not to proceed upon hearing of IBJ's right-to-match. (Red 25) 64 Heller's contention appears to be supported by the record. Mr. Fannemel, a consultant for Japanese Hotel investors (CT 9/8/89; 72:12-14), testified that he and Joe Onuma were working on a deal whereby Sampo Land Inc., would purchase the Ilikai (CT 9/8/89 90:21-24). Sampo Land, a client of Mr. Onuma, is owned by Yonezo Ozaki (CT 9/8/89 89:22-23). 4 65 Fannemel and Onumu presented Mr. Ozaki with Heller's requirements for the purchase of the Ilikai (i.e., purchase price of in excess of $80 million) (CT 9/8/89 90:21-24; 91;5-6). Fannemel prepared an offer on behalf of Mr. Ozaki which was approved by Mr. Ozaki (I got [Mr. Ozaki] to increase the price that he was willing to pay, [from $75 million] up to $80 million, and to agree to the basic terms that we had outlined in this--one, two, third page--the draft (CT 9/8/89 92:18-21)). Fannemel sent Heller a draft of the offer to make sure there were no additional requirements that needed to be incorporated into the draft before Mr. Ozaki signed (CT 9/8/89 92:23-25; 93:1-3) (see draft letter Heller's ER 203). 66 At the time Fannemel sent the draft of Sampo Land's offer, he was unaware of the arrangements between Mr. Heller and IBJ (CT 9/8/89 95:15-19). Shortly thereafter, Heller informed Fannemel that he was in negotiations with a major financial institution from Japan which had a first right of refusal to buy the Ilikai (CT 9/8/89 96:20-24). When Fannemel told Mr. Ozaki about the other offer with first refusal rights, Mr. Ozaki decided that Sampo Land should not submit the offer (CT 9/8/89 155:24-25; 156:7-11). Fannemel did keep some diaglogue going with Heller on the chance that the IBJ deal might fall through, but basically that was the end of Sampo Land's involvement with the Ilikai (CT 9/8/89 156:7-11). 67 This testimony indicates that Mr. Ozaki had agreed to the terms of the proposed offer, and was about to sign pending Heller's approval of the terms. However, Mr. Ozaki decided not to submit the offer because of IBJ's right of first refusal. The district court's Findings of Fact acknowledged that Sampo Land withdrew a proposal upon learning of IBJ's right-to-match agreement. (FF 107) Fannemel's testimony seems to indicate that but for the pending IBJ deal and the right of first refusal extracted by Katayama by his fraudulent statements, the draft offer of $80 million would have been signed by Mr. Ozaki. 68 We remand this issue for further findings in support of the district court's proximate cause Conclusion of Law. 69 b) Speculative Damages 70 The district court also held that Heller's damage claim was too speculative. (Decision 14) 71 Damages which result from a tort must be established with reasonable certainty. Tanuvasa, 626 P.2d at 1184. The United States Supreme Court has held that [d]amages are not rendered uncertain because they cannot be calculated with absolute exactness. It is sufficient if a reasonable basis of computation is afforded, although the result be only approximate. Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 379 (1927) (emphasis added). 72 Hawaii adopts the restitution principle of damages in fraud cases. Hawaii's Thousand Friends, 768 P.2d at 1301. The aim of compensation in deceit cases is to put the plaintiff in the position he would have been had he not been defrauded. Id. 73 Heller presented a calculation of restitution damages measuring the difference between what he received from the IBJ deal and what he would have received by selling the Ilikai to Sampo Land at its offering price of $80 million. (Red 31-32) 6 74 $80.0 Million Sales Price From Sampo - 70.0 Million Amount Received ($69 million ------------- purchase price k $500,000 tax credit) Subtotal 10.0 Million Gross Damages - 2.4 Million Fannemel's Commission (3%) ------------- Subtotal 7.6 Million k 1.5 Million Amount Paid to Covella/Others ------------- ------------- TOTAL $ 9.1 Million Net Damages 75 We remand this issue to the district court for further findings as to why Heller's calculation is an unreasonable basis of computation and, thereby, unduly speculative.