In re Marn Family Litigation. ( 2016 )

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Electronically Filed
Supreme Court
SCWC-10-0000181
21-DEC-2016
07:56 AM
IN THE SUPREME COURT OF THE STATE OF HAWAI#I
---o0o---
IN RE: MARN FAMILY LITIGATION
SCWC-10-0000181
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-10-0000181; MASTER FILE NO. 00-1-MFL)
DECEMBER 21, 2016
RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.
OPINION OF THE COURT BY NAKAYAMA, J.
I. INTRODUCTION
This appeal is the most recent development in the Marn
family litigation, which has been ongoing for almost twenty years
and concerns the ownership and control of the Marn family
business. In brief, in 1998 Petitioner-Appellant Alexander Y.
Marn (Alexander) sought a declaratory judgment and specific
performance regarding his rights to the family business. Despite
a jury demand, a bench trial was held and the Circuit Court of
the First Circuit (circuit court) held in favor of Respondent-
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Appellee James K.M. Dunn (Dunn). The Intermediate Court of
Appeals (ICA) affirmed the circuit court’s judgment on all
counts.
At issue for our review is whether Alexander was denied
his right to a jury trial when the circuit court decided the
underlying dispute by bench trial.
Because Alexander was constitutionally entitled to a
trial by jury on his action for declaratory judgment, and because
the record indicates that a jury trial was properly demanded and
preserved, we hold that the ICA gravely erred in affirming the
circuit court’s decision to conduct a bench trial in this case.
As such, the ICA’s March 23, 2016 judgment on appeal, which
affirmed the circuit court’s October 25, 2010 partial final
judgment, is vacated and remanded on the ground that Alexander
was entitled to a jury trial.
II. BACKGROUND
This case arises from a partnership dispute between
four siblings over the operation of a family business, McCully
Associates, and the siblings’ respective interests in the
business.
The Marn parents built a successful family business
through Ala Wai Investment, Inc., a Hawai#i corporation, and
McCully Associates (MA), a Hawai#i limited partnership. Ala Wai
Investment was the corporate general partner of MA, and MA
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developed and managed various Marn properties, including the
McCully Shopping Center.
Four of the Marn children (James, Alexander, Annabelle,
and Eric) served as limited partners and owned equal shares of
MA. Annabelle died in 1996 and her interest in MA was left to
her husband, James Dunn, as the trustee of the Annabelle Y. Dunn
Trust (AYD Trust). The underlying dispute in this case arose
between some of the Marn siblings and Dunn over Annabelle’s
interest in MA.
A. Circuit Court Proceedings
Over the last seventeen years, various suits were
brought by members of the Marn family over the ownership and
control of MA and its properties. These suits were consolidated
for discovery and case management, but not for trial. Of the
cases that were filed, only Civil No. 98-4706-10 (the Buyout
case) and Civil No. 98-5371-12 (the Judicial Accounting case)1
reached trial. On appeal for our review is a single issue
regarding the Buyout case.
On October 29, 1998, Alexander and Eric filed the
original complaint for the Buyout case,2 seeking both declaratory
1
In the Judicial Accounting case, James Marn and the AYD Trust
sought a full and complete judicial accounting of MA and an appointment of a
receiver for MA and Ala Wai Investment, Inc.
2
Alexander filed a first amended complaint on April 27, 2001,
essentially raising the same grounds and seeking the same relief.
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relief and specific performance regarding the partners’ rights to
buy-out Annabelle’s interest in MA. Alexander and Eric asserted
that two agreements, the McCully Associates Partnership Agreement
(Partnership Agreement) and the Transfer Restriction Agreement
(Transfer Agreement), both drafted in 1982 and signed by all
siblings, were created “to ensure that the Marn Properties would
stay in the Marn Family.”
According to Alexander and Eric, under the Partnership
and Transfer Agreements, a partner was prohibited from disposing
of his or her interest in MA without first offering to sell his
or her interest to the other partners. Accordingly, Alexander
and Eric asserted that when Annabelle died and her interest in MA
passed to Dunn through the AYD Trust, Dunn was obligated to offer
to sell this interest in accordance with the terms of the
Partnership and Transfer Agreements.
As such, under the heading “Claim for Declaratory
Relief,” Alexander and Eric made the following request for
relief:
25. Plaintiffs believe that the trustees of the Revocable
Trust, the personal representatives of the Estate of
Annabelle Dunn (Defendants James Dunn and Stephen Marn),
and/or such persons who currently hold Annabelle’s
Partnership interests, are obligated to sell those interests
in accordance with the terms of the Partnership Agreement
and the Transfer Restriction Agreement[.]
26. In the alternative and if the sale of Annabelle’s
Partnership interest has not been triggered by the foregoing
events, Plaintiffs believe that they were deceived or, at a
minimum, reasonably operated under a mistake of fact, in
their consent to the holding of Annabelle’s interest in the
partnership in the name of the Revocable Trust. Had they
known that the Marn Properties would not be kept within the
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Marn family, they would not have consented to the purported
assignment.
27. Plaintiffs have deposited into escrow 1) earnest money
and 2) documents ready for execution, to effect and
facilitate the transfer of Annabelle’s Partnership interest
as required by the foregoing agreements. The escrow was
ready to close on or before September 28, 1998. Plaintiffs
made demand upon James Dunn and Stephen Marn to sell
Annabelle’s Partnership interest in accordance with the
foregoing agreements, but they refused to do so.
28. As a result, a genuine dispute has arisen between the
parties, which is ripe for decision. A decision at
this time will materially aid the parties in their own
planning and in the operation of the Partnership.
Additionally, under the heading “Claim for Specific
Performance,” Alexander and Eric made the following request for
relief:
If the Court agrees that Defendants are obligated to sell
Annabelle’s interest in the Partnership to the remaining
limited partners, then Plaintiffs request that the Court
enforce the terms of the purchase and sale provisions, as
the Plaintiffs are ready, willing and able to perform and
they have no adequate remedy at law, because the underlying
asset of the Partnership is real property, the loss of which
cannot be adequately compensated by damages.
Plaintiffs pray judgment as follows:
1. That process issue out of and under the seal of
this court, citing and summoning the defendants to
appear and respond as required by law; and
2. That the court determine that those Defendants
who hold the Partnership interest originally held in
the name of Annabelle Y. Dunn are obligated to sell
the same to the remaining limited partners; or, in the
alternative,
3. That the Consent to Assignment of Annabelle’s
Partnership interest to her Revocable Trust was
ineffective to waive Plaintiffs’ rights to purchase
Annabelle’s interest;
4. That this Court order the sale of the Annabelle
Y. Dunn partnership interests in McCully Associates to
the other limited partners of the Partnership at a
price consistent with sections 1,2,3 and 4 of the
McCully Associates Partnership Agreement and the
Transfer Restriction Agreement annexed as Exhibit “B”
thereto.
5. For their cost of court, reasonable attorneys
[sic] fees and such other relief as is just.
On December 4, 1998, the AYD Trust filed an answer to
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the complaint, admitting that it had refused to sell Annabelle’s
partnership interest and denying that “any transfer of
partnership interest is ‘required.’” The AYD Trust also included
in its answer a demand for jury trial. On December 11, 1998, the
AYD Trust filed a first amended answer to the complaint, which
also included a jury demand.
In the October 15, 19993 and February 1, 20024 orders
setting trial for the Buyout case, it was noted that the case was
set for a jury trial.
In June of 2005, the court’s appointed receiver for MA
(the Receiver) filed a motion for summary judgment or, in the
alternative, a motion to strike jury demands in the Buyout and
Judicial Accounting cases. Eric filed a memorandum in opposition
to the motion to strike jury demand, which Alexander joined. In
its order granting in part the Receiver’s motion for summary
judgment, the court5 concluded that it was unnecessary to decide
the jury issue at that point.
During a pretrial hearing on August 24, 2005, the trial
by jury issue was discussed for the Buyout case. Wayne Sakai,
counsel for Eric and Linda Marn, argued that there should be a
3
The Honorable Kevin S.C. Chang presided.
4
The Honorable Virginia Lea Crandall presided.
5
The Honorable Victoria S. Marks presided over the proceedings from
this point forward.
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jury trial for the Buyout case because there were factual and
legal issues that needed to be resolved. Steven Guttman, counsel
for Dunn,6 argued that a jury trial had not been demanded for the
Buyout case and that there was no right to demand a jury trial at
this time. The circuit court agreed with Guttman.
[MR. SAKAI]: Your Honor, if I may address and add to what
Mr. Guttman and Mr. Freed said is we believe that another –-
the third issue would be ripe for the Court’s adjudication
without being enmeshed in the I.R.S. criminal investigation
would be the buy-out. . . . It just goes to the ability of
Eric and Alexander Marn’s ability to buy-out the Dunn,
Annabelle Dunn’s share.
And our position is that’s a valid agreement, and that
should be heard by the Court. And if the Court hears that,
there’s another catch to it is, I believe, that there’s
factual determinations to be made in addition to legal
issues, than [sic] a jury trial should be warranted on that
aspect of it. Because it does not involve at all the I.R.S.
It does involve factual and legal issues, and I think we
need –- not I think, I –- I believe we need a jury to
determine the factual issues, and the Court to determine the
legal issues.
But the buy-out is very isolated, and it’s very clean,
your Honor, very clean. And I think that requires a very
short jury trial that, basically, there’s not too much for
the jury to determine. I think the factual issues are
there. If they want to do a stipulated facts, we can do
that, but I –- I don’t think they want to do that. So we
need a jury to determine the facts of the case, but I think
that’s a –- a document that cries out to be adjudicated
separate and apart from the I.R.S. issue.
The buy-out is very important, and it could have
significant impact upon the current mediation right now.
I’m only talking about the Dunn –-
[THE COURT]: Uh-huh.
[MR. SAKAI]: The Dunn –- Annabelle Dunn matter, and that,
you know, that would be, I think, very helpful. And I’d
like to add that to the –- the package, so to speak.
[MR. GUTTMAN]: Your Honor, as –- as to that matter . . .
There was no jury demand. There is no right to a jury at
this date to be requesting a jury. I –- I think in terms of
the factual issues, 90 percent to the facts, I don’t think
there’s any disagreement. I think the – the actual facts
6
Attorneys James J. Bickerton and Alan B. Burdick represented Dunn
in the initial proceedings in this case, when the AYD Trust filed its
December 4, 1998 answer to the complaint and demand for jury trial and
December 11, 1998 first amended answer to the complaint and jury demand.
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are –- are very narrow that that [sic] are in dispute. . . .
But there’s only a small number of facts that are
actually in dispute. Most of it is –- is real clear.
. . .
[THE COURT]: There are a lot of files. But as I recall, I
think Mr. Guttman is correct that there was no separate jury
demand in the buy-out.
(Emphasis added).
On November 29, 2006, the circuit court entered a trial
setting order, in which the “Jury-waived” box was now checked.
Trial was held on April 10 and 11, 2007.
On July 9, 2007, the circuit court entered its findings
of fact, conclusions of law, and order in favor of the AYD Trust.
The circuit court made the following conclusions of law:
1. Mrs. Dunn properly assigned all of her limited
partnership interest in McCully Associates to her Trust with
the consent of the general partner and all other limited
partners pursuant to the terms of the Partnership Agreement.
2. The Assignment effected a substitution of her Trust as
a limited partner of McCully Associates.
...
4. After Mrs. Dunn died, the buyout provision of the
Partnership Agreement was not applicable because Mrs. Dunn’s
Trust was already substituted as the limited partner of
McCully Associates.
...
6. Independent of the Assignment . . . Plaintiffs cannot
force the AYD Trust to sell its limited partnership interest
in McCully Associates because Plaintiffs materially breached
the terms of the Partnership Agreement.
7. Plaintiffs[’] failure to properly and timely make
their first installment payment of the purchase price within
90 days of Mrs. Dunn’s death and, in fact, waiting
approximately 25 months after Mrs. Dunn’s death before ever
expressing an interest in exercising the buyout right set
forth under the Partnership Agreement is a material breach
of the Agreement’s buyout provision.
...
12. The AYD Trust did not breach the Partnership
Agreement’s “buyout” provision, while Plaintiffs materially
and repeatedly breached the said provision. Therefore,
Plaintiffs are not entitled to specific performance.
Furthermore, granting Plaintiffs the equitable remedy of
specific performance would in effect reward Plaintiffs for
the violations of their contractual duties owed to the AYD
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Trust, an inequitable result as to the AYD Trust.
As such, the circuit court ordered that the AYD Trust
was not obligated to sell its limited partnership interest in MA
to Alexander or any other partners of McCully Associates.
On October 25, 2010, the circuit court entered a
partial final judgment for both the Buyout and Judicial
Accounting cases. As to the Buyout case, the circuit court
entered a judgment in favor of the AYD Trust, holding that the
AYD Trust was not obligated to sell its partnership interest to
any of the MA partners and denying Alexander’s claim for specific
performance. The circuit court also awarded the AYD Trust
attorneys’ fees and costs in the sum of $54,498.44. As to the
Judicial Accounting case, the circuit court held that MA and Ala
Wai Investment, Inc. were to be dissolved and the assets
liquidated.
B. ICA Proceedings
On March 28, 2015, Alexander filed an amended opening
brief before the ICA and raised nine points of error on appeal.
Relevant to our review is Alexander’s second point, which argued
that the circuit court erred in conducting a bench trial instead
of a jury trial in the Buyout case.7 Alexander argued that the
7
Alexander also argued that he was entitled to a jury trial for the
Judicial Accounting case. However, Alexander did not raise that argument in
his application for writ of certiorari.
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Buyout case was an action for declaratory judgment because it
requested that the court determine the parties’ rights under the
Partnership Agreement and was, “therefore an action on a
contract.” Alexander contended that, as an action for
declaratory judgment, the Buyout case should have been tried by
jury pursuant to Hawai#i Rules of Civil Procedure (HRCP) Rule 57.
In its answering brief, the AYD Trust made three
arguments as to why Alexander was not entitled to a jury trial
for the Buyout case. First, the AYD Trust argued that, as an
action for specific performance without a claim for damages, the
Buyout case was purely equitable and rightly tried by the court
instead of by a jury. Second, the AYD Trust argued that
Alexander waived the issue because he never demanded a jury trial
for the Buyout case, and also made no objections at the trial
court level when a bench trial was ordered by the court. Third,
the AYD Trust contended that “even if [Alexander] had shown a
proper objection, and a right to a jury trial, the issue of a
buyout of the AYD Trust’s [sic] . . . is now moot. . . . [because
McCully Associates] was dissolved by operation of law.”
In his reply, Alexander argued that, while he did not
demand a jury trial in the Buyout case, the AYD Trust made such a
demand in its December 4, 1998 answer to the complaint and in its
December 11, 1998 first amended answer to the complaint.
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Alexander contended that pursuant to HRCP Rule 38(d), the AYD
Trust’s demand for a jury trial could not be withdrawn without
the consent of the parties, which never occurred.
On February 26, 2016, the ICA entered a memorandum
opinion affirming the circuit court’s October 25, 2010 partial
final judgment on all counts. Relevant to our review is the
ICA’s disposition of Alexander’s argument that the circuit court
erred in not affording Alexander a jury trial in the Buyout case.
First, the ICA explained that the Hawai#i Constitution
and HRCP Rule 38(a) provide a right to a jury trial in suits at
common law. In order to determine whether a suit is “at common
law” the ICA noted that courts look to the nature of the remedy,
specifically whether the cause of action seeks “legal” or
“equitable” relief. The ICA further explained that claims for
specific performance are equitable in nature and are not claims
arising at common law. The ICA did not address whether an action
for declaratory judgment was legal or equitable.
The ICA then examined Alexander’s claim in the Buyout
case, and concluded that the “sole remedy [Alexander] sought was
specific performance.” The ICA cited to Alexander and Eric’s
circuit court complaint, which stated that they had “no adequate
remedy at law, because the underlying asset of the Partnership is
real property, the loss of which cannot be adequately compensated
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by damages.” As such, the ICA held that Alexander was not
entitled to a jury trial in the Buyout case.8
On March 23, 2016, the ICA entered a judgment on
appeal, which affirmed the circuit court’s October 25, 2010
partial final judgment.
III. STANDARDS OF REVIEW
A. Jury Trial
The denial of a demand for jury trial is a question of
law reviewable de novo. Credit Assocs. of Maui, Ltd. v. Brooks,
90 Hawai#i 371, 372, 978 P.2d 809, 810 (1999).
B. Mootness
Mootness is an issue of subject matter jurisdiction.
“Whether a court possesses subject matter jurisdiction is a
question of law reviewable de novo.” Cty. of Hawai#i v. Ala Loop
Homeowners, 123 Hawai#i 391, 403-04, 235 P.3d 1103, 1115-16
(2010) (quoting Hamilton ex rel. Lethem v. Lethem, 119 Hawai#i 1,
4-5, 193 P.3d 839, 842-43 (2008)).
IV. DISCUSSION
The sole question before this court is whether the ICA
erred in affirming the circuit court’s decision to hear this case
8
The ICA also held that Alexander was not entitled to a jury trial
in the Judicial Accounting case because “[a] judicial accounting is equitable
in nature.”
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without a jury. In short, Alexander argues that he was entitled
to a jury trial because he raised claims for declaratory relief.
In turn, the AYD Trust argues that Alexander waived this argument
by not raising it at the circuit court level, that the argument
is now moot, and that the ICA correctly ruled that Alexander had
no right to a jury trial. We address each of those arguments in
turn.
A. The Jury Trial Issue was Properly Preserved at the Circuit
Court and ICA Levels.
Hawai#i Revised Statutes (HRS) § 641-2 (Supp. 2004)
provides that the “appellate court may correct any error
appearing on the record, but need not consider a point that was
not presented in the trial court in an appropriate manner.” See
also Okuhara v. Broida, 51 Haw. 253, 255, 456 P.2d 228, 230
(1969) (“[W]e are restricted in granting relief because of the
rule in this jurisdiction which prohibits an appellant from
complaining for the first time on appeal of error to which he has
acquiesced or to which he failed to object.”).
The AYD Trust argues that the issue before this court
is waived because Alexander did not object to the bench trial at
the circuit court level. However, it does appear from the record
that both Eric and Alexander expressed objections to having a
bench trial for the Buyout case at the circuit court level.
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For example, after the Receiver filed a motion to
strike the jury trial for the Buyout case, Eric filed a motion in
opposition in which Alexander joined. Additionally, during the
August 2005 pretrial hearing, Eric Marn’s attorney argued that a
jury trial should be preserved for the Buyout case. Thus, the
record does indicate that both Eric and Alexander objected to
having a bench trial for the Buyout case, and that the issue of
trial by jury was discussed during a pretrial hearing. See Lii
v. Sida of Hawai#i, Inc., 53 Haw. 353, 355, 493 P.2d 1032, 1034
(1972) (“We consider the right to a jury trial to be inviolate in
the absence of an unequivocal and clear showing of a waiver of
such right either by express or implied conduct. This court will
indulge every reasonable presumption against the waiver of such
right.”).
For this reason, the AYD Trust’s argument that the
issue is now waived is unpersuasive.
B. The Jury Trial Issue is Not Moot.
This court has stated that “[a] case is moot if it has
lost its character as a present, live controversy of the kind
that must exist if courts are to avoid advisory opinions on
abstract propositions of law.” Ala Loop Homeowners, 123 Hawai#i
at 405, 235 P.3d at 1117 (quoting Kona Old Hawaiian Trails Grp.
v. Lyman, 69 Haw. 81, 87, 734 P.2d 161, 165 (1987)). As a
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general rule, a “case is moot if the reviewing court can no
longer grant effective relief.” Id. (quoting Kaho#ohanohano v.
State, 114 Hawai#i 302, 332, 162 P.3d 696, 726 (2007)). “Stated
another way, the central question before us is whether changes in
the circumstances that prevailed at the beginning of litigation
have forestalled any occasion for meaningful relief.” Gator.com
Corp. v. L.L. Bean, Inc., 398 F.3d 1125, 1129 (9th Cir. 2005)
(internal quotation marks and citations omitted).
The AYD Trust argues that the “issue of Petitioners’
entitlement to a jury trial regarding the determination of rights
of the MA limited partners under the Transfer Restriction
Agreement is moot because . . . such determination would not
serve any valid purpose in light of the fact that MA has already
been dissolved and its assets liquidated.”
Alexander argues that, while MA has been dissolved and
its assets liquidated,9 there has yet to be a final accounting of
the proceeds or a determination of the distribution of the
proceeds to the partners. As such, Alexander contends that the
outcome of the Buyout case would determine each partner’s
interest in the proceeds.
To the extent that Alexander is still seeking to
9
Alexander does not appear to dispute that MA has been dissolved
and its assets sold.
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acquire Annabelle’s interest in MA or MA property, that relief
appears to be unavailable because MA no longer exists and the
property has been sold. However, to the extent that Alexander is
seeking other relief at this point, perhaps in the form of
proceeds from the sale of MA and its properties, the issue is not
moot and can be considered by this court. See In re Gentry
Revocable Tr., 138 Hawai#i 158, 171-72, 378 P.3d 874, 887-88
(2016) (stating that a case is not moot, even when the assets at
issue have already been sold, if the proceeds from the sale have
yet to be distributed). In short, a court could still grant
Alexander effective relief in the form of a greater share in the
proceeds generated from MA’s dissolution. Thus, Alexander’s
claim is not moot.
C. Alexander Has a Right to a Jury Trial in the Buyout Case.
There are two aspects to the jury trial issue. The
first is whether Alexander was entitled to a jury trial in the
Buyout case. If he was entitled to a jury trial, the second
question is whether trial by jury was properly demanded and
preserved.
1. Alexander was entitled to a trial by jury in the
Buyout case because he requested legal relief in
the form of a declaratory judgment.
Article 1, section 13 of the Hawai#i Constitution
mandates that “[i]n suits at common law where the value in
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controversy shall exceed five thousand dollars, the right of
trial by jury shall be preserved.” See also HRCP Rule 38(a)
(“The right of trial by jury as given by the Constitution or a
statute of the State or the United States shall be preserved to
the parties inviolate.”).
As the Hawai#i Constitution notes, the right to a jury
trial is preserved for suits at common law. “The test to
determine whether a suit is at common law is . . . whether the
cause of action seeks legal or equitable relief.” Lee v. Aiu, 85
Hawai#i 19, 29, 936 P.2d 655, 665 (1997) (internal quotation
marks omitted). Thus, “courts look to the nature of the remedy
to determine whether a jury trial is warranted.” Id.
In its memorandum opinion, the ICA concluded that
Alexander was not entitled to a jury trial in the Buyout case
because “the sole remedy Marn sought was specific performance[,]”
which at common law was a claim in equity. Alexander argues that
he was entitled to a jury trial in the Buyout case because he
also sought a declaratory judgment concerning his rights under
the Partnership and Transfer Agreements, and that this was an
action for legal relief.
Alexander’s argument has merit. Hawai#i law preserves
the right to trial by jury for declaratory judgments. First,
actions for declaratory judgments are provided for in HRS § 632-1
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(1993), which states in part that “[r]elief by declaratory
judgment may be granted in civil cases where an actual
controversy exists between contending parties . . . and the court
is satisfied also that a declaratory judgment will serve to
terminate the uncertainty or controversy giving rise to the
proceeding.”10 See also Island Ins. Co., Ltd. v. Perry, 94
10
HRS § 632-1 provides in full:
Jurisdiction; controversies subject to. In cases of actual
controversy, courts of record, within the scope of their
respective jurisdictions, shall have power to make binding
adjudications of right, whether or not consequential relief
is, or at the time could be, claimed, and no action or
proceeding shall be open to objection on the ground that a
judgment or order merely declaratory of right is prayed for;
provided that declaratory relief may not be obtained in any
district court, or in any controversy with respect to taxes,
or in any case where a divorce or annulment of marriage is
sought. Controversies involving the interpretation of deeds,
wills, other instruments of writing, statutes, municipal
ordinances, and other governmental regulations, may be so
determined, and this enumeration does not exclude other
instances of actual antagonistic assertion and denial of
right.
Relief by declaratory judgment may be granted in civil cases
where an actual controversy exists between contending
parties, or where the court is satisfied that antagonistic
claims are present between the parties involved which
indicate imminent and inevitable litigation, or where in any
such case the court is satisfied that a party asserts a
legal relation, status, right, or privilege in which the
party has a concrete interest and that there is a challenge
or denial of the asserted relation, status, right, or
privilege by an adversary party who also has or asserts a
concrete interest therein, and the court is satisfied also
that a declaratory judgment will serve to terminate the
uncertainty or controversy giving rise to the proceeding.
Where, however, a statute provides a special form of remedy
for a specific type of case, that statutory remedy shall be
followed; but the mere fact that an actual or threatened
controversy is susceptible of relief through a general
common law remedy, a remedy equitable in nature, or an
extraordinary legal remedy, whether such remedy is
(continued...)
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Hawai#i 498, 502, 17 P.3d 847, 851 (App. 2000) (“Actions for
declaratory judgments are authorized by Hawai#i Revised Statues
(HRS) § 632-1 (1993).”).
Second, HRCP Rule 57, titled “Declaratory Judgments,”
provides that a jury trial may be requested in actions for a
declaratory judgment:
The procedure for obtaining a declaratory judgment pursuant
to statute shall be in accordance with these rules, and the
right to trial by jury may be demanded under the
circumstances and in the manner provided in Rules 38 and 39.
The existence of another adequate remedy does not preclude a
judgment for declaratory relief in cases where it is
appropriate, except that declaratory relief may not be
obtained in any controversy with respect to taxes.
Third, Hawai#i case law has preserved the right to a
jury trial in declaratory actions. For instance, in Kimball v.
Lincoln, 72 Haw. 117, 809 P.2d 1130 (1991), this court considered
the issue of right to jury trial in actions for specific
performance and declaratory judgment. At issue in Kimball was
whether there was a valid lease of agricultural land. 72 Haw. at
118-19, 809 P.2d at 1131. The plaintiff sought both a
declaration that the lease was valid and specific performance in
enforcing the lease. Id.
In deciding whether there was a right to jury trial in
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recognized or regulated by statute or not, shall not debar a
party from the privilege of obtaining a declaratory judgment
in any case where the other essentials to such relief are
present.
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Kimball, this court first addressed the claim for specific
performance:
Appellant’s claim for specific performance is clearly
equitable in nature and not a claim arising at common law.
Accordingly, appellant had no right to demand a jury trial
of the claim for specific performance under HRCP 38(b) since
the right to demand a jury trial is expressly limited to
issues triable of right by a jury under that rule.
Id. at 126, 809 P.2d at 1134.
In contrast, this court noted that “[t]he declaratory
judgment count stands on a different footing.” Id. This court
further explained:
This count . . . raise[s] questions of whether a lease was
in fact intended to be entered into, and whether there was a
sufficient meeting of the minds of the parties on all the
material terms of the lease to constitute a contract. These
are legal issues, historically tried at common law in
assumpsit or, in some cases, in covenant.
Id. at 126, 809 P.2d at 1134-35. This court concluded that
“[c]learly, the issues raised by the complaint for declaratory
relief are legal issues, triable of right by a jury[.]” Id.
Similarly, in this case, Alexander requested both a
declaratory judgment and specific performance. Under the former,
Alexander sought a declaration of his rights, and the rights of
the other MA partners, under the Partnership and Transfer
Agreements. As this court concluded in Kimball, such issues are
legal in nature. 72 Haw. at 126, 809 P.2d 1134-35.
As such, it appears that Alexander was entitled to a
jury trial in the Buyout case. The ICA erred by focusing
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exclusively on the specific performance aspect of Alexander’s
complaint without examining his claim for declaratory relief.
Next, we address whether a trial by jury was properly demanded
and preserved in this case.
2. Trial by jury was properly demanded and preserved
in the Buyout case.
HRCP Rule 38 provides the procedural mechanism for
demanding and waiving a trial by jury. HRCP Rule 38(b) and (d)
provide in relevant part:
(b) Demand. Any party may demand a trial by jury of any
issue triable of right by a jury by (1) serving upon the
other parties a demand therefor in writing at any time after
the commencement of the action and not later than 10 days
after the service of the last pleading directed to such
issue, and (2) filing the demand as required by Rule 5(d). .
. .
(d) Waiver. The failure of a party to serve and file a
demand as required by this rule and to file it as required
by Rule 5(d) constitutes a waiver by the party of trial by
jury. A demand for trial by jury made as herein provided
may not be withdrawn without the consent of the parties.
Pursuant to HRCP Rule 38(b), the AYD Trust filed a
demand for jury trial in the Buyout case twice: first with its
answer to the complaint on December 4, 1998, and second with its
first amended answer to the complaint on December 11, 1998. It
appears from the record that there were no deficiencies as to
timing or service of process. Thus, a trial by jury was properly
demanded in the Buyout case when the AYD Trust filed its December
4, 1998 and December 11, 1998 demands; Alexander did not need to
file his own jury demand to preserve this right. See Mehau v.
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Reed, 76 Hawai#i 101, 112, 869 P.2d 1320, 1331 (1994) (“[I]t is
well settled in this jurisdiction that when either of the
litigating parties properly demanded jury, it fixed the status of
the case and the other party was not required to file his [or
her] own demand.”) (internal quotation marks and citations
omitted).
As to HRCP Rule 38(d), no citation to the record has
been provided that shows that the demand for jury trial was
withdrawn with the consent of the parties. In fact, in its
briefings before this court and the ICA, the AYD Trust does not
address Alexander’s contentions that the jury demand was never
withdrawn. Additionally, on the October 5, 1999 and February 1,
2002 order setting trial, the Buyout case was designated as a
jury trial. Because a trial by jury was demanded for the Buyout
case and because this demand was never withdrawn once it was
made, a trial by jury was properly preserved under HRCP Rule 38.
Confusion over the jury trial arose in August of 2005,
when a pretrial hearing was held. At that hearing, Eric Marn’s
attorney, Mr. Sakai, argued that there should be a trial by jury
while Dunn’s attorney, Mr. Guttman, argued that a jury trial had
not been requested for this case:
[MR. SAKAI]: Your Honor, if I may address and add to what
Mr. Guttman and Mr. Freed said is we believe that another –-
the third issue would be ripe for the Court’s adjudication
without being enmeshed in the I.R.S. criminal investigation
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would be the buy-out. . . .
But the buy-out is very isolated, and it’s very clean,
your Honor, very clean. And I think that requires a very
short jury trial that, basically, there’s not too much for
the jury to determine. I think the factual issues are
there. If they want to do a stipulated facts, we can do
that, but I –- I don’t think they want to do that. So we
need a jury to determine the facts of the case, but I think
that’s a –- a document that cries out to be adjudicated
separate and apart from the I.R.S. issue.
The buy-out is very important, and it could have
significant impact upon the current mediation right now.
I’m only talking about the Dunn –-
. . .
[MR. GUTTMAN]: There was no jury demand. There is no right
to a jury at this date to be requesting a jury. I –- I
think in terms of the factual issues, 90 percent to the
facts, I don’t think there’s any disagreement. I think the
– the actual facts are –- are very narrow that that [sic]
are in dispute.
(Emphasis added). The circuit court agreed with Dunn’s attorney
and concluded that “there was no separate jury demand in the buy-
out.” Then, in November 2006, the court entered another order
setting trial, in which the box entitled “Jury-waived” was
checked.
In summary, Alexander was entitled to a jury trial for
the Buyout case. In the early stages of the litigation, a jury
trial was properly demanded, preserved, and designated for the
Buyout case. Years later, during a pretrial hearing, it was
represented to the court that there had been no jury demand for
the Buyout case. The circuit court erred when it agreed and re-
designated the case as a jury-waived trial.
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V. CONCLUSION
For the reasons stated above, the ICA’s March 23, 2016
judgment on appeal, which affirmed the circuit court’s
October 25, 2010 partial final judgment, is vacated and remanded
on the ground that Alexander was entitled to a trial by jury.
This holding does not disturb the ICA’s judgment as to
Alexander’s other points, as these points were not raised to or
reviewed by this court.
Alexander Y. Marn, /s/ Mark E. Recktenwald
individually, and Alexander Y.
Marn, and Ernestine L. Marn, /s/ Paula A. Nakayama
as Co-trustees of the Revocable
Living Trust Agreement of /s/ Sabrina S. McKenna
Alexander Y. Marn, petitioners-
pro se /s/ Richard W. Pollack
Steven Guttman and Dawn Egusa /s/ Michael D. Wilson
for James. K. M. Dunn, as
Successor Trustee of the
Annabelle Y. Dunn Trust,
Mark B. Desmarais for
James Y. Marn, Jr.
Louise K.Y. Ing and Zachary M.
DiIonno for Liquidating
Receiver S. Steven Sofos
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