Association of Owners of Kalele Kai v. Yoshikawa. ( 2021 )

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Electronically Filed
Supreme Court
SCWC-XX-XXXXXXX
12-AUG-2021
09:04 AM
Dkt. 18 OP
IN THE SUPREME COURT OF THE STATE OF HAWAIʻI
---o0o---
________________________________________________________________
ASSOCIATION OF OWNERS OF KALELE KAI,
Respondent/Plaintiff-Appellee,
vs.
HITOSHI YOSHIKAWA,
Petitioner/Defendant-Appellant.
________________________________________________________________
SCWC-XX-XXXXXXX
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-XX-XXXXXXX; CIVIL NO. 15-1-0102)
AUGUST 12, 2021
RECKTENWALD, C.J., NAKAYAMA, McKENNA, WILSON, AND EDDINS, JJ.
OPINION OF THE COURT BY McKENNA, J.
I. Introduction
This certiorari proceeding addresses attorneys’ fees and
costs awarded to the Association of Owners of Kalele Kai
(“Association”) by the Circuit Court of the First Circuit
(“circuit court”) in connection with a dispute over whether
Hitoshi Yoshikawa (“Yoshikawa”) was allowed to moor his boat in
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the Kalele Kai marina. The circuit court granted the
Association’s motion for summary judgment, awarded attorneys’
fees and costs, and entered final judgment in favor of the
Association. On appeal, the Intermediate Court of Appeals
(“ICA”) vacated the summary judgment but affirmed the related
attorneys’ fees and costs awards because Yoshikawa had not
specifically addressed them in his appellate briefs.
Yoshikawa’s application for certiorari (“Application”)
presents a single question: “Did the ICA commit grave error in
vacating the Circuit Court’s Final Judgment Order, thereby
reversing summary judgment and remanding the case for further
proceedings to the Circuit Court but refusing to vacate the
underlying attorneys’ fee award?”
We hold as follows: (1) when a judgment upon which
attorneys’ fees and costs were based has been vacated,
attorneys’ fees and costs arising out of that judgment should
also be vacated; and (2) the ICA abused its discretion by
limiting the issues on remand to prevent the circuit court from
considering attorneys’ fees and costs awarded based on the
vacated summary judgment.
We therefore vacate in part the ICA’s January 6, 2021
judgment on appeal to the extent it affirmed the $79,514.50 in
attorneys’ fees and costs awarded by the circuit court on
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November 5, 2015, which arose from the vacated summary judgment.1
We also vacate the November 5, 2015 order of the circuit court
awarding fees and costs. We remand this case to the circuit
court for further proceedings consistent with this opinion.
II. Background
A. Arbitration and circuit court proceedings
The Association operated the Kalele Kai condominium project
in Hawaiʻi Kai, which included part of the Kalele Kai marina.
The Association’s Declaration of Condominium Property Regime
(“Declaration”) provided that “boat moorings shall be restricted
to use by boats no larger than twenty-three (23) feet in
length[.]”
Yoshikawa owned a Kalele Kai condominium unit (“the
Apartment”) and six appurtenant mooring spaces (“mooring
spaces”). In 2013, Yoshikawa purchased a boat 49 feet in
length, which he moored parallel to the dock in the mooring
1 These fees and costs are reflected in Paragraph E.3 of the final
judgment. Paragraph E of the final judgment contains four attorneys’ fees
and costs awards. The first two arise out of a discovery dispute and are not
at issue. Paragraph E.3 concerns the $79,514.50 in fees and costs awarded on
November 5, 2015 pursuant to the grant of summary judgment. Paragraph E.4
concerns an additional $21,180.35 in fees and costs awarded on January 5,
2016, which may include fees and costs arising out of the vacated summary
judgment. At oral argument, Yoshikawa indicated that, on certiorari, he only
seeks vacatur of the fees and costs in Paragraph E.3. As further discussed,
this opinion does not preclude Yoshikawa from filing a motion on remand
seeking vacatur of fees and costs in Paragraph E.4 to the extent they arise
out of the vacated summary judgment. See infra text accompanying and notes 5
& 8.
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spaces. The Association issued a notice of violation demanding
that Yoshikawa remove his boat.
The Association and Yoshikawa entered arbitration, and the
arbitrator found in favor of Yoshikawa.2 The arbitrator deemed
the Declaration’s 23-foot limitation inapplicable due to a
settlement agreement between the Association and Richard Rosic
(“Rosic”), the previous owner of the Apartment and the mooring
spaces. The settlement agreement “authorized the subsequent
owner to moor a boat in excess of 23 feet.” The arbitrator also
found the Association had allowed other owners to keep boats in
excess of 23 feet for at least a decade.
On January 21, 2015, the Association filed a complaint in
the circuit court demanding a trial de novo, followed by a first
amended complaint (“complaint”) on February 20, 2015.3 Relevant
to the issues on certiorari, the Association filed a motion for
summary judgment on March 17, 2015, arguing Yoshikawa’s boat
exceeded the Declaration’s length restriction. A hearing was
held on April 28, 2015, and the circuit court took the matter
under advisement.4
2 Keith W. Hunter served as the arbitrator.
3 Trial de novo was demanded pursuant to Hawai‘i Revised Statutes (“HRS”)
§ 514B-163 (Supp. 2004), which provides in subsection (a) that “[t]he
submission of any dispute to an arbitration under section 514B-162 shall in
no way limit or abridge the right of any party to a trial de novo.”
4 The Honorable Karen T. Nakasone presided.
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The day after this hearing, Yoshikawa filed an answer to
the complaint along with a counterclaim against the Association
and a “cross-claim” against two new parties, who were
Association board members (“counterclaim”). Yoshikawa’s
counterclaim asserted: breach of contract, breach of fiduciary
duty, bad faith, intentional infliction of emotional distress,
violations of the Restatement of Servitudes, “prima facia tort,”
abuse of process, misrepresentation, and violations of HRS
Chapter 514B pertaining to “Condominiums.”
The Association filed a motion to dismiss the counterclaim
on May 27, 2015, which was heard on July 30, 2015. On August 6,
2015, the circuit court entered its order dismissing Yoshikawa’s
counterclaim.
Then, on August 14, 2015, the circuit court entered
findings of fact (“FOFs”), conclusions of law (“COLs”), and an
order granting the Association’s motion for summary judgment.
The circuit court ordered Yoshikawa to remove his boat within
ten days and permanently enjoined him from mooring the boat in
the Kalele Kai marina.
On August 26, 2015, Yoshikawa filed a motion to stay the
circuit court’s order to remove the boat and/or to extend the
deadline for removal. The circuit court extended the deadline
but denied a stay. Also on August 26, 2015, Yoshikawa filed a
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motion for leave to file an amended counterclaim/cross-claim,
which the circuit court also denied.
On August 28, 2015, the Association filed a motion for
attorneys’ fees and costs totaling $84,093. The Association
argued it was the prevailing party because the circuit court
dismissed Yoshikawa’s counterclaim and granted summary judgment
in its favor. The Association maintained it was entitled to
fees based on HRS § 514B-157 (Supp. 2004) and Yoshikawa’s breach
of contractual obligations under the Declaration. On November
5, 2015, the circuit court granted in part the Association’s
August 28, 2015 motion for attorneys’ fees and costs, awarding a
total of $79,514.50.
On November 13, 2015, the Association filed a motion for
supplemental attorneys’ fees and costs in the amount of $21,507
as the prevailing party on Yoshikawa’s August 26, 2015 motions
to stay the August 14, 2015 injunction and for leave to file an
amended counterclaim/cross-claim.5 The Association contended it
had already established its entitlement to an award of
attorneys’ fees and costs as the prevailing party based on the
circuit court’s November 5, 2015 award of attorneys’ fees. On
5 The Association does not appear to have distinguished between fees and
costs requested to obtain the injunction, which clearly arose from the
vacated summary judgment, and for the denial of Yoshikawa’s motion for leave
to file an amended counterclaim/cross-claim.
6
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January 5, 2016, the circuit court granted in part this motion
for supplemental fees and costs, awarding $21,180.35.
On November 9, 2016, the circuit court entered its first
amended final judgment in favor of the Association (“final
judgment”), which included the November 5, 2015 and January 5,
2016 fees and costs awards.
B. ICA proceedings
Yoshikawa filed a notice of appeal of the final judgment on
November 16, 2016. The notice of appeal included an appeal of
the November 5, 2015 and January 5, 2016 fees and costs awards.
Yoshikawa’s sole point of error in his appellate briefs was
that the circuit court erred in granting summary judgment in
favor of the Association. Yoshikawa’s briefs did not
specifically address attorneys’ fees and costs based on the
grant of summary judgment or any other rulings reflected in the
final judgment.
On December 8, 2020, the ICA issued a memorandum opinion
vacating the final judgment with respect to the circuit court’s
grant of summary judgment. AOAO Kalele Kai v. Yoshikawa, CAAP-
XX-XXXXXXX (App. Dec. 8, 2020) (mem.). The ICA determined the
Association did not satisfy its summary judgment burden because
of the settlement between Rosic and the Association and evidence
that multiple Kalele Kai unit owners had “purchased and
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reconfigured boat moorings to accommodate boats longer than 23
feet.” AOAO Kalele Kai, mem. op. at 6-13.
The ICA affirmed the remainder of the final judgment,
however, including the November 5, 2015 and January 5, 2016
awards of attorneys’ fees and costs to the Association. AOAO
Kalele Kai, mem. op. at 16. The ICA noted Yoshikawa’s opening
brief did not discuss attorneys’ fees and costs. Id. The ICA
further ruled it had “discretion to limit the issues to be
decided on remand” and that the orders awarding attorneys’ fees
and costs, including those awarded pursuant to the November 5,
2015 and January 5, 2016 orders, were “not subject to litigation
on remand.” AOAO Kalele Kai, mem. op. at 16-17 (citing Miyamoto
v. Lum, 104 Hawai‘i 1, 10, 84 P.3d 509, 518 (2004)).
III. Discussion
A. When a judgment upon which attorneys’ fees and costs were
based has been vacated, the attorneys’ fees and costs
should also be vacated
Yoshikawa’s Application presents a single question: whether
the ICA erred in refusing to vacate the award of attorneys’
fees. Yoshikawa argues the award of attorneys’ fees should have
been vacated because “once the underlying matter . . . is
vacated or reversed, then the subsequent orders based on that
are also considered reversed.”
This court has previously ruled that an award of attorneys’
fees is inappropriate where the underlying judgment is vacated.
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We have held that a request for attorneys’ fees is premature
where the judgment on appeal vacates the circuit court’s
judgment and remands for further proceedings. O’Grady v. State,
141 Hawai‘i 26, 31, 404 P.3d 292, 297 (2017). We have also held
that there is no “prevailing party” for the purpose of
attorneys’ fees where the underlying judgment is vacated and
remanded for further proceedings. Nelson v. Univ. of Hawai‘i, 99
Hawai‘i 262, 54 P.3d 433 (2002) (holding that a judgment on
appeal that vacates a trial court judgment does not provide
grounds for an award of attorneys’ fees); see also Ass’n of Apt.
Owners of Maalaea Kai, Inc. v. Stillson, 108 Hawai‘i 2, 16, 116
P.3d 644, 658 (2005) (vacating the award of attorneys’ fees
after vacating the underlying judgment and remanding for further
proceedings).
Other state courts are in accord. In Board of Managers of
Warren House Condominium v. Pike, the New York Supreme Court,
Appellate Division held that a vacatur order that nullified the
underlying judgment’s findings that the defendant had violated a
condominium’s bylaws “necessarily nullified as well the award of
attorney’s fees in the . . . judgment[.]” 46 A.D.3d 344, 344-45
(N.Y. App. Div. 2007) (emphasis added). Similarly, in Viets v.
American Recruiters Enterprises, Inc., the Florida District
Court of Appeal held, “Once the trial court vacated the
dismissal of plaintiff’s complaint, it was no longer possible to
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identify the prevailing party. Thus, vacating the attorney’s
fee award was mandatory.” 922 So.2d 1090, 1096 (Fla. Dist. Ct.
App. 2006) (emphasis added).
Federal courts also hold that awards of attorney’s fees
should be vacated if the underlying judgment is vacated or
reversed. In Dillard’s Inc. v. Liberty Life Assurance Company
of Boston, 456 F.3d 901, 903 (8th Cir. 2006), the Eighth Circuit
vacated an award of attorney’s fees after reversing the
underlying judgment because “Dillard’s [was] no longer the
prevailing party[.]” Similarly, in Department of Education,
State of Hawai‘i v. Rodarte, the United States District Court for
the District of Hawai‘i ruled that the “general rule is that
attorneys’ fees awarded for victory on the merits must be
returned if a recipient loses on the merits on appeal. An
appellee is no longer a ‘prevailing party’ when a favorable
judgment on the merits in a lower proceeding is reversed on
appeal.” 127 F.Supp.2d 1103, 1115 (D. Hawai‘i 2000) (citing
Lovell v. Poway Unified Sch. Dist., 90 F.3d 367 (9th Cir. 1996))
(vacating award of attorney’s fees after reversing judgment on
the merits).
Hence, in this case, because the ICA vacated summary
judgment, the Association was no longer the prevailing party,
and the attorneys’ fees and costs awarded pursuant to the grant
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of summary judgment should have also been vacated. Further,
this result is required by HRS § 514B-157(a), which provides:
All costs and expenses, including reasonable attorneys’
fees, incurred by or on behalf of the association for:
(1) Collecting any delinquent assessments
against any owner’s unit;
(2) Foreclosing any lien thereon; or
(3) Enforcing any provision of the declaration,
bylaws, house rules, and this chapter, or the
rules of the real estate commission;
against an owner, occupant, tenant, employee of an owner,
or any other person who may in any manner use the property,
shall be promptly paid on demand to the association by such
person or persons; provided that if the claims upon which
the association takes any action are not substantiated, all
costs and expenses, including reasonable attorneys’ fees,
incurred by any such person or persons as a result of the
action of the association, shall be promptly paid on demand
to such person or persons by the association.
(Emphases added.)
Pursuant to HRS § 514B-157(a), the Association may be
awarded attorneys’ fees only if its claims are “substantiated.”
Otherwise, the Association must pay the attorneys’ fees of the
person it took action against. Here, the Association’s claims
have not been substantiated because the ICA vacated summary
judgment in favor of the Association. Therefore, attorneys’
fees and costs awarded to the Association based on the grant of
summary judgment should also have been vacated when the ICA
vacated summary judgment.
The Association argues, however, that pursuant to Hawai‘i
Rules of Appellate Procedure (“HRAP”) Rule 28(b)(4) (2016), it
was within the ICA’s discretion to disregard the issues
Yoshikawa failed to raise in his opening brief. The ICA did not
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directly cite to HRAP Rule 28, but it pointed out that
Yoshikawa’s opening brief did not argue the circuit court erred
in granting attorneys’ fees and costs.6
Granted, Yoshikawa could have argued which fees and costs
awards he sought to have vacated, especially when the final
judgment contained various fees and costs awards.7 Court rules,
however, should not be applied in a formalistic manner. See,
e.g., United States v. Oaks, 508 F.2d 1403, 1405 (9th Cir. 1974)
(noting that the United States Supreme Court has cautioned
against an overly rigid or formalistic interpretation of the
federal criminal rules). In this case, it was clear that the
November 5, 2015 attorneys’ fees and costs award arose from the
grant of summary judgment. Thus, pursuant to the general rule,
the ICA should also have at least ordered vacatur of those
attorneys’ fees and costs. In the alternative, if the
attorneys’ fees and costs required to be vacated were unclear,
the ICA could have remanded that determination to the circuit
court.
6 HRAP Rule 28(b)(4) provides, in relevant part: “Points not presented
[in the opening brief] in accordance with this section will be disregarded,
except that the appellate court, at its option, may notice a plain error not
presented.” Similarly, HRAP Rule 28(b)(7) provides, in relevant part:
“Points not argued may be deemed waived.” Yoshikawa appealed the entire
final judgment, including the subject attorneys’ fees and costs awards, but
did not specifically request that the fees and costs also be set aside.
7 See supra note 1.
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B. The ICA abused its discretion by limiting the issues on
remand to prevent the circuit court from considering
attorneys’ fees and costs awarded based on the vacated
summary judgment
Even if the ICA had not vacated attorneys’ fees and costs
related to the vacated summary judgment, on remand, Yoshikawa
could have filed a Hawai‘i Rules of Civil Procedure (“HRCP”) Rule
60(b)(5) (2006) motion to vacate fees and costs awarded pursuant
to the improper grant of summary judgment.8 The ICA also ruled,
however, that it had discretion to limit the issues to be
decided on remand and that the attorneys’ fees and costs orders
were not subject to litigation on remand. AOAO Kalele Kai, mem.
op. at 16-17.
As indicated by the ICA, Miyamoto, 104 Hawaiʻi at 10, 84
P.3d at 518, stands for the proposition that an appellate court
has discretion to limit the issues to be decided on remand.
AOAO Kalele Kai, mem. op. at 16. Miyamoto, however, actually
supports Yoshikawa’s position. Miyamoto was a negligence case
in which this court held that “the issues of causation and
8 HRCP Rule 60(b)(5) provides:
On motion and upon such terms as are just, the court may
relieve a party or a party’s legal representative from a
final judgment, order, or proceeding for the following
reasons: . . . (5) the judgment has been satisfied,
released, or discharged, or a prior judgment upon which it
is based has been reversed or otherwise vacated, or it is
no longer equitable that the judgment should have
prospective application[.]
(Emphases added.)
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damages are not ‘sufficiently separate’ to warrant limiting the
new trial to only one of the issues.” Miyamoto, 104 Hawai‘i at
10, 84 P.3d at 518. As in Miyamoto, in this case, the order
granting summary judgment and the award of attorneys’ fees and
costs based on that order are also not sufficiently separate —
rather, they are inextricably intertwined. Thus, the summary
judgment and fees and costs awarded pursuant to it should not
have been separated, and the ICA should have followed the
general rule to vacate the related fees and costs. Hence, the
ICA also abused its discretion by preventing the circuit court,
on remand, from addressing its awards of attorneys’ fees and
costs related to its erroneous grant of summary judgment.
IV. Conclusion
For these reasons, we vacate in part the ICA’s January 6,
2021 judgment on appeal to the extent it affirmed paragraph E.3
of the circuit court’s final judgment pertaining to the circuit
court’s November 5, 2015 order granting the Association
attorneys’ fees and costs of $79,514.50, and we also vacate that
order. We remand this case to the circuit court for further
proceedings consistent with this opinion.9
9 See supra note 1.
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James W. Rooney /s/ Mark E. Recktenwald
(Terrance M. Revere
with him on the briefs) /s/ Paula A. Nakayama
for Yoshikawa
/s/ Sabrina S. McKenna
John D. Zalewski
(Jana M. Naruse /s/ Michael D. Wilson
with him on the briefs)
for the Association /s/ Todd W. Eddins
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