Opinion ID: 1190415
Heading Depth: 4
Heading Rank: 6

Heading: Attorney's fees awarded for declaratory judgment action

Text: In COL No. 37, the trial court concluded in relevant part: WBIC is ... the prevailing party as to Amfac's Complaint for Declaratory Relief, which Complaint did not seek an imposition of monetary liability, but solely an adjudication of rights. Where a party prevails on a claim which did not seek an award of monetary damages, he is entitled under § 607-17, H.R.S. to an unlimited reasonable attorney's fees [sic] for services reasonably and necessarily incurred. Smothers v. Renander, [2 Haw.App. 400, 406-07, 633 P.2d 556, 562-63 (1981)]; Food Pantry v. Waikiki Business Plaza, 58 Haw. 606, 618[-21, 575 P.2d 869, 878-80] (1978). WBIC is entitled to an award of reasonable attorney's fees for the claims asserted in Amfac's Complaint of $42,455.35. Amfac contends that the trial court erred in COL No. 37 by concluding that attorney's fees awardable to WBIC, as the prevailing party on Amfac's complaint for declaratory judgment, were unconstrained by the twenty-five percent limit set forth in HRS § 607-17 (1985). We disagree. HRS § 607-17 provides in relevant part: Any other law to the contrary notwithstanding, where an action is instituted in the district or circuit court on a promissory note or other contract in writing which provides for an attorney's fee the following rates shall prevail and shall be awarded to the successful party, whether plaintiff or defendant: (1) Where the note or other contract in writing provides for a fee of twenty-five per cent or more, or provides for a reasonable attorney's fee, not more than twenty-five per cent shall be allowed; . . . . . provided that the fee allowed in any of the above cases shall not exceed that which is deemed reasonable by the court. In Food Pantry, Ltd. v. Waikiki Business Plaza, Inc., 58 Haw. 606, 575 P.2d 869 (1978), this court recognized the inequity of enforcing the twenty-five percent statutory ceiling against the prevailing party on an award of nominal damages and held that, in cases where no monetary judgment has been sought, the prevailing party is entitled to attorney's fees reasonably and necessarily incurred in the action. 58 Haw. at 621, 575 P.2d at 880. The rationale of the Food Pantry rule is that if no money damages are sought or awarded, as in a complaint for declaratory judgment, there is no monetary amount on the basis of which to calculate the twenty-five percent statutory ceiling for attorney's fees. The Food Pantry rule has been followed in subsequent appellate decisions. See, e.g., Tradewinds Hotel, Inc. v. Cochran, 8 Haw.App. 256, 270, 799 P.2d 60, 68 (1990) (declaratory judgment on question of lease violation); Smothers v. Renander, 2 Haw.App. 400, 407, 633 P.2d 556, 563 (1981) (adjudication of contract rights where no money damages at issue). In its complaint, Amfac was not seeking a monetary judgment, but rather a declaration that it had performed its obligations under the Indemnification Agreement and, therefore, had not breached the agreement. The application of the Food Pantry rule entitles WBIC, as the prevailing party, to attorney's fees reasonably and necessarily incurred in defending against Amfac's declaratory judgment action. Nevertheless, Amfac contends that application of the Food Pantry rule to this case place[s] form over substance because the attorney's fees incurred in defense of Amfac's [c]omplaint ... are the same as those incurred in establishing the right to indemnification under the [c]ounterclaim. However, Amfac does not challenge FOF No. 82, in which the trial court found that WBIC had incurred $42,445.35 in attorney's fees specifically attributable to Amfac's declaratory judgment action and $83,351.33 specifically attributable to WBIC's counterclaim. Alleged error in findings of fact not expressly challenged on appeal will be disregarded in the absence of plain error. See Hawaii Rules of Appellate Procedure (HRAP) 28(b)(4)(C). Moreover, Amfac does not support its contention that WBIC's attorney's fees incurred in connection with the complaint and counterclaim are the same with any evidence whatsoever. Finally, we note that if Amfac had prevailed on its declaratory judgment action, it most likely would be arguing that the Food Pantry rule should be applied. Thus, we hold that COL No. 37 was not clearly erroneous in concluding that the twenty-five percent limit on attorney's fees set forth in HRS § 607-17 was inapplicable to Amfac's declaratory judgment action and that, under the Food Pantry rule, WBIC was entitled to recover attorney's fees reasonably and necessarily incurred in defending against Amfac's action. [21]