Court Opinion

ID: 4385970
Source: CourtListenerOpinion
Date Created: 2019-04-10 22:02:42.009225+00
Date Added: 2024-06-11T14:22:58.590819
License: Public Domain

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                                                                 Electronically Filed
                                                                 Supreme Court
                                                                 SCWC-XX-XXXXXXX
                                                                 10-APR-2019
                                                                 09:27 AM

             IN THE SUPREME COURT OF THE STATE OF HAWAII

                                  ---o0o---

    GORAN PLEHO, LLC, a Hawaii Limited Liability Company (dba
  Resorts Limousine Services), GORAN PLEHO and ANA MARIA PLEHO,
        Petitioners/Plaintiffs-Appellants/Cross-Appellees,

                                      vs.

                DAVID W. LACY, LACY AND JACKSON, LLLC,
               a Hawaii Limited Liability Law Company,
          Respondents/Defendants-Appellees/Cross-Appellants,

                                      and

             DRAGAN RNIC, Respondent/Defendant-Appellee.

                              SCWC-XX-XXXXXXX

           CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
                (CAAP-XX-XXXXXXX; CIVIL NO. 06-1-101K)

                               APRIL 10, 2019

 RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.1

      1
            Chief Justice Recktenwald writes for the court, except with
respect to Petitioners’ unfair and deceptive trade practices claim. With
respect to that issue, Justice Pollack writes for the majority of the court
and Chief Justice Recktenwald, with whom Justice Nakayama joins, respectfully
dissents.
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              OPINION OF THE COURT BY RECKTENWALD, C.J.

                              I.   INTRODUCTION

            This case requires us to consider a series of rulings

by the trial court in a complex commercial dispute involving the

sale of a limousine service.        Goran and Ana Maria2 Pleho

purchased Resorts Limousine Services (RLS), a Kona-based

business, from their acquaintance, Dragan Rnic, in 2005.
David W. Lacy, Esq., of the firm Lacy & Jackson LLLC

(collectively, “Lacy Parties”), represented Goran and Maria in

the transaction.     At Lacy’s recommendation, Goran and Maria

formed a corporation, Goran Pleho, LLC (GPLLC), and the

transaction was completed in GPLLC’s name.            Goran and Maria

discovered problems with the business several months after the

purchase.    Goran and Maria, and GPLLC (collectively, “Pleho

Parties”), brought the present action in the Circuit Court for

the Third Circuit (circuit court)3, alleging that Rnic and Lacy

Parties intentionally misrepresented the value of RLS.

            Pleho Parties asserted numerous claims against the

defendants, including fraud and legal malpractice, and they asked

the court to rescind or reform the sale of RLS and award

compensatory and punitive damages.          Rnic counterclaimed for

      2
            In Petitioners’ application for writ of certiorari, Ana Maria
Pleho is referred to as Maria. We adopt this naming convention throughout
this opinion.
     3
            The Honorable Ronald Ibarra presided.

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breach of contract and other counts related to Pleho Parties’

failure to make payments on the purchase price, and cross-claimed

against Lacy Parties.

          After extensive pretrial motions and discovery, Rnic

settled all claims with Lacy Parties and Pleho Parties.

Additionally, the circuit court dismissed or granted summary

judgment on most of Pleho Parties’ claims against Lacy Parties
prior to trial.

          Meanwhile, Goran and Maria filed for bankruptcy in

Nevada, which led to a stay of the action in the circuit court

for eleven months.     Lacy Parties filed a motion in limine

requesting that Pleho Parties be barred from presenting any

evidence regarding their assets that conflicted with Goran and

Maria’s submissions in the bankruptcy proceeding, which the

circuit court denied.

          At trial, the circuit court granted judgment as a

matter of law (JMOL) against Pleho Parties on most remaining

claims, and only their legal malpractice claim based on Lacy’s

representation of GPLLC went to the jury.           The jury found Lacy

Parties not liable by special verdict.          The circuit court entered

judgment against Pleho Parties on all counts, awarding attorney’s

fees and costs to Lacy Parties.

          On appeal, the Intermediate Court of Appeals (ICA)

partially vacated the circuit court’s judgment, finding that the

circuit court had erroneously dismissed or granted summary

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judgment on Goran and Maria’s claims as individuals for fraud,

legal malpractice, and punitive damages.          The ICA also vacated

the circuit court’s denial of the motion in limine, finding that

Lacy Parties had demonstrated all of the elements of judicial

estoppel.    The ICA affirmed the circuit court’s judgment in all

other respects.

            In their application for writ of certiorari, Pleho
Parties argue that the ICA erred in failing to revive their

remaining claims against Lacy Parties.          These include claims by

Goran and Maria, as individuals, for conspiracy to commit fraud,

intentional infliction of emotional distress (IIED), negligent

infliction of emotional distress (NIED), and unfair and deceptive

trade practices (UDAP); and claims by GPLLC for fraud and

punitive damages.     Pleho Parties also argue that the ICA erred

when it vacated the trial court’s order denying Lacy Parties’

motion in limine.

            We conclude that the dismissal of Goran and Maria’s

claims for IIED and NIED was in error, as they stated colorable

claims on both counts.      We also conclude that the grant of JMOL

on GPLLC’s claims for fraud and punitive damages was in error.

Viewing the evidence in the light most favorable to the non-

moving party, a reasonable jury could have returned a verdict in

favor of Pleho Parties on these counts.          We also conclude that

the ICA erred in vacating the trial court’s order denying Lacy

Parties’ motion in limine.

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               Finally, a majority of this court concludes that the

grant of summary judgment as to Goran and Maria Pleho’s UDAP

claim was in error.

               We affirm the ICA on all remaining issues.

                                 II.   BACKGROUND

A.     Sale of RLS4

               Before the sale of RLS to GPLLC, Rnic signed an
agreement in June 2005 with a third individual, Don Rullo, to

sell RLS for $800,000 in cash.           The sale did not close.        Rullo, a

real estate agent, was a client of Lacy’s who consulted with him

about business matters frequently, and Lacy testified that he

represented Rullo in this potential transaction.                Rnic testified

that Rullo introduced him to Lacy.

               Goran Pleho and Rnic met in Las Vegas in 2004, and

Goran subsequently served as Rnic’s realtor in a number of real

estate purchases.        Rnic told Goran about his intention to sell

RLS.       Goran testified that Rnic gave him financial documents

detailing RLS’s profits and losses; when Goran told Rnic that he

did not understand the documents, Rnic said that they should

consult “David Lacy, the best attorney on the island.”                  Goran and

Maria met Lacy on July 11, 2005, where, according to Goran:

               Mr. Rnic introduced Mr. Lacy as   his attorney, but he
               also introduced him as the best   attorney on the
               island, and only he was the one   capable of doing all
               the business transactions, very   capable. And at that

       4
               Unless otherwise indicated, the following facts are undisputed.

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          point I said, “Well, okay. But that is your attorney,
          and if we are going to even consider this, I have to
          have my attorney to represent me.” Rnic said, “Well,
          then I don’t need an attorney, and Mr. Lacy can be
          your attorney.” And Mr. Lacy said, “Well, I’m not
          sure I can do it. I got to think about it.”

          Lacy described his introduction to Goran as follows:

          Dragan Rnic was trying to sell his limousine company
          to Don Rullo. Don Rullo introduced Dragan Rnic to me.
          That fell through. And some, a week, five days, I
          forget what it was after that, Dragan brought Goran to
          my office. And I met him. And then they had all the
          terms and conditions of the deal that they had agreed
          to. And so I agreed to do the paperwork on behalf of
          Mr. Pleho as an LLC.

          . . . .

          [T]hey both came in and had agreed upon the terms and
          conditions of the sale, and I think I told ‘em they
          needed lawyers. Mr. Rnic said he didn’t, and I should
          just be Mr. Pleho’s lawyer. And then after thinking
          about it and I guess I talked to [Lacy’s partner] Kim
          [Jackson], I agreed to be his lawyer, if he wanted me
          to.

          Lacy agreed to represent Goran in the transaction, and

referred Goran to a certified public accountant (CPA) to obtain

an appraisal of RLS.     However, the CPA told Goran that he was not

available to do the appraisal.        Goran testified that he expressed

concern about proceeding with the sale without an appraisal at

his next meeting with Rnic and Lacy on July 19, 2005:

          So I said, “I can’t go forward with this. I need an
          appraisal. I need to see what is this company’s
          worth.”

          And Mr. Rnic said, “Well, what do you mean? This is a
          unique company, only one of this kind. There’s nobody
          to appraise this company. It’s worth $2 million, and
          $1.5 is just a great price.” And Mr. Lacy repeated
          the same thing to me.

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          Goran testified that he and Lacy went over hundreds of

documents provided by Rnic pertaining to RLS’s finances, and that

Lacy assured him that the “financials” were “satisfactory.”                  Lacy

testified that he “would never tell any client that his business

was unique and could not be appraised.”

          Lacy recommended that Goran form a limited liability

company to purchase RLS, and on July 25, 2005, Goran executed
GPLLC’s incorporation documents, which Lacy drafted.             Goran was

GPLLC’s sole member at the time of incorporation.

          Also on July 25, 2005, Rnic and GPLLC executed a Sale

of Assets Agreement (Sale Agreement), by which Rnic sold RLS to

GPLLC for a price of $1,500,000.          As a down payment, Goran and

Maria agreed to transfer three Las Vegas properties worth

approximately $378,000 to Rnic, with the rest of the sale price

to be paid back by GPLLC in monthly installments based on the

gross income of RLS.     The agreement provided that closing would

take place upon the transfer of Rnic’s Public Utilities

Commission (PUC) license to GPLLC.

          That same day, GPLLC executed a $1,122,000 promissory

note in favor of Rnic and a Management Services Agreement,

whereby GPLLC agreed to manage and operate RLS until the transfer

of Rnic’s PUC license.      Lacy prepared the Sale Agreement, the

promissory note, and the Management Services Agreement.              He also

prepared a limited power of attorney allowing GPLLC to manage RLS

on Rnic’s behalf before the PUC license was transferred to GPLLC,

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and a warranty bill of sale, both executed on July 25, 2005.

Although the Sale Agreement provided that closing would occur

once the PUC license was transferred, the bill of sale was

transferred to GPLLC that same day.

           After July 25, 2005, Goran and Maria received some

training from RLS employees and began running the business.

Goran testified that in November 2005, he received a phone call
about RLS from a friend, who informed him that “the numbers were

altered before it was sold.”        Goran testified that he

subsequently met with Lacy several times and told him that “this

surely looks like fraud,” but Lacy downplayed Goran’s concern and

advised him to wait for the completion of the PUC license

transfer before taking any action “as far as fraud.”              According

to Lacy’s notes from a February 14, 2006 meeting with Goran, “Mr.

Pleho wanted to wait until he had the [PUC] license and then

approach Mr. Rnic and try and resolve the problems. . . .”

Rnic’s PUC license was transferred to GPLLC on March 10, 2006.

B.   Circuit Court Proceedings

     1.    Pretrial

           Pleho Parties filed a complaint on July 6, 2006, naming

Rnic and Lacy Parties as defendants.          Pleho Parties asserted that

they had purchased RLS for a price “far in excess of the actual

fair market value” based on fraudulent information from Rnic.

The complaint alleged that Lacy Parties had:

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           failed, refused, and/or neglected to properly advise
           and assist [Pleho Parties] on the transaction and to
           safeguard them against the unconscionable terms of the
           agreement ultimately entered and, in fact, drafted the
           terms adverse to the interests of [Pleho
           Parties]. . . . Further, [Lacy Parties] continued to
           represent [Pleho Parties] subsequent to the initial
           transaction and failed, refused, and/or neglected to
           take timely and appropriate action to foreclose or
           mitigate harm to [Pleho Parties] once the fraudulent
           conduct of [Rnic] was discovered.

           Pleho Parties twice amended their complaint, which
ultimately included the following counts against Rnic and Lacy

Parties:   (I) conspiracy to commit fraud; (II) fraud; (III) fraud

in the inducement; (IV) gross inadequacy of consideration; (V)

IIED; (VI) NIED; (VII) UDAP; (VIII) legal malpractice (against

Lacy Parties alone); (IX) intentional spoilation of evidence; (X)

negligent spoilation of evidence; and (XI) punitive damages.                 The

second amended complaint alleged that Lacy intentionally

misrepresented the value of RLS to Pleho Parties, and that Pleho

Parties would not have purchased RLS if they had known that Rnic

had agreed to sell the business to Rullo for only $800,000.

           In their answer, Lacy Parties argued that Pleho Parties

had caused or contributed to any injuries they suffered.              That

same day, Lacy Parties also filed a cross-claim against Rnic.

           Rnic filed an answer and counterclaim against GPLLC on

September 26, 2006, alleging that:

           since the Management Service Agreement, GPLLC and
           [Goran] Pleho have failed to maintain [RLS] in a
           reasonable, profitable fashion, running the business
           into the ground, causing lost profits and decrease in

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          the value of the business and goodwill, all to Rnic's
          detriment.

          Rnic’s counterclaim included six counts against GPLLC

and Goran related to the sale and management of RLS, including

breach of the Sale Agreement and promissory note for failure to

make payments on the purchase price.         Pleho Parties filed a

cross-claim against Lacy Parties based on Rnic’s counterclaim.

          Rnic filed a motion for summary judgment on Pleho
Parties’ claims against him, which the circuit court granted on

May 13, 2009.

          Lacy Parties filed a Hawaii Rules of Civil Procedure

(HRCP) Rule 12(b)(6) motion to dismiss all counts of Pleho

Parties’ second amended complaint except for Count VII (UDAP) and

Count XI (punitive damages), which the circuit court granted on

May 13, 2009.

          Pleho Parties filed a motion for reconsideration and

clarification of the May 13, 2009 order granting Lacy Parties’

motion to dismiss.     On July 29, 2009, the circuit court entered

an order denying and clarifying Pleho Parties’ motion.              The court

stated that it was dismissing all counts but the following:                  for

GPLLC, Counts II (fraud), III (fraud in the inducement), and VIII

(legal malpractice); for Goran and Maria Pleho as individuals,

Count VII (UDAP); and for GPLLC and Goran and Maria Pleho as

individuals, Count XI (punitive damages).           The court explained

its reasoning as follows:

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          Count I for conspiracy to commit fraud falls away
          because there is but one person accused and the prior
          co-conspirator has been judged not liable. . . .
          Because the conspiracy was alleged to have been
          between Defendant Rnic and Defendants David W. Lacy
          and Lacy & Jackson, LLLC, and Defendant Rnic was
          granted summary judgment on the count of conspiracy to
          commit fraud, there is no party for the remaining
          Defendants to conspire with.

          Count V and VI are properly dismissed by implication.
          There is no mental distress which can be suffered by a
          corporation. . . .

          Count VII for unfair and deceptive trade practices can
          not stand on behalf of [GPLLC], because a claim for
          unfair and deceptive trade practices is reserved by
          statute for consumers. . . . A corporation is not a
          natural person and does not have standing to bring a
          claim for unfair and deceptive trade practices under
          the statute. . . .

          Count VIII for legal malpractice was asked to be
          dismissed as to [Goran and Maria Pleho] as individual
          plaintiffs, because they had not suffered damages;
          they did not purchase, as individuals, the business
          that is the underlying subject of this case, and
          therefore did not suffer any individual damages
          relating to the purchase. The Court ruled in favor of
          the Defendants; therefore Count VIII for legal
          malpractice stands on behalf of the LLC alone.

          Count XI for punitive damages stands, based only on
          the claims still standing for [Goran and Maria Pleho]
          and the LLC. But because the only claim [Goran and
          Maria] can claim punitive damages for is unfair and
          deceptive trade practices, which awards double or
          treble damages, they should be held to only one form
          of recovery.

          Lacy Parties subsequently moved for partial summary

judgment on Goran and Maria’s UDAP and punitive damages claims,

which the circuit court granted.

          On March 10, 2011, counsel for all parties appeared

before the circuit court to enter two settlement agreements into

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the record.    The first settlement agreement provided that Lacy’s

indemnity insurance company would pay Rnic $650,000 in exchange

for releasing GPLLC from all claims arising out of the RLS Sale

Agreement and promissory note, so as to “allow [GPLLC] to retain

and operate RLS free and clear of any claims by or obligations to

Rnic.”    Rnic also agreed to the dismissal of his counterclaim

against GPLLC.
            The second settlement agreement provided that Rnic

would release all claims against Pleho Parties in exchange for a

stipulation of entry of judgment against Goran in the amount of

$100,000, to be paid in twenty-five $4,000 installments.5

     2.     Trial

            Jury trial began on June 7, 2011 on GPLLC’s remaining

claims:    Count II (fraud), Count III (fraud in the inducement),

Count VIII (legal malpractice), and Count XI (punitive damages).

            Both Goran and Lacy testified at trial, giving their

conflicting accounts of the events leading up to the sale of RLS.

Among the other witnesses called were two expert accountants, who

offered competing appraisals of the value of RLS:              Lacy Parties’

expert appraised RLS at $1,156,000, while Pleho Parties’ expert

Mark Hunsaker appraised RLS at $128,000.           On cross-examination,

Hunsaker testified as follows:

      5
            Maria was not represented at the March 10, 2011 hearing and thus
was not bound by the settlement. Pleho Parties do not contest the settlement
with Rnic in their application.

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          [Lacy Parties’ counsel]: Now, what you valued in this
          case . . . is the 100 percent equity interest in Goran
          Pleho, LLC dba Resorts Limousines as of July 25, 2005,
          on a controlling marketable basis?

          [Hunsaker]:   Correct.

          [Lacy Parties’ counsel]: Are you familiar with the
          “International Glossary of Business Valuation Terms”?

          [Hunsaker]:   I am.

          [Lacy Parties’ counsel]: Isn’t that an authoritative
          source that business appraisers customarily rely on?

          [Hunsaker]:   It is.

          [Lacy Parties’ counsel]: Isn’t the definition of
          equity the owner’s interest in property after
          deduction of all liabilities?

          [Hunsaker]:   Correct.

          After Pleho Parties rested their case, Lacy Parties

moved for JMOL on all remaining claims.          Lacy Parties argued that

these claims must fail for lack of damages because Rnic had

agreed to release all claims against Pleho Parties as part of

Lacy Parties’ settlement with Rnic, i.e., any damages based on

Pleho Parties’ liability to Rnic no longer existed.             According to

Lacy Parties:

          Plaintiff’s valuation expert, Mark Hunsaker, testified
          that he valued a 100% equity interest in RLS. His
          valuation was $128,000, but his own testimony
          establishes that valuation of the equity interest was
          an incorrect measure. Hunsaker agreed on cross-
          examination with the definition in the International
          Glossary of Business Valuation Terms, 2001 Ed., that
          equity is “the owner’s interest in property after
          deduction of all liabilities.” . . . Conversely, in
          order to obtain the actual value of RLS, which is the
          owner’s interest in the property, Hunsaker would need
          to take the equity and add back in the liabilities.

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          Based on Hunsaker’s valuation of the equity at
          $128,000, and adding the $1,122,000 liability for the
          promissory note . . . the LLC’s interest in RLS is
          valued at $1,250,000.

          . . . .

          Even viewing Plaintiff’s evidence in the best light
          possible, as a result of the settlement, the LLC
          obtained a $1,250,000 business for $452,698 [$378,000
          (Plaintiff’s down payment from the three properties)
          + $74,698 (the amounts paid to date)] . . . . Not
          only does the LLC have no damages, it actually came
          out ahead as a result of the settlement.

          The circuit court orally granted the motion for JMOL as

to fraud, fraud in the inducement, and punitive damages, but

denied it as to legal malpractice, issuing a written order on

July 6, 2011.    Regarding the fraud, fraud in the inducement, and

punitive damages claims, the court stated:

          looking at the evidence in light most favorable to the
          non-movant, the Court finds that no reasonable jury
          would be able to find by clear and convincing evidence
          that the defendants committed fraud or fraud in the
          inducement as well as awarding punitive damages.

          The jury returned a Special Verdict on the legal

malpractice claim, finding that while Lacy breached the standard

of care in providing legal services to GPLLC, this breach was not

a legal cause of damages to GPLLC.         Thus, the jury found that

Lacy Parties were not liable for legal malpractice.

          The circuit court entered judgment in favor of Lacy

Parties on all claims asserted by Pleho Parties.            Lacy Parties

moved for attorney’s fees and costs, and the court awarded

$407,013.69 in attorney’s fees and $29,191.96 in costs.

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     3.     The Motion in Limine

            On June 9, 2009, Goran and Maria filed for Chapter 11

bankruptcy in the U.S. Bankruptcy Court for the District of

Nevada.

            On April 21, 2011, Lacy Parties filed a motion in

limine to bar Pleho Parties from pursuing claims or introducing

evidence regarding any alleged loan, debt, or other asset not
specifically declared as an asset in the Nevada Bankruptcy Court

action.   Lacy Parties asserted that there “is apparent discord

and confusion between [Goran and Maria’s] disclosures in the

Nevada [bankruptcy] action and [Pleho Parties’] claims in this

civil litigation.”     Pleho Parties responded that they were not

required to disclose GPLLC’s debt to Goran and Maria in the

bankruptcy proceedings, and that there was no evidence that Pleho

Parties stood to gain unfair advantage by the alleged

inconsistency.    On June 3, 2011, the circuit court orally denied

the motion, noting, “[c]ertainly it goes to credibility versus

admissibility.”

            At trial, Pleho Parties offered into evidence Exhibit

27-G(7), a check from Goran to GPLLC, in order to prove damages.

Counsel for Lacy Parties objected based on lack of foundation and

lack of relevance, but the circuit court received the check into

evidence.

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C.   ICA Proceedings

            Pleho Parties appealed to the ICA, and Lacy Parties

filed a cross-appeal from the circuit court’s order denying their

motion in limine to bar evidence inconsistent with Pleho Parties’

disclosures in their bankruptcy proceedings.

     1.     Pleho Parties’ Arguments

            Pleho Parties raised four points of error before the
ICA relevant to this opinion,6 arguing that the circuit court

erred in:    (1) granting Lacy Parties’ motion to dismiss Pleho

Parties’ claims for conspiracy, inadequate consideration, IIED,

NIED, and spoliation of evidence, and Goran and Maria’s claims as

individuals for fraud, fraud in the inducement, and malpractice;

(2) granting Lacy Parties’ motions for partial summary judgment

as to Goran and Maria’s UDAP and punitive damages claims; (3)

granting the Lacy Parties’ motion for JMOL as to GPLLC’s claims

for fraud, fraud in the inducement, and punitive damages; and (4)

granting Lacy Parties’ attorney’s fees and costs.

            First, Pleho Parties argued that they alleged

sufficiently “outrageous” conduct that was “calculated to cause,

and did in fact cause, extreme emotional distress,” supporting

the restoration of their IIED and NIED claims.             Pleho Parties

further contended that although Lacy claimed that he only had an

     6
            Pleho Parties also argued that the circuit court erred in (1)
granting Rnic’s motion to enforce settlement; and (2) granting Rnic’s motion
for summary judgment. The ICA upheld both the settlement and summary judgment
in Rnic’s favor in its memorandum opinion, and Pleho Parties do not contest
the rulings on Rnic’s motions in their application for writ of certiorari.

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attorney-client relationship with GPLLC, Goran and Maria were

“real parties in interest” because they had been injured by his

conduct.

           Pleho Parties asserted that “by first eliminating

[GPLLC] as a non-customer, and then dropping [Goran and Maria]

because they were allegedly not his clients, the court denied

[Goran and Maria] relief for prima facie unfair and deceptive
trade practices.”     Pleho Parties argued that “a lawyer who

deceives a client about the value a company he wishes to

purchase, has not only committed malpractice, but also a

deceptive trade practice.”

           Finally, Pleho Parties argued that JMOL for fraud,

fraud in the inducement, and punitive damages was inappropriate.

According to Pleho Parties, the circuit court disregarded

“compelling evidence” supporting all three claims, which “cut the

heart out of this case” and left the jury “with the absurd

impression that [Pleho Parties] were seeking millions in damages

because Lacy violated two or three technical provisions of the

Hawaii Rules of Professional Conduct.”

     2.    Lacy Parties’ Arguments

           Lacy Parties asserted (1) that the circuit court abused

its discretion when it denied the motion in limine regarding

evidence inconsistent with Pleho Parties’ disclosures in their

bankruptcy proceedings; and (2) that the circuit court erred in

“admitting evidence at trial of a payment made by [Goran] to

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[GPLLC] when [Goran] did not disclose any such debt owed to him

in the bankruptcy schedules.”         According to Lacy Parties, Goran

and Maria claimed loans to GPLLC as damages in their civil

lawsuit while failing to disclose any such loans in their

bankruptcy proceedings.       Lacy Parties argued that the circuit

court should have applied judicial estoppel to prevent Pleho

Parties from asserting these inconsistent positions, which gave
them an unfair advantage and suggested that one court or the

other was being misled.

      3.    The ICA Amended Memorandum Opinion

            The ICA addressed the circuit court’s grant of Lacy

Parties’ motion to dismiss,7 motion for summary judgment, and

motion for JMOL in an unpublished Amended Memorandum Opinion.

            Regarding conspiracy to commit fraud, the ICA found

that the trial court did not err in granting dismissal, noting,

“[t]here is no evidence in the record that the Lacy Parties

intentionally participated in the sales transaction with a view

to the furtherance of the common design and purpose.”

            As to fraud and fraud in the inducement, the ICA noted

that, although it was GPLLC that had purchased RLS, Goran and

Maria made a down payment of $378,000 on behalf of GPLLC.                Thus,

the ICA found that “we cannot conclude that it appears beyond

      7
            The ICA noted that the circuit court appeared to review “the
record and file of the case” in evaluating Lacy Parties’ HRCP Rule 12(b)(6)
motion, making it appropriate to consider the motion under the HRCP Rule 56
motion for summary judgment standard as well.

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doubt that [Goran and Maria] can prove no set of facts in support

of their claim that they were real parties in interest and

suffered damages in conjunction with” the transfer of their Las

Vegas properties.     The ICA concluded that the circuit court erred

in dismissing the fraud claims, but noted that Lacy Parties

remained free to assert on remand that [Goran and Maria’s] claims

were barred by the jury verdict.
          The ICA affirmed the circuit court’s dismissal of Pleho

Parties’ IIED and NIED claims.        First, the ICA noted its

agreement with the circuit court’s conclusion that a corporation

such as GPLLC cannot suffer mental distress.           Second, the ICA

determined that, even accepting Goran and Maria’s allegations as

true, “we cannot conclude that reasonable people could construe

Lacy’s conduct as ‘beyond all possible bounds of decency’ . . .

as required by our case law” for IIED.

          Regarding Pleho Parties’ NIED claims, the ICA noted

that “Pleho Parties do not cite to any Hawaii case law

supporting recovery for NIED based entirely on a commercial
transaction, and we find none.”
          The ICA found that the court properly dismissed GPLLC’s

UDAP claim because HRS Chapter 480 does not create a cause of

action for corporations.

          Regarding Goran and Maria’s legal malpractice claims,

the ICA found that there was a genuine issue of material fact as

to whether Lacy formed an attorney-client relationship with Goran

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and Maria.   The ICA concluded that the circuit court erred when

it dismissed Goran and Maria’s legal malpractice claim against

Lacy Parties.    The ICA noted that its ruling “is without

prejudice to the Lacy Parties asserting on remand that [Goran and

Maria’s] malpractice claims are barred by the jury’s verdict.”

          The ICA then addressed the grant of Lacy Parties’

motions for partial summary judgment on Pleho Parties’ UDAP and
punitive damages claims.      The ICA concluded that HRS Chapter 480

did not apply to Lacy’s conduct in his capacity as a practicing

attorney, citing numerous cases from other jurisdictions for the

proposition that regulation of attorneys “does not fall within

the ambit of consumer protection laws.”          However, the ICA

reinstated the punitive damages claims with respect to Goran and

Maria’s fraud and malpractice claims against Lacy Parties.

          The ICA then addressed the grant of Lacy Parties’

motion for JMOL on GPLLC’s claims for fraud, fraud in the

inducement, and punitive damages.         The ICA agreed with Lacy

Parties’ contention that Pleho Parties “obtained a $1,250,000

business for $452,698 (including the $378,000 down payment . . .

and $74,698 that was otherwise paid, according to evidence

entered at trial).”     Noting that Pleho Parties “failed to cite

any evidence at trial that is contrary” to this argument, the ICA

concluded that the circuit court did not err in granting the

motion for JMOL in favor of Lacy Parties on fraud, fraud in the

inducement, and punitive damages.

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           The ICA affirmed the circuit court’s award of

attorney’s fees and costs to Lacy Parties regarding GPLLC’s legal

malpractice claim.      However, the ICA partially vacated the award

to the extent that it held Goran and Maria jointly and severally

liable, “as it is unclear whether the Lacy Parties will be

determined the prevailing party against Goran and Maria, as well

as GPLLC” on remand.
           Finally, the ICA addressed Lacy Parties’ cross-appeal,

finding Goran and Maria’s apparently inconsistent positions in

their Nevada bankruptcy proceeding and the instant case

established the elements required to invoke judicial estoppel.

Accordingly, the ICA held the circuit court erroneously concluded

that “the issue was a matter of credibility rather than

admissibility, and did not reach the exercise of its discretion

on whether to judicially estop [Pleho Parties] from asserting the

factually incompatible position in this case.”             The ICA thus

vacated the circuit court’s ruling on the motion in limine and

the admission of Exhibit 27-G(7) to allow the circuit court “to

exercise its discretion” on Lacy Parties’ request for judicial

estoppel “in the first instance.”

           The ICA entered judgment on October 13, 2016.

                        III.   STANDARDS OF REVIEW

A.   Motion to Dismiss

           A trial court’s ruling on a motion to dismiss is
           reviewed de novo. The court must accept plaintiff’s
           allegations as true and view them in the light most

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           favorable to the plaintiff; dismissal is proper only
           if it appears beyond doubt that the plaintiff can
           prove no set of facts in support of his or her claim
           that would entitle him or her to relief. However . .
           . a motion seeking dismissal of a complaint is
           transformed into a Hawaii Rules of Civil Procedure
           (HRCP) Rule 56 motion for summary judgment when the
           circuit court considers matters outside the pleadings.

Wong v. Cayetano, 111 Hawaii 462, 476, 143 P.3d 1, 15 (2006)

(internal quotation marks and citations omitted).

B.   Motion for Summary Judgment
           The appellate court reviews “the circuit court’s grant

or denial of summary judgment de novo.”           Querubin v. Thronas, 107

Hawaii 48, 56, 109 P.3d 689, 697 (2005) (citation omitted).

           A grant of summary judgment is “appropriate where
           there is no genuine issue as to any material fact and
           the moving party is entitled to judgment as a matter
           of law.” Ross v. Stouffer Hotel Co., 76 Hawaii 454,
           457, 879 P.2d 1037, 1040 (1994)(internal citation
           omitted). In other words, “summary judgment should
           not be granted unless the entire record shows a right
           to judgment with such clarity as to leave no room for
           controversy and establishes affirmatively that the
           adverse party cannot prevail under any circumstances.”
           State v. Zimring, 52 Haw. 472, 475, 479 P.2d 202, 204
           (1970) (internal citation omitted). “A fact is
           material if proof of that fact would have the effect
           of establishing or refuting one of the essential
           elements of a cause of action or defense asserted by
           the parties.” Hulsman v. Hemmeter Dev. Corp., 65 Haw.
           58, 61, 647 P.2d 713, 716 (1982) (internal citations
           omitted).

Balthazar v. Verizon Hawaii, Inc., 109 Hawaii 69, 72, 123 P.3d

194, 197 (2005).

C.   Motion for Judgment as a Matter of Law

           “It is well settled that a trial court’s rulings on
           [motions for judgment as a matter of law] are reviewed
           de novo.”   Nelson v. University of Hawaii, 97 Hawaii

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           376, 392, 38 P.3d 95, 112 (2001) (internal citation
           omitted). When reviewing a motion for judgment as a
           matter of law, “the evidence and the inferences which
           may be fairly drawn therefrom must be considered in
           the light most favorable to the nonmoving party and
           [the] motion may be granted only where there can be
           but one reasonable conclusion as to the proper
           judgment.” Id. (citing Carr v. Strode, 79 Hawaii
           475, 486, 904 P.2d 489, 500 (1995)).

Kramer v. Ellett, 108 Hawaii 426, 430, 121 P.3d 406, 410 (2005).

D.   Motion in Limine
           The granting or denying of a motion in limine is
           reviewed for abuse of discretion. The denial of a
           motion in limine, in itself, is not reversible error.
           The harm, if any, occurs when the evidence is
           improperly admitted at trial. Thus, even if the trial
           court abused its discretion in denying a party’s
           motion, the real test is not in the disposition of the
           motion but the admission of evidence at trial.

State v. Eid, 126 Hawaii 430, 440, 272 P.3d 1197, 1207 (2012)

(quoting Miyamoto v. Lum, 104 Hawaii 1, 7, 84 P.3d 509, 515

(2004)).

                              IV.   DISCUSSION

           Pleho Parties’ application presents the following

questions:

           A. Did the ICA commit grave error when it vacated
           orders dismissing claims by real parties in interest
           Goran and Maria for fraud and malpractice, which
           gutted this lawsuit, but affirmed dismissal of
           conspiracy, IIED, NIED and unfair and deceptive trade
           practices, and a judgment against [GPLLC] and $436,000
           in fees and costs?

           B. Did the ICA commit grave error when it affirmed
           mid-trial orders dismissing claims against Lacy by [GP
           LLC] for fraud and punitive damages, despite
           substantial and credible evidence supporting those
           claims requiring their submission to the jury?

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           C. Did the ICA commit grave error when it vacated the
           trial court’s order denying a motion in limine to bar
           evidence of loans to [GPLLC] because of unrelated
           bankruptcy proceedings brought by Goran and Maria,
           when Lacy failed to renew his objection to the
           evidence at trial?

           The ICA vacated and remanded the circuit court’s

dismissal of Goran and Maria’s fraud and legal malpractice

claims.8   At issue in Pleho Parties’ application are several

claims that the ICA did not restore, the award of attorney’s
fees, and the vacatur of the circuit court’s denial of the motion

in limine.

A.   Motion to Dismiss

     1.    Conspiracy to Commit Fraud

           The circuit court relied on its grant of summary

judgment in favor of Rnic when it dismissed the conspiracy count

against Lacy Parties.       The ICA thus reviewed the grant of Lacy

     8
            The ICA noted that its ruling was “without prejudice” to Lacy
Parties claiming on remand that the claims are barred by the jury verdict on
GPLLC’s malpractice claim. Respectfully, we disagree with the ICA’s
observations on that issue. Goran and Maria’s claims as individuals are
sufficiently distinct from GPLLC’s that it appears collateral estoppel would
be inappropriate in this instance. See Dorrance v. Lee, 90 Hawaii 143, 149,
976 P.2d 904, 910 (1999) (delineating the elements of collateral estoppel,
including, “(1) [that] the issue decided in the prior adjudication is
identical to the one presented in the action in question”).

            We also note that we do not agree with Pleho Parties’ assertion
that the jury verdict on GPLLC’s malpractice claim is a “nullity” because
Goran and Maria were necessary parties under HRCP Rule 19(a) on all claims.
Mandatory joinder under HRCP Rule 19 functions to "ensure[] due process for
the absent party." Marvin v. Pflueger, 127 Hawaii 490, 520, 280 P.3d 88, 118
(2012). Goran and Maria cannot claim that they were absent, as they initiated
the lawsuit and their claims were heard in circuit court. See Mauna Kea
Anaina Hou v. Bd. of Land and Natural Res., 136 Hawaii 376, 389, 363 P.3d
224, 237 (2015) ("The basic elements of procedural due process are notice and
an opportunity to be heard at a meaningful time and in a meaningful manner.")
(citation omitted).

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Parties’ motion to dismiss as a HRCP Rule 56 motion for summary

judgment, as it appears that the circuit court looked beyond the

pleadings and reviewed the “record and file of the case.”

However, if on a Rule 12(b)(6) motion to dismiss for failure to

state a claim upon which relief can be granted,

          matters outside the pleading are presented to and not
          excluded by the court, the motion shall be treated as
          one for summary judgment and disposed of as provided
          in Rule 56, and all parties shall be given reasonable
          opportunity to present all material made pertinent to
          such a motion by Rule 56.

HRCP Rule 12(b) (emphasis added).

          It does not appear that Pleho parties were given

“reasonable opportunity to present all material made pertinent”

by the conversion to a motion for summary judgment.             It was thus

improper for the circuit court to consider matters outside the

pleadings in granting Lacy Parties’ motion to dismiss as to the

conspiracy count.     Accordingly, the ICA erred in affirming the

circuit court’s grant of Lacy Parties’ motion to dismiss the

conspiracy count.

          2.     IIED

          The elements of the tort of IIED are:            1) that the

conduct allegedly causing the harm was intentional or reckless;

2) that the conduct was outrageous; and 3) that the conduct

caused 4) extreme emotional distress to another.            Hac v. Univ. of

Hawaii, 102 Hawaii 92, 106–07, 73 P.3d 46, 60–61 (2003).              “The

term ‘outrageous’ has been construed to mean without just cause

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or excuse and beyond all bounds of decency.”           Enoka v. AIG

Hawaii Ins. Co., Inc., 109 Hawaii 537, 559, 128 P.3d 850, 872

(2006) (citations and some internal quotation marks omitted).

Additionally, “[t]he question whether the actions of the alleged

tortfeasor are unreasonable or outrageous is for the court in the

first instance, although where reasonable people may differ on

that question it should be left to the jury.”            Young v. Allstate
Ins. Co., 119 Hawaii 403, 429, 198 P.3d 666, 692 (2008)

(citation omitted).

          The ICA concluded that Lacy’s behavior, as alleged by

Pleho Parties, did not reach the threshold of outrageousness

required for IIED.     We respectfully disagree.         There is “no clear

definition of the prohibited outrageous conduct,” and the correct

inquiry is simply whether “an average member of the community”

would exclaim, “Outrageous!”       Id. at 425, 198 P.3d at 688

(internal citations, brackets, and quotations marks omitted).

Pleho Parties alleged that Lacy, their attorney, colluded with

Rnic to defraud them of hundreds of thousands of dollars and

three properties they owned in Nevada, causing Goran and Maria

“severe emotional distress and serious physical injuries.”

Taking these allegations as true for the purposes of evaluating

the motion to dismiss, we cannot say Goran and Maria have failed

to state a claim for IIED.       Accordingly, the ICA erred in

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affirming the circuit court’s dismissal of Goran and Maria’s IIED

claim.9

      3.    NIED

            “[A]n NIED claim is nothing more than a negligence

claim in which the alleged actual injury is wholly psychic and is

analyzed utilizing ordinary negligence principles.”10              Doe

Parents No. 1 v. State, Dep’t of Educ., 100 Hawaii 34, 69, 58
P.3d 545, 580 (2002) (internal citation and quotation marks

omitted).    Although the injury is wholly psychic, Hawaii courts

have generally held that an NIED plaintiff “must establish some

predicate injury either to property or to another person in order

[sic] himself or herself to recover for negligently inflicted

emotional distress.”      Id. (citing Rodrigues v. State, 52 Haw.

156, 172, 472 P.2d 509, 520 (1970); John & Jane Roes, 1-100 v.

FHP, Inc., 91 Hawaii 470, 473, 985 P.2d 661, 664 (1999)).               This

      9
            The circuit court and the ICA dismissed GPLLC’s IIED and NIED
claims. We hereby affirm these rulings, as a corporation cannot suffer
emotional distress. See RT Imp., Inc. v. Torres, 139 Haw. 445, 448 n.2, 393
P.3d 997, 1000 n.2 (2017) (indicating emotional distress damages cannot be
awarded in favor of corporations).
      10
            A valid negligence claim has four elements:

            1. A duty or obligation, recognized by the law,
            requiring the defendant to conform to a certain
            standard of conduct, for the protection of others
            against unreasonable risks;
            2. A failure on the defendant’s part to conform to the
            standard required: a breach of the duty;
            3. A reasonably close causal connection between the
            conduct and the resulting injury; and
            4. Actual loss or damage resulting to the interests of
            another.

Doe Parents, 100 Hawaii at 68, 58 P.3d at 579.

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court has, however, recognized NIED claims even absent a

distinct, non-psychological injury when “they involve

circumstances which guarantee the genuineness and seriousness of

the claim.”   Rodrigues v. State, 52 Haw. 156, 171, 472 P.2d 509,

519 (1970); see also Doe Parents, 100 Hawaii at 70, 58 P.3d at

581 (finding that when a teacher is reinstated into a position in

close contact with children after accusations of child
molestation, without serious inquiry into the accusations, and

the teacher molests the children, it is “self evident” that the

children’s and parents’ resulting psychological trauma guarantees

the “genuineness and seriousness” of parents’ NIED claim).

          In 1986, the legislature modified our common law tort

of NIED in HRS § 663-8.9 (1986 Supp.), which provides:

          (a) No party shall be liable for the negligent
          infliction of serious emotional distress or
          disturbance if the distress or disturbance arises
          solely out of damage to property or material objects.

          (b) This section shall not apply if the serious
          emotional distress or disturbance results in physical
          injury to or mental illness of the person who
          experiences the emotional distress or disturbance.

          Thus, a viable NIED claim for damage to property or

material objects must allege:        (1) a duty or obligation,

recognized by the law, requiring the defendant to conform to a

certain standard of conduct, for the protection of others against

unreasonable risks; (2) the defendant breached the duty; (3) a

reasonably close causal connection between the defendant’s breach

and the plaintiff’s resulting injury; and (4) serious emotional

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distress or disturbance resulting in physical injury to or mental

illness of the plaintiff, or circumstances guaranteeing the

genuineness and seriousness of the claim.11           See Doe Parents, 100

Hawaii at 68-88, 58 P.3d 545, 579-99 (plaintiffs stated a valid

NIED claim for psychic injuries in the absence of physical injury

or mental illness by establishing:          duty of care, breach of duty,

legal causation, and circumstances guaranteeing the genuineness
and seriousness of the mental distress alleged).             By this

standard, Pleho Parties stated a claim for NIED upon which relief

can be granted.

            Pleho Parties alleged Lacy formed a “special

relationship” with Goran and Maria “for which the law imposes a

duty of care” when he undertook to represent Pleho Parties in the

purchase of RLS.     Pleho Parties further alleged Lacy breached

this duty and “[a]s a direct and proximate result,” Goran and

Maria “have suffered and continue to suffer from severe emotional

distress and serious physical injuries and they have incurred and

continue to incur reasonable and necessary medical and

rehabilitative expenses for medical treatment” as a result of

Lacy Parties’ conduct.       Goran and Maria thus sufficiently stated

an NIED claim by alleging, in addition to their claims of

      11
            In affirming the circuit court’s dismissal of Pleho Parties’ NIED
claim, the ICA stated, “the Pleho Parties do not cite to any Hawaii case law
supporting recovery for NIED based entirely on a commercial transaction, and
we find none.” However, whether the conduct at issue occurred in the context
of a commercial transaction is irrelevant to whether the elements of an NIED
claim have been sufficiently alleged.

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emotional distress, that they suffered serious physical injuries

and needed medical treatment for those injuries.             Accordingly,

the ICA erred in affirming the circuit court’s dismissal of Goran

and Maria’s NIED claim.

B.   Judgment as a Matter of Law on Fraud, Fraud in the
     Inducement, and Punitive Damages

           The circuit court granted JMOL against GPLLC on its

fraud, fraud in the inducement, and punitive damages12 claims,
determining that no reasonable jury would be able to find by

clear and convincing evidence that Lacy “committed fraud or fraud

in the inducement as well as awarding punitive damages.”               We

respectfully disagree.       The circuit court was required to view

the evidence and inferences therefrom in the light most favorable

to the non-moving party, i.e., GPLLC, and grant the motion only

if “there can be but one reasonable conclusion as to the proper

judgment.”    Kramer, 108 Hawaii at 430, 121 P.3d at 410.

           “The elements of fraud are:          (1) false representations

made by the defendant; (2) with knowledge of their falsity (or

without knowledge of their truth or falsity); (3) in

contemplation of plaintiff’s reliance upon them; and (4)

      12
            “Punitive or exemplary damages are generally defined as those
damages assessed in addition to compensatory damages for the purpose of
punishing the defendant for aggravated or outrageous misconduct and to deter
the defendant and others from similar conduct in the future.” Masaki v. Gen.
Motors Corp., 71 Haw. 1, 6, 780 P.2d 566, 570 (1989) (citations omitted).

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plaintiff’s detrimental reliance.”13         Miyashiro, 122 Hawaii at

482–83, 228 P.3d at 362–63.

            There was evidence at trial indicating that Lacy

drafted the documents for GPLLC’s purchase of RLS for $1.5

million, yet he did not disclose the fact that he had represented

a prior prospective buyer, who had been poised to acquire the

business for only $800,000.        Further, Goran testified that Lacy
repeated Rnic’s claims about RLS’s value, i.e., “[t]his is a

unique company, only one of this kind.           There’s nobody to

appraise this company.       It’s worth $2 million, and $1.5 is just a

great price.”     Where there is a duty to exercise reasonable care

to disclose a matter in question, failure to disclose the matter

is considered a false representation for purposes of the fraud

analysis.    Santiago v. Tanaka, 137 Hawaii 137, 149, 366 P.3d

612, 624 (2016).     Here, Lacy had such a duty stemming from his

fiduciary role as Pleho Parties’ attorney.            Viewing such evidence

in the light most favorable to GPLLC, we conclude that a

reasonable jury could have found in favor of GPLLC on the fraud

and punitive damages claims.

            The ICA affirmed the circuit court’s grant of JMOL with

a different rationale, adopting Lacy Parties’ argument that Pleho

      13
            Fraud in the inducement is simply a type of fraud which induces an
action by fraudulent misrepresentation, so it is appropriate to analyze Pleho
Parties’ counts of fraud and fraud in the inducement together. See Aames
Funding Corp. v. Mores, 107 Hawaii 95, 103-04, 110 P.3d 1042, 1050-51 (2005).

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Parties could not show damages because the actual value of RLS

was $1,250,000 even according to Pleho Parties’ own expert.                  The

ICA based its conclusion on the following exchange between Pleho

Parties’ expert accountant Hunsaker and Lacy Parties’ counsel:

          [Lacy Parties’ counsel]: Isn’t the definition of
          equity the owner’s interest in property after
          deduction of all liabilities?

          Hunsaker:   Correct.

          Hunsaker had previously testified that a “market

analysis and conclusion of value of a 100 percent equity

interest” in RLS at the time of sale was $128,000.             The ICA thus

attributed to Hunsaker the conclusion that that the “actual

value” of RLS, i.e., “the owner’s interest in the property,” was

the $128,000 “equity interest” plus the $1,122,000 promissory

note to Rnic, for a total of $1,250,000.

          Pleho Parties argue that the ICA’s characterization of

Hunsaker’s testimony represents a “tortured interpretation of

counsel’s ‘gotcha’ question.”        We agree.    “Equity” is an

accounting term of art with a specific meaning, i.e., the

“owner’s interest in property after deduction of all

liabilities.”    Based on his answer to a question about this

technical definition, the ICA incorrectly imputed to Hunsaker the

conclusion that the “actual value” of RLS was $1,250,000.

          GPLLC’s $1,122,000 debt to Rnic is a liability properly

attributed to GPLLC, not to RLS.          Thus, the ICA erred in

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considering this amount when calculating the actual value of RLS.

Moreover, since the crux of Pleho Parties’ claim alleges Lacy

fraudulently induced them to purchase RLS for far more than its

true value, it would be improper to hold that, as a matter of

law, a promissory note allegedly procured by fraud should be used

as a measure of RLS’s value.        The true value of RLS thus remains

a question properly left to the trier of fact.
           To conclude, the circuit court erred in granting JMOL

in favor of Lacy Parties on GPLLC’s fraud, fraud in the

inducement, and punitive damages claims.

C.   Attorney’s Fees and Costs

           The ICA upheld the circuit court’s award of $407,013.69

in attorney’s fees and $29,191.96 in costs to Lacy Parties,

pursuant to HRS § 607-14 (Supp. 1997),14 but vacated it “to the

extent that it held Goran and Maria jointly and severally liable,

as it is unclear whether the Lacy Parties will be determined the

prevailing party against Goran and Maria, as well as GPLLC, after

further proceedings on their remaining claims.”             Because we

vacate the grant of JMOL against GPLLC on its claims for fraud

     14
           HRS § 607-14 provides, in relevant part:

           In all the courts, in all actions in the nature of
           assumpsit and in all actions on a promissory note or
           other contract in writing that provides for an
           attorney’s fee, there shall be taxed as attorneys’
           fees, to be paid by the losing party and to be
           included in the sum for which execution may issue, a
           fee that the court determines to be reasonable[.]

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and punitive damages, we also vacate the award of attorney’s fees

to Lacy Parties, as it is unclear whether GPLLC will remain the

“losing party” after the adjudication of these claims.

D.   Judicial Estoppel

           The circuit court denied Lacy Parties’ motion in limine

requesting that Pleho Parties be barred from introducing evidence

inconsistent with their disclosures in Goran and Maria Pleho’s
bankruptcy proceeding in Nevada.           The ICA vacated the circuit

court’s ruling and the subsequent admission of Exhibit 27-G(7),

finding that the Lacy Parties had demonstrated the elements15 of

     15
           As correctly noted by the ICA:

           Most jurisdictions apply judicial estoppel when, at
           minimum, the following elements are met:

                  (1) The party to be estopped must be asserting a
                  position that is factually incompatible with a
                  position taken in a prior judicial or
                  administrative proceeding;

                  (2) the prior inconsistent position must have
                  been accepted by the tribunal; and

                  (3) the party to be estopped must have taken
                  inconsistent positions intentionally for the
                  purpose of gaining unfair advantage.

                  Although Hawaii courts have not expressly
                  adopted those elements, our case law is
                  generally in accord. See Roxas, 89 Hawaii at
                  124, 969 P.2d at 1242; Rosa, 4 Haw. App. at 220,
                  664 P.2d at 752 (“A party is precluded from
                  subsequently repudiating a theory of action
                  accepted and acted upon by the court.”).

           Langer v. Rice, No. 29636, 2013 WL 5788676, at *5
           (Haw. App. Oct. 28, 2013) (mem.) (citations omitted).

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judicial estoppel.     The ICA explained that the purpose of vacatur

was “to allow the Circuit Court, in the first instance, to

exercise its discretion on the Lacy Parties’ request for judicial

estoppel.”

          Although the ICA correctly states the elements of

judicial estoppel, its conclusion that the circuit court failed

to exercise its discretion is not supported by the record.
          As noted by the United States Supreme Court, “judicial

estoppel is an equitable doctrine invoked by a court at its

discretion,” intended to “prevent the improper use of judicial

machinery.”   New Hampshire v. Maine, 532 U.S. 742, 750 (2001)

(internal citations and quotation marks omitted).             The circuit

court’s oral denial of the motion in limine states, in full:

          So on the motion in limine Number 2, to bar plaintiff
          from pursuing claims for or introducing any evidence
          regarding any alleged loan, debt, note, payment,
          advance, contract or other asset not specifically
          disclosed in Goran Pleho and [Maria] Pleho’s Nevada
          bankruptcy, the motion is denied. Certainly it goes
          to credibility versus admissibility.

          Although terse, this statement shows that the court

considered the arguments presented in Lacy Parties’ motion in

limine and Pleho Parties’ response to that motion, both of which

focused on the issue of judicial estoppel.           Accordingly, the

circuit court’s denial of the motion in limine should be

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interpreted as a discretionary determination that judicial

estoppel was not appropriate in this instance.

          As the circuit court properly exercised its discretion,

we vacate the ICA’s judgment to the extent that it vacates the

circuit court’s denial of the motion in limine, and we affirm

this ruling of the circuit court.

                              V.   CONCLUSION
          For the foregoing reasons, we vacate the circuit

court’s dismissal of Pleho Parties’ IIED and NIED claims, its

grant of JMOL in favor of Lacy Parties on GPLLC’s fraud and

punitive damages claims, and its award of attorney’s fees and

costs, and we vacate the ICA’s October 13, 2016 judgment to the

extent that it affirms these rulings of the circuit court.               We

also vacate the ICA’s judgment to the extent that it vacates the

circuit court’s ruling on the motion in limine.

          A majority of this court also vacates the ICA’s

judgment to the extent that it affirms the circuit court’s grant

of summary judgment in favor of Lacy Parties on Goran and Maria’s

UDAP claim.

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          In all other respects, the ICA’s judgment is affirmed.

The case is remanded to the circuit court for proceedings

consistent with this opinion.

Peter Van Name Esser                      /s/ Mark E. Recktenwald
for petitioners
                                          /s/ Paula A. Nakayama
Jodie D. Roeca (Norma K. Odani
with her on the briefs)                   /s/ Sabrina S. McKenna
for respondents
                                          /s/ Richard W. Pollack
                                          /s/ Michael D. Wilson

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