Wagner v. Giacometti ( 2023 )

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
29-MAR-2023
07:53 AM
Dkt. 101 MO
NO. CAAP-XX-XXXXXXX
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI#I
CHARLES DAVID WAGNER, TRUSTEE OF THE CHARLES DAVID WAGNER TRUST
DATED FEBRUARY 16, 1995 and JILL ABIGAIL WAGNER, TRUSTEE OF THE
JILL ABIGAIL WAGNER TRUST DATED FEBRUARY 16, 1995,
Plaintiffs/Counterclaim Defendants-Appellants,
v.
GUIDO GIACOMETTI and SUSAN TIUS,
Defendants/Counterclaimants-Appellees,
and
Does 1-10, Defendants
APPEAL FROM THE CIRCUIT COURT OF THE THIRD CIRCUIT
(CIVIL No. 3CC15100083K)
MEMORANDUM OPINION
(By: Hiraoka, Presiding Judge, Nakasone and McCullen, JJ.)
Plaintiffs/Counterclaim Defendants-Appellants Charles
David Wagner, Trustee of the Charles David Wagner Trust Dated
February 16, 1995, and Jill Abigail Wagner, Trustee of the Jill
Abigail Wagner Trust Dated February 16, 1995, (the Wagners)
appeal from the "Final Judgment as to All Claims and Parties" in
favor of Defendants/Counterclaimants-Appellees Guido Giacometti
and Susan Tius entered by the Circuit Court of the Third Circuit
on January 11, 2019.1 For the reasons explained below, we vacate
the Judgment and remand for proceedings consistent with this
memorandum opinion.
1
The Honorable Melvin H. Fujino presided.
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BACKGROUND
The Wagners and Giacometti and Tius were neighbors in
the Anekona Estates subdivision on the island of Hawai#i. The
Wagners sued Giacometti and Tius on March 3, 2015. They alleged
that Giacometti and Tius violated various provisions of the
Declaration of Protective Covenants, Conditions and Restrictions
for Anekona Estates. The complaint alleged breach of contract,
injunctive relief, and specific performance. It was signed by
attorney Steven D. Strauss.
Giacometti and Tius answered the complaint and filed a
counterclaim on April 23, 2015. They claimed that the Wagners
"negatively impacted and impaired [their] enjoyment and use of
their property and the value of their property." The
counterclaim alleged tortious interference with contractual and
other relations, nuisance, and abuse of process. Giacometti and
Tius were represented by attorney Bruce H. Wakuzawa.
The Wagners answered the counterclaim on May 29, 2015.
On November 25, 2015, attorney Gary W.K. Au Young entered an
appearance as counsel for the Wagners "on the Counterclaim." It
appears from the record that Au Young was retained by the
Wagners' insurer, The Hartford, to defend the Wagners against
Giacometti's and Tius's counterclaim.
According to the Rules of the Circuit Courts of the
State of Hawai#i (RCCH) in effect at the relevant time, the
Wagners' pretrial statement was due on November 3, 2015 (eight
months after their complaint was filed) and Giacometti's and
Tius's pretrial statement for their counterclaim was due on
December 23, 2015. See former RCCH Rule 12(b). At that time in
the Third Circuit, within sixty days after the pretrial statement
was filed, the plaintiff was required to file a document with the
court indicating that either: counsel has agreed upon 3 separate
weeks, within 150-240 days from the filing date of the pretrial
statement, in which the trial can occur; or counsel cannot agree
on trial dates and the parties wish a trial setting status
conference. See former RCCH Rule 12(c)(2). Under the RCCH, the
trial date should have been set for June 30, 2016, at the latest.
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None of the parties filed pretrial statements. On
August 11, 2017, the circuit court entered an order dismissing
the complaint and the counterclaim. See former RCCH Rule 12(q).
The parties filed timely motions to set aside the order of
dismissal. Orders granting the motions were entered on
October 30, 2017.
Giacometti and Tius filed their pretrial statement on
September 25, 2017. The Wagners filed their pretrial statement
on October 2, 2017. Under former RCCH Rule 12(c)(2), the trial
date was to be between February 22, 2018 and May 23, 2018.
On December 15, 2017, the Wagners filed their trial
setting statement. They reported that the parties were unable to
agree on a trial date, and requested a trial setting conference.
On January 8, 2018, the circuit court scheduled a trial setting
conference for February 13, 2018. The conference was continued
by stipulation and held on March 9, 2018.
On March 14, 2018, the circuit court entered an order
setting a settlement conference for July 5, 2018, and the trial
for August 7, 2018 (Order Setting Trial). The order stated:
"Counsel shall filed [sic] written client consent to the trial
date as set." Giacometti and Tius filed their consent to the
August 7, 2018 trial date on March 28, 2018.2 The record does
not contain a consent filed by the Wagners.
Pertinent to this appeal, the Order Setting Trial also
stated:
Attendance at Settlement Conferences
Attendance at settlement conferences shall be as
required by Rule 12.1, Rules of the Circuit Courts. The
Court notes particularly Rule 12.1(a)(4) mandating the
parties to have attempted to negotiate settlement through an
exchange of written bona fide and reasonable offers of
settlement prior to the conference.[3] Attendance and
2
The document was titled "Consent to Continuance of Trial Date" but
the text of the document stated only that Giacometti and Tius "consent to the
August 7, 2018 Trial Date" and did not mention a continuance.
3
Former RCCH Rule 12.1(a)(4) provided:
Each party to the action shall have thoroughly evaluated the
case and shall have discussed and attempted to negotiate a
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authority are extremely important, therefore, the parties or
attorneys who have complete settlement authority (not
authority to settle up to a certain amount) shall be
present. Failure to comply with this shall result in the
Court imposing appropriate sanctions. The court suffers
great inconvenience when clients are not readily available.
. . . .
Sanctions
The sanctions for non-compliance with this order
include those imposed by Haw. R. Circuit Cts. Rule
12.1(a)(6), and shall, in the appropriate case, include
default.[4]
The parties began to mediate in April 2018.
On June 21, 2018, the Wagners filed: (1) a motion to
continue the trial date, reset pretrial deadlines, and continue
the settlement conference; and (2) an ex parte motion to shorten
time for hearing the motion. The motion was heard on June 29,
2018. The circuit court orally denied the motion. A written
order was entered on August 29, 2018 (Order Denying Motion to
Continue).
The settlement conference took place as scheduled on
July 5, 2018. The circuit court noted that the Wagners had not
submitted a confidential settlement conference letter or filed a
settlement through an exchange of written bona fide and
reasonable offers of settlement prior to the conference.
4
Former RCCH Rule 12.1(a)(6) provided:
SANCTIONS. The failure of a party or his attorney to appear
at a scheduled settlement conference, the neglect of a party
or his attorney to discuss or attempt to negotiate a
settlement prior to the conference, or the failure of a
party to have a person authorized to settle the case present
at the conference shall, unless a good cause for such
failure or neglect is shown, be deemed an undue interference
with orderly procedures. As sanctions, the court may, in its
discretion:
(i) Dismiss the action on its own motion, or on the
motion of any party, or hold a party in default, as the case
may be;
(ii) Order a party to pay the opposing party's
reasonable expenses and attorneys' fees;
(iii) Order a change in the calendar status of the
action;
(iv) Impose any other sanction as may be appropriate.
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settlement conference statement as to their affirmative claims;
were not present in person; and the attorney defending them
against the counterclaim (Au Young) was also not present in
person. The court stated:
The Court has reviewed the files and records in this case,
and pursuant to orders setting jury trial date and pre-trial
deadline filed March 14, 2018:
As to the counterclaim filed by [Giacometti and Tius],
the Court will enter default against the [Wagners] as
neither Mr. Au Young [n]or the [Wagners] are present today;
As to the underlying complaint, the [Wagners]'
attorney not being in compliance with filing a confidential
-- personal and confidential letters, as well as the
settlement conference statement, the Court will dismiss the
underlying complaint without prejudice.
On August 13, 2018, the circuit court entered the
"Order Imposing Sanctions Against [the Wagners] for Multiple
Violations of March 14, 2018 Order Setting Jury Trial Date and
Pretrial Deadlines[.]"
On August 21, 2018, the Wagners filed a motion for
reconsideration of the Order Imposing Sanctions. Also on
August 21, 2018, Giacometti and Tius filed a motion for default
judgment on their counterclaim against the Wagners and a motion
for attorneys' fees and costs. The three motions were heard on
September 20, 2018.
On December 3, 2018, the circuit court entered an order
denying the Wagners' motion for reconsideration (Order Denying
Reconsideration) and separate orders granting Giacometti's and
Tius's motion for default judgment (Order Granting Default
Judgment) and motion for attorneys' fees and costs (Order
Granting Fees and Costs).
The Judgment was entered on January 11, 2019.5 This
appeal followed.
5
The judgment amount was $446,750.06, including $105,843.42 in
attorneys' fees and $3,331.64 in costs.
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DISCUSSION
The Wagners contend that the circuit court erred by
entering the Order Denying Motion to Continue, Order Imposing
Sanctions, Order Denying Reconsideration, Order Granting Default
Judgment, and Order Granting Fees and Costs.
I. The Circuit Court Abused its Discretion by
Denying the Wagners' Motion to Continue the
Settlement Conference and Trial Dates
We review the Order Denying Motion to Continue for
abuse of discretion. Sapp v. Wong, 62 Haw. 34, 41, 609 P.2d 137,
142 (1980). "Generally, to constitute an abuse it must appear
that the court clearly exceeded the bounds of reason or
disregarded rules or principles of law or practice to the
substantial detriment of a party litigant." Id.A. Trial Date
The Wagners waited more than three months after entry
of the Order Setting Trial to move to continue the trial and
settlement conference. Their motion was supported by their
declarations stating they would be away from Hawai#i from
June 12, 2018, until July 30, 2018 (a week before the trial was
to begin). They submitted copies of their itinerary showing
their tickets had been issued on January 10, 2018 (two months
before the March 9, 2018 trial setting conference), and that they
would be in Europe on July 5, 2018 (the date set for the
settlement conference). Their declarations also stated that
their expert witness died unexpectedly in March 2018, and they
intended to retain another expert witness for trial.6
The Wagners also argued that Giacometti and Tius
originally requested, at the trial setting conference, "a trial
date in October 2018[.]" Giacometti and Tius agree that they had
requested a trial date in October 2018, but "[t]he Court
6
The expert witness, who was to "testify about his appraisal of the
WAGNERS' real property[,]" had been properly identified in their pretrial
statement.
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declined[.]" Giacometti and Tius acknowledge that Wakuzawa told
the Wagners' counsel, "[s]hortly after the trial setting
conference," that Giacometti and Tius "would not oppose a short
continuance of the trial."
In opposition to the motion, Giacometti and Tius argued
that the Wagners' travel plans were not mentioned during the
trial setting conference, and that all counsel agreed to the
August 7, 2018 trial date during the trial setting conference.
Strauss and Au Young did not dispute this. They should have
determined their clients' availability before the trial setting
conference. Had they raised the Wagners' travel schedule at the
trial setting conference, the circuit court may well have agreed
to Giacometti's and Tius's proposed October 2018 trial setting —
the August 7, 2018 trial date selected by the circuit court was
already three months past the outside date prescribed by former
RCCH Rule 12(c)(2), and was the first trial setting for the case.
The record contains no other information, such as the circuit
court's trial calendar for late-2018 to early-2019, or other
information about the court's availability for trial.
Giacometti and Tius also argued that the case was over
three years old. This, however, was due in part to their own
failure to timely file a pretrial statement for their
counterclaim.
Finally, Giacometti and Tius argued that the expired
pretrial deadlines should not be continued. They claim they did
not name an expert appraiser in their final naming of witnesses
(filed on May 7, 2018) because "the Wagners had not identified
any replacement expert for [their appraiser] or even stated that
they intended to do so" after their expert died in March 2018.
The circuit court could have addressed this concern by continuing
the trial date but not extending the pretrial deadlines.
Under these circumstances, the circuit court should not
have prejudiced the Wagners because of their counsels' failure to
adequately prepare for the trial setting conference. Any
prejudice to Giacometti and Tius from continuing the trial date
could have been cured by not extending the pretrial deadlines.
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We conclude that the circuit court abused its discretion by
denying a continuance of the trial date.
B. Settlement Conference
The Wagners argue that a settlement conference date was
not discussed at the trial setting conference, and they first
received notice of the July 5, 2018 date for the settlement
conference when they received the Order Setting Trial. They
would not be able to attend the settlement conference because
they were supposed to be in Europe on July 5, 2018.
Au Young was also scheduled to be out of the country on
July 5, 2018, and contacted the circuit court clerk to obtain
alternative dates for the settlement conference soon after the
Order Setting Trial was entered. He did not ask the circuit
court to reschedule the settlement conference, because he "could
not obtain confirmation from [Strauss] for a new date."
Significantly, in addition to Giacometti's and Tius's
memorandum in opposition stating they "would not oppose a short
continuance of the trial[,]" it also stated:
Mr. Giacometti and Ms. Tius are prepared to proceed with the
scheduled July 5, 2018 settlement conference. However, if
the Wagners and Mr. Au Young will not be present at the
settlement conference as indicated in the Motion to Continue
and Reset, Mr. Giacometti and Ms. Tius do not want to engage
in an exercise in futility.
Au Young could have immediately brought his travel
conflict to the court's attention by filing a motion to continue
the settlement conference. The record does not indicate that
Au Young asked Wakuzawa whether Giacometti and Tius would agree
to reschedule the settlement conference but, in view of their
desire to not "engage in an exercise in futility[,]" they may
well not have opposed a continuance of the settlement conference
to enable Au Young (and the Wagners) to attend in person.
Under the circumstances of this case — including
Giacometti's and Tius's reticence to participate in a settlement
conference in the absence of the Wagners and Au Young and their
failure to show that they would be prejudiced by a continuance of
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the settlement conference — we conclude it was an abuse of
discretion for the circuit court to deny the motion to continue
the settlement conference.
II. The Circuit Court Abused its Discretion by
Entering the Order Imposing Sanctions
We review the Order Imposing Sanctions for abuse of
discretion. Dela Cruz v. Quemado, 141 Hawai#i 338, 344, 409 P.3d
742, 748 (2018).
The Order Imposing Sanctions was entered because of the
Wagners' and their counsels' failure to comply with the
settlement conference requirements in the Order Setting Trial.
It (1) dismissed the Wagners' complaint without prejudice; and
(2) entered the Wagners' default on Giacometti's and Tius's
counterclaim. The drastic sanctions of dismissal and default
judgment are authorized only in extreme circumstances. Rearden
Fam. Tr. v. Wisenbaker, 101 Hawai#i 237, 254, 65 P.3d 1029, 1046
(2003) (citing W.H. Shipman, Ltd. v. Hawaiian Holiday Macadamia
Nut Co., 8 Haw. App. 354, 361, 802 P.2d 1203, 1207 (1990)).
"[D]efaults and default judgments are not favored and . . . any
doubt should be resolved in favor of the party seeking relief, so
that, in the interests of justice, there can be a full trial on
the merits." Dela Cruz, 141 Hawai#i at 345, 409 P.3d at 749
(quoting Rearden Fam. Tr., 101 Hawai#i at 254, 65 P.3d at 1046).
"[A]n order of dismissal cannot be affirmed absent deliberate
delay, contumacious conduct, or actual prejudice[.]" Erum v.
Llego, 147 Hawai#i 368, 383, 465 P.3d 815, 830 (2020) (citation
and emphasis omitted).
The Wagners' counsel did not promptly move to continue
the settlement conference after entry of the Order Setting Trial.
But Au Young did take steps to mitigate his unavailability by
informing the circuit court, in his confidential settlement
letter, that: he would be out of the country on July 5, 2018, and
unable to personally attend the settlement conference; "The
Hartford has made an offer to settle the Counterclaim"; a
representative of The Hartford would be available by telephone to
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discuss settlement of the counterclaim; Strauss would handle
settlement discussions for the counterclaim on behalf of the
Wagners; and Strauss "had full authority to settle the
Counterclaim."
The record does not indicate, nor does the Order
Imposing Sanctions recite, that the circuit court attempted to
learn: whether Giacometti and Tius had made a demand to settle
their counterclaim; the terms of The Hartford's offer to settle
the counterclaim; Giacometti's and Tius's position on that offer;
whether Giacometti and Tius were prepared to make a counteroffer
at the settlement conference; whether there had been any demands
or offers to settle the Wagner's claims; whether Strauss was
prepared to make a demand at the settlement conference to settle
the Wagners' claims; whether Wakuzawa was prepared to make an
offer at the settlement conference to settle the Wagners' claims;
any of the parties' respective settlement positions; or the
status of the mediation.
The circuit court made no findings that: the settlement
conference — even in the absence of the Wagners and Au Young —
would have been "an exercise in futility" as predicted by
Giacometti and Tius; but for the absence of the Wagners and
Au Young, a settlement would likely have been reached; or the
absence of the Wagners and Au Young actually and materially
impeded productive settlement discussions. Nor could the circuit
court have reasonably so concluded, without making the inquiries
listed in the previous paragraph.
"[T]he sanction of dismissal of a complaint with
prejudice is one of last resort where lesser sanctions would not
serve the interest of justice." In re Blaisdell, 125 Hawai#i 44,
49, 252 P.3d 63, 68 (2011) (citation omitted). Although the
circuit court dismissed the Wagners' claims without prejudice,
the dismissal could effectively have been with prejudice because
the accompanying entry of the Wagners' default on Giacometti's
and Tius's counterclaim could have preclusive effect on the
Wagners' affirmative claims against Giacometti and Tius. See
Bremer v. Weeks, 104 Hawai#i 43, 53-54, 85 P.3d 150, 160-61
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(2004) (discussing elements of claim preclusion and issue
preclusion).
Under the circumstances of this case, we conclude that
the circuit court abused its discretion by issuing the Order for
Sanctions because lesser sanctions, such as assessing Wakuzawa's
fees and Giacometti's and Tius's expenses incurred to attend the
settlement conference, were available.
We need not address the Wagners' remaining point of
error.
CONCLUSION
For the foregoing reasons, we vacate: the Order
Imposing Sanctions entered on August 13, 2018; the Order Granting
Default Judgment and Order Granting Fees and Costs, both entered
on December 3, 2018; and the Judgment entered on January 11,
2019. We remand this case to the circuit court for further
proceedings consistent with this memorandum opinion, without
prejudice to any party moving for an award of attorneys' fees and
costs at an appropriate time.
DATED: Honolulu, Hawai#i, March 29, 2023.
On the briefs:
/s/ Keith K. Hiraoka
Steven D. Strauss, Presiding Judge
Gary W. K. Au Young,
for Plaintiffs/ /s/ Karen T. Nakasone
Counterclaim Defendants- Associate Judge
Appellants Charles David
Wagner and Jill Abigail /s/ Sonja M.P. McCullen
Wagner. Associate Judge
Bruce H. Wakuzawa,
Peter Knapman,
for Defendants/Counterclaimants-
Appellees Guido Giacometti and
Susan Tius.
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