In re: Young Hui Kim ( 2017 )

FILED
NOV 21 2017
1 NOT FOR PUBLICATION
SUSAN M. SPRAUL, CLERK
U.S. BKCY. APP. PANEL
2 OF THE NINTH CIRCUIT
3 UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
4
5 In re: ) BAP No. HI-17-1066-LBTa
) BAP No. HI-17-1137-LBTa
6 YOUNG HUI KIM, ) (related appeals)
)
7 Debtor. ) Bk. No. 14-01353
______________________________)
8 ) Adv. No. 15-90001
YOUNG HUI KIM; GLORY OF GOD )
9 PRESBYTERIAN CHURCH; )
PACIFIC EAGLE REALTY LLC, )
10 )
Appellants, )
11 )
v. ) M E M O R A N D U M*
12 )
JULIA RIIHIMAKI, )
13 )
Appellee. )
14 ______________________________)
15
Argued and Submitted on October 26, 2017
16 at Honolulu, Hawaii
17 Filed - November 21, 2017
18 Appeal from the United States Bankruptcy Court
for the District of Hawaii
19
Honorable Robert J. Faris, Chief Bankruptcy Judge, Presiding
20 _________________________
21 Appearances: Christopher James Muzzi of Mosely Biehl Tsugawa
Lau & Muzzi argued for Appellants; Ronald K.K.
22 Sakimura argued for Appellee.
_________________________
23
Before: LAFFERTY, BRAND, and TAYLOR, Bankruptcy Judges.
24
25
26 *
This disposition is not appropriate for publication.
27 Although it may be cited for whatever persuasive value it may
have (see Fed. R. App. P. 32.1), it has no precedential value.
28 See 9th Cir. BAP Rule 8024-1.
1 INTRODUCTION
2 Appellee moved to enforce an agreement to settle her
3 nondischargeability claims and Appellants’ counterclaims.
4 Appellants contended that there was no enforceable settlement
5 agreement because Appellant Young Hui Kim (“Reverend Kim”) had
6 not provided written authorization for her attorney to settle the
7 matter, as required under Hawaii law. After a five-day
8 evidentiary hearing, the bankruptcy court found that although
9 Reverend Kim had not provided written authorization to settle,
10 she had ratified the settlement by failing to raise her
11 objections within a reasonable time. The bankruptcy court thus
12 granted the motion to enforce. The bankruptcy court also granted
13 Appellee’s motion for attorney’s fees. Appellants timely
14 appealed both orders. We AFFIRM both orders.
15 FACTS
16 Reverend Kim is a licensed real estate broker and the owner
17 of Appellant Pacific Eagle Realty LLC (“Realty”); she is also
18 owner and pastor of Appellant Glory of God Presbyterian Church
19 (“Church”). Pre-petition, the parties to this appeal were
20 involved in litigation in Hawaii state court. That litigation
21 commenced in February 2011 when Appellee Julia Riihimaki filed a
22 lawsuit against Reverend Kim to recover money that Reverend Kim
23 allegedly swindled from Ms. Riihimaki through a number of real
24 estate transactions and monetary advances. Reverend Kim filed a
25 counterclaim. Less than two months later, the parties settled
26 and dismissed their respective claims. Reverend Kim did not
27 follow through with the settlement; instead, in June 2011 she
28 filed a complaint against Ms. Riihimaki in state court asserting
-2-
1 claims that were substantially identical to those alleged in her
2 counterclaim in the first litigation. Ms. Riihimaki filed a
3 counterclaim; she also filed a complaint against Reverend Kim and
4 Realty in the Hawaii Regulated Industries Complaints Office
5 (“HRICO”).
6 The second state court action was stayed when Reverend Kim
7 filed a chapter 71 petition on October 8, 2014. Ms. Riihimaki
8 filed a timely complaint against Appellants and others, alleging
9 essentially the same conduct alleged in the first state court
10 action and seeking a declaration of nondischargeability under
11 §§ 523(a)(2), (4) and (6). Ms. Riihimaki alleged that the debt
12 owed to her by Reverend Kim was not dischargeable because
13 Reverend Kim, while acting as Ms. Riihimaki’s real estate agent,
14 had cheated her out of money and property by false pretenses,
15 false representations, and fraud. Reverend Kim filed a
16 counterclaim against Ms. Riihimaki that was similar to her
17 counterclaim in the first state court action and her complaint in
18 the second state court action (seeking compensatory and punitive
19 damages for breach of contract and unjust enrichment or
20 rescission of a transfer of real property from Reverend Kim to
21 Ms. Riihimaki).
22 Reverend Kim was originally represented in her bankruptcy
23 case by attorney Gregory T. Dunn; attorney Jean Christensen
24 represented Reverend Kim, the Church, and Realty in the Riihimaki
25
26 1
Unless specified otherwise, all chapter and section
27 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532.
“LBR” references are to the Local Bankruptcy Rules for the
28 District of Hawaii.
-3-
1 adversary proceeding. Ms. Christensen and Ms. Riihimaki’s
2 counsel – Ronald Sakimura and Ronald Ogomori – began discussing
3 settlement early on. Reverend Kim was incentivized to settle
4 because (i) she lacked sufficient funds to pay defense counsel;
5 (ii) Ms. Riihimaki had sued some of Reverend Kim’s relatives and
6 business associates, and Reverend Kim did not want the litigation
7 to affect those people; (iii) the litigation was preventing
8 Reverend Kim from focusing on her ministry; and (iv) Reverend Kim
9 risked losing her real estate license if Ms. Riihimaki proved
10 that Reverend Kim had committed fraud.
11 On July 17, 2015, Ms. Christensen sent a settlement proposal
12 to Mr. Ogomori and Mr. Sakimura. On July 31, 2015, Mr. Ogomori
13 responded with a counteroffer (the “Counteroffer”). Among the
14 terms of the Counteroffer were: (1) Reverend Kim would stipulate
15 to a judgment against her, the Church, and Realty, in the amount
16 of $1,350,000, $650,000 of which would be nondischargeable under
17 § 523, to be paid over a specified schedule; (2) Ms. Riihimaki
18 would file a proof of claim for the full judgment amount in
19 Reverend Kim’s bankruptcy case, and any recovery on that claim in
20 excess of $7,500 would be applied to the nondischargeable portion
21 of the judgment; (3) defendants would make two cash payments of
22 $30,000 and $28,450.432 that would not be credited to the
23 judgment; (4) any proceeds received by Ms. Riihimaki from certain
24 real property, net of expenses outlined in the Counteroffer,
25 would be applied to the nondischargeable portion of the judgment;
26
27
2
The $28,450.43 represented a discovery sanction that had
28 been imposed against Reverend Kim in the state court litigation.
-4-
1 (5) the pending state court action, the adversary proceeding, and
2 the complaint filed in the HRICO would be dismissed with
3 prejudice and all claims released, subject to specified
4 conditions precedent; (6) the settlement agreement would not be
5 construed as an admission by Reverend Kim, the Church, or Realty
6 of liability in the adversary proceeding; and (7) the settlement
7 agreement would be subject to review by Reverend Kim’s bankruptcy
8 trustee and the approval of the bankruptcy court.
9 On August 20, 2015, Ms. Christensen emailed Mr. Ogomori and
10 Mr. Sakimura stating that the terms of the Counteroffer were
11 acceptable to her clients. Thereafter, counsel for each side
12 worked on the specific language to be included in a written
13 agreement, and Ms. Christensen met with Reverend Kim several
14 times to discuss the settlement terms; at no time during those
15 discussions did Reverend Kim object to the settlement. In late
16 September 2015, Ms. Christensen presented Reverend Kim with a
17 final version of the settlement agreement (the “Draft Settlement
18 Agreement”). The Draft Settlement Agreement contained some terms
19 that were materially different from those contained in the
20 Counteroffer. Reverend Kim refused to sign the Draft Settlement
21 Agreement. Ms. Christensen thereafter withdrew from representing
22 Reverend Kim; attorney Christopher Muzzi substituted in as
23 counsel for Appellants in the adversary proceeding and for
24 Reverend Kim in the main case.
25 On November 5, 2015, Ms. Riihimaki filed a motion to enforce
26 the settlement. Appellants opposed the motion to enforce,
27 arguing that Ms. Christensen did not have written authority to
28 settle the adversary proceeding and that Reverend Kim had not
-5-
1 ratified the settlement.
2 The bankruptcy court held an evidentiary hearing over
3 several days in late 2016. Reverend Kim, Ms. Christensen,
4 Gregory Dunn, and Francene Dunn, Gregory Dunn’s wife and legal
5 assistant, testified regarding meetings at which they were
6 present when settlement terms were discussed. Ms. Christensen
7 testified that she believed Reverend Kim had authorized her to
8 accept the terms of the Counteroffer. Reverend Kim testified
9 that she never saw any settlement proposals and had not agreed to
10 any settlement. Nevertheless, based on trial testimony,
11 exhibits, and credibility determinations, the bankruptcy court
12 found that:
13 After months of discussion, Reverend Kim orally
authorized Ms. Christensen to send a written settlement
14 offer to Ms. Riihimaki’s counsel. Reverend Kim
understood and approved all of the terms of the offer.
15 Ms. Christensen did not, however, obtain Reverend Kim’s
written authority to make the offer.
16
17 Riihimaki v. Kim (In re Kim), 565 B.R. 169, 172 (Bankr. D. Haw.
18 2017).
19 Ms. Christensen, Mr. and Mrs. Dunn, and Reverend
Kim met several times to discuss the counteroffer. The
20 circumstances of those meetings were far from ideal
(most of the meetings were held in bars and restaurants
21 over drinks). Further, the dispute with Mrs. Riihimaki
made Reverend Kim very angry; she believed that
22 Mrs. Riihimaki had defrauded her, rather than the other
way around, and resented the fact that she might have
23 to compromise with Mrs. Riihimaki. Nevertheless, by
the last such meeting, Reverend Kim was fully informed
24 of, understood, and agreed to the terms of the
counteroffer. Reverend Kim orally authorized
25 Ms. Christensen to accept the counteroffer, and
Ms. Christensen did so. Because Reverend Kim
26 understood the terms of the counteroffer, there was a
meeting of the minds about the essential terms of the
27 settlement. Ms. Christensen did not obtain Reverend
Kim’s written authorization, in any form, before
28 sending the acceptance.
-6-
1 Ms. Riihimaki’s counsel prepared a draft
settlement agreement. (Nothing in the counteroffer or
2 the acceptance provides that the parties’ agreement was
contingent upon the execution of a formal settlement
3 agreement.) The draft settlement agreement included
provisions that were inconsistent with and materially
4 different from the terms of the accepted counteroffer.
5 . . . .
6 Ms. Christensen presented Reverend Kim with the
draft settlement agreement. Despite the numerous
7 glaring inconsistencies between the accepted
counteroffer and the draft settlement agreement,
8 Ms. Christensen told Reverend Kim that it was a “take
it or leave it” proposition. Upon reviewing the draft,
9 Reverend Kim, for the first time, instructed
Ms. Christensen to discontinue seeking a settlement.
10 She said that she felt defrauded by Ms. Riihimaki,
rather than vice versa, and she now wanted to prove it.
11
Reverend Kim never agreed to the terms in the
12 draft settlement agreement that varied from the July 31
counteroffer.
13
14 Id. at 174-75.
15 The terms of the Draft Settlement Agreement that differed
16 from the Counteroffer included the following: (i) a requirement
17 that Reverend Kim admit that the judgment was based on false
18 pretenses, a false representation, or actual fraud; (ii) releases
19 in favor of Ms. Riihimaki were to become effective long before
20 the releases in favor of defendants; (iii) extra conditions were
21 imposed before Ms. Riihimaki would be required to withdraw her
22 HRICO complaint; (iv) Reverend Kim was required to provide
23 extensive information to Ms. Riihimaki and limit her business
24 activity to the Church and Realty until the entire judgment was
25 satisfied; and (v) Reverend Kim would be required to obtain an
26 order from the bankruptcy court that authorized her to act for
27 and on behalf of the chapter 7 trustee to the extent necessary to
28 dismiss the claims in the state court action and the
-7-
1 counterclaims in the adversary proceeding. Id.2 Based on these findings, the bankruptcy court concluded that
3 although Reverend Kim had not agreed to the terms of the Draft
4 Settlement Agreement, she had agreed to the terms of the
5 Counteroffer; thus, the terms outlined in the Counteroffer were
6 enforceable as a valid contract. Applying Hawaii state law, the
7 bankruptcy court concluded that although Reverend Kim did not
8 provide written authorization for Ms. Christensen to settle the
9 adversary proceeding, she had ratified the terms of the
10 settlement as outlined in the Counteroffer:
11 Given her knowledge of and acquiescence in the ongoing
settlement discussions and of the efforts that the
12 attorneys were expending to negotiate and document the
settlement, she waited an unreasonably long time to
13 raise her objections. Therefore, she ratified her
attorney’s acceptance of the counteroffer and both she
14 and Mrs. Riihimaki are bound by it.
15 Id. at 177.
16 The bankruptcy court thereafter entered a judgment declaring
17 that the Counteroffer constituted a binding and enforceable
18 contract between Appellee and Appellants. Appellants timely
19 appealed (BAP No. HI-17-1066). A BAP motions panel granted leave
20 to appeal on June 6, 2017, and the bankruptcy court granted a
21 stay pending appeal.
22 After the first appeal was filed, Ms. Riihimaki filed a
23 motion for attorneys’ fees and costs based on the attorneys’ fee
24 provision in the Counteroffer and Haw. Rev. Stat. § 607-14.
25 Ms. Riihimaki requested total fees and costs of $177,449.37.
26 Appellants opposed the motion, arguing that (i) Ms. Riihimaki was
27 not entitled to attorneys’ fees because LBR 7054-2 permits a
28 prevailing party to move for attorney’s fees and costs only if
-8-
1 the judgment so provides; (ii) Ms. Riihimaki was not the
2 prevailing party; and (iii) the time sheets did not contain
3 sufficient descriptions, included billing for work that was
4 excessive, redundant and unnecessary, and contained many “block-
5 billed” entries. Appellants also disputed the cost request on
6 similar grounds.
7 At a hearing in April 2017, the bankruptcy court granted
8 Ms. Riihimaki’s motion for fees and costs in part. The court
9 found that LBR 7054-2 did not preclude the award. The bankruptcy
10 court concluded that it could award fees under Haw. Rev. Stat.
11 § 607-14, which authorizes attorneys’ fees to a prevailing party
12 in actions on a written contract that provides for such an award
13 and limits the award to 25 percent of the judgment amount. The
14 court concluded that Ms. Riihimaki was the prevailing party on
15 the main disputed issue of whether there was a settlement. The
16 court disallowed some of the fees and costs and entered an order
17 granting fees of $161,212.43 and costs of $16,236.94. Appellants
18 timely appealed that order (BAP No. HI-17-1137).
19 JURISDICTION
20 The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
21 §§ 1334 and 157(b)(2)(I). We have jurisdiction under 28 U.S.C.
22 § 158.
23 ISSUES
24 Whether the bankruptcy court erred in granting
25 Ms. Riihimaki’s motion to enforce.
26 Whether the bankruptcy court abused its discretion in
27 awarding attorneys’ fees to Ms. Riihimaki.
28
-9-
1 STANDARDS OF REVIEW
2 Whether a contract is enforceable is a question of law that
3 is reviewed de novo. Local Motion, Inc. v. Niescher, 105 F.3d
4 1278, 1280 (9th Cir. 1997). Under de novo review, we look at the
5 matter anew, as if it had not been heard before, and as if no
6 decision had been rendered previously, giving no deference to the
7 bankruptcy court’s determinations. Freeman v. DirecTV, Inc.,
8 457 F.3d 1001, 1004 (9th Cir. 2006).
9 Whether parties intended to create a contract is a factual
10 question that we review for clear error, Bay Area Typographicsl
11 Union, Union No. 21 v. Alameda Newspapers, Inc., 900 F.2d 197,
12 199 (9th Cir. 1990), as is whether a ratification occurred. See
13 McDonnell v. Pennington, 40 Haw. 265, 268 (1953) (whether facts
14 in evidence show ratification is a question of fact for the
15 jury).
16 A court’s factual determination is clearly erroneous if it
17 is illogical, implausible, or without support in the record.
18 United States v. Hinkson, 585 F.3d 1247, 1261–62 & n.21 (9th Cir.
19 2009) (en banc) (quoting Anderson v. City of Bessemer City,
20 470 U.S. 564, 577 (1985)). Where there are two permissible views
21 of the evidence, the factfinder’s choice between them cannot be
22 clearly erroneous. Anderson, 470 U.S. at 574; see also Hinkson,
23 585 F.3d at 1260 (recognizing the rule that a trial court’s
24 choice between two permissible views of the weight of evidence is
25 not clearly erroneous where the evidence would support a
26 conclusion either way, citing United States v. Yellow Cab Co.,
27 338 U.S. 338, 342 (1949)). When factual findings are based on
28 determinations regarding the credibility of witnesses, we give
-10-
1 great deference to the bankruptcy court’s findings, because the
2 bankruptcy court, as the trier of fact, had the opportunity to
3 note “variations in demeanor and tone of voice that bear so
4 heavily on the listener’s understanding of and belief in what is
5 said.” Retz v. Samson (In re Retz), 606 F.3d 1189, 1196 (9th
6 Cir. 2010) (quoting Anderson, 470 U.S. at 575).
7 We review a bankruptcy court’s determination on attorney’s
8 fees for abuse of discretion or erroneous application of the law.
9 Bertola v. N. Wisc. Produce Co. (In re Bertola), 317 B.R. 95, 99
10 (9th Cir. BAP 2004). A bankruptcy court abuses its discretion if
11 it applies the wrong legal standard, misapplies the correct legal
12 standard, or if its actual findings are clearly erroneous.
13 TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820, 832 (9th
14 Cir. 2011).
15 DISCUSSION
16 A. The bankruptcy court did not err in granting Ms. Riihimaki’s
motion to enforce.
17
1. The bankruptcy court did not err in applying Hawaii
18 state law to the question of enforceability.
19 The bankruptcy court correctly applied Hawaii state law to
20 the question of whether the settlement was enforceable. See
21 O’Neil v. Bunge Corp., 365 F.3d 820, 822 (9th Cir. 2004) (in the
22 absence of federal statute governing the matter, Oregon law would
23 have applied to determine the enforceability of a settlement
24 agreement); United Commercial Ins. Servs., Inc. v. Paymaster
25 Corp., 962 F.2d 853, 856 (9th Cir. 1992) (“the construction and
26 enforcement of settlement agreements are governed by principles
27 of local law which apply to interpretation of contracts
28 generally.”).
-11-
1 Although Ms. Riihimaki did not cross-appeal, she argues that
2 the bankruptcy court should have applied federal law to determine
3 the question of Ms. Christensen’s authority to settle the
4 nondischargeability action because the underlying matter was a
5 federal question (nondischargeability) being decided in a federal
6 court. Under federal common law, once a settlement has been
7 entered into, a presumption is created that the attorney who
8 enters into the settlement agreement had the authority to do so,
9 and the burden to show that there was no consent to the
10 settlement is placed on the person challenging the validity of
11 the agreement. Scott v. Burns Int’l Sec. Servs., Inc., 165 F.
12 Supp. 2d 1133, 1139 n.5 (D. Haw. 2001), rev'd in part on other
13 grounds, vacated in part sub nom. Scott v. Borg Warner Protective
14 Servs., 55 F. App’x 414 (9th Cir. 2003).
15 Assuming without deciding that Ms. Riihimaki did not need to
16 file a cross-appeal to raise this argument, we do not find it
17 persuasive. The primary issue for the bankruptcy court was the
18 enforceability of the settlement. Ms. Christensen’s authority to
19 settle was implicated in answering the question of whether there
20 was a meeting of the minds and an acceptance under contract law,
21 but that authority was not the primary issue to be determined.
22 And the Ninth Circuit cases cited above make clear that the
23 enforceability of a settlement is to be determined in accordance
24 with state law, unless there is a controlling federal statute.3
25
26 3
Additionally, even though federal law controls the issue of
27 nondischargeability, a determination of the existence and amount
of the underlying debt is controlled by state law. Grogan v.
28 Garner, 498 U.S. 279, 283-284 (1991).
-12-
1 2. Requirements for an enforceable contract under Hawaii
law
2
3 Under Hawaii law, “[a] compromise agreement, like other
4 contracts, requires an offer and acceptance, consideration, and
5 parties who have the capacity and authority to agree as they do.”
6 Amantiad v. Odum, 977 P.2d 160, 170 (Haw. 1999) (citing 15A Am.
7 Jur. 2d Compromise and Settlement § 7 (1976)). There must also
8 be mutual assent or a meeting of the minds as to the essential
9 elements of the contract. Siopes v. Kaiser Found. Health Plan,
10 Inc., 312 P.3d 869, 879 (Haw. 2013).
11 The parties do not dispute that they had the capacity to
12 enter into a contract, that Ms. Riihimaki, through counsel, made
13 an offer (the Counteroffer) and that Ms. Christensen accepted the
14 Counteroffer on Reverend Kim’s behalf, and that the parties’
15 mutual promises constituted consideration. The dispute in this
16 appeal centers around (i) whether Reverend Kim understood the
17 terms of the Counteroffer such that there was a meeting of the
18 minds and (ii) whether Reverend Kim ratified the terms of the
19 Counteroffer in the absence of express written consent to her
20 attorney to settle. The bankruptcy court found that Reverend Kim
21 understood the terms of the Counteroffer; thus there was a
22 meeting of the minds as to those terms. The bankruptcy court
23 further found that Reverend Kim ratified her attorney’s
24 acceptance of the Counteroffer by failing to timely object,
25 resulting in an enforceable contract. For the reasons explained
26 below, we find no error in these conclusions.
27
28
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1 3. The bankruptcy court did not clearly err in finding
that Reverend Kim understood the terms of the
2 Counteroffer and ratified it.
3 Under Hawaii law, an attorney must have express written
4 consent from a client to settle a lawsuit. Hawai’i Hous. Auth.
5 v. Uyehara, 883 P.2d 65, 71 (Haw. 1994). Specifically, Haw. Rev.
6 Stat. § 605-7 provides:
7 The practitioners licensed by the supreme court shall
have control to judgment and execution, of all suits
8 and defenses confided to them; provided that no
practitioner shall have power to compromise, arbitrate,
9 or settle such matters confided to the practitioner,
unless upon special authority in writing from the
10 practitioner’s client.
11 It is undisputed that Reverend Kim never gave written
12 authority to Ms. Christensen to settle the adversary proceeding.
13 Hawaii law, however, recognizes an exception to the written
14 authority requirement if the client ratifies the settlement.
15 Uyehara, 883 P.2d at 71. Whether the client has ratified the
16 settlement depends on the facts and circumstances of the
17 particular case. Scott v. Pilipo, 25 Haw. 386, 390 (1920).
18 Ratification may be express or implied. Id. Ratification may be
19 implied where the client acquiesces in the settlement by failing
20 to object to the settlement within a reasonable time or by
21 accepting the benefits of the settlement. Nelson v. Boone,
22 890 P.2d 313, 321 (Haw. 1995); Scott, 25 Haw. at 390; McKeague v.
23 Freitas, 40 Haw. 108, 115 (1953); Cook v. Sur. Life Ins., Co.,
24 903 P.2d 708, 716 (Haw. App. 1995), as amended (Aug. 30, 1995).
25 Appellants contend that these cases stand for the
26 proposition that a significant time – years – must pass without
27 objection before a failure to object can be deemed a
28 ratification, or that the party opposing enforcement sought or
-14-
1 received benefits under the settlement agreement. No such
2 requirements are contained in the cited cases, which make clear
3 that whether ratification occurred is an intensely factual
4 determination; as such, those cases do not establish any bright
5 line rules regarding the requirements for ratification.
6 Despite conflicting testimony, there is evidence in the
7 record to support the bankruptcy court’s findings that
8 Reverend Kim both understood and ratified the terms of the
9 Counteroffer. Ms. Christensen testified that after she received
10 the Counteroffer, she met with Reverend Kim three times to review
11 it. At the third meeting on August 19, 2015, Ms. Christensen
12 completed reviewing the Counteroffer with Reverend Kim and
13 understood that Reverend Kim wanted her to accept the terms of
14 the Counteroffer. It is undisputed that the next day,
15 Ms. Christensen sent an email to Ms. Riihimaki’s counsel stating
16 that the terms of the Counteroffer were acceptable to her
17 clients.
18 Ms. Christensen testified that Reverend Kim’s acceptance was
19 “not in so many words.” But later, Ms. Christensen testified
20 that she did not believe she had misunderstood Reverend Kim’s
21 instructions to accept. Moreover, she advised Reverend Kim that
22 she had accepted the Counteroffer, and Reverend Kim did not
23 object.
24 Ms. Christensen then testified that on August 26, 2015, at
25 Reverend Kim’s request, she emailed a copy of the July 17
26 settlement proposal and Counteroffer to Reverend Kim. Two days
27 later, Ms. Christensen met with Reverend Kim and the Dunns. At
28 that meeting, Reverend Kim indicated to Ms. Christensen that she
-15-
1 was still on board with the settlement; moreover, Reverend Kim
2 told Ms. Christensen that she had shown the offer and
3 Counteroffer to a friend, who had advised Reverend Kim to accept
4 the Counteroffer. Over the next few weeks, Ms. Christensen
5 communicated with Mr. Sakimura regarding the language of the
6 settlement agreement; she also had several meetings with
7 Reverend Kim. On September 11, 2015, she met with Reverend Kim
8 and the Dunns to discuss the settlement agreement. On
9 September 18, 2015, Ms. Christensen received the Draft Settlement
10 Agreement by email from Mr. Sakimura. Later that day, she met
11 with Reverend Kim at Mr. Dunn’s office, but this meeting was
12 primarily to discuss a proposed sale of certain property. It is
13 not clear exactly when Reverend Kim was provided a copy of the
14 Draft Settlement Agreement, but on September 22, 2015,
15 Ms. Christensen again met with Reverend Kim and the Dunns. The
16 ostensible purpose of the meeting was for Ms. Christensen to
17 answer Reverend Kim’s questions about the settlement agreement
18 and possibly obtain Reverend Kim’s signature. Ms. Dunn had been
19 reviewing the settlement terms with Reverend Kim, and Reverend
20 Kim had questions that Ms. Dunn could not answer. According to
21 Ms. Christensen’s testimony, the status of the settlement was
22 discussed, but it was not clear that anything substantive was
23 accomplished at this meeting (“there was a lot of social banter
24 . . . so it was hard to get a lot of focus on [the settlement] at
25 that meeting, but . . . we did discuss the status and . . . we
26 had an agreement, but often with these restaurant meetings it was
27 hard to really . . . focus.”). In any event, Reverend Kim did
28
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1 not raise any objection to the settlement at this meeting.4
2 Another meeting occurred on September 29, 2015.
3 Ms. Christensen could not recall what was discussed at that
4 meeting, but it was around this time that Reverend Kim refused to
5 sign the Draft Settlement Agreement.5 Shortly thereafter,
6 Ms. Christensen withdrew from representing Reverend Kim.
7 The Dunns’ testimony was not helpful in either corroborating
8 or contradicting Ms. Christensen’s version of events; neither of
9 them seemed to remember any details of the various meetings they
10 attended. Ms. Christensen’s time sheets and the text messages
11 exchanged between Ms. Christensen and the Dunns, however, were
12 consistent with her version of events.
13 Reverend Kim contradicted much of Ms. Christensen’s
14 testimony. Reverend Kim testified that she had not authorized
15 Ms. Christensen to accept the Counteroffer, had never seen the
16 offer or Counteroffer, and did not tell Ms. Christensen that her
17 friend had advised her to accept the settlement.
18 The bankruptcy court did not explicitly find that
19 Reverend Kim’s testimony was not credible. Such a finding was
20 implicit, however, in the court’s statement that “I have
21 considered all of the testimony and other materials that were
22
23
4
Ms. Christensen also testified that Reverend Kim never
24 asked for an interpreter or asked for a Korean translation of the
settlement terms.
25
5
26 There was some testimony at trial indicating that
Reverend Kim expected to receive some insurance proceeds that she
27 could use to fund further litigation, suggesting that this gave
her a motive to renege on the agreement. The bankruptcy court
28 made no such finding, however.
-17-
1 received in evidence, much of which is in sharp conflict, and
2 have evaluated the credibility and weight of each piece of
3 evidence[,]” In re Kim, 565 B.R. at 171, and in its factual
4 findings, which were consistent with Ms. Christensen’s testimony
5 rather than Reverend Kim’s. As such, we must defer to the
6 bankruptcy court’s finding that Reverend Kim was aware of and
7 authorized Ms. Christensen to accept the terms of the
8 Counteroffer. The bankruptcy court found that Reverend Kim
9 raised no objections “until the settlement negotiations were
10 complete and a draft of a formal settlement agreement (which was
11 not necessary to the effectiveness of the agreement) was
12 presented to her.” From this, and from the fact that Reverend
13 Kim knew about and acquiesced in the ongoing settlement
14 discussions and the efforts that the attorneys were expending to
15 negotiate and document the settlement, the bankruptcy court
16 concluded that “she waited an unreasonably long time to raise her
17 objections.”
18 Appellants argue that the record does not support these
19 findings. Appellants’ argument, however, is dependent upon
20 accepting Reverend Kim’s version of events, i.e., that she did
21 not see the offer or Counteroffer and did not understand the
22 terms and conditions of the Counteroffer. Appellants also
23 attempt to cast doubt on whether Ms. Kim understood the terms of
24 the Counteroffer by pointing out that English is Ms. Kim’s second
25 language but that no interpreter was present during any of her
26 meetings with Ms. Christensen. Appellants note further that most
27 of the meetings were held in noisy, dimly lit restaurants where
28 alcohol was being consumed. It was undisputed, however, that
-18-
1 Reverend Kim specifically declined having an interpreter present.
2 And the bankruptcy court, having heard testimony from all parties
3 present at those meetings, implicitly concluded that the
4 circumstances of the meetings, while not ideal, had not hindered
5 Reverend Kim’s understanding of the settlement terms. As noted,
6 the bankruptcy court implicitly rejected Reverend Kim’s testimony
7 as not credible, and the other evidence in the record supports
8 the bankruptcy court’s findings. Accordingly, we find no clear
9 error in the bankruptcy court’s factual finding that Reverend Kim
10 ratified the Counteroffer.6
11
12
13
14
6
15 Although the Draft Settlement Agreement contained terms
that were materially different from the Counteroffer, this did
16 not negate the enforceability of the Counteroffer. As the
bankruptcy court found, the Counteroffer did not require a
17 written agreement; thus a binding contract was created when
Reverend Kim accepted the Counteroffer. Accordingly, the varying
18 material terms in the Draft Settlement are more appropriately
19 viewed as a proposed modification to the contract. See Shanghai
Inv. Co., Inc. v. Alteka Co., 993 P.2d 516, 531 (Haw. 2000),
20 overruled in part on other grounds by Blair v. Ing, 31 P.3d 184,
188 (Haw. 2001) (“[a] modification of a contract is a change in
21 one or more respects which introduces new elements into the
details of the contract and cancels others but leaves the general
22
purpose and effect undisturbed.”) (quoting Int’l Bus. Lists, Inc.
23 v. Am. Tel. & Tel. Co., 147 F.3d 636, 641 (7th Cir. 1998)). “The
original contract generally remains in force except as modified
24 or superseded by the new agreement.” Id. But because Reverend
Kim did not accept that modification, it is not binding on the
25 parties.
26
Importantly, Ms. Riihimaki asks this Panel to affirm the
27 bankruptcy court’s ruling, thus implicitly abandoning the terms
of the Draft Settlement Agreement and accepting the terms of the
28 Counteroffer.
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1 B. The bankruptcy court did not abuse its discretion in
awarding attorneys’ fees and costs to Ms. Riihimaki.
2
3 The bankruptcy court granted most of the fees and costs
4 requested by Ms. Riihimaki, finding that Ms. Riihimaki was the
5 prevailing party. The attorneys’ fee award was authorized under
6 Paragraph 16.d. of the Counteroffer: “If any action or proceeding
7 is commenced to enforce the terms of the settlement agreement,
8 the prevailing party shall be entitled to recover its reasonable
9 attorneys’ fees and costs incurred therein, in an amount to be
10 determined by the court.” The fee award was subject to Haw. Rev.
11 Stat. § 607-14, which provides, in relevant part:
12 In all the courts, in all actions in the nature of
assumpsit and in all actions on a promissory note or
13 other contract in writing that provides for an
attorney’s fee, there shall be taxed as attorneys’
14 fees, to be paid by the losing party and to be included
in the sum for which execution may issue, a fee that
15 the court determines to be reasonable; provided that
the attorney representing the prevailing party shall
16 submit to the court an affidavit stating the amount of
time the attorney spent on the action and the amount of
17 time the attorney is likely to spend to obtain a final
written judgment, or, if the fee is not based on an
18 hourly rate, the amount of the agreed upon fee. The
court shall then tax attorneys’ fees, which the court
19 determines to be reasonable, to be paid by the losing
party; provided that this amount shall not exceed
20 twenty-five per cent of the judgment.
21 In determining who is the prevailing party under this
22 statute, Hawaii courts focus on which party prevailed on the
23 disputed main issue. Countrywide Home Loans, Inc. v. Hoopai
24 (In re Hoopai), 581 F.3d 1090, 1101-02 (9th Cir. 2009) (citing
25 Food Pantry, Ltd. v. Waikiki Bus. Plaza, Inc., 575 P.2d 869, 879
26 (Haw. 1978)). The disputed main issue is determined by “looking
27 to the pleadings and proof in a particular case[.]” Id. at 1102
28 (citing Fought & Co., Inc. v. Steel Eng’g & Erection, Inc.,
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1 951 P.2d 487, 503 (Haw. 1998); additional citation omitted).
2 “[T]he ‘prevailing party’ is the party that succeeds on the issue
3 or issues that are (1) the ‘principal’ issues raised in the
4 litigation and (2) disputed by the parties.” Id.5 The bankruptcy court concluded that the disputed main issue
6 was whether there was a settlement and that Ms. Riihimaki had
7 prevailed on that issue. The court noted that the terms of that
8 settlement, while important, were not the main issue.
9 Appellants do not dispute the amount of the attorneys’ fees
10 and costs awarded or the bankruptcy court’s conclusion that
11 LBR 7054-2 did not preclude the award. Appellants’ sole argument
12 is that Ms. Riihimaki was not the prevailing party on the main
13 disputed issue of the motion to enforce. They reason that the
14 motion sought enforcement of the Draft Settlement Agreement that
15 Reverend Kim had objected to, but the bankruptcy court ruled that
16 the Counteroffer, not the draft written agreement, should be
17 enforced.
18 We agree with the bankruptcy court that the main disputed
19 issue of the motion to enforce was whether a settlement had been
20 reached; the exact terms of that settlement were secondary. In
21 her motion, Ms. Riihimaki argued that Appellants had accepted the
22 terms of the Counteroffer, resulting in a binding contract
23 between the parties, and that Reverend Kim’s refusal to sign the
24 Draft Settlement Agreement was unjustified. In their opposition,
25 Appellants argued that Reverend Kim had not authorized settlement
26 in writing as required under Hawaii law and that Reverend Kim had
27 not ratified the settlement; thus the settlement was not
28 enforceable. In short, the parties focused virtually all of
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1 their arguments on the issue of whether an enforceable agreement
2 existed. The bankruptcy court ruled that it did; thus
3 Ms. Riihimaki was the prevailing party. The fact that the
4 bankruptcy court ruled that the terms agreed to were those
5 contained in the Counteroffer rather than the Draft Settlement
6 Agreement does not change that conclusion. Accordingly, the
7 bankruptcy court did not abuse its discretion in awarding
8 attorneys’ fees and costs.
9 CONCLUSION
10 For the reasons explained above, we AFFIRM both the
11 bankruptcy court’s order granting the motion to enforce and its
12 order granting attorneys’ fees to Ms. Riihimaki.
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