Court Opinion

ID: 4530505
Source: CourtListenerOpinion
Date Created: 2020-04-30 19:04:33.960031+00
Date Added: 2024-06-11T12:23:39.638993
License: Public Domain

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                                                                Electronically Filed
                                                                Supreme Court
                                                                SCWC-XX-XXXXXXX
                                                                30-APR-2020
                                                                08:27 AM

            IN THE SUPREME COURT OF THE STATE OF HAWAI#I

                                  ---o0o---

                         FRANCIS KAHAWAIOLAA,
                   Respondent/Plaintiff-Appellant,

                                     vs.

 HAWAIIAN SUN INVESTMENTS, INC., a Hawaii Domestic Corporation,
            RONALD J. BLANSET, and JANICE M. BLANSET,
                Petitioners/Defendants-Appellees.

                             SCWC-XX-XXXXXXX

           CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
                (CAAP-XX-XXXXXXX; CIVIL NO. 15-1-0180)

                              APRIL 30, 2020

 RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.

              OPINION OF THE COURT BY RECKTENWALD, C.J.

                             I.   INTRODUCTION

            This case involves a commercial landlord-tenant

dispute.    Defendants Hawaiian Sun Investments, Inc., Ronald

Blanset, and Janice Blanset (collectively referred to as Hawaiian

Sun) performed a self-help eviction (also called a lockout) after
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Plaintiff Francis Kahawaiolaa allegedly breached the lease.

After a bench trial, the Circuit Court of the Third Circuit

(circuit court)1 found that (1) Kahawaiolaa was not entitled to

damages because two of the breaches were material; and (2) his

claims for equitable relief, including a claim for replevin

seeking access to his personal property, were moot.             The

Intermediate Court of Appeals (ICA) vacated the circuit court’s

judgment and concluded that the circuit court erred by (1)
finding that the breaches were material; (2) failing to shift the

burden of proof to Hawaiian Sun on Kahawaiolaa’s replevin claim;

and (3) failing to exercise its equitable powers to weigh the

relative harms to each party.

          The ICA’s first conclusion was correct - the breaches

did not go to the root of the parties’ intent in contracting, as

evidenced by the contract itself.         As to the second finding,

while the ICA correctly stated the law, it incorrectly applied

the law to the circuit court’s decision.          The circuit court found

that the replevin claim was moot since Kahawaiolaa had already

retrieved his personal property by the time of trial.              Thus, the

ICA should not have analyzed the merits of the replevin claim.

Similarly, the ICA misapplied the law of equitable relief to this

case because the only issue on appeal was damages for the lockout

- all the equitable claims were moot.          Because the ICA erred in

its second two holdings, we affirm in part and vacate in part its

     1
          The Honorable Greg K. Nakamura presided.

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judgment on appeal and remand the case to the circuit court for

further proceedings consistent with this opinion.

                              II.   BACKGROUND

            According to his trial testimony, in 2012, Kahawaiolaa

began renting space for his hair salon from Hawaiian Sun in the

Hilo Plaza building.      During the time period relevant to this

case, Kahawaiolaa paid a monthly rent of $4,410.             Kahawaiolaa

further testified that Ronald Blanset had indicated that he
planned to convert Hilo Plaza to condominiums and told

Kahawaiolaa that he could secure commercial space at a fixed

price for a down payment of $12,000.          Kahawaiolaa agreed and paid

Blanset $12,000.

            A letter dated July 1, 2012 that set forth terms for

the $12,000 payment is in the record.           In this letter, Hawaiian

Sun wrote: “If there are differences, change of heart or we

cannot reach an agreement[,] we will compensate you with a

reduction of $1,000.00 per month of the [b]ase rent portion of

the rent during the term of this lease, unless earlier terminated

as herein provided.”

            Kahawaiolaa further testified at trial that he asked

Blanset about the lack of progress on the condominium conversion

in January 2015.2     Unsatisfied with Blanset’s answer, and in

accordance with the July 2012 written agreement, Kahawaiolaa paid

      2
            Page 16 of the transcript appears to indicate that this
conversation took place in January 2012, but Kahawaiolaa’s subsequent
testimony of other events makes clear that the correct date was January 2015.

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$1,000 less in rent than the amount due for that month.

Subsequently, a letter apparently sent from Hawaiian Sun’s

attorneys to Kahawaiolaa on February 24, 2015 indicated that he

owed $5,699.72 for unpaid January and February rent and fees.3

The copy of this letter in the record contains handwritten notes

indicating that Kahawaiolaa was permitted to take $1,000 off the

rent each month.     In addition, the handwritten notes state: “New

30 days notice then take action.           Lock ‘em’ out.”     Ronald Blanset
testified that the notes were in his handwriting, though he also

indicated that he did not remember why he wrote them.

            It appears undisputed that, in addition to the $1,000

withheld from January 2015 rent, Kahawaiolaa then withheld his

rent in its entirety for the months of February, March, and April

2015.   On March 18, 2015 and April 14, 2015, Hawaiian Sun sent

Kahawaiolaa letters stating that these were 30-day and 15-day

notices and demands for Kahawaiolaa to pay $14,719.72 in past-due

rent and fees.     Each letter also indicated that Kahawaiolaa had

violated his lease by (1) failing to maintain the air

conditioner, which allegedly caused damage; (2) having

contractors complete work without permission; and (3) failing to

complete inspections for a certificate of occupancy, and stated

that he did not have the “license(s) to practice in the leased

      3
            This was not the first time Hawaiian Sun sent Kahawaiolaa a notice
for past-due rent. On November 1, 2013, Hawaiian Sun sent a letter indicating
that Kahawaiolaa owed $16,460.54 in rent for the months of August, September,
October, and November.

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space.”   The April 14, 2015 letter also alleged that Kahawaiolaa

had failed to keep Hawaiian Sun informed of his activities,

thereby violating his lease.        The April 14 letter also offered to

apply the $12,000 credit to this amount, indicating a remaining

balance of $7,129.72,4 and gave Kahawaiolaa until May 1, 2015, to

pay the amount indicated.        Kahawaiolaa testified that on

April 29, 2015, he delivered a check for $14,000 to Hawaiian Sun.

            According to his trial testimony, on May 2, 2015,
Kahawaiolaa arrived at the premises and discovered that Hawaiian

Sun had changed the locks.        Posted on the door was a letter from

Hawaiian Sun stating that Kahawaiolaa had not responded to its

notice and that it would return the $14,000 check.              Kahawaiolaa

testified that he was unable to enter the premises to retrieve

his personal belongings due to the lock-out.

            Based on the described events, Kahawaiolaa’s complaint

alleged violations of Hawai#i Revised Statutes (HRS) §§ 654-1,5

      4
            The balance due reflects $14,719.72 in past-due rent and fees,
minus the $12,000 credit, plus rent for the month of May.
      5

            HRS § 654-1 states in relevant part:

            (a) An action may be brought to secure the immediate
            possession of personal property in any court of
            competent jurisdiction by filing a verified complaint
            showing:

            (1) That the plaintiff is entitled to the immediate
            possession of the property claimed;

            (2) A particular description of the property claimed;
            if the property claimed is a portion of divisible
            property of uniform kind, quality, or value, that such
            is the case, and the amount thereof which the
                                                                (continued...)

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480-2,6 480-13,7 and 480-13.5,8 and intentional infliction of

      5
       (...continued)
            plaintiff claims;

            (3) The actual value of the property claimed;

            (4) That the property has not been taken for a tax,
            assessment, or fine pursuant to a statute, or seized
            under an execution or an attachment against the
            plaintiff or the plaintiff’s property, or if so seized
            that it is by statute exempt from such seizure;

            (5) That the property is in the possession of a named
            defendant, and the facts and circumstances relating to
            the possession thereof by the defendant, according to
            the plaintiff’s best knowledge and belief;

            (6) The names of all persons other than the defendant
            in possession of the property, having or claiming or
            who might have or claim to have an interest in the
            property according to the best belief of plaintiff,
            all of whom shall be joined as defendants in the
            action.
      6
             HRS § 480-2 declares unlawful “[u]nfair methods of competition and
unfair or deceptive acts or practices in the conduct of any trade or
commerce[.]”
      7
            HRS § 480-13 states in relevant part:

            (b) Any consumer who is injured by any unfair or
            deceptive act or practice forbidden or declared
            unlawful by section 480-2:

            (1) May sue for damages sustained by the consumer,
            and, if the judgment is for the plaintiff, the
            plaintiff shall be awarded a sum not less than $1,000
            or threefold damages by the plaintiff sustained,
            whichever sum is the greater, and reasonable
            attorney’s fees together with the costs of suit;
            provided that where the plaintiff is an elder, the
            plaintiff, in the alternative, may be awarded a sum
            not less than $5,000 or threefold any damages
            sustained by the plaintiff, whichever sum is the
            greater, and reasonable attorney’s fees together with
            the costs of suit. In considering whether to adopt
            the $5,000 alternative amount in an award to an elder,
            the court shall consider the factors set forth in
            section 480-13.5; and

            (2) May bring proceedings to enjoin the unlawful
            practices, and if the decree is for the plaintiff, the
            plaintiff shall be awarded reasonable attorney’s fees
                                                                (continued...)

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emotional distress.      Kahawaiolaa also requested injunctive relief

to gain access to his personal property and the leased space, and

actual, statutory, exemplary, and punitive damages.

            It is undisputed that on May 18, 2015, Hawaiian Sun

allowed Kahawaiolaa back into the property and he resumed his

business.    Kahawaiolaa testified that he lost customers, income,

and an employee due to the lockout between May 2 and May 18.

            On cross-examination, Kahawaiolaa testified that the
lease he signed stated that the lease itself was the entire

agreement and that the premises were rented as-is.               He further

testified that, although the lease states that written consent of

the lessor was required prior to making alterations, he did not

     7
      (...continued)
           together with the costs of suit.
     8

            Kahawaiolaa, who was 66 years old when the complaint
            was filed, qualifies as an elder for purposes of HRS
            § 480-13.5, which sets forth factors courts must
            consider when determining whether to increase the
            penalties under § 480-2 for commission of the offense
            against an elder:

            (1) Whether the person’s conduct was in wilful
            disregard of the rights of the elder;

            (2) Whether the person knew or should have known that
            the person’s conduct was directed toward or targeted
            an elder;

            (3) Whether the else was more vulnerable to the
            person’s conduct than other consumers because of age,
            poor health, infirmity, impaired understanding,
            restricted mobility, or disability;

            (4) The extent of injury, loss, or damages suffered by
            the elder; and

            (5) Any other factors the court deems appropriate.

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obtain that consent.9      Nor did he provide Hawaiian Sun with a

bond before commencing construction, as the lease indicated was

required.10   And Kahawaiolaa testified that he did not cure the

other lease violations alleged in the April 14 letter.

           Kahawaiolaa testified further on cross-examination that

he does not have a certificate of occupancy.11            He further

testified that, although he had a hairstylist license, he did not

     9
           Section 5.4 of the lease states in pertinent part:

           Lessee agrees that Lessee will make no alterations or
           additions or improvements to said premises without in
           each such case the written consent of Lessor firsthand
           obtained; further, that in the event any alterations,
           additions or improvements in or to said premises are
           required by reason of the special use and occupancy of
           said premises by said Lessee, then said Lessee
           covenants and agrees that Lessee will make such
           alterations, additions or improvements in or to said
           premises at Lessee’s own expense; it being further
           covenanted and agreed that any such alterations,
           additions or improvements and in using and occupying
           the premises, comply with Building Code and ordinances
           of the County of Hawaii and all laws of the State of
           Hawaii pertaining to such work, use or occupancy[.]
     10
           Section 5.7 of the lease states:

           Lessee, before commencing any repair, alteration,
           removal, reconstruction or improvement having a cost
           of $10,000.00 or more shall deposit with Lessor a bond
           or Certificate therefore, in a penal amount equal to
           100% of the contract sum therefore and in form and
           with surety satisfactory to Lessor, naming Lessor as a
           co-obligee, guaranteeing improvement free and clear of
           all mechanic’s and material men’s liens.
      11
            Section 3.7 of the lease states: “Lessee will at all times during
the term observe and comply with all laws, ordinances, and rules and
regulations now or hereinafter made by any governmental authority and
applicable to the occupancy or use of the Premises or the conduct of any
business therein or to the use of the common areas.” Haw. Cty. Code § 5-45(a)
states, “No building or structure shall be used or occupied, and no change in
the existing occupancy classification of a building or structure or portion
thereof shall be made until the building official has issued a certificate of
occupancy therefor as provided herein.”

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have a “beauty shop license,” which is required in order to

employ other stylists to cut hair.         Kahawaiolaa said that he had

not applied for his beauty shop license because the construction

on the suite was not yet completed.         In addition, not all of the

people who worked in the hair salon had licenses to cut hair.

Finally, Kahawaiolaa testified that the lease he signed includes

a “default” clause.12

          On redirect, Kahawaiolaa testified that he paid a large
bill for air conditioner maintenance, though he could not

remember when.    He also indicated that getting his certificate of

occupancy would take more than thirty days and he was diligently

     12
          Section 10.1 of the lease states:

          This lease is upon the express condition that, if
          Lessee shall fail to pay the rent herein reserved or
          any part thereof as the same becomes due, or shall
          fail to faithfully observe and perform any other term,
          covenant, or condition of this lease . . . and the
          breach or default shall continue for a period of
          thirty (30) days after delivery of a written notice of
          any such breach or default . . . Lessor may at once
          reenter the Premises and upon or without the entry, at
          its option, terminate this lease without any further
          service or notice or legal process, and may expel and
          remove from the Premises, Lessee and those claiming
          under it and its effects and Lessor may store, remove
          and dispose of any of Lessee’s improvements or
          personal property at Lessee’s expense, and may then or
          at any time before or thereafter bring an action for
          summary possession of said Premises, all without
          prejudice to any other remedy or right of action which
          Lessor may have to arrears of rent or other breach of
          contract; PROVIDED, HOWEVER, that if the nature of the
          default, other than nonpayment of rent is such that
          the same cannot be reasonably cured within a thirty-
          day period, Lessee shall not be deemed to be in
          default if Lessee shall, within the period, commence a
          cure and thereafter diligently prosecute the same to
          completion.

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working to rectify the problem.13

            When called to testify by Kahawaiolaa, Blanset stated

that he had received the $14,000 check from Kahawaiolaa before

Blanset locked Kahawaiolaa out of his unit.

            Blanset also testified in Hawaiian Sun’s case-in-chief.

He stated that the first time he heard that Kahawaiolaa wanted

his $12,000 returned was in February.14          Blanset further

testified that Kahawaiolaa’s payment history was “erratic at
best,” and that Hawaiian Sun had been lenient about late

payments.    With respect to the $14,000 check, Blanset indicated

that the amount confused him because the letter to Kahawaiolaa

stated his balance due as $7,129.72.          He therefore did not cash

the check.15

            Blanset maintained that, after he changed the locks,

Kahawaiolaa did not ask him to enter to retrieve his personal

property.

            On the topic of damages, Blanset testified that he saw

      13
            This was relevant because Section 10.1 of the lease, which allows
self-help eviction, does not apply if the breach of the lease “cannot be
reasonably cured within a thirty-day period” and the tenant commences a cure
within thirty days and “thereafter diligently prosecute[s] the same to
completion.” Supra, note 10.
      14
            Although Blanset said February 2013, it appears that he meant
February 2015 because he indicates that it was after he received Kahawaiolaa’s
$3,400 rent payment, which occurred in January 2015.
      15
            The March 18, 2015 letter listed rent past due plus rent for
April, which would be due on April 1. This totaled $14,719.72. The April 14
letter listed this amount, minus the $12,000 credit from the condominium
agreement, plus rent for the month of May (though it appears to be mistakenly
listed as rent for the month of April twice). The total due listed in this
letter was $7,129.72.

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very few customers coming to Kahawaiolaa’s salon.

           In addition, Blanset disagreed with Kahawaiolaa’s

testimony that Kahawaiolaa initially gave him the $12,000 as a

personal loan - he maintained that those funds were always for

the condominium conversion.16

           The circuit court issued its written decision and order

on August 26, 2016.      First, the circuit court found that the

July 1, 2012 agreement regarding the $12,000 payment and
Kahawaiolaa’s conversation with Ronald Blanset about repayment

gave Kahawaiolaa the right to pay a monthly rent reduced by

$1,000 until the $12,000 was paid back.           Second, the circuit

court found that, because Hawaiian Sun received Kahawaiolaa’s

$14,000 check before it locked him out, non-payment of rent was

not a proper justification for the lockout.

           The circuit court stated that “as to Hawaiian Sun’s

other justifications for the lock out, Kahawiaolaa has the burden

of proving that he was not in material breach of the lease.”                  The

court found that “[i]f Kahawaiolaa used or occupied the leased

premises without a certificate of occupancy,” that would

constitute a material breach of the lease.            Similarly, the court

      16
            In addition to Kahawaiolaa and Blanset, four other witnesses
testified at trial: Karey Correa, Rhonda Nacino, Linda Sweinhart, and Janice
Blanset. Correa and Nacino worked at Kahawaiolaa’s salon and testified to the
appointments they were unable to keep due to the lockout and the process of
retrieving their personal property from the unit. Correa and Sweinhart
testified to a dispute over Correa attempting to take some chairs that
belonged to Janice Blanset that were stored in another unit of the building.
And Ms. Blanset testified to interactions between her and Kahawaiolaa that do
not bear on the issues on appeal.

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found that “[i]f it is true that [Kahawaiolaa] failed to maintain

an air conditioner maintenance contract and repairs to air

condition[ers] were required, then this could constitute a

material breach” of the lease.        The circuit court further

concluded that Kahawaiolaa did not materially violate the lease

by (1) allowing a mechanic’s and materialmen’s lien to attach (as

Hawaiian Sun did not allege that such a lien in fact attached);

(2) improperly parking his motor vehicles; and (3) failing to
obtain permission from Hawaiian Sun to perform electric and

plumbing work on the property.        The circuit court ordered

Hawaiian Sun to submit proposed findings of fact (FOFs) and

conclusions of law (COLs).

          In a separate order, the circuit court granted in part

Hawaiian Sun’s motion for attorney’s fees, awarding half of the

requested amount.

          The circuit court entered its FOFs and COLs on

December 8, 2016, which tracked its earlier-issued order and used

parts of proposed language that Hawaiian Sun submitted.              The

relevant FOFs read:

          18. Section 5-45 of the Hawaii County Code states:

          No building or structure shall be used or occupied,
          and no change in the existing occupancy classification
          of a building or structure or portion thereof shall be
          made until the building official has issued a
          certificate of occupancy therefore as provided herein.

          19. Section [ ] 3.7 of the Lease states:

          Observance of Laws. Lessee will at all times during
          the term observe and comply with all laws, ordinances,

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          and rules and regulations now or hereinafter made by
          any governmental authority and applicable to the
          occupancy or use of the Premises or the conduct of any
          business therein or to the use of the common areas.

          20. Section 5.4 of the Lease states that any
          alterations, additions or improvements to the leased
          premises and “in using and occupying the premises,
          [must] comply with Building Code and ordinances of the
          County of Hawaii . . . .”

          21. Plaintiff did not prove that he used or occupied
          the leased premises with a certificate of occupancy
          and so he did not prove that he was not in material
          breach of the Lease terms from May 2, 2015 to May 18,
          2015.

          . . .

          26. Under Section 5.1 c) of the Lease, “Lessee shall
          maintain an air conditioners (A/C) contract to clean
          drainage pans and change air filters on three month
          interval[s].”

          . . .

          28. Plaintiff has not shown a breach of contract or a
          basis for liability under Hawai#i Revised Statutes
          (“HRS”) §§ 480-2, 480-13, and 480-13.5 which prohibit
          unfair and deceptive acts or practices in the conduct
          of any trade or commerce.

          29. Plaintiff has not shown there was a factual basis
          for liability for a claim for relief for intentional
          infliction of emotional distress.

The relevant COLs are as follows:

          1. Because Plaintiff failed to prove he was not in
          material breach of the Lease when he was locked out of
          the leased premises from May 2, 2015 to May 18, 2015,
          he is not entitled to recover damages because he was
          precluded from entering the leased premises during
          this period of time.

          2. Because Plaintiff was allowed entry onto the
          premises on May 18, 2015, Plaintiff’s claim for relief
          for entry onto the business premises . . . and for an
          order to be issued pursuant to HRS § 654-2 to retrieve
          Plaintiff’s personal property is moot.

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           3. Because the parties have acted in accordance with
           the lease which was in effect from May 18, 2015,
           Plaintiff’s claim for relief for an order declaring
           Plaintiff’s lease for the business premises . . . to
           remain in effect is moot. Furthermore, Plaintiff’s
           claim for the possession, use and quiet enjoyment
           thereof for the period of the lease is moot.

           4. Because Plaintiff was allowed entry onto the
           premises on May 18, 2015, Plaintiff’s claim for relief
           for an order to be issued pursuant to HRS § 480-13
           restraining Defendants from seizing Plaintiff’s
           personal property, locking Plaintiff out of his
           business space, or harassing Plaintiff or otherwise
           interfering with his business, is moot.

           5. Because Defendants have not breached the contract
           and there is no basis for liability under HRS §§ 480-
           2, 480-13, and 480-13.5 which prohibits unfair and
           deceptive acts or practices in the conduct of any
           trade or commerce, Plaintiff is not entitled to relief
           under these statutes.

           6. Because there is no factual basis for intentional
           infliction of emotional distress, Plaintiff is not
           entitled to recover damages for intentional infliction
           of emotional distress.

           7. Because Defendants have not committed an underlying
           tort, Plaintiff is not entitled to recover punitive
           damages.

A.   ICA Proceedings

           On appeal, Kahawaiolaa raised three points of error.

First, Kahawaiolaa challenged the circuit court’s FOF 21 and COL

1, in which it required him to bear the burden of proving that he

was not in material breach of the lease at the time of the

lockout.   He also challenged the corresponding findings in the

circuit court’s Decision and Order.

           Kahawaiolaa further challenged FOF 21, arguing that the

circuit court erred as a matter of law when it found that he had

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materially breached the lease by failing to obtain a certificate

of occupancy and maintain the air conditioners.            Kahawaiolaa

contended that Hawai#i law does not permit termination of a

commercial lease for breaches of the lease unless the breach is

“so substantial and fundamental as to defeat the object of the

parties in making the agreement.”          (Quoting Aickin v. Ocean View

Investments Co., Inc., 84 Hawai#i 447, 460, 935 P.2d 992, 1005

(1997)).
            Finally, Kahawaiolaa argued that the circuit court

erred when it declined to award him damages after finding that he

cured the violation of the lease caused by his non-payment of

rent.   On this point of error, Kahawaiolaa challenged FOFs 28 and

29 and COLs 5, 6, and 7.      As part of this argument, he asserted

that the circuit court should have awarded him attorney’s fees

instead of Hawaiian Sun.

            The ICA vacated the circuit court’s decision in a

summary disposition order (SDO).          The ICA noted that, under

Hawai#i law, codified as HRS § 654-1, “[i]n an action in replevin

the burden is upon the plaintiff to show that he is entitled to

immediate and exclusive possession of the property claimed.”

(Quoting Chong v. Young, 39 Haw. 527, 529 (Terr. 1952)).              Once a

plaintiff establishes a prima facie case of entitlement to

possession, the burden shifts to the defendant to prove that the

defendant has a special right to title or possession of the

property.    (Citing Consol. Amusement Co. v. Jarrett, 22 Haw. 537,

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538 (Terr. 1915)).

            The ICA found that Kahawaiolaa established a prima

facie case for replevin based on his possession of the property

just prior to Hawaiian Sun locking him out.17            Therefore, the

burden should have shifted to Hawaiian Sun to show any special

entitlement to the property.        Instead, the circuit court

“required Plaintiff to additionally prove that Plaintiff was not

in material breach of the lease,” despite the fact that this is
not an element of a replevin claim.          The ICA noted that the

clause in the lease allowing self-help eviction does not give

Hawaiian Sun title to Kahawaiolaa’s personal property.               Instead,

it provides that Hawaiian Sun “may store, remove and dispose of

any of [Plaintiff]’s improvements or personal property at

[Plaintiff]’s expense.”       (Alterations in SDO).        The ICA thus

determined that the circuit court erred in failing to shift the

burden to Hawaiian Sun on Kahawaiolaa’s replevin claim.

            The ICA further concluded that the circuit court did

not err with respect to its burden-shifting on Kahawaiolaa’s

damages claim.     It reasoned that the Hawai#i Supreme Court has

preserved the common law right to self-help eviction as one

remedy a landlord has for material breach of a lease.

Consequently, the burden for a plaintiff in a civil case alleging

wrongful use of self-help eviction is to show that he or she did

      17
            As discussed further below, the ICA analyzed the merits of the
replevin claim apparently not realizing that the claim was moot.

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not materially breach the lease.           According to the ICA, the

circuit court correctly applied this standard.

           Next, the ICA analyzed whether the two alleged material

breaches of the lease were in fact material - whether the

breaches “go to the ‘root’ of the lease” itself.             The ICA found

that “the lease indicates the Defendants’ objectives included

assurance of [ ] long-term, monthly income and use of the

property by the Plaintiff.”        Consequently, it concluded that the
provisions in the lease mandating that Kahawaiolaa obtain a

certificate of occupancy and maintain the air-conditioning system

were “peripheral” to the primary purpose of the contract and

therefore that his failures to comply were not material breaches.

Thus, the circuit court erred when it found that Kahawaiolaa

materially breached the lease.

           The ICA then held that the circuit court abused its

discretion when it declined to exercise its equitable power to

award damages to Kahawaiolaa based on the circuit court’s

erroneous conclusion that Kahawaiolaa had materially breached the

lease.

           Finally, the ICA vacated the circuit court’s award of

attorney’s fees and costs to Hawaiian Sun.

B.   Supreme Court Proceedings

           Hawaiian Sun raises two errors in its application for

the writ of certiorari.       First, it argues that the ICA erred in

its finding that Kahawaiolaa did not materially breach the lease.

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And second, it argues that the ICA erred in analyzing the

elements of the replevin claim.

              As to the materiality of the breaches, Hawaiian Sun

distinguishes Aickin on the basis that Aickin was about a

forfeiture of a lease, not about a lockout.18            In addition,

Hawaiian Sun appears to argue that the circuit court’s finding of

materiality should be reviewed for abuse of discretion, rather

than de novo, faulting the ICA for “insert[ing] their judgment
for that of the trial judge.”         Hawaiian Sun further argues that

failure to maintain a certificate of occupancy is a material

breach because it constitutes a petty misdemeanor punishable by a

fine of not more than $1,000 or imprisonment for not more than 30

days.      Hawaiian Sun also appears to argue that it could be

subject to accomplice liability for Kahawaiolaa’s failure to

comply with the law.19      Finally, Hawaiian Sun argues that

Kahawaiolaa’s failure to maintain the air conditioner was a

material breach because it resulted in the air conditioner

malfunctioning, causing damage.

      18
            Hawaiian Sun does not explain why this factual distinction means
that Aickin’s method of analysis for determining whether a breach is material
does not apply to this case. In addition, the distinction is one without a
real difference; forfeiture of a lease would entitle the landlord to execute a
lockout. Although the case is distinguishable with respect to the materiality
holding, as explained further below, the ICA erred in relying on Aickin’s
holding with respect to equitable relief.
      19
            Hawaiian Sun quotes HRS § 702-222(1)(b): “A person is an
accomplice of another person in the commission of an offense if[,] [w]ith the
intention of promoting or facilitating the commission of the offense, the
person . . . [a]ids or agrees or attempts to aid the other person in planning
or committing it[.]”

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          With respect to the second point raised in the

application, Hawaiian Sun argues that the ICA incorrectly

analyzed the replevin claim as COL 1, when replevin was actually

covered by COL 2.     In COL 1, the circuit court found that

Kahawaiolaa was not entitled to damages because he failed to

prove that he did not materially breach the lease.             And in COL 2,

the circuit court found that Kahawaiolaa’s claim for relief

requesting access to his personal property was moot because he
was allowed access to it on May 18, 2015.

          In addition, Hawaiian Sun argues that the ICA erred in

the replevin claim analysis because Kahawaiolaa never asked to

retrieve his personal property.

          Kahawaiolaa did not file a response.

                        III.   STANDARD OF REVIEW

          The circuit court’s finding that Kahawaiolaa’s breaches

“could” be material is a conclusion of law.           See Brown v. KFC

Nat’l Management Co., 82 Hawai#i 226, 239, 921 P.2d 145, 159

(1996) (“As a general rule, the construction and legal effect to

be given a contract is a question of law freely reviewable by an

appellate court.” (citation omitted)); see also Aickin v. Ocean

View Inv. Co., Inc., 84 Hawai#i 447, 461, 935 P.2d 992, 1006

(1997) (analyzing whether breach of a lease was material by

reviewing the lease on its face).

          “An appellate court may freely review conclusions of

law and the applicable standard of review is the right/wrong

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test.   A conclusion of law that is supported by the trial court's

findings of fact and that reflects an application of the correct

rule of law will not be overturned.”          Dan v. State, 76 Hawai#i

423, 428, 879 P.2d 528, 533 (1994) (internal quotation marks and

citations omitted).

                              IV.   DISCUSSION

            With respect to Kahawaiolaa’s claim for damages, the

ICA was correct that the circuit court erred as a matter of law
when it found that Kahawaiolaa’s breaches could have been

material.    However, the ICA’s analysis of Kahawaiolaa’s replevin

claim was superfluous because the circuit court correctly

determined that the claim was moot.          In addition, the ICA

misapplied case law regarding the circuit court’s equitable

powers where all of the equitable claims were moot and only

claims for damages remained.

A.   The Circuit Court Incorrectly Determined That Kahawaiolaa’s
     Breaches Were Or Could Have Been Material

            In Watson v. Brown, this court held that “a commercial

landlord is not precluded as a matter of law from self-help

eviction for non-payment of rent.”          67 Haw. 252, 257, 686 P.2d
12, 16 (1984).     Watson did not speak to the availability of self-

help eviction for other types of breaches of the lease.               But

under ordinary principles of contract law, in order for one party

to rescind the contract based on an alleged breach by the other

party, the alleged breach must be material.            Golf Carts, Inc. v.

Mid-Pacific Country Club, 53 Haw. 357, 359, 493 P.2d 1338, 1339

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(1972) (citing Yucca Mining & Petroleum Co. v. Howard C. Phillips

Oil Co., 365 P.2d 925, 927 (N.M. 1961) (“A rescission is not

warranted by a mere breach of contract not so substantial and

fundamental as to defeat the object of the parties in making the

agreement.” (quotation omitted))).

            “A material default or breach does not result simply

because a party to a contract violates one of the agreement’s

provisions.”    Aickin, 84 Hawai#i at 460, 935 P.2d at 1005
(emphasis in original).      Instead, “the act failed to be performed

must go to the root of the contract or the failure to perform the

contract must be in respect of matters which would render the

performance of the remainder a thing different in substance from

that which was contracted for.” Id. (quoting Golf Carts, 53 Haw.

at 359, 493 P.2d at 1339) (emphasis omitted).

            The lease between the parties has a five year term,

during which Kahawaiolaa was able to occupy the premises in

exchange for monthly rent of $2,940.00, plus utilities, taxes,

and fees.    As the ICA correctly concluded, “on its face, the

lease indicates the Defendants’ objectives included assurance of

[ ] long-term, monthly income[.]”         Kahawaiolaa’s objective, as

indicated by the lease, was to secure a place to conduct his hair

salon business.

            The circuit court’s order does not include any

explanation of its findings that the failure to obtain a

certificate of occupancy and maintain the air conditioning system

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were material breaches of the lease.          In the case of the air

conditioner, the circuit court did not even find that Kahawaiolaa

did breach the lease.20      We conclude that neither breach, if it

occurred, was material.

      1.    Failure to obtain a certificate of occupancy

            The lease required Kahawaiolaa to “observe and comply

with all laws, ordinances, and rules and regulations now or

hereinafter made by any governmental authority and applicable to
the occupancy or use of the Premises or the conduct of any

business therein or to the use of the common areas.”              It is

undisputed that Kahawaiolaa failed to obtain a certificate of

occupancy, required under Haw. Cty. Code § 5-45(a).21              The

question is whether this breach goes to the root of the

contract.22

      20
            The circuit court’s Decision and Order states, “If it is true that
Kahawaiolaa failed to maintain an air conditioner maintenance contract and
repairs to air condition[ers] were required, then this could constitute a
material breach of the Lease terms on this point.” (Emphases added.)
      21
            For the text of this provision, see supra, note 11.
      22
            It is not clear from the record why obtaining a certificate of
occupancy is Kahawaiolaa’s responsibility, rather than Hawaiian Sun’s. It is
possible that the responsibility arises from Kahawaiolaa doing construction on
the premises, as it appears from the County Code that a person generally
obtains a certificate of occupancy after new construction. See Haw. Cty. Code
§ 5-45(c) (“The building official is authorized to issue a temporary
certificate of occupancy before the completion of the entire work covered by
the permit, provided that such portion or portions shall be occupied
safely.”). The circuit court appears to have assumed without finding that it
was Kahawaiolaa’s responsibility to obtain the certificate of occupancy, not
Hawaiian Sun’s. Although the ordinance does not indicate whether the landlord
or the tenant is responsible for obtaining the certificate, the certificate
itself must contain “[t]he name and address of the owner.” § 5-45(b)(3). As
explained further below, even assuming arguendo that it was Kahawaiolaa’s
responsibility to obtain a certificate of occupancy, his failure to do so was
                                                                (continued...)

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            Hawai#i courts have not ruled on the materiality of

this specific type of breach of a commercial lease, and precedent

from other jurisdictions is aged and sparse.            But the case law

that does exist shows that courts in other jurisdictions have

implied or found that failure to obtain a certificate of

occupancy or comply with zoning codes is not a material breach of

a lease, even where the lease requires compliance with all laws.

See, e.g., Entrepreneur, Ltd. v. Yasuna, 498 A.2d 1151, 1159-60
(D.C. Ct. App. 1985) (forfeiture of the lease was not warranted

where tenant failed to obtain a certificate of occupancy for

tenant’s mail-order business); Ogden v. Hamer, 268 A.2d 500, 501

(N.Y. App. Div. 1944) (forfeiture was not warranted after tenant

failed city inspection where “the covenants were substantially

performed and no injury resulted to the landlords for the failure

to comply strictly”); Madison Stores, Inc. v. Enkay Sales Corp.,

142 N.Y.S.2d 132, 138 (N.Y. Mun. Ct. 1955) (placement of signs in

building window in violation of zoning code prohibiting signage

would not justify forfeiture).

            At the same time, several of these cases holding that

various legal violations are not grounds for forfeiture imply

that the tenant would be in a legally worse position had the

tenant failed to maintain a certificate of occupancy.               For

example, in Intertherm, Inc. v. Structural Systems, Inc., the

      22
       (...continued)
not be a material breach of the lease.

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Missouri Supreme Court held that, although the tenant breached

the lease by failing an inspection of its warehouse, the fact

that “the occupancy permit was presently valid” was reason to

think that the breach of the lease was not material.              504 S.W.2d
64, 67 (Mo. 1974) (alterations and quotation marks omitted).

This comparison suggests that some courts may consider failure to

maintain a certificate of occupancy a particularly severe type of

legal violation.
            On the whole, it appears that courts are most likely to

find legal violations to be material lease violations where the

legal violation threatens the health or safety of the occupants.

See, e.g. Lewis v. Clothes Shack, Inc., 309 N.Y.S.2d 513, 515-16

(N.Y. Civ. Ct. 1970) (finding material breach where tenant failed

to clear a fire hazard for one-and-a-half years), rev’d on other

grounds, 322 N.Y.S.2d 738 (N.Y. App. Term 1971) (citing First

Nat. Stores v. Yellowstone Shopping Center, Inc., 237 N.E.2d 868

(N.Y. 1968)).

            In this case, there is no indication that Kahawaiolaa’s

failure to obtain a certificate of occupancy affected the root of

the contract, nor that his breach caused or perpetuated a safety

hazard.23   Consequently, we hold that, under the circumstances of

this case, this breach was not material.

      23
            Our ruling is based on the language of this lease, which did not
specify that obtaining a certificate of occupancy was a material term of the
agreement.

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     2.     Failure to maintain air conditioners

            Kahawaiolaa’s alleged failure to maintain the air

conditioners was plainly not a material breach.             Although

Hawaiian Sun alleged that this breach caused damage, that is not

an element of materiality.

            Viewing the lease as a whole, we can surmise that

Hawaiian Sun did have the purpose of receiving the property back

at the end of the lease in substantially the same condition in

which they leased it to Kahawaiolaa.          It is possible that failing

to maintain the air conditioner in a way that causes significant

damage would frustrate that purpose.          But that argument is

fundamentally about damage to the property, not air conditioner

maintenance.    Failing to maintain an air conditioning system may

or may not ultimately result in property damage.             Under the

circumstances of this case, air conditioner maintenance itself

did not affect the parties’ purpose in contracting, as evidenced

by the contract itself.       Thus this breach also was not material.

B.   Kahawaiolaa’s Replevin Claim Was Moot

            An action in replevin seeks return of specific personal

property.    Tsuru v. Bayer, 25 Haw. 693, 697 (Terr. 1920).              HRS

§ 654-1(a) codifies replevin into statute.            The statute provides,

“An action may be brought to secure the immediate possession of

personal property in any court of competent jurisdiction by

filing a verified complaint” that meets certain requirements.                  In

COL 2, the circuit court found that Kahawaiolaa’s claim for

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return of his personal property was moot by the time of the trial

because he was allowed access to the premises on May 18, 2015,

sixteen days after being locked out.

          The ICA did not analyze whether the circuit court erred

when it deemed Kahawaiolaa’s replevin claim moot.             Instead, the

ICA appears to have erroneously read the circuit court’s COL 1 as

if it applied to the replevin claim when in fact, COL 2 applied

to the replevin claim.24     The ICA proceeded to analyze the

accuracy of COL 1’s burden-shifting framework as applied to a

replevin claim, determining it to be in error.            Had the circuit

court in fact failed to shift the burden of proof in the way that

the ICA said, the ICA’s judgment would have been correct.

          But as it stands, the ICA’s analysis appears to have

been based on a mistaken reading of the circuit court’s order.

COL 1 applies only to Kahawaiolaa’s damages claim.             The circuit

court was right to find that the replevin claim was moot because

Kahawaiolaa had by then received access to his personal property.

     24
          COL 1 states:

          Because Plaintiff failed to prove he was not in
          material breach of the Lease when he was locked out of
          the leased premises from May 2, 2015 to May 18, 2015,
          he is not entitled to recover damages because he was
          precluded from entering the leased premises during
          this period of time.

          COL 2 states:

          Because Plaintiff was allowed entry onto the premises
          on May 18, 2015, Plaintiff’s claim for relief for
          entry onto the business premises . . . for an order to
          be issued pursuant to HRS § 654-2 to retrieve
          Plaintiff’s personal property is moot.

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C.   The Circuit Court Committed No Additional Errors With
     Respect To Its Equitable Powers

            The ICA engaged in analysis of the circuit court’s use

of its equitable powers despite the fact that the only remedy on

appeal was the legal remedy for the lockout - damages.               The other

equitable claims were moot.        The ICA’s analysis appears to have

been based on a misapplication of Aicken and Food Pantry, Ltd. v.

Waikiki Business Plaza, Inc., 58 Haw. 606, 575 P.2d 869 (1978).

The ICA quotes Food Pantry as stating, in part, “In an action for

declaratory judgment, the court is empowered to grant ancillary

equitable relief . . . .       Equity does not favor forfeitures, and

where no injustice would thereby be visited upon the injured

party, equity will award him compensation rather than decree a

forfeiture against the offending party.”           (Citing 58 Haw. at 613-

14, 575 P.2d at 875-76)       The ICA took this quote to mean that in

the present case, it must analyze whether the circuit court erred

when it declined to award damages based on its finding that

Kahawaiolaa materially breached the lease.            But this misreads

Food Pantry.

            Kahawaiolaa’s complaint is not a declaratory action.

And the matters on appeal relate only to damages he allegedly

suffered as a result of Hawaiian Sun exercising self-help

eviction.    Therefore, the rule stated in Food Pantry does not

apply in the first instance.        Second, in Food Pantry, the trial

court refused to declare the lease invalid after the landlord

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requested that it do so. 58 Haw. at 617-18, 575 P.2d at 878.

The language from Food Pantry the ICA quoted refers to the trial

court’s equitable authority to grant damages instead of the

equitable relief requested (in Food Pantry, a declaration that

the lease was no longer in effect).         That is not the situation

presented in Kahawaiolaa’s case; the ICA erred in applying that

analysis here.

          As a consequence of its analysis, the ICA remanded the

case to the circuit court with instructions to “act in accordance

with established principles of equity to balance the damages to

Defendants stemming from Plaintiff’s breaches and the damages to

Plaintiff stemming from Defendants’ own breaches of the lease[.]”

This balancing would be inappropriate given that the only matter

left for the circuit court to decide after correctly finding that

Kahawaiolaa’s equitable claims were moot was the amount of

damages to which Kahawaiolaa is entitled.           Hawaiian Sun did not

counterclaim for any damages against Kahawaiolaa.             We therefore

vacate the portion of the ICA’s judgment finding that the circuit

court abused its discretion in exercising its equitable powers.

          The ICA did not conclude that the circuit court erred

in determining the merits of Kahawaiolaa’s unfair competition and

intentional infliction of emotional distress claims except to the

extent that the circuit court based that decision on a finding

that Kahawaiolaa’s breaches were material.           Kahawaiolaa did not

cross-appeal.    Consequently, we need not analyze those claims

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further.

                              V.   CONCLUSION

           Although the ICA was correct to hold that Kahawaiolaa

was entitled to damages because he did not materially breach his

lease, it was incorrect to analyze the merits of the moot

equitable claims.     Accordingly, we affirm in part and vacate in

part the ICA’s September 12, 2019 judgment on appeal, and remand

the case to the circuit court for entry of a judgment of damages

in favor of Kahawaiolaa, in accordance with this opinion, in an

amount it determines appropriate.

Al Thompson                               /s/ Mark E. Recktenwald
for petitioners
                                          /s/ Paula A. Nakayama
Peter L. Steinberg
for respondent                            /s/ Sabrina S. McKenna

                                          /s/ Richard W. Pollack

                                          /s/ Michael D. Wilson

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