LEDCOR – U.S. Pacific Construction LLC v. Joslin ( 2022 )

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
29-SEP-2022
07:49 AM
Dkt. 96 SO
NO. CAAP-XX-XXXXXXX
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI#I
LEDCOR – U.S. PACIFIC CONSTRUCTION LLC, now known as
LEDCOR CONSTRUCTION HAWAII, LLC,
a Delaware limited liability company, Plaintiff-Appellee, v.
LISA RENE JOSLIN; Defendant–Appellant,
COMPLETE MECHANICAL INC, a Hawai#i Corporation,
Defendant–Appellee,
JOHN AND JANE DOE CORPORATIONS 1-50;
DOE PARTNERSHIPS 1-50; DOE GOVERNMENTAL UNITS 1-50;
and DOE ENTITIES 1-50; Defendants.
APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUIT
(CIVIL NO. 10-1-0341(1))
SUMMARY DISPOSITION ORDER
(By: Ginoza, Chief Judge, Leonard and McCullen, JJ.)
Defendant-Appellant Lisa Rene Joslin (Joslin) appeals
from the Second Amended Judgment entered on May 23, 2018 (Second
Amended Judgment), by the Circuit Court of the Second Circuit
(Circuit Court).1 Joslin also challenges various orders entered
by the Circuit Court on remand from this court's Memorandum
1
The Honorable Rhonda I.L. Loo presided.
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Opinion entered on November 13, 2014, in CAAP-XX-XXXXXXX, upon a
prior appeal by Joslin (Ledcor I).2
On May 26, 2010, Ledcor filed a five-count complaint
(the Complaint) against Joslin and Defendant-Appellee Complete
Mechanical Inc. (CMI).3 Ledcor alleged non-disclosure of
material facts and fraudulent inducement, intentional and
negligent misrepresentation, and constructive fraud against
Joslin and breach of contract claims against CMI. Neither Joslin
nor CMI filed an answer or otherwise defended against the
Complaint. On July 25, 2011, the Clerk of the Circuit Court
entered a default judgment, which entered judgment in favor of
Ledcor in the total amount of $218,699.26, and against Joslin and
CMI, jointly and severally (Default Judgment).4
Joslin appealed, raising multiple points of error. In
Ledcor I, this court affirmed in part and vacated in part the
Circuit Court's January 4, 2012 order denying Joslin's motion to
set aside the default judgment entered against her (Order Denying
Set Aside). This court held that: (1) the Circuit Court did not
err in its finding and conclusion that Joslin was properly
2
A second prior appeal from an Amended Judgment entered on remand
on March 29, 2016, was dismissed for lack of appellate jurisdiction due to
deficiencies in the form of the judgment.
3
As noted in Ledcor I, it appears that CMI may be insolvent as it
no longer holds a contractor's license. Ledcor I, No. CAAP-XX-XXXXXXX, 2014
WL 5905077 at *1 n.3 (App. Nov. 13, 2014). CMI did not seek relief from the
default judgment either in Ledcor I or during the subsequent litigation
leading to this appeal or on appeal.
4
The $218,699.26 in the July 25, 2011 Default Judgment consisted of
the following: $157,437.05 (principal amount for payments made to
subcontractors), $45,377.64 (prejudgment interest), $559.97 (court costs), and
$15,324.60 (attorneys' fees). Ledcor I, No. CAAP-XX-XXXXXXX, 2014 WL 5905077at *2 (App. Nov. 13, 2014).
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served; (2) the Circuit Court's Default Judgment properly
adjudicated the parties' rights based upon Ledcor's prayer for
relief, which arose from the facts stated in the Complaint;
(3) the Circuit Court did not err in rejecting Joslin's argument
that the Default Judgment against her was void because the
Circuit Court Clerk lacked authority to enter the principal
amount of the damages; (4) the Circuit Court Clerk lacked the
authority to award pre-judgment interest and to determine that
Joslin and CMI can and/or should be held jointly and severally
liable in light of the mixed prayer for relief (seeking tort
damages against Joslin and contract damages against CMI); and
(5) the Circuit Court did not abuse its discretion in entering
the Order Denying Set Aside, with respect to the principal amount
of the damages awarded to Ledcor.
On remand from Ledcor I, the Circuit Court ultimately
entered, inter alia, the Second Amended Judgment, which:
(1) again entered judgment in favor of Ledcor and against Joslin
in the principal amount of $157,437.05 for damages arising out of
Ledcor's tort claims, plus awarded Ledcor pre-judgment interest;
and (2) entered judgment in favor of Ledcor and against CMI in
the principal amount of $157,437.05 for damages arising out of
Ledcor's tort claims, plus pre-judgment interest. Ledcor did not
renew its request for attorneys' fees. The Second Amended
Judgment is silent on the issue of joint and several liability.
Joslin raises two points of error on appeal, contending
that: (1) the Circuit Court's denial of an evidentiary hearing
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on the proper apportionment of damages violated Joslin's due
process rights; and (2) the Circuit Court's awards of pre-
judgment interest against her were based on procedural error and
were an abuse of discretion.
Upon careful review of the record and the briefs
submitted by the parties, and having given due consideration to
the arguments advanced and the issues raised, as well as the
relevant statutory and case law, we resolve Joslin's contentions
as follows:
(1) To the extent that Joslin seeks to challenge the
principal amount of the judgment entered against her, $157,437.05
for damages arising out of Ledcor's tort claims against her, her
arguments are without merit. In Ledcor I, this court affirmed
the principal tort damages award against Joslin, notwithstanding
her various arguments, including that the Default Judgment was
entirely void. Indeed, in Ledcor I, this court did not disturb
the damages award against CMI, which arose out of Ledcor's breach
of contract claims against CMI, as CMI did not at any time
challenge the entry of judgment against it on Ledcor's breach of
contract claims.5
In Ledcor I, however, this court vacated the Default
Judgment to the extent that it jointly and severally assessed the
tort damages against Joslin and the breach of contract damages
againt CMI, stating:
5
This observation should not be construed as an opinion as to the
merits of any such challenge.
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[W]ith respect to the issue of joint and several
liability, the complaint herein prayed for damages against
Joslin personally for misrepresentations made to Ledcor and
damages against CMI resulting from CMI's alleged breaches of
contract. Neither the record on appeal nor Ledcor's brief
to this court present any legal authority regarding the
determination of whether or not, under Hawai #i law, Joslin
and CMI can and/or should be held jointly and severally
liable in light of the mixed prayer for relief in this case.
Such a determination must be made by judicial decree, rather
than a ministerial act. On this record, we conclude that
the Default Judgment is void to the extent that it assesses
joint and several liability.
In addition to re-entering the tort judgment against
Joslin, the Second Amended Judgment enters judgment in favor of
Ledcor and against CMI for tort claims, rather than breach of
contract claims. Joslin submits that the Circuit Court erred in
this regard. Although Joslin is not the judgment debtor with
respect to the tort judgment against CMI, if both Joslin and CMI
were both liable for damages based on the same tort claims,
arguably, as Joslin contends, she might be entitled to
apportionment of the award damages. However, upon review of the
record of proceedings on remand, we cannot find any discernible
support, explanation, or factual or legal basis for the Circuit
Court's entry of a judgment against CMI sounding in tort, rather
than in contract, as would be consistent with the claims set
forth in the Complaint and the undisturbed parts of the Default
Judgment. The Circuit Court thusly sidestepped the issue of
whether Joslin and CMI could be held jointly and severally liable
in light of the mixed prayer for relief in this case, and erred
in doing so.
Joslin argues in her opening brief that "joint and
several liability is exclusively a tort concept that has no
application to a breach of contract claim." However, Joslin
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cites no authority for the proposition that the tort judgment
against her, as previously affirmed by this court, is subject to
"apportionment" against a judgment for breach of contract damages
entered against CMI, as was previously entered against CMI. It
appears that Joslin seeks to require Ledcor to prove at an
evidentiary hearing the principal amount of its tort damages
against her, although such damages were properly entered against
her, and affirmed in Ledcor I. Joslin's arguments to this effect
are without merit, and the Circuit Court did not violate Joslin's
due process rights by declining to allow her to re-litigate the
principal amount of the tort judgment previously entered against
her and affirmed.
Joslin argues that by entering a tort judgment against
both her and CMI, the Circuit Court in effect entered judgment
against them jointly and severally. However, as the Circuit
Court erroneously characterized the judgment against CMI as
sounding in tort, under the circumstances of this case, we
conclude that the proper remedy is to vacate the Second Amended
Judgment to the extent it awarded tort damages against CMI, and
remand this case to the Circuit Court to correct that error in
the entry of the Second Amended Judgment.
(2) In the Second Amended Judgment, the Circuit Court
awarded pre-judgment interest for three separate periods in this
case: (1) $45,377.64 for interest up to July 11, 2011 (the date
of the Default Judgment); (2) $56,944.40 from July 11, 2011,
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through March 11, 2015; and (3) $12,942.00 from March 11, 2015,
through January 11, 2016.
Joslin first contends that the imposition of pre-
judgment interest before a proper apportionment of damages
violated her right to due process. As we have concluded that
Joslin's arguments regarding apportionment are without merit, we
also conclude that this basis for setting aside the award of pre-
judgment interest is without merit.
Joslin further argues that the request for $56,944.40
in additional pre-judgment interest was first made in a reply
memorandum, thereby violating the Rules of the Circuit Courts of
the State of Hawai#i (RCCH) Rule 7(b) and depriving her of an
opportunity to respond to the request for an additional award
against her. This argument has merit. A non-moving party should
be given the opportunity to respond to arguments for additional
relief that are made in a reply memorandum, as additional
evidence and arguments in a reply memorandum, inter alia, violate
the RCCH. See, e.g., Hiwalani P S Holdings, LLC v. Wells Fargo
Bank, N.A., as Tr. for Option One Mortg. Loan Tr., No. CAAP-13-
0001760, 2017 WL 750582, at *5 (App. Feb. 27, 2017); see also
Assoc. Fin. Servs. Co. of Haw., Inc. v. Richardson, 99 Hawai#i
446, 458, 56 P.3d 748, 760 (App. 2002).
Joslin similarly argues that the request for the
additional amount of $12,942.00 was made in a declaration,
followed by an explanatory letter to the Circuit Court, and was
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not properly before the court on a motion for relief. We
conclude that this argument has merit, as well.
Finally, Joslin argues that the Circuit Court abused
its discretion in awarding pre-judgment interest in this case.
The award of pre-judgment interest is governed by Hawaii Revised
Statutes (HRS) § 636-16 (2016),6 which vests a court, in civil
cases, with discretion to award pre-judgment interest. Cnty. of
Haw. v. C & J Coupe Fam. Ltd. P'ship, 124 Hawai#i 281, 311-12,
242 P.3d 1136, 1166-67 (2010). "[T]he purpose of prejudgment
interest, in the context of HRS § 636-16, is to correct injustice
when a judgment is delayed for a long period of time for any
reason, including litigation delays." Id. at 312, 242 P.3d at
1167 (internal citation and quotation marks omitted). In Tri-S
Corp. v. W. World Ins. Co., 110 Hawai#i 473, 498, 135 P.3d 82,
107 (2006), the supreme court stated that a finding of fault is
not necessary, and a review of an award of pre-judgment interest
should consider the following factors:
(1) if fault is found on the part of the party seeking
interest, denial of interest will not be considered an abuse
of discretion; (2) if fault is found on the part of the
party opposing interest, an award of interest will not be
considered an abuse of discretion; and (3) where no fault is
found on either side, the trial court may still award or
deny prejudgment interest in its discretion, depending on
the circumstances of the case.
6
HRS § 636-16 states:
§ 636-16 Awarding Interest. In awarding interest in
civil cases, the judge is authorized to designate the
commencement date to conform with the circumstances of each
case, provided that the earliest commencement date in cases
arising in tort, may be the date when the injury first
occurred and in cases arising by breach of contract, it may
be the date when the breach first occurred.
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Ledcor argued that pre-judgment interest starting from
the date the Default Judgment was entered in 2011 was necessary
due to the amount of time that had elapsed since the
misrepresentations. At an April 21, 2015 hearing, counsel for
Ledcor additionally stated:
MR. LEONG: . . . We'll leave it at that. That's been
thoroughly briefed by both sides, and we'll leave it to the
Court's discretion as far as how much prejudgment interest
to award, if any. I think the case law is clear that the
Court has discretion to award it. You know, regardless of
whether or not any delay was caused by Defendant Joslin or
not, the court cases say that the Court has discretion to
award prejudgment interest as long as there has been some
delay.
And the bottom line, your Honor, is it's been seven
years. Ledcor paid out these amounts a long time ago.
We've gone through the appeal. We're back here, and again,
we'll leave it to the Court's discretion, but we do believe
that an award of prejudgment interest, which the appellate
courts say is an element of the damages, should be awarded.
In light of the circumstances of this case, although
the Circuit Court did not ascribe fault to any party, it
nevertheless had the discretion to award prejudgment interest.
See HRS § 636-16; C & J Coupe, 124 Hawai#i at 311-12, 242 P.3d at
1166-67. Ledcor articulated that the delay prejudiced it because
it had long ago paid moneys out as a result of Joslin's
misrepresentations. We cannot conclude that the Circuit Court
clearly exceeded the bounds of reason or disregarded the rules or
principles of law or practice to the substantial detriment of
Joslin, and thus, the Circuit Court did not abuse its discretion
to the extent it awarded pre-judgment interest totaling
$45,377.64. However, for the reasons set forth above, the
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additional awards of pre-judgment interest, in the amounts of
$56,944.40 and $12,942.00, are vacated.
For these reasons, the Second Amended Judgment is
affirmed in part and vacated in part, as set forth above. This
case is remanded to the Circuit Court for the entry of a further
amended judgment consistent with this Summary Disposition Order.
DATED: Honolulu, Hawai#i, September 29, 2022.
On the briefs: /s/ Lisa M. Ginoza
Chief Judge
Peter N. Martin,
for Defendant-Appellant. /s/ Katherine G. Leonard
Associate Judge
Roy T. Ogawa and
Kurt K. Leong /s/ Sonja M.P. McCullen
(Ogawa, Lau, Nakamura & Jew), Associate Judge
for Plaintiff-Appellee.
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