Nakaoka v. Shizuru. ( 2022 )

FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
01-SEP-2022
11:50 AM
Dkt. 96 OP
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI#I
–––O0O–––
ARYN NAKAOKA and DARCIE NAKAOKA,
Plaintiffs-Appellants,
v.
EUGENE SHIZURU and CAROLE SHIZURU; DANIEL T.M.
CHOY; individually and dba CORINTHIANS REALTY;
LYNIEL CHOY, individually and dba RAINBOW REALTY
INTERNATIONAL, Defendants-Appellees
and
JOHN DOES 1-10, JANE DOES 1-10, DOE LIMITED
LIABILITY COMPANIES 1-10; DOES LIMITED LIABILITY
CORPORATIONS 1-10; DOE GOVERNMENTAL ENTITIES 1-10;
AND DOE OTHER ENTITIES 1-10, Defendants
NO. CAAP-XX-XXXXXXX
APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CIVIL NO. 17-1-0160-01)
SEPTEMBER 1, 2022
GINOZA, C.J., AND LEONARD AND WADSWORTH, JJ.
OPINION OF THE COURT BY WADSWORTH, J.
This appeal stems from a dispute involving the sale of
residential real property, in which Plaintiffs-Appellants Aryn
Nakaoka and Darcie Nakaoka (the Nakaokas), as buyers, alleged
that Defendants-Appellees Eugene Shizuru and Carole Shizuru (the
Shizurus), as sellers, failed to disclose the presence of
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
asbestos on the property. Defendant-Appellee Daniel T.M. Choy,
individually and dba Corinthians Realty (Daniel), was the
Shizurus' real estate agent, and Defendant-Appellee Lyniel Choy,
individually and dba Rainbow Realty International (Lyniel),
assisted Daniel with the transaction. The Nakaokas alleged that
Daniel and Lyniel breached legal duties owed to the Nakaokas
related to the non-disclosure of asbestos.
The Nakaokas appeal from the April 8, 2020 Final
Judgment (Judgment), entered in favor of the Shizurus, Daniel,
and Lyniel (collectively, Appellees) by the Circuit Court of the
First Circuit (Circuit Court). The Nakaokas also challenge the
following post-judgment orders (collectively, the Orders Awarding
Fees and Costs), entered on July 17, 2020, by the Circuit Court:
(1) "Order Granting [the Shizurus'] Motion for an Award of
Attorneys' Fees, Filed April 22, 2020"; (2) "Order Granting [the
Shizurus'] Motion for Costs, Filed May 1, 2020"; (3) "Order
Granting [Lyniel's] Motion for an Award of Attorneys' Fees and
Costs, Filed April 22, 2020"; and (4) "Amended Order Granting
[Daniel's] Motion for an Award of Attorney's Fees and Costs,
Filed April 22, 2020."1/
The Judgment and the Orders Awarding Fees and Costs
followed a series of orders granting Appellees' various motions
for summary judgment and partial summary judgment, including the
Circuit Court's December 13, 2019 "Order Granting [the Shizurus']
Motion for Partial Summary Judgment Respecting [the Nakaokas'
Hawaii Revised Statutes (HRS)] Chapter 508D Claims" (Order Re
508D Claims).2/ In the Order Re 508D Claims, the Circuit Court
ruled that the Nakaokas' failure to comply with the mediation
provision in the parties' purchase contract deprived the court of
"jurisdiction" over the Nakaokas' lawsuit.
1/
The Honorable John M. Tonaki entered the Judgment and the Orders
Awarding Fees and Costs.
2/
The Honorable James S. Kawashima presided over the October 2, 2019
hearing on "[the Shizurus'] Motion for Partial Summary Judgment Respecting
[the Nakaokas' HRS] Chapter 508D Claims" ( 508D Motion), filed on July 8, 2019.
Judge Tonaki entered the Order Re 508D Claims.
2
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
The Nakaokas raise a single point of error on appeal:
Having concluded that it lacked subject matter
jurisdiction via its December 13, 2019 Order [Re 508D
Claims], [the Circuit C]ourt committed reversible error when
it thereafter entered Judgment in favor of Appellees,
entertained Appellees' motions for awards of attorneys' fees
and costs, and then ultimately awarded all Appellees their
full fee and cost requests.
(Record citations omitted.)
As a threshold matter, we hold that the Circuit Court
lacked jurisdiction to enter the July 17, 2020 order granting the
Shizurus' motion for costs. The motion for costs was filed after
the notice of appeal was filed, and did not qualify as a motion
extending the time for appeal ("tolling motion") under Hawai#i
Rules of Appellate Procedure (HRAP) Rule 4(a)(3), as further
explained below. The filing of the notice of appeal thus
divested the Circuit Court of jurisdiction to decide the
Shizurus' motion for costs.
With respect to the Nakaoka's point of error, we hold
that the mediation provision in the purchase contract, read in
conjunction with HRS 508D-18, functioned as a condition precedent
to filing suit, but the failure to mediate in these circumstances
did not divest the Circuit Court of subject matter jurisdiction.
Accordingly, we affirm the Judgment, as well as the subsequent
orders awarding attorneys' fees and costs to Daniel and Lyniel,
and attorneys' fees to the Shizurus.
I. Background
On April 21, 2016, the Nakaokas, as buyers, and the
Shizurus, as sellers, entered into a purchase contract. The
purchase contract stated in part:
O-4 Mediation. If any dispute or claim arises out of this
Purchase Contract prior to or after closing between
Buyer and Seller, or between Buyer and/or Seller and a
Brokerage Firm and all its licensees assisting in this
transaction, and the parties to such dispute or claim
are unable to resolve the dispute, Buyer and Seller
agree in good faith to attempt to settle such dispute
or claim by non-binding mediation. . . .
It is undisputed that the parties did not attempt to settle their
dispute by non-binding mediation prior to the filing of the
3
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
underlying complaint on November 9, 2016.
The Nakaokas' Second Amended Complaint (SAC), filed on
February 21, 2018, asserted eight claims for relief:
• Count I - Breach of Written Contract for Sale
of Real Property, alleged against the
Shizurus.
• Count II - Statutory Violations, alleged
against Daniel and Lyniel.
• Count III - Breach of Duties as Relator,
alleged against Daniel and Lyniel.
• Count IV - Fraudulent Concealment, alleged
against the Shizurus, Daniel, and Lyniel.
• Count V - Intentional Infliction of Emotional
Distress, alleged against the Shizurus,
Daniel, and Lyniel.
• Count VI - Punitive Damages, alleged against
the Shizurus, Daniel, and Lyniel.
• Count VII - Unfair or Deceptive Acts or
Practices, alleged against Daniel and Lyniel.
• Count VIII - Negligent Misrepresentation,
alleged against the Shizurus, Daniel, and
Lyniel.
In July 2019, the Shizurus, Daniel and Lyniel each
filed motions for summary judgment or partial summary judgment.
On August 28, 2019, the Circuit Court entered an order
granting summary judgment in favor of Lyniel on SAC Counts II,
III, IV, V, and VIII, and denying summary judgment on SAC Count
VII without prejudice.
On September 4, 2019, the Circuit Court orally granted
Daniel's motion for summary judgment on SAC Counts II, III, and
IV, and denied the motion on SAC Counts V, VII, and VIII. These
rulings were eventually formalized in the Circuit Court's
March 18, 2020 "Order Granting in Part and Denying in Part
[Daniel's] Motion for Summary Judgment."
On December 13, 2019, the Circuit Court entered four
orders granting the Shizurus' respective motions for partial
4
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
summary judgment on SAC Counts I, IV, V, VI, and VIII.3/ On the
same day, the Circuit Court entered the Order Re 508D Claims,
which granted the Shizurus' 508D Motion.4/
The Order Re 508D Claims included the following
relevant finding of fact, which is unchallenged on appeal and
thus binding on the parties and this court, see State v.
Rodrigues, 145 Hawai#i 487, 494, 454 P.3d 428, 435 (2019):
3. Section 0, Paragraph 4 of the purchase contract
specifically states that if a disputed claim
arises out of the purchase contract and the
parties are unable to resolve the dispute, then
the parties agree in good faith to attempt to
settle such dispute by non-binding mediation.
The Order Re 508D Claims also includes the following relevant
conclusions of law:
2. . . . Section 0, Paragraph 4 of the purchase contract
does require mediation since the buyer and seller
agree to attempt to do so, and the term is a binding
contractual term.
3. Absent evidence that actual mediation has been
attempted, then the buyer is in breach by filing suit
herein and, by breaching the contract giving rise to
this suit, thereby deprives this Court of
jurisdiction. Within the four corners of the purchase
contract, an attempt at mediation is a requirement to
which both sides agreed. Absent that mediation, the
terms of the contract itself prevent the buyer from
filing suit herein.
4. As this motion relates to jurisdiction, it applies to
all parties.
(Emphases added.)
On April 8, 2020, the Circuit Court entered the
Judgment, which stated in part that "[t]he [Order Re 508D Claims]
disposes of all claims against all [Appellees]." Judgment was
entered in favor of all Appellees and against the Nakaokas "on
all claims . . . asserted in this action."
3/
Although these four orders granted the Shizurus' respective
motions for "partial summary judgment," the orders resolved all claims against
the Shizurus in their favor.
4/
We note that the Nakaokas did not assert a separate claim under
HRS Chapter 580D in the SAC. Nevertheless, the Nakaokas conceded below that
"it is a fair reading of the [SAC] to conclude that its key allegation is that
the Shizuru Defendants breached the written property sales contract governed
by [HRS] Chapter 508D."
5
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
On April 21, 2020, the Shizurus filed a bill of costs,
seeking taxation by the Clerk of the Court of costs incurred in
the case. On April 22, 2020, Daniel and Lyniel each filed a
motion for an award of attorneys' fees and costs, and the
Shizurus filed a motion for an award of attorneys' fees. On
April 27, 2020, the Clerk of the Court denied the Shizurus'
proposed taxation of costs, apparently because their bill of
costs did not state that 48 hours notice had been given to all
parties. On May 1, 2020, the Shizurus filed a motion for costs
as set out in their original bill of costs, pursuant to Hawai#i
Rules of Civil Procedure (HRCP) Rule 54(d)(1).
Meanwhile, on April 28, 2020, the Nakaokas timely filed
a notice of appeal from the Judgment.
The Nakaokas also opposed Appellees' motions for fees
and costs, arguing that the Circuit Court had concluded that it
lacked subject matter jurisdiction over the entire case, and that
all prior orders were therefore void, leaving no prevailing
parties for the purpose of awarding fees and costs. The Nakaokas
made the same argument during the July 15, 2020 hearing on the
motions. At that time, the Circuit Court granted all Appellees'
motions for fees and costs, stating in part:
The court ruled that it lacked jurisdiction over Chapter
508D claims pursuant to the requirement in HRS Section 508D-
18 which required the parties to submit to mediation prior
to filing of a suit when the purchase contract provided for
alternative dispute resolution.
The court did not rule in its order that it lacked subject
matter jurisdiction over this matter as argued by the
[Nakaokas]. The [Nakaokas] raise[] the argument that
because the court held pursuant to the statute that it
lacked jurisdiction to adjudicate 508D claims that this
court does not have the power to award attorneys' fees and
costs.
However, the court believes that it does retain subject
matter jurisdiction and the jurisdiction to award fees and
costs if allowed by the agreement and by statute.
On July 17, 2020, the Circuit Court entered the Orders
Awarding Fees and Costs.
6
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
II. Discussion
A. The Order Granting the Shizurus' Motion for Costs
In their opening brief, the Nakaokas challenge the
Orders Awarding Fees and Costs, including the July 17, 2020 order
granting the Shizurus' motion for costs.
We conclude that the Circuit Court lacked jurisdiction
to enter the order granting the Shizurus' motion for costs. The
May 1, 2020 motion for costs was filed after the April 28, 2020
notice of appeal was filed. Under HRAP Rule 4(a)(3),5/ only the
filing of a timely motion for costs, where court rules specify
the time by which the motion must be filed: (1) tolls the time
for filing a notice of appeal, and (2) extends the time the trial
court retains jurisdiction to resolve the motion. See Woodruff
v. Hawai#i Pacific Health, No. 29447, 2014 WL 128607, at *18
(Haw. App. Jan. 14, 2014) (construing predecessor version of HRAP
Rule 4(a)(3)). Here, the Shizurus' motion for costs was filed
under HRCP Rule 54(d)(1), which imposes a five-day time limit on
seeking review of the clerk's action on a request for taxation of
costs, but does not impose any time limit for the initial request
for taxation of costs by the clerk. Id. Because HRCP Rule
54(d)(1) does not specify the time by which a motion for costs
must be filed as measured from the entry of judgment, a post-
judgment motion for costs under HRCP Rule 54(d)(1) does not
qualify as a tolling motion under HRAP Rule 4(a)(3). Id. Thus,
the Circuit Court was divested of jurisdiction to decide the
Shizurus' motion for costs upon filing of the Nakaokas' notice of
appeal. See id. (citing Cox v. Cox, 125 Hawai#i 19, 28-29 &
n.14, 250 P.3d 775, 784-85 & n.14 (2011), and Hoddick, Reinwald,
O'Connor & Marrack v. Lotsof, 6 Haw. App. 296, 300, 719 P.2d
5/
HRAP Rule 4(a)(3) provides in relevant part:
(3) TIME TO APPEAL AFFECTED BY POST–JUDGMENT MOTIONS.
If any party files a timely motion for judgment as a matter
of law, to amend findings or make additional findings, for a
new trial, to reconsider, alter or amend the judgment or
order, or for attorney's fees or costs, and court or agency
rules specify the time by which the motion shall be filed,
then the time for filing the notice of appeal is extended
until 30 days after entry of an order disposing of the
motion. . . .
7
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
1107, 1111 (1986)).
In light of our conclusion, the Nakaokas' purported
appeal from the order granting the Shizurus' motion for costs is
dismissed. The Shizurus' motion for costs remains pending before
the Circuit Court and may be resolved after this appeal is
concluded and jurisdiction is returned to the Circuit Court.
B. The Circuit Court's Subject Matter Jurisdiction
The Nakaokas assert that they "are not challenging the
December 13, 2019 [Order Re 508D Claims]," and they "accept that
the trial court concluded that it lacked subject matter
jurisdiction." Based on the premise that the Circuit Court
lacked subject matter jurisdiction, the Nakaokas argue that "all
prior orders of any form were void ab initio." They further
argue: "Since the trial court held it lacked jurisdiction, a
point neither contested by [the Nakaokas] or Appellees, and thus
not subject to review, there are no prevailing parties, and no
one is entitled to fees and costs."
In response, Appellees point out that the Circuit Court
found it lacked "jurisdiction," not "subject matter
jurisdiction," based on the Nakaokas' failure to comply with the
mediation provision of the purchase contract. Appellees contend
that the Order Re 508D claims was premised on the failure to
satisfy a condition precedent to litigation, rather than a lack
of subject matter jurisdiction.
HRS § 508D-18 (2018) provides:
If the real estate purchase contract provides for
alternative dispute resolution, then prior to filing an
action in any court to enforce this chapter, a seller or
buyer shall first submit the claim to alternative dispute
resolution as required in the real estate purchase contract.
Here, the parties do not dispute that the purchase
contract required non-binding mediation prior to filing suit and
that such mediation did not occur. We must therefore decide
whether the failure to engage in mediation prior to filing suit
deprived the Circuit Court of subject matter jurisdiction, as the
Nakaokas contend.
8
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Addressing the subject matter jurisdiction of the
circuit courts, the Hawai#i Supreme Court has stated:
The circuit courts are courts of general jurisdiction.
State v. Villados, 55 Haw. 394, 397, 520 P.2d 427, 430
(1974). We defined jurisdiction as "the power and authority
on the part of the court to hear and judicially determine
and dispose of the cause pending before it." Id. at 396,
520 P.2d at 430. HRS § 603-21.5 gives the circuit court
subject matter jurisdiction over civil actions and
proceedings. Thus, the circuit court has jurisdiction over
all civil causes of action unless precluded by the State
Constitution or by statute.
Sherman v. Sawyer, 63 Haw. 55, 57–58, 621 P.2d 346, 348–49 (1980)
(footnote omitted).
The supreme court has also observed that "[i]n the
sound interest of finality, the concept of void judgment must be
narrowly restricted." In re Genesys Data Techs., Inc., 95
Hawai#i 33, 38, 18 P.3d 895, 900 (2001) (quoting Dillingham Inv.
Corp. v. Kunio Yokoyama Tr., 8 Haw. App. 226, 233, 797 P.2d 1316,
1320 (1990), abrogated on other grounds by Chen v. Mah, 146
Hawai#i 157, 457 P.3d 796 (2020)); see also Bank of Hawaii v.
Shinn, 120 Hawai#i 1, 14, 200 P.3d 370, 383 (2008) ("[I]n the
sound interest of finality, the concept of void judgment must be
narrowly restricted . . . if a court has the general power to
adjudicate the issues in the class of suits to which the case
belongs then its interim orders and final judgments, whether
right or wrong, are not subject to collateral attack, so far as
jurisdiction over the subject matter is concerned[.]" (quoting
Dillingham Inv. Corp., 8 Haw. App. at 233-34, 797 P.2d at 1320)).
The Nakaokas do not cite any Hawai#i authority
supporting their argument that the parties' failure to engage in
prelitigation mediation deprived the Circuit Court of subject
matter jurisdiction, and we have found none. We note, however,
that other jurisdictions have addressed whether a failure to
mediate as required by contract or statute strips a court of
subject matter jurisdiction. Absent clear statutory language
that mediation is a jurisdictional prerequisite, a number of
these courts have viewed mediation requirements merely as
conditions precedent to filing suit. See, e.g., MB Am., Inc. v.
Alaska Pac. Leasing Co., 367 P.3d 1286, 1288 (Nev. 2016) (holding
9
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
"that the mediation provision in the parties' contract is an
enforceable condition precedent to litigation" and concluding
that a grant of summary judgment was proper where the plaintiff
initiated litigation "without complying with the prelitigation
mediation provision in the Agreement[.]"); Windham Land Tr. v.
Jeffords, 967 A.2d 690, 697 (Me. 2009) (concluding that "the
parties' failure to engage in prelitigation mediation did not
strip the Superior Court of subject matter jurisdiction," and
explaining that "[t]he court's jurisdiction over the subject
matter of the dispute in this case [was] not contingent on
whether the parties engaged in pre-litigation mediation, which is
merely a condition precedent to filing suit"); Stone & Webster,
Inc. v. Georgia Power Co., 968 F. Supp. 2d 1, 6 (D.D.C. 2013)
("Given that other courts in this district have implicitly
concluded that failure to abide by a mediation clause that
functions as a condition precedent does not deprive a court of
subject matter jurisdiction, this Court is reluctant to interpret
this privately agreed-upon condition as a jurisdictional bar."
(citation omitted)); cf. Klinge v. Bentien, 725 N.W.2d 13, 18
(Iowa 2006) (concluding that the small claims court lacked
subject matter jurisdiction over a farm dispute where a state
statute explicitly stated "that filing a mediation request and
obtaining a mediation release 'are jurisdictional prerequisites
to a person filing a civil action . . . to resolve a dispute
subject to this chapter[.]'" (quoting Iowa Code § 654B.3(1)(b))).
Here, given that HRS § 603-21.5 grants the circuit
courts subject matter jurisdiction over civil actions and
proceedings, and HRS § 508D-18 does not state that mediation is a
jurisdictional prerequisite to filing suit, we conclude that the
failure to mediate in these circumstances did not divest the
Circuit Court of subject matter jurisdiction. Instead, the
mediation provision in the purchase contract, read in conjunction
with HRS § 508D-18, functioned as a condition precedent to filing
suit. See, e.g., MB Am., Inc., 367 P.3d at 1288; Windham Land
Tr., 967 A.2d at 697; Stone & Webster, Inc., 968 F. Supp. 2d at
6. Because the Circuit Court had subject matter jurisdiction
over the Nakaokas' claims, the Judgment and subsequent orders
10
FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
awarding attorneys' fees and costs to Daniel and Lyniel, and
attorneys' fees to the Shizurus, are not void for lack of such
jurisdiction.
The Nakaokas assert no other argument as a basis for
vacating the Judgment and subsequent orders awarding attorneys'
fees and costs.
III. Conclusion
For the reasons discussed above, we affirm the
following judgment and orders, entered by the Circuit Court of
the First Circuit:
(1) the April 8, 2020 Final Judgment;
(2) the July 17, 2020 "Order Granting [the Shizurus']
Motion for an Award of Attorneys' Fees, Filed
April 22, 2020";
(3) the July 17, 2020 "Order Granting [Lyniel's]
Motion for an Award of Attorneys' Fees and Costs,
Filed April 22, 2020"; and
(4) the July 17, 2020 "Amended Order Granting
[Daniel's] Motion for an Award of Attorney's Fees
and Costs, Filed April 22, 2020."
The purported appeal from the July 17, 2020 "Order Granting [the
Shizurus'] Motion for Costs, Filed May 1, 2020" is dismissed.
On the briefs:
Richard E. Wilson, /s/ Lisa M. Ginoza
for Plaintiffs-Appellants Chief Judge
Robert J. Crudele and /s/ Katherine G. Leonard
Henry F. Beerman Associate Judge
(Crudele & Beerman, LLLC)
for Defendants-Appellees /s/ Clyde J. Wadsworth
Eugene and Carole Shizuru Associate Judge
Enver W. Painter, Jr.
for Defendant-Appellee
Daniel T.M. Choy, individually
and dba Corinthians Realty
Philip W. Miyoshi
(Miyoshi & Hironaka LLC)
for Defendant-Appellee
Lyniel Choy, individually and
dba Rainbow Realty International
11