Court Opinion

ID: 4378175
Source: CourtListenerOpinion
Date Created: 2019-03-18 19:02:59.749896+00
Date Added: 2024-06-11T07:39:51.371459
License: Public Domain

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                                                          Electronically Filed
                                                          Supreme Court
                                                          SCAP-XX-XXXXXXX
                                                          18-MAR-2019
                                                          07:57 AM

            IN THE SUPREME COURT OF THE STATE OF HAWAII

                            ---oOo---
________________________________________________________________

            STEPHANIE SHEVELAND, Plaintiff-Appellant,
                               vs.
           WELLS FARGO BANK, N.A., Defendant-Appellee,
                               and
MASOOD M. FOADI; FAHI S. FOADI; MORTGAGE ELECTRONIC REGISTRATION
        SYSTEMS, INC.; CIT BANK, N.A., formerly known as
    ONEWEST BANK, FSB; OWB REO LLC, and DOE DEFENDANTS 1-50,
                      Defendants-Appellees.
________________________________________________________________

                            SCAP-XX-XXXXXXX

        APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUIT
              (CAAP-XX-XXXXXXX; CIV. NO. 16-1-0262(1))

                            MARCH 18, 2019

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

                 OPINION OF THE COURT BY McKENNA, J.

                           I.   Introduction

      Dentons represents itself as the world’s largest law firm.

Dentons US LLP maintains offices throughout the United States,

including, as of July 2018, an office in Hawaiʻi comprising the
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former partners (and other employees) of the former Hawaiʻi law

firm Alston Hunt Floyd & Ing (“AHFI”).          Prior to joining Dentons

US LLP as partners, the AHFI partners incorporated themselves

into separate lawyers’ professional business organizations.               See

Declaration of Paul Alston (“[T]he lawyers who were to become

partners in Dentons US LLP form[ed] their own individual law

corporations and ha[d] those corporations become partners in

Dentons.”).

      Dentons US LLP represents Defendant-Appellee CIT Bank in

this appeal, through two former AHFI partners who are Hawaiʻi-

licensed.     During the course of the appeal, Dentons US LLP,

through these two partners, filed a motion for admission pro hac

vice of a California attorney with a different law firm.

Counsel for Plaintiff-Appellant Stephanie Sheveland

(“Sheveland”) opposed the motion, alleging that Dentons US LLP,

as a firm, was engaged in the unauthorized practice of law in

Hawaiʻi, in violation of Hawaiʻi Revised Statutes (“HRS”) § 605-

14 (2016), which provides the following, in relevant part:

            It shall be unlawful for any person, firm, association, or
            corporation to engage in or to attempt to engage in or to
            offer to engage in the practice of law, or to do or attempt
            to do or offer to do any act constituting the practice of
            law, except and to the extent that the person, firm, or
            association is licensed or authorized so to do by an
            appropriate court, agency, or office or by a statute of the
            State or of the United States. . . .

This court is the “appropriate court” authorizing the practice

of law in this state.      See Haw. Const. art. VI, § 7 (“The

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supreme court shall have power to promulgate rules and

regulations in all civil and criminal cases for all courts

relating to process, practice, procedure and appeals, which

shall have the force and effect of law.”).

      The specific court rule governing the organized practice of

law in Hawaiʻi is Rule 6 of the Rules of the Supreme Court of

Hawaiʻi (“RSCH”), titled “Lawyer’s Professional Business

Organizations,” which provides, in relevant part, as follows:

                 (a) Compliance    with   this   rule   and   applicable
           statutes. Any person or persons seeking to practice law as
           a corporation, a company, an association, in partnership,
           or in some other lawful organizational form (hereafter,
           lawyers’ professional business organization) shall comply
           with the provisions of this rule and[,] if applicable[,]
           statutes.
           . . . .
                 (d) Shares; ownership and transfer.
                 (1) Shares or interests in a lawyers’ professional
           business organization may be owned only by a lawyers’
           professional business organization or by one or more
           persons licensed to practice law in this state by this
           court. . . .
           . . . .
                 (e) Directors.      Notwithstanding    any    statutory
           provisions, each director of a lawyers’ professional
           business organization shall be licensed to practice law in
           this state by this court. . . .
                 (f) Officers. Notwithstanding statutory provisions,
           each   officer   of   a    lawyers’   professional   business
           organization shall be licensed to practice law in this
           state by this court. . . .

RSCH Rule 6 (2001).     Sheveland contends that the language of

RSCH Rule 6 requires every partner of Dentons US LLP to be

Hawaiʻi-licensed.    Sheveland argues that, without such a

requirement, non-Hawaiʻi-licensed attorneys could direct the

activities of Hawaiʻi-licensed attorneys in a Hawaiʻi firm

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without regulation or oversight by this court or the Office of

Disciplinary Counsel.     She asserts that Dentons US LLP is

“majority owned by persons not licensed to practice law in

Hawaiʻi,” in violation of the rule.       Sheveland asserts that the

Hawaiʻi-licensed attorneys appearing in this appeal “should be

barred from stating or representing that they are practicing or

appearing as part of ‘Dentons US LLP.’”

      CIT Bank counter-argues that Sheveland’s interpretation of

RSCH Rule 6 contradicts the rule’s plain text, purpose, and

history.   As to Rule 6(d)(1)’s plain language, CIT Bank asserts

that shares or interests in a law firm can be owned either by

another lawyer’s professional business organization or by one or

more Hawaiʻi-licensed attorneys:

           (d) Shares; ownership and transfer.
           (1) Shares or interests in a lawyers’ professional
           business organization may be owned only by a lawyers’
           professional business organization or by one or more
           persons licensed to practice law in this state by this
           court. . . .

CIT Bank points out that the “one or more persons” language

allows a Hawaiʻi law firm to be owned by non-Hawaiʻi-licensed

attorneys and a minimum of one Hawaiʻi-licensed attorney.            Were

the rule to require that only Hawaiʻi-licensed attorneys could

own law firms practicing in Hawaiʻi, CIT Bank argues, the phrase

“one or more” would have to be omitted from the rule.

      CIT Bank next turns to the history of RSCH Rule 6.            CIT

Bank argues that when the rule was first promulgated, there were
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no express jurisdictional limitations contained in the statutes

the rule referenced (namely, HRS Chapter 416, the Hawaiʻi

Professional Corporation Law, and Chapter 605, the chapter

governing attorney licensure in Hawaiʻi).      Instead, CIT Bank

argues, the statutes “reflected an intent only to limit

management and control of professional corporations to licensed

individuals.”    CIT Bank also points out that the rule was not

updated after the repeal of the Hawaiʻi Professional Corporation

Law in 1987 and its replacement with the Professional

Corporation Act.    The Professional Corporation Act expressly

provided that corporate shares could be owned by anyone in the

United States, its territories, and the District of Columbia.

      CIT Bank further argues that Sheveland’s interpretation is

inconsistent with other court rules that contemplate multi-

jurisdictional law firm practice in Hawaiʻi.       CIT Bank cites to

RSCH 11(b) (2016), which requires firms composed “in whole or in

part” by Hawaiʻi-licensed attorneys to participate in the IOLTA

program.   It also notes that Hawaiʻi Rules of Professional

Conduct (“HRPC”) Rule 7.5 (2014) similarly permits multi-

jurisdictional law firm practice, as it requires Hawaiʻi law firm

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letterheads to indicate which attorneys are not licensed to

practice in Hawaiʻi.1

      CIT Bank also points out that this court’s ethical rules

once prohibited Hawaiʻi law partnerships from including any

person not licensed to practice law in Hawaiʻi.           See Hawaiʻi Code

of Professional Responsibility (“HCPR”) Disciplinary Rule (“DR”)

2-102(D) (“A partnership shall not include any person not

licensed to practice law in the courts of the State of

Hawaii.”); see also HCPR Ethical Consideration (“EC”) 2-11 (“No

partnership for the practice of law in the State of Hawaii may

include a member who is not admitted to practice in the courts

of the State of Hawaii.”).       Over 30 years ago, however, those

rules were deleted.      Lastly, CIT Bank asserts that statutes on

similar subject matter, namely the licensure of Hawaiʻi

professionals organized into corporations, do not limit

ownership of corporate shares to just Hawaiʻi-licensed

individuals.    See HRS § 415A-9(a) (2004) (“A professional

corporation may issue shares . . . only to individuals

authorized by law in this State or in any other state or

territory of the United States or the District of Columbia to

1
      CIT Bank also argues that Sheveland’s interpretation of RSCH Rule 6
renders the rule unconstitutional under the United States Constitution’s
Commerce Clause and Privileges and Immunities Clause. As we dispose of the
RSCH Rule 6 challenge using canons of interpretation, we do not address the
constitutional issues.

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render a professional service permitted by the corporation’s

articles of incorporation.”) (emphasis added).

      Amicus Curiae Federal National Mortgage Association

(“FNMA”) filed a substantive joinder to CIT Bank’s reply brief.

FNMA is represented by Carlsmith Ball, a multi-jurisdictional

law firm with offices in Hawaiʻi and California (and, in the

past, Guam).    FNMA points out an inconsistency within RSCH Rule

6:   amendments to the rule to expressly include law partnerships

inadvertently retained jurisdictional limitations initially

intended for law corporations.      FNMA submits that Carlsmith Ball

was properly formed as a law partnership before this change to

RSCH Rule 6 occurred.     FNMA posits that the rule change

“inadvertently divested properly formed partnerships like

Carlsmith Ball, which had partners licensed in other

jurisdictions, of their legitimate business interests,” in

violation of the due process clause of the Fourteenth Amendment

to the United States Constitution.      FNMA adds that it was

“highly doubtful” that this court would have amended RSCH Rule 6

in a manner exposing it to constitutional challenge.

      This court issued an order granting Dentons US LLP’s motion

for pro hac vice admission and stating that an opinion on the

RSCH Rule 6 issue would be forthcoming.       This opinion now

addresses the issue.     We hold that the following underlined

portions of RSCH Rule 6 have been superseded, by implication, by

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other rules of this court that permit law firms composed of

Hawaiʻi-licensed and non-Hawaiʻi-licensed attorneys to practice

law in Hawaiʻi, to mean “in this state or in any other state or

territory of the United States or the District of Columbia”:

            (e) Directors. Notwithstanding any statutory provisions,
            each director of a lawyers’ professional business
            organization shall be licensed to practice law in this
            state by this court. A lawyers’ professional business
            organization that has only one shareholder need have only
            one director who shall be such shareholder.
            (f) Officers. Notwithstanding statutory provisions, each
            officer of a lawyers’ professional business organization
            shall be licensed to practice law in this state by this
            court, except as provided in this subsection (f). If a
            lawyers’ professional business organization is incorporated
            with a single shareholder and a single director after July
            1, 1987, or if a lawyers’ professional business
            organization converts to having a single shareholder and a
            single director after that date, the person or persons
            holding the offices of secretary and treasurer need not be
            licensed. If a lawyers’ professional business organization
            had a single shareholder and single director prior to July
            1, 1987, the person or persons holding the offices of vice-
            president and secretary need not be licensed, in which
            event the offices of president and treasurer shall be held
            by the sole shareholder as previously required by this
            rule. An unlicensed person, even if permitted to serve as
            an officer pursuant to this rule, shall in no event serve
            as a director or be a shareholder of a lawyers’
            professional business organization.2

                              II.   Discussion

      Upon closer inspection, the above-identified portions of

RSCH Rule 6 have been impliedly superseded by other court rules

governing the organized practice of law to mean “in this state

or in any other state or territory of the United States or the

2
      The continued need for the remainder of RSCH Rule 6 is not addressed at
this time.

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District of Columbia.”     As will be discussed in further detail

below, when the rule was first promulgated, it was clear that

only Hawaiʻi-licensed attorneys could serve as partners or

shareholders in Hawaiʻi law corporations.      Two years later,

however, this court’s ethical rules governing the practice of

law changed dramatically, to eliminate the requirement that only

Hawaiʻi-licensed attorneys could serve as partners in Hawaiʻi law

firms.   RSCH Rule 6, however, remained the same in all material

respects.    This court went further to promulgate new rules that

seemed to allow law firms practicing in Hawaiʻi to have non-

Hawaiʻi-licensed members, as long as these firms noted the

jurisdictional limitations of these attorneys on their

letterheads and firm listings (HRCP Rule 7.5) and contributed to

the IOLTA program (RSCH Rule 11(b)).      (Even when related

statutes changed to allow non-Hawaiʻi-licensed individuals to

serve as shareholders, officers, directors, and partners within

Hawaiʻi professional corporations and partnerships, RSCH Rule 6

still remained materially unchanged.)      Thus, the above-

identified portions of RSCH Rule 6, which prohibit non-Hawaiʻi-

licensed attorneys from serving as directors or officers of

Hawaiʻi law firms with a multi-jurisdictional presence, were

repealed by implication by these related court rules.        As such,

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RSCH Rule 6 does not prohibit Dentons US LLP from practicing law

in Hawaiʻi through its Hawaiʻi-licensed attorneys.

A.   RSCH Rule 6’s History

      RSCH 6 (initially numbered RSCH Rule 24) originated in a

per curiam opinion of this court, Petition of the Bar

Association of Hawaii, 55 Haw. 121, 516 P.2d 1267 (1973) (per

curiam).   In that matter, the Hawaiʻi State Bar Association

petitioned this court to allow the incorporation of attorneys

under the newly enacted Professional Corporation Act, then HRS

§§ 416-141 through 154. 55 Haw. at 121, 516 P.2d at 1267-68.

This court was aware that attorneys sought to establish law

corporations to benefit from federal tax advantages, but it was

concerned that the Bar Association’s proposed rule would limit

malpractice liability of incorporated attorneys, contrary to the

Uniform Partnership Act, the HCPR, and a state statute

forbidding abridgment of the substantive rights of client-

litigants. 55 Haw. at 122, 516 P.2d at 1268.        This court

therefore adopted the rule, then numbered RSCH Rule 24,

governing Professional Corporations, which read, in relevant

part, as follows:

           (b) Requirements for Issuance of Certificate of
           Registration. The clerk shall issue a Certificate of
           Registration to such corporation if its application shows
           that:
                 (1) The applicant is organized and exists pursuant
                 to Professional Corporation Law, HRS, Sections 416-

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                 141 through 416-154, and is a professional
                 corporation within the meaning of said law and
                 complies with all the requirements of said law and
                 this rule.
                 (2) Each shareholder, director and officer of the
                 applicant is licensed to practice law in this state
                 by this court. . . .
           (c) Shares; Ownership and Transfer.
                 (1) Shares in a law corporation may be owned only by
                 the corporation or by one or more persons licensed to
                 practice law in this state by this court.
           . . . .
           (j) Compliance with Law and Rules of Court. A law
           corporation’s affairs shall be conducted in compliance with
           law and with the rules of this court. It shall be subject
           to the applicable rules and regulations adopted by, and the
           disciplinary powers of, this court. Nothing in this rule
           shall affect or impair the disciplinary powers of this
           court over any law corporation or over any person licensed
           to practice in this state by this court.

RSCH Rule 24 (1979) (emphases added).        RSCH Rule 24 thus

prohibited non-Hawaiʻi-licensed attorneys from serving as

shareholders, directors, or officers of Hawaiʻi law corporations.

      Contemporaneous provisions of the HCPR and the HRS provide

a fuller picture of the jurisdictional limitations on organized

law practice at that time.      Between 1970 and 1981, HCPR DR 2-

102(D) stated, “A partnership shall not include any person not

licensed to practice law in the courts of the State of Hawaii.”

EC 2-11 likewise provided, “No partnership for the practice of

law in the State of Hawaii may include a member who is not

admitted to practice in the courts of the State of Hawaii.”

Similarly, HRS § 416-146 (1976) required that “[s]hares of

capital in a professional corporation . . . be issued only to a

licensed person. . . .” with “licensed person” referring to the

attorney licensing provisions in HRS Chapter 605, which

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pertained only to Hawaiʻi licensure by this court.           Thus, it

seems clear that at that time, all law partners, shareholders,

officers, and directors had to have been Hawaiʻi-licensed

attorneys.

B.    RSCH Rule 6’s Inconsistency with Related Court Rules and
      Statutes

      Just two years following RSCH Rule 24’s adoption, however,

inconsistencies between the rule and other court rules appeared.

HCPR DR 2-102(D) and EC 2-11 were amended to delete the

requirement that every partner in a law firm be licensed to

practice law in Hawaiʻi.      The 1981 amendment to HCPR DR 2-102(D)

stated the following, which allowed, with conditions, Hawaiʻi law

firm ownership by Hawaiʻi-licensed and non-Hawaiʻi-licensed

attorneys:

           A law firm shall not be formed or continued between or
           among lawyers licensed in different jurisdictions unless
           all enumerations of the partners, associates, and “of
           counsel” lawyers of the firm on its letterhead and in other
           permissible listings make clear the jurisdictional
           limitations on those partners, associates, and “of counsel”
           lawyers of the firm not licensed to practice in all listed
           jurisdictions.

(Emphasis added.)3     Likewise, the 1981 amendment to EC 2-11

deleted the sentence, “No partnership for the practice of law in

3
    In 1994, the HCPR was replaced by the Hawaiʻi Rules of Professional
Conduct (“HRPC”); Rule 2-102(D) was replaced with the “identical” HRPC Rule
7.5(e), which provided the following, which, again, allowed, with conditions,
law firms to be owned by non-Hawaiʻi-licensed and Hawaiʻi-licensed attorneys
practicing in Hawaiʻi:

                                                              (continued. . .)

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the State of Hawaii may include a member who is not admitted to

practice in the courts of the State of Hawaii.”           These changes

to court rules are clearly inconsistent with the prohibitions

within RSCH Rule 6 against non-Hawaiʻi-licensed attorneys serving

as directors or officers within Hawaiʻi law firms that have a

multi-jurisdictional presence.        Where court rules conflict in

this way, the later rules prevail.         See, e.g., Bank of America

v. Reyes-Toledo, 143 Hawaiʻi 249, 257, 428 P.3d 761, 769 (2018)

(“[W]hen interpreting rules promulgated by the court, principles

of statutory construction apply.”) (citations omitted); HRS § 1-

9 (2009) (“The repeal of a law is . . . implied when the new law

contains provisions contrary to, or irreconcilable with, those

of the former law.”); Wahiawa Sugar Co. v. Waialua Agric. Co.,

13 Haw. 109, 110, 1900 WL 2519, 1 (Haw. Terr. 1900)

(acknowledging that “repeals by implication are not favored,”

but, as between two versions of a statute that conflict, the

latter must prevail over the former).         Although repeal or

supersession of rules by implication is not favored, in this

(continued. . .)
            A law firm shall not be formed or continued between or
            among lawyers licensed in different jurisdictions unless
            all enumerations of the partners, associates, and “of
            counsel” lawyers of the firm on its letterhead and in other
            permissible listings make clear the jurisdictional
            limitations on those partners, associates, and “of counsel”
            lawyers of the firm not licensed to practice in all listed
            jurisdictions.

(Emphasis added.)

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case, the inconsistency between the changes to court rules and

the relevant portions of RSCH Rule 6 is so clear, and there is

no rational basis for harmonizing the inconsistencies, that

supersession by implication exists.           See Fuentes v. Workers’

Comp. Appeals Bd., 16 Cal. 3d 1, 7, 547 P.2d 449, 453 (1976)

(“Repeals by implication are not favored, and are recognized

only when there is no rational basis for harmonizing two

potentially conflicting laws.”).

        RSCH Rule 6(e) and (f)4 also became inconsistent with

related statutes governing professional corporations.               The

Legislature replaced HRS Chapter 416 with Chapter 415A in 1985.

1985 Haw. Sess. Laws Act 259 at 495-504.            Section 9(a) of the

newly enacted chapter provided that non-Hawaiʻi-licensed

professionals could own shares in Hawaiʻi professional

corporations or serve as partners alongside Hawaiʻi-licensed

professionals:

              A professional corporation may issues shares, fractional
              shares, and rights or options to purchase shares only to:
              (1) Natural persons who are authorized by law in this
              State or in any other state or territory of the United
              States or the District of Columbia to render a
              professional service permitted by the articles of
              incorporation of the corporation; and
              (2) General partnerships in which all the partners are
              qualified persons with respect to such professional
              corporation and in which at least one partner is
              authorized by law in this State to render a
              professional service permitted by the articles of
              incorporation of the corporation.

4
     RSCH Rule 24 was renumbered RSCH Rule 6 in 1984.

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1985 Haw. Sess. Laws Act 259 § 9 at 497-98 (emphases added).5,            6

      In September 1987, prompted by the repeal of HRS Chapter

416 (the Hawaiʻi Professional Corporation Law) and its

replacement by HRS Chapter 415A (the Hawaiʻi Professional

Corporation Act), RSCH Rule 6 was extensively amended, more

closely resembling, sub-section by sub-section, the rule in

place today:

                 (a) Compliance with this Rule and the Hawaii
           Professional Corporation Act. Any person or persons
           seeking to practice law as a corporation shall comply with
           the provisions of this rule and the Hawaii Professional
           Corporation Act, HRS Chapter 415A.
           . . . .

5
      Very shortly afterward, the first provision was amended to allow
corporations to issue shares, fractional shares, and rights of options
to purchase shares only to “individuals,” instead of “natural persons,”
“authorized by law in this State or in any other state or territory of
the United States or the District of Columbia to render a professional
service permitted by the corporation’s articles of incorporation.”
1987 Haw. Sess. Laws Act 135, § 115 at 271. The legislature deleted
the second provision regarding general partnerships owning shares where
at least one partner is authorized by law in this State. Id.
6
       Section 9(b) of the newly enacted chapter also provided, however, that
a “licensing authority for any profession,” such as this court over the legal
profession, can “further restrict, condition, or abridge the authority of
professional corporations to issue shares” where it is deemed “necessary . .
. to prevent violations of the ethical standards of such profession. . . .”
1985 Haw. Sess. Laws Act 259 § 9 at 498. As such, this provision, codified
as HRS § 415A-9(b), recognizes the inherent authority of this court to
regulate the practice of law. See In re Ellis, 53 Haw. 23, 25 n.1, 487 P.2d
286, 287 n.1 (1971) (“This court has inherent power to regulate matters
before it regarding the practice of law.”) (quoting Hawaiʻi Constitution,
article V, section 1, which vests judicial power in the courts). Thus,
section 9(b) does not purport to affect this court’s authority to prohibit
non-Hawaiʻi-licensed attorneys from serving as directors or officers of
Hawaiʻi law firms with a multi-jurisdictional presence. As we have already
noted, however, it appears that this court’s later-enacted rules
contemplating multi-jurisdictional law practice in Hawaiʻi repealed, by
implication, those parts of RSCH Rule 6(e) and (f) prohibiting non-Hawaiʻi-
licensed attorneys from serving as officers and directors of Hawaiʻi law
firms.

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                  (d) Shares; Ownership and Transfer.
                        (1) Shares in a law corporation may be owned
            only by the corporation or by one or more persons licensed
            to practice law in this state by this court. . . .
            . . . .
                  (e) Directors. Notwithstanding the provisions of HRS
            § 415A-14, each director of a law corporation shall be
            licensed to practice law in this state by this court. . . .
            . . . .
                  (f) Officers. Notwithstanding the provisions of HRS
            § 415A-14, each officer of a law corporation shall be
            licensed to practice law in this state by this court. . . .
            . . . .
                  (h) Compliance with Law and Rules of Court. A law
            corporation’s affairs shall be conducted in compliance with
            law and with the rules of this court. It shall be subject
            to the applicable rules and regulations adopted by, and all
            the disciplinary powers of, this court. Nothing in this
            rule shall affect or impair the disciplinary powers of this
            court over any law corporation or over any person licensed
            to practice in this state by this court.

RSCH Rule 6 (1987).

       As argued by CIT Bank, the plain language of RSCH Rule 6(d)

appears to allow Dentons to practice law in Hawaiʻi as a lawyers’

professional business organization.         RSCH Rule 6(d)(1) states,

in relevant part, “Shares or interests in a lawyers’

professional business organization may be owned only by a

lawyers’ professional business organization or by one or more

persons licensed to practice law in this state by this court. .

. .”    Contrary to Sheveland’s assertion, the word “only”

modifies the two forms of share ownership that are allowed:

one, by a lawyer’s professional business organization, or two,

by “one or more persons licensed to practice law in this state

by this court. . . .”      According to Paul Alston, Dentons US LLP

is owned in part by individual Hawaiʻi-licensed attorneys

formerly from AHFI who have individually incorporated as each’s

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own lawyer’s professional business organization.            See

Declaration of Alston (“It was further determined that any

concerns about RSC[H] 6 could also be addressed by having the

lawyers who were to become partners in Dentons US LLP form their

own individual law corporations and have those corporations

become partners in Dentons.        In that way, consistent with the

language of RSC[H] 6, the interests in Dentons US LLP (a

“lawyer’s professional business organization”) are owned by

other “lawyers’ professional business organizations” – i.e., our

individual law corporations.”).         Thus, Dentons US LLP shares or

interests, owned by each former AHFI partner’s lawyer’s

professional business organization, satisfies RSCH Rule 6(d)(1).

      Even if the former AHFI partners who are now Dentons US LLP

partners are viewed as individuals instead of law corporations,

there is still no violation of RSCH Rule 6(d)(1), as Dentons US

LLP would be owned “by one or more persons licensed to practice

law in this state by this court. . . .”          This is because shares

or interests in Dentons US LLP are owned by one or more Hawaiʻi-

licensed attorneys:      the former AHFI partners.        Thus, RSCH Rule

6 is no impediment to the former AHFI partners’ practice of law

in Hawaiʻi as part of Dentons US LLP.7

7
      Even after the amendments to court rules authorizing law practice
ownership by non-Hawaiʻi-licensed and Hawaiʻi-licensed attorneys, the
provisions of RSCH Rule 6 currently at issue remained substantively unchanged
for over three decades. During this period, RSCH Rule 6 was amended multiple
                                                               (continued. . .)

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 C.    Concerns about the Conduct of non-Hawaiʻi-Licensed Attorneys
       within Hawaiʻi Lawyers’ Professional Business Organizations

       Finally, we also address Sheveland’s concern that non-

Hawaiʻi-licensed attorneys, in Hawaiʻi firms with a multi-

jurisdictional presence, may direct the conduct of Hawaiʻi-

licensed attorneys in a manner free from oversight by this court

or the Office of Disciplinary Counsel.          For the following

(continued. . .)
times, but never to account for the changing regulatory landscape surrounding
organized law practice in Hawaiʻi. First, in 1995, RSCH Rule 6(a) was amended
to include organized law practice in the form of partnerships, as follows
(with new material underscored):

            (a) Compliance With this Rule and Either the Hawaiʻi
            Professional Corporation Act or the Hawaiʻi Partnership Act.
            Any person or persons seeking to practice law as a
            corporation or in partnership shall comply with the
            provisions of this rule and either the Hawaiʻi Professional
            Corporation Act, HRS Chapter 415A, or the Hawaiʻi
            Partnership Act, HRS Chapter 425 or both, if applicable.

(We note that, despite the express addition of “partnership” as an
organizational form for law practice, Rule 6(d)(1), (e), and (f) still
referred to only the corporate concepts of shares, directors, and officers,
and not partnership concepts.)
      Second, in 1999, RSCH Rule 6 was amended to introduce the term
“lawyer’s professional business organization” to cover law practiced in the
form of a “corporation, a company, an association,” or a “partnership.” RSCH
Rule 6(a) was also amended to require compliance with the rest of the
provisions of RSCH Rule 6 as well as “any applicable statutes,” instead of
expressly referencing HRS Chapters 415A and 425 (governing corporations and
partnerships, respectively) as it once had.
      Lastly, in 2001, RSCH Rule 6(d)(1) was amended slightly to delete the
bracketed “the” and replace it with the underscored “a”, as follows: “Shares
or interests in a lawyer’s professional business organization may be owned
only by [the] a lawyer’s professional business organization or by one or more
persons licensed to practice law in this state by this court. . . .” RSCH
Rule 6 has not changed since this 2001 amendment.
      The relevant portions of RSCH Rule 6 (e) and (f) did not appropriately
evolve in response to dramatic changes to related court rules contemplating
the inclusion of non-Hawaiʻi-licensed attorneys in Hawaiʻi lawyers’
professional business organizations with a multi-jurisdictional presence.
Thus, for the reasons stated in this opinion, RSCH Rule 6 is no impediment to
the former AHFI partners’ practice of law in Hawaiʻi as part of Dentons US
LLP.

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reasons, HRS § 605-14 would still prohibit non-Hawaiʻi-licensed

attorneys from doing so within this jurisdiction.

       Fought & Co. v. Steel Eng’g and Erection, Inc., 87 Hawaiʻi

37, 951 P.2d 487 (1998), is instructive on this issue.        In that

case, the Department of Transportation withheld payment for a

Kahului Airport construction project from a general contractor,

who, in turn, withheld payment from its subcontractor, who, in

turn, withheld payment from its subcontractor, Fought & Co.

(“Fought”), a company headquartered in Oregon, which employed

Oregon-licensed general counsel.        87 Hawaiʻi at 41-42, 43, 951
P.2d at 491-92, 493.     Fought initiated a contract action in

Hawaiʻi through Hawaiʻi-licensed local counsel, who filed all

briefs and made all court appearances in Hawaiʻi courts.        87

Hawaiʻi at 44-45, 48, 951 P.2d at 494-95, 498.       Fought’s general

counsel assisted local counsel by preparing the company’s

statement of position in anticipation of mediation, consulting

and strategizing on the appeal, conducting legal research and

reviewing the briefing of local counsel and other parties to the

litigation, and resolving issues pertaining to the posting of

another party’s supersedeas bond.        87 Hawaiʻi at 46, 951 P.2d at

496.    While we concluded Fought’s general counsel was indeed

engaged in the practice of law, we held that it was not the

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“unauthorized practice of law” because it did not take place

within this jurisdiction.     Id.

      We reasoned that Fought’s general counsel represented an

Oregon corporation, rendered all legal services in Oregon, did

not draft or sign any of the court filings, did not appear in

Hawaiʻi courts, and did not communicate with counsel for other

parties on Fought’s behalf.       87 Hawaiʻi at 48, 951 P.2d at 498.

In sum, we concluded that Fought’s general counsel’s “role was

strictly one of consultant to Fought and Fought’s Hawaiʻi

counsel.”    Id.   We emphasized that “Fought’s Hawaiʻi counsel were

at all times ‘in charge’ of Fought’s representation within the

jurisdiction so as to insure that Hawaiʻi law was correctly

interpreted and applied.”     Id.    Non-Hawaiʻi-licensed attorneys

within Dentons US LLP must comply with HRS § 605-14 and Fought.

                           III.     Conclusion

      We hold that the portions of RSCH Rule 6 identified in

Section I have been superseded by implication to mean “in this

state or in any other state or territory of the United States or

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the District of Columbia” and do not prohibit the former AHFI

partners’ practice of law in Hawaiʻi as part of Dentons US LLP.

James J. Bickerton,                     /s/ Mark E. Recktenwald
Stanley H. Roehrig, and
Bridget G. Morgan                       /s/ Paula A. Nakayama
Bickerton Dang, LLLP
                                        /s/ Sabrina S. McKenna
John F. Perkin
Perkin & Faria, LLLC                    /s/ Richard W. Pollack

Van-Alan H. Shima                       /s/ Michael D. Wilson
Affinity Law Group, LLLC
for plaintiff-appellant
Stephanie Sheveland

Michael C. Bird and
Summer H. Kaiawe
for defendant-appellee
Wells Fargo Bank, N.A.

Charles A. Price
Koshiba Price & Gruebner
for defendants-appellees
Masood M. Foadi and
Fahi S. Foadi

Judy A. Tanaka,
Pamela W. Bunn, and
Meredith G. Miller
Dentons US LLP

Julie B. Strickland
Stroock & Stroock & Lavan LLP
(admitted pro hac vice)
for defendants-appellees
CIT BANK, N.A., f/k/a
OneWest Bank, FSB, and
OWB REO LLC

Steven M. Egesdal,
Tom E. Roesser, and
Daniel J. Padilla
Carlsmith Ball LLP
for amicus curiae

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