Court Opinion

ID: 9957933
Source: CourtListenerOpinion
Date Created: 2024-04-05 18:03:01.610006+00
Date Added: 2024-06-11T08:17:32.312983
License: Public Domain

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

                                                 Electronically Filed
                                                 Intermediate Court of Appeals
                                                 CAAP-XX-XXXXXXX
                                                 05-APR-2024
                                                 07:49 AM
                                                 Dkt. 80 SO

                          NO. CAAP-XX-XXXXXXX

                IN THE INTERMEDIATE COURT OF APPEALS

                        OF THE STATE OF HAWAI#I

 WAIMANALO 56, LLC and SHILOAH WARREN, Plaintiffs-Appellants, v.
     WAIMANALO TELEVISION PARTNERS, LLC, WAIMANALO TELEVISION
    PARTNERS, HULI HULI TV, LLC, and OCEANIA CHRISTIAN CHURCH
       N.K.A. PACIFIC CHRISTIAN CHURCH, Defendants-Appellees

         APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
                       (CASE NO. 1CC111000898)

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

           Waimanalo 56, LLC and Shiloah Warren (collectively,
Plaintiffs) appeal from the Final Judgment for defendant Pacific
Christian Church, formerly known as Oceania Christian Church,
entered by the Circuit Court of the First Circuit on December 27,
2017.1 We affirm.
          Plaintiffs' complaint was filed on May 4, 2011. It had
three substantive counts: (1) breach of a promissory Note;
(2) breach of a contract; and (3) unjust enrichment. Waimanalo
Television Partners, LLC, Waimanalo Television Partners (WTP),
and Huli Huli TV, LLC were named as defendants, but were never
served with the complaint. They were dismissed before trial.
          A jury-waived trial was held on December 8 and 9, 2015.
The Note, an Addendum to Agreement, an Assignment Agreement, and

     1
           The Honorable Gary W.B. Chang presided.
   NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

an Asset Purchase Agreement were stipulated into evidence.
Stuart Mitchell was Plaintiffs' only witness.           Church called no
witnesses. After the close of evidence, Church moved to dismiss
Waimanalo 56's claims under Hawai#i Rules of Civil Procedure
Rule 52(c). The circuit court granted the motion. The circuit
court entered findings of fact, conclusions of law, and an order
on July 1, 2016. The Final Judgment was entered on December 27,
2017. This appeal followed.
          Plaintiffs challenge many of the circuit court's
findings, conclusions, and mixed findings and conclusions. The
dispositive issues are whether the circuit court erred by finding
and concluding that (1) "[P]laintiffs failed to prove that
[Church] breached a contract or any other promise, debt, or
obligation [Church] owed to [P]laintiffs," and (2) Plaintiffs did
not prove that Church was unjustly enriched.
          (1) Plaintiffs' Exhibit 1 is the Note. The circuit
court found, and Plaintiffs do not challenge, that Huli Huli was
the sole maker.2 A maker is "a person who signs or is identified
in a note as a person undertaking to pay." Hawaii Revised
Statutes (HRS) § 490:3-103(a)(5) (2008). The Note does not
evidence any obligation by Church.
          The Note is payable "to the order of Stuart B.
Mitchell[.]" "A promise or order that is payable to order is
payable to the identified person." HRS § 490:3-109(b) (2008).
The Note bears no indorsement. Mitchell was not a plaintiff.
The Note bears no evidence entitling Waimanalo 56 or Warren to
enforce Huli Huli's obligation to pay Mitchell.
          Plaintiffs' Exhibit 2 is the Addendum. The Addendum
does not evidence any obligation by Church. It requires that
Huli Huli deliver to Waimanalo 56 "an Amended Promissory Note[.]"
No such note is in evidence. Waimanalo 56 conceded there was no
evidence that such a promissory note was delivered to it.

      2
            An unchallenged finding of fact is binding on the parties and the
appellate court. Okada Trucking Co. v. Bd. of Water Supply, 97 Hawai#i 450,
459, 40 P.3d 73, 82 (2002).

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

          Plaintiffs' Exhibit 3 is the Assignment. Mitchell
assigned his interest in the Note to Warren. But the Note bears
no indorsement. If "the transferee does not become a holder
because of lack of indorsement by the transferor, the transferee
has a specifically enforceable right to the unqualified
indorsement of the transferor, but negotiation of the instrument
does not occur until the indorsement is made." HRS
§ 490:3-203(c) (2008). The Assignment does not give Warren the
right to enforce Huli Huli's obligation to pay Mitchell under the
Note — her right is to require that Mitchell indorse the Note to
her. See HRS § 490:3-205(a) (2008). But that would only enable
her to enforce Huli Huli's obligation to pay. Id. The
Assignment does not create an obligation by Church to pay Warren.
          Plaintiffs' Exhibit 4 is the Asset Purchase Agreement.
Church agreed to buy WTP's Federal Communications Commission
broadcast license and certain assets connected with its KMGT(TV)
television station. Church agreed to assume WTP's obligations
"arising after the Closing under the . . . Contracts . . . and
all obligations arising from the business or operation of [KMGT]
after the Closing."
          The Note states that WTP pledged "all equipment and
other assets to be utilized in connection with the operation of
Station KMGT(TV), in order to secure Huli Huli's performance"
under the Note.3 The circuit court found "there is no question
that . . . WTP granted Stuart B. Mitchell a security interest in
the equipment and other assets of Station KMGT(TV) to secure Huli
Huli's performance under the Note." Plaintiffs argue that Church
"assumed the payment and security interest obligations created by

      3
            The Addendum also contained a provision stating that WTP "hereby
give[s] the payee/holder of the note a security interest in all equipment and
other assets utilized in connection with the operation of" KMGT, but there is
no evidence that "the note" exists and Waimanalo 56 conceded there was no
evidence that "the note" was delivered to it.

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

the Note . . . and which, as to them as purchaser, arose upon or
after the Closing." The argument fails for several reasons.
          WTP — which was dismissed from the lawsuit — has no
payment obligation under the Note. There was no payment
obligation for Church to assume. And, as discussed above,
neither Waimanalo 56 nor Warren are entitled to enforce Huli
Huli's obligation to pay Mitchell under the Note.
          A "security interest" is an interest in property that
secures payment or performance of an obligation. HRS § 490:1-201
(2008). The secured party is Mitchell, not Waimanalo 56 or
Warren. The circuit court found, and Plaintiffs do not
challenge, that there was no evidence of a financing statement
being prepared or filed to perfect Mitchell's security interest.
See HRS Chapter 490, Article 9, Part 5 (2008). Assuming a
default by Huli Huli under the Note, the remedy of obtaining a
judgment against Huli Huli and (assuming a valid security
interest) foreclosing on KMGT's assets belongs to Mitchell, not
Waimanalo 56 or Warren. See HRS § 490:9-601 (2008).
          The circuit court's mixed finding and conclusion that
Plaintiffs did not prove that Church breached a contract or any
other promise, debt, or obligation Church owed to Plaintiffs was
supported by substantial evidence and reflected an application of
the correct rules of law. It will not be overturned. Est. of
Klink ex rel. Klink v. State, 113 Hawai#i 332, 351, 152 P.3d 504,
523 (2007).
          (2) A claim for unjust enrichment arises when a
plaintiff has bestowed a benefit upon the defendant and seeks
some form of equitable relief to prevent the defendant being
unjustly enriched. Lumford v. Ota, 144 Hawai#i 20, 25, 434 P.3d
1215, 1220 (App. 2018). Plaintiffs argue that Church, "by fraud,
duress or taking unfair advantage, received value or benefits,
the Station Assets, from [Plaintiffs]." (Emphasis added.)
Plaintiffs cite no evidence in the record tending to show fraud,

                                  4
  NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

duress, or unfair advantage. The parties to the Asset Purchase
Agreement were WTP, as seller, and Church, as buyer. Plaintiffs
cite no evidence in the record showing that they bestowed a
benefit on Church, or that they are otherwise entitled to some
sort of equitable relief from Church. The circuit court's mixed
finding and conclusion that Plaintiffs did not prove that Church
was unjustly enriched reflected that absence of evidence, and
applied the correct rule of law.
          For all of these reasons, the circuit court's
December 27, 2017 Final Judgment is affirmed.
          DATED: Honolulu, Hawai#i, April 5, 2024.

On the briefs:
                                      /s/ Keith K. Hiraoka
Glenn T. Honda,                       Presiding Judge
for Plaintiffs-Appellants.
                                      /s/ Clyde J. Wadsworth
Thomas R. Sylvester,                  Associate Judge
for Defendant-Appellee
Oceania Christian Church              /s/ Sonja M.P. McCullen
n/k/a Pacific Christian               Associate Judge
Church.

                                  5