Court Opinion

ID: 4765458
Source: CourtListenerOpinion
Date Created: 2021-08-12 20:05:57.95269+00
Date Added: 2024-06-11T08:09:10.706006
License: Public Domain

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                                                         Electronically Filed
                                                         Supreme Court
                                                         SCWC-XX-XXXXXXX
                                                         12-AUG-2021
                                                         09:04 AM
                                                         Dkt. 18 OP

           IN THE SUPREME COURT OF THE STATE OF HAWAIʻI

                           ---o0o---
________________________________________________________________

               ASSOCIATION OF OWNERS OF KALELE KAI,
                  Respondent/Plaintiff-Appellee,

                                 vs.

                       HITOSHI YOSHIKAWA,
                Petitioner/Defendant-Appellant.
________________________________________________________________

                          SCWC-XX-XXXXXXX

         CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
             (CAAP-XX-XXXXXXX; CIVIL NO. 15-1-0102)

                          AUGUST 12, 2021

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

               OPINION OF THE COURT BY McKENNA, J.

                         I.    Introduction

    This certiorari proceeding addresses attorneys’ fees and

costs awarded to the Association of Owners of Kalele Kai

(“Association”) by the Circuit Court of the First Circuit

(“circuit court”) in connection with a dispute over whether

Hitoshi Yoshikawa (“Yoshikawa”) was allowed to moor his boat in
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the Kalele Kai marina.   The circuit court granted the

Association’s motion for summary judgment, awarded attorneys’

fees and costs, and entered final judgment in favor of the

Association.   On appeal, the Intermediate Court of Appeals

(“ICA”) vacated the summary judgment but affirmed the related

attorneys’ fees and costs awards because Yoshikawa had not

specifically addressed them in his appellate briefs.

    Yoshikawa’s application for certiorari (“Application”)

presents a single question: “Did the ICA commit grave error in

vacating the Circuit Court’s Final Judgment Order, thereby

reversing summary judgment and remanding the case for further

proceedings to the Circuit Court but refusing to vacate the

underlying attorneys’ fee award?”

    We hold as follows: (1) when a judgment upon which

attorneys’ fees and costs were based has been vacated,

attorneys’ fees and costs arising out of that judgment should

also be vacated; and (2) the ICA abused its discretion by

limiting the issues on remand to prevent the circuit court from

considering attorneys’ fees and costs awarded based on the

vacated summary judgment.

    We therefore vacate in part the ICA’s January 6, 2021

judgment on appeal to the extent it affirmed the $79,514.50 in

attorneys’ fees and costs awarded by the circuit court on

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November 5, 2015, which arose from the vacated summary judgment.1

We also vacate the November 5, 2015 order of the circuit court

awarding fees and costs.       We remand this case to the circuit

court for further proceedings consistent with this opinion.

                              II.   Background

A.      Arbitration and circuit court proceedings

        The Association operated the Kalele Kai condominium project

in Hawaiʻi Kai, which included part of the Kalele Kai marina.

The Association’s Declaration of Condominium Property Regime

(“Declaration”) provided that “boat moorings shall be restricted

to use by boats no larger than twenty-three (23) feet in

length[.]”

        Yoshikawa owned a Kalele Kai condominium unit (“the

Apartment”) and six appurtenant mooring spaces (“mooring

spaces”).      In 2013, Yoshikawa purchased a boat 49 feet in

length, which he moored parallel to the dock in the mooring

1     These fees and costs are reflected in Paragraph E.3 of the final
judgment. Paragraph E of the final judgment contains four attorneys’ fees
and costs awards. The first two arise out of a discovery dispute and are not
at issue. Paragraph E.3 concerns the $79,514.50 in fees and costs awarded on
November 5, 2015 pursuant to the grant of summary judgment. Paragraph E.4
concerns an additional $21,180.35 in fees and costs awarded on January 5,
2016, which may include fees and costs arising out of the vacated summary
judgment. At oral argument, Yoshikawa indicated that, on certiorari, he only
seeks vacatur of the fees and costs in Paragraph E.3. As further discussed,
this opinion does not preclude Yoshikawa from filing a motion on remand
seeking vacatur of fees and costs in Paragraph E.4 to the extent they arise
out of the vacated summary judgment. See infra text accompanying and notes 5
& 8.

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spaces.      The Association issued a notice of violation demanding

that Yoshikawa remove his boat.

        The Association and Yoshikawa entered arbitration, and the

arbitrator found in favor of Yoshikawa.2            The arbitrator deemed

the Declaration’s 23-foot limitation inapplicable due to a

settlement agreement between the Association and Richard Rosic

(“Rosic”), the previous owner of the Apartment and the mooring

spaces.      The settlement agreement “authorized the subsequent

owner to moor a boat in excess of 23 feet.”            The arbitrator also

found the Association had allowed other owners to keep boats in

excess of 23 feet for at least a decade.

        On January 21, 2015, the Association filed a complaint in

the circuit court demanding a trial de novo, followed by a first

amended complaint (“complaint”) on February 20, 2015.3             Relevant

to the issues on certiorari, the Association filed a motion for

summary judgment on March 17, 2015, arguing Yoshikawa’s boat

exceeded the Declaration’s length restriction.            A hearing was

held on April 28, 2015, and the circuit court took the matter

under advisement.4

2       Keith W. Hunter served as the arbitrator.

3     Trial de novo was demanded pursuant to Hawai‘i Revised Statutes (“HRS”)
§ 514B-163 (Supp. 2004), which provides in subsection (a) that “[t]he
submission of any dispute to an arbitration under section 514B-162 shall in
no way limit or abridge the right of any party to a trial de novo.”

4       The Honorable Karen T. Nakasone presided.

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    The day after this hearing, Yoshikawa filed an answer to

the complaint along with a counterclaim against the Association

and a “cross-claim” against two new parties, who were

Association board members (“counterclaim”).     Yoshikawa’s

counterclaim asserted: breach of contract, breach of fiduciary

duty, bad faith, intentional infliction of emotional distress,

violations of the Restatement of Servitudes, “prima facia tort,”

abuse of process, misrepresentation, and violations of HRS

Chapter 514B pertaining to “Condominiums.”

    The Association filed a motion to dismiss the counterclaim

on May 27, 2015, which was heard on July 30, 2015.      On August 6,

2015, the circuit court entered its order dismissing Yoshikawa’s

counterclaim.

    Then, on August 14, 2015, the circuit court entered

findings of fact (“FOFs”), conclusions of law (“COLs”), and an

order granting the Association’s motion for summary judgment.

The circuit court ordered Yoshikawa to remove his boat within

ten days and permanently enjoined him from mooring the boat in

the Kalele Kai marina.

    On August 26, 2015, Yoshikawa filed a motion to stay the

circuit court’s order to remove the boat and/or to extend the

deadline for removal.    The circuit court extended the deadline

but denied a stay.   Also on August 26, 2015, Yoshikawa filed a

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motion for leave to file an amended counterclaim/cross-claim,

which the circuit court also denied.

        On August 28, 2015, the Association filed a motion for

attorneys’ fees and costs totaling $84,093.          The Association

argued it was the prevailing party because the circuit court

dismissed Yoshikawa’s counterclaim and granted summary judgment

in its favor.      The Association maintained it was entitled to

fees based on HRS § 514B-157 (Supp. 2004) and Yoshikawa’s breach

of contractual obligations under the Declaration.            On November

5, 2015, the circuit court granted in part the Association’s

August 28, 2015 motion for attorneys’ fees and costs, awarding a

total of $79,514.50.

        On November 13, 2015, the Association filed a motion for

supplemental attorneys’ fees and costs in the amount of $21,507

as the prevailing party on Yoshikawa’s August 26, 2015 motions

to stay the August 14, 2015 injunction and for leave to file an

amended counterclaim/cross-claim.5        The Association contended it

had already established its entitlement to an award of

attorneys’ fees and costs as the prevailing party based on the

circuit court’s November 5, 2015 award of attorneys’ fees.             On

5     The Association does not appear to have distinguished between fees and
costs requested to obtain the injunction, which clearly arose from the
vacated summary judgment, and for the denial of Yoshikawa’s motion for leave
to file an amended counterclaim/cross-claim.

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January 5, 2016, the circuit court granted in part this motion

for supplemental fees and costs, awarding $21,180.35.

     On November 9, 2016, the circuit court entered its first

amended final judgment in favor of the Association (“final

judgment”), which included the November 5, 2015 and January 5,

2016 fees and costs awards.

B.   ICA proceedings

     Yoshikawa filed a notice of appeal of the final judgment on

November 16, 2016.     The notice of appeal included an appeal of

the November 5, 2015 and January 5, 2016 fees and costs awards.

     Yoshikawa’s sole point of error in his appellate briefs was

that the circuit court erred in granting summary judgment in

favor of the Association.     Yoshikawa’s briefs did not

specifically address attorneys’ fees and costs based on the

grant of summary judgment or any other rulings reflected in the

final judgment.

     On December 8, 2020, the ICA issued a memorandum opinion

vacating the final judgment with respect to the circuit court’s

grant of summary judgment.     AOAO Kalele Kai v. Yoshikawa, CAAP-

XX-XXXXXXX (App. Dec. 8, 2020) (mem.).     The ICA determined the

Association did not satisfy its summary judgment burden because

of the settlement between Rosic and the Association and evidence

that multiple Kalele Kai unit owners had “purchased and

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reconfigured boat moorings to accommodate boats longer than 23

feet.”    AOAO Kalele Kai, mem. op. at 6-13.

     The ICA affirmed the remainder of the final judgment,

however, including the November 5, 2015 and January 5, 2016

awards of attorneys’ fees and costs to the Association.       AOAO

Kalele Kai, mem. op. at 16.    The ICA noted Yoshikawa’s opening

brief did not discuss attorneys’ fees and costs.      Id.   The ICA

further ruled it had “discretion to limit the issues to be

decided on remand” and that the orders awarding attorneys’ fees

and costs, including those awarded pursuant to the November 5,

2015 and January 5, 2016 orders, were “not subject to litigation

on remand.”    AOAO Kalele Kai, mem. op. at 16-17 (citing Miyamoto

v. Lum, 104 Hawai‘i 1, 10, 84 P.3d 509, 518 (2004)).

                          III. Discussion

A.   When a judgment upon which attorneys’ fees and costs were
     based has been vacated, the attorneys’ fees and costs
     should also be vacated

     Yoshikawa’s Application presents a single question: whether

the ICA erred in refusing to vacate the award of attorneys’

fees.    Yoshikawa argues the award of attorneys’ fees should have

been vacated because “once the underlying matter . . . is

vacated or reversed, then the subsequent orders based on that

are also considered reversed.”

     This court has previously ruled that an award of attorneys’

fees is inappropriate where the underlying judgment is vacated.

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We have held that a request for attorneys’ fees is premature

where the judgment on appeal vacates the circuit court’s

judgment and remands for further proceedings.     O’Grady v. State,

141 Hawai‘i 26, 31, 404 P.3d 292, 297 (2017).     We have also held

that there is no “prevailing party” for the purpose of

attorneys’ fees where the underlying judgment is vacated and

remanded for further proceedings.     Nelson v. Univ. of Hawai‘i, 99

Hawai‘i 262, 54 P.3d 433 (2002) (holding that a judgment on

appeal that vacates a trial court judgment does not provide

grounds for an award of attorneys’ fees); see also Ass’n of Apt.

Owners of Maalaea Kai, Inc. v. Stillson, 108 Hawai‘i 2, 16, 116

P.3d 644, 658 (2005) (vacating the award of attorneys’ fees

after vacating the underlying judgment and remanding for further

proceedings).

     Other state courts are in accord.     In Board of Managers of

Warren House Condominium v. Pike, the New York Supreme Court,

Appellate Division held that a vacatur order that nullified the

underlying judgment’s findings that the defendant had violated a

condominium’s bylaws “necessarily nullified as well the award of

attorney’s fees in the . . . judgment[.]”     46 A.D.3d 344, 344-45

(N.Y. App. Div. 2007) (emphasis added).     Similarly, in Viets v.

American Recruiters Enterprises, Inc., the Florida District

Court of Appeal held, “Once the trial court vacated the

dismissal of plaintiff’s complaint, it was no longer possible to

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identify the prevailing party.    Thus, vacating the attorney’s

fee award was mandatory.”    922 So.2d 1090, 1096 (Fla. Dist. Ct.

App. 2006) (emphasis added).

     Federal courts also hold that awards of attorney’s fees

should be vacated if the underlying judgment is vacated or

reversed.    In Dillard’s Inc. v. Liberty Life Assurance Company

of Boston, 456 F.3d 901, 903 (8th Cir. 2006), the Eighth Circuit

vacated an award of attorney’s fees after reversing the

underlying judgment because “Dillard’s [was] no longer the

prevailing party[.]”    Similarly, in Department of Education,

State of Hawai‘i v. Rodarte, the United States District Court for

the District of Hawai‘i ruled that the “general rule is that

attorneys’ fees awarded for victory on the merits must be

returned if a recipient loses on the merits on appeal.      An

appellee is no longer a ‘prevailing party’ when a favorable

judgment on the merits in a lower proceeding is reversed on

appeal.”    127 F.Supp.2d 1103, 1115 (D. Hawai‘i 2000) (citing

Lovell v. Poway Unified Sch. Dist., 90 F.3d 367 (9th Cir. 1996))

(vacating award of attorney’s fees after reversing judgment on

the merits).

     Hence, in this case, because the ICA vacated summary

judgment, the Association was no longer the prevailing party,

and the attorneys’ fees and costs awarded pursuant to the grant

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of summary judgment should have also been vacated.          Further,

this result is required by HRS § 514B-157(a), which provides:

          All costs and expenses, including reasonable attorneys’
          fees, incurred by or on behalf of the association for:
                (1) Collecting any delinquent assessments
                against any owner’s unit;
                (2) Foreclosing any lien thereon; or
                (3) Enforcing any provision of the declaration,
                bylaws, house rules, and this chapter, or the
                rules of the real estate commission;
          against an owner, occupant, tenant, employee of an owner,
          or any other person who may in any manner use the property,
          shall be promptly paid on demand to the association by such
          person or persons; provided that if the claims upon which
          the association takes any action are not substantiated, all
          costs and expenses, including reasonable attorneys’ fees,
          incurred by any such person or persons as a result of the
          action of the association, shall be promptly paid on demand
          to such person or persons by the association.

(Emphases added.)

    Pursuant to HRS § 514B-157(a), the Association may be

awarded attorneys’ fees only if its claims are “substantiated.”

Otherwise, the Association must pay the attorneys’ fees of the

person it took action against.      Here, the Association’s claims

have not been substantiated because the ICA vacated summary

judgment in favor of the Association.       Therefore, attorneys’

fees and costs awarded to the Association based on the grant of

summary judgment should also have been vacated when the ICA

vacated summary judgment.

    The Association argues, however, that pursuant to Hawai‘i

Rules of Appellate Procedure (“HRAP”) Rule 28(b)(4) (2016), it

was within the ICA’s discretion to disregard the issues

Yoshikawa failed to raise in his opening brief.         The ICA did not

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directly cite to HRAP Rule 28, but it pointed out that

Yoshikawa’s opening brief did not argue the circuit court erred

in granting attorneys’ fees and costs.6

        Granted, Yoshikawa could have argued which fees and costs

awards he sought to have vacated, especially when the final

judgment contained various fees and costs awards.7           Court rules,

however, should not be applied in a formalistic manner.             See,

e.g., United States v. Oaks, 508 F.2d 1403, 1405 (9th Cir. 1974)

(noting that the United States Supreme Court has cautioned

against an overly rigid or formalistic interpretation of the

federal criminal rules).       In this case, it was clear that the

November 5, 2015 attorneys’ fees and costs award arose from the

grant of summary judgment.        Thus, pursuant to the general rule,

the ICA should also have at least ordered vacatur of those

attorneys’ fees and costs.        In the alternative, if the

attorneys’ fees and costs required to be vacated were unclear,

the ICA could have remanded that determination to the circuit

court.

6     HRAP Rule 28(b)(4) provides, in relevant part: “Points not presented
[in the opening brief] in accordance with this section will be disregarded,
except that the appellate court, at its option, may notice a plain error not
presented.” Similarly, HRAP Rule 28(b)(7) provides, in relevant part:
“Points not argued may be deemed waived.” Yoshikawa appealed the entire
final judgment, including the subject attorneys’ fees and costs awards, but
did not specifically request that the fees and costs also be set aside.
7       See supra note 1.

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B.      The ICA abused its discretion by limiting the issues on
        remand to prevent the circuit court from considering
        attorneys’ fees and costs awarded based on the vacated
        summary judgment

        Even if the ICA had not vacated attorneys’ fees and costs

related to the vacated summary judgment, on remand, Yoshikawa

could have filed a Hawai‘i Rules of Civil Procedure (“HRCP”) Rule

60(b)(5) (2006) motion to vacate fees and costs awarded pursuant

to the improper grant of summary judgment.8            The ICA also ruled,

however, that it had discretion to limit the issues to be

decided on remand and that the attorneys’ fees and costs orders

were not subject to litigation on remand.            AOAO Kalele Kai, mem.

op. at 16-17.

        As indicated by the ICA, Miyamoto, 104 Hawaiʻi at 10, 84

P.3d at 518, stands for the proposition that an appellate court

has discretion to limit the issues to be decided on remand.

AOAO Kalele Kai, mem. op. at 16.            Miyamoto, however, actually

supports Yoshikawa’s position.          Miyamoto was a negligence case

in which this court held that “the issues of causation and

8       HRCP Rule 60(b)(5) provides:

              On motion and upon such terms as are just, the court may
              relieve a party or a party’s legal representative from a
              final judgment, order, or proceeding for the following
              reasons: . . . (5) the judgment has been satisfied,
              released, or discharged, or a prior judgment upon which it
              is based has been reversed or otherwise vacated, or it is
              no longer equitable that the judgment should have
              prospective application[.]

(Emphases added.)

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damages are not ‘sufficiently separate’ to warrant limiting the

new trial to only one of the issues.”         Miyamoto, 104 Hawai‘i at

10, 84 P.3d at 518.         As in Miyamoto, in this case, the order

granting summary judgment and the award of attorneys’ fees and

costs based on that order are also not sufficiently separate —

rather, they are inextricably intertwined.           Thus, the summary

judgment and fees and costs awarded pursuant to it should not

have been separated, and the ICA should have followed the

general rule to vacate the related fees and costs.           Hence, the

ICA also abused its discretion by preventing the circuit court,

on remand, from addressing its awards of attorneys’ fees and

costs related to its erroneous grant of summary judgment.

                                  IV.   Conclusion

        For these reasons, we vacate in part the ICA’s January 6,

2021 judgment on appeal to the extent it affirmed paragraph E.3

of the circuit court’s final judgment pertaining to the circuit

court’s November 5, 2015 order granting the Association

attorneys’ fees and costs of $79,514.50, and we also vacate that

order.      We remand this case to the circuit court for further

proceedings consistent with this opinion.9

9       See supra note 1.

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James W. Rooney                 /s/ Mark E. Recktenwald
(Terrance M. Revere
with him on the briefs)         /s/ Paula A. Nakayama
for Yoshikawa
                                /s/ Sabrina S. McKenna
John D. Zalewski
(Jana M. Naruse                 /s/ Michael D. Wilson
with him on the briefs)
for the Association             /s/ Todd W. Eddins

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