Goran Pleho, LLC v. Lacy. ICA mem.op., filed 07/29/2016. Motion for Partial Reconsideration of Memorandum Opinion, filed 08/08/2016. ( 2019 )

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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
37