Court Opinion

ID: 9941056
Source: CourtListenerOpinion
Date Created: 2024-02-15 19:03:14.890703+00
Date Added: 2024-06-11T13:46:11.255127
License: Public Domain

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

                                                 Electronically Filed
                                                 Intermediate Court of Appeals
                                                 CAAP-XX-XXXXXXX
                                                 15-FEB-2024
                                                 07:56 AM
                                                 Dkt. 89 SO

                          NO. CAAP-XX-XXXXXXX

                IN THE INTERMEDIATE COURT OF APPEALS

                        OF THE STATE OF HAWAI#I

         KATHERINE A. WOLF, Personal Representative of the
    Estate of Beverly H. Wolf, Deceased, Plaintiff-Appellant,
                                 v.
      HENRY J. HEIS, GRUNEWALD EQUITY FUNDING, INC., a Hawaii
    corporation; FIRST HAWAII TITLE CORPORATION dba NEXTITLE;
  FIRST AMERICAN TITLE COMPANY, INC., Defendants-Appellees; and
      JOHN DOES 1-10; JANE DOES 1-10; and DOE ENTITIES 3-10,
                             Defendants

         APPEAL FROM THE CIRCUIT COURT OF THE FIFTH CIRCUIT
                      (CIVIL NO. 5CC161000127)

                     SUMMARY DISPOSITION ORDER
  (By:   Hiraoka, Presiding Judge, Wadsworth and McCullen, JJ.)

           Katherine A. Wolf appeals from the Final Judgment
entered by the Circuit Court of the Fifth Circuit on March 12,
2018.1 Wolf challenges the July 17, 2017 order granting the
motion to dismiss her second amended complaint filed by First
American Title Company, Inc. (FATCO) and the July 28, 2017 order
granting the motion to dismiss filed by First Hawaii Title
Corporation doing business as Nextitle. We vacate and remand.
          We review a circuit court's ruling on a motion to
dismiss de novo, under the same standard applied by the circuit
court. Bank of Am., N.A. v. Reyes-Toledo, 143 Hawai#i 249, 256-

     1
           The Honorable Randal G.B. Valenciano presided.
   NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

57, 428 P.3d 761, 768-69 (2018). A complaint should not be
dismissed for failure to state a claim unless it appears beyond
doubt that the plaintiff can prove no set of facts supporting
their claim that would entitle them to relief. Id. at 257, 428
P.3d at 769. We view the factual allegations in the complaint in
a light most favorable to the plaintiff to determine whether they
could warrant relief under any legal theory.2 Id.
          Wolf is the personal representative of the estate of
her late mother, Beverly H. Wolf. The second amended complaint
alleged that Beverly used Henry J. Heis and his company,
Grunewald Equity Funding, Inc. (together, Heis) to broker loans —
with Beverly as the lender — secured by mortgages on real
property in Hawai#i. When a loan became due or the real property
securing it was sold, an escrow was opened to process payments
and documentation. In at least three transactions the escrow —
either FATCO or Nextitle — paid the loan proceeds to Heis, even
though it was instructed to pay Beverly. Beverly "lost money
[that was] due to her."
          FATCO and Nextitle both cite DeMello v. Home Escrow,
Inc., 4 Haw. App. 41, 659 P.2d 759 (1983), and argue they owed no
legal duty to Beverly because she was not a party to the escrow
agreements. We held in DeMello that the defendant escrow company
owed no fiduciary duty to the plaintiff, who was not a signatory
to the escrow agreement. Id. at 47, 659 P.2d at 763. Viewing
the allegations in the second amended complaint in the light most
favorable to Wolf, Beverly was an intended third-party
beneficiary of the escrow agreements. Ass'n of Apt. Owners of
Newtown Meadows v. Venture 15, Inc., 115 Hawai#i 232, 269–70, 167
P.3d 225, 262–63 (2007); see Hough v. Pac. Ins. Co., 83 Hawai#i
457, 468, 927 P.2d 858, 869 (1996) (holding that insurer owed
contractual duties to employer's employee as intended third-party
beneficiary of employer's workers compensation policy).

     2
            Hawai#i is a notice-pleading jurisdiction where it is "not
necessary to plead legal theories with precision." Reyes-Toledo, 143 Hawai#i
at 259, 428 P.3d at 771 (cleaned up).

                                      2
   NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

           As to Nextitle, we must assume this allegation to be
true for purposes of its motion to dismiss because none of
Nextitle's escrow instructions were attached to the second
amended complaint.3
           FATCO's escrow agreement (Exhibit 5 to the second
amended complaint) contains the instruction "All proceeds to be
sent to 1st lien holder [sic]" in handwriting. On this record,
the circuit court erred by granting the motions to dismiss
because the second amended complaint stated an intended-third-
party-beneficiary claim for breach of contract.
           FATCO and Nextitle both argue that Wolf's claims are
time-barred under Hawaii Revised Statutes (HRS) § 657-7 (two
years for damage to persons or property). But the six-year
limitation period under HRS § 657-1 (2016) applies to Wolf's
claims based on Beverly being an intended third-party beneficiary
of the escrow agreements. That period began to run when
Beverly's cause of action accrued. Beverly's intended-third-
party-beneficiary claim for breach of contract accrued when she
knew or should have discovered that the defendant breached the
contract — the escrow agreement. Blair v. Ing, 95 Hawai#i 247,
264, 21 P.3d 452, 469 (2001). When that was for each escrow
agreement at issue is a question of fact that could not have been
resolved on a motion to dismiss. See Newtown Meadows, 115
Hawai#i at 277, 167 P.3d at 270.
           For these reasons, the July 17, 2017 "Order Granting
Defendant First American Title Company, Inc.'s Motion to Dismiss
Plaintiff's Second Amended Complaint[,]" the July 28, 2017 "Order
Granting Defendant First Hawaii Title Corporation dba Nextitle's
Motion to Dismiss Plaintiff's Second Amended Complaint[,]" and

      3
            Wolf's memorandum in opposition to Nextitle's motion to dismiss
included an exhibit that appears to be escrow instructions. The record (which
does not include the transcript of the hearing on Nextitle's motion) does not
indicate whether the circuit court excluded the exhibit or considered it,
which would have converted the motion to dismiss into a motion for summary
judgment. See Hawai#i Rules of Civil Procedure Rule 12(b). We do not
consider the exhibit and express no opinion about its contents, or lack
thereof.

                                      3
  NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

the "Final Judgment" entered on March 12, 2018, are vacated, and
this case is remanded for further proceedings consistent with
this summary disposition order.
          DATED: Honolulu, Hawai#i, February 15, 2024.

On the briefs:
                                      /s/ Keith K. Hiraoka
Gary G. Grimmer,                      Presiding Judge
Ann Correa,
for Plaintiff-Appellant.              /s/ Clyde J. Wadsworth
                                      Associate Judge
Calvin E. Young,
David J. Hoftiezer,                   /s/ Sonja M.P. McCullen
Deirdre Marie-Iha,                    Associate Judge
for Defendant-Appellee First
Hawaii Title Corporation dba
Nextitle.

Michael C. Bird,
Summer H. Kaiawe,
for Defendant-Appellee
First American Title Company, Inc.

                                  4