Drummond v. Cho ( 2023 )

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
20-APR-2023
07:53 AM
Dkt. 69 SO
NO. CAAP-XX-XXXXXXX
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI#I
PAIGE T. C. DRUMMOND, Plaintiff-Appellee,
v.
ABRAHAM W. D. CHO, Defendant-Appellant
APPEAL FROM THE FAMILY COURT OF THE FIRST CIRCUIT
(CASE NO. 1DV161007974)
SUMMARY DISPOSITION ORDER
(By: Hiraoka, Presiding Judge, Nakasone and McCullen, JJ.)
Defendant-Appellant Abraham W. D. Cho appeals from the
"Order re: Plaintiff's Motion to Enforce Settlement Agreement,
Impose Sanctions and Award Attorney's Fees and Costs," entered by
the Family Court of the First Circuit on October 4, 2018; and the
"Decree Granting Absolute Divorce" (Divorce Decree) entered by
the family court on January 18, 2019.1 For the reasons explained
below, we affirm.
Abraham was married to Plaintiff-Appellee Karlin Kinuyo
Cho2 in 1967. They separated in 1998. Karlin filed for divorce
1
The Honorable Gale L.F. Ching presided.
2
Karlin died after entry of the Divorce Decree. We granted a
motion to substitute Paige T. C. Drummond for Karlin in this appeal on May 23,
2019. Paige is Karlin's and Abraham's granddaughter. They adopted Paige
after their daughter — Paige's mother — died.
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in 2016, when both were in their seventies. Both were
represented by counsel throughout the divorce proceeding.
On August 22, 2018, Karlin filed a motion to enforce a
settlement, impose sanctions, and recover attorneys fees and
costs from Abraham. The motion was supported by Karlin's
declaration and a number of exhibits. Abraham's memorandum in
opposition was supported by his declaration and exhibits. Karlin
filed a reply memorandum, supported by her declaration and a
declaration by Paige Drummond. Abraham then filed a supplemental
declaration and additional exhibits.
The motion was heard on October 3, 2018. The family
court enforced the settlement but denied the request for
sanctions, attorneys fees, and costs.3 The Order was entered on
October 4, 2018. The Divorce Decree was entered on January 18,
2019. This appeal followed.
A motion to enforce a settlement is reviewed under the
same standard as a motion for summary judgment. McKenna v. Ass'n
of Apt. Owners of Elima Lani, 148 Hawai#i 233, 239, 470 P.3d
1110, 1116 (2020). "Accordingly, granting a motion to enforce a
settlement agreement is appropriate if there is no genuine issue
of material fact and as a matter of law the parties entered into
a valid compromise agreement."4 Id. (cleaned up).
Settlement agreements are contracts. McKenna, 148
Hawai#i at 241, 470 P.3d at 1118. The requirements for contract
formation must be met for an enforceable settlement to exist.
Id. The elements of contract formation are: (1) capacity to
contract, (2) offer, (3) acceptance, and (4) consideration.
Calipjo v. Purdy, 144 Hawai#i 266, 280, 439 P.3d 218, 232 (2019).
"A compromise is supported by good consideration if it is based
upon a disputed or unliquidated claim and if the parties make or
3
Karlin hasn't appealed from the denial of her request for
attorneys fees and costs.
4
We disregard the family court's findings of fact and conclusions
of law entered on May 15, 2019, because a trial court deciding a motion for
summary judgment doesn't make findings on disputed material facts.
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promise mutual concessions as a means of terminating their
dispute; no additional consideration is required." Sylvester v.
Animal Emergency Clinic of Oahu, 72 Haw. 560, 567, 825 P.2d 1053,
1057 (1992) (cleaned up).
The declarations and exhibits submitted by the parties,
viewed in the light most favorable to Abraham, McKenna, 148
Hawai#i at 242, 470 P.3d at 1119, showed that on September 24,
2017, Abraham's attorney Gary Okuda emailed a settlement offer to
Karlin's attorney Jamie Young. The terms offered by Abraham
were:
1. The parties shall be divorced.
2. KARLIN K. CHO shall be awarded the [Mānoa house].
KARLIN shall be responsible for all loans or encumbrances
covering the property, and shall obtain the release of
ABRAHAM CHO for such loans, liens or encumbrances, ABRAHAM
CHO shall be released from any and all loans, liens or
encumbrance before the entry of the Divorce Decree in this
matter. (Reason for this condition: the money from these
loans were used to purchase the [Mānoa house], which KARLIN
will be retaining.)
3. ABRAHAM CHO shall be awarded the [Pearl City house].
KARLIN shall be responsible for all loans or encumbrances
covering the property, and shall obtain the release of
ABRAHAM CHO for such loans, liens or encumbrances, ABRAHAM
CHO shall be released from any and all loans, liens or
encumbrance before the entry of the Divorce Decree in this
matter. (Reason for this condition: the money from these
loans were used to purchase the [Mānoa house], which KARLIN
will be retaining.)
4. Each party will otherwise keep his or her own property
or assets in his or her own control or custody.
Abraham doesn't contend that he lacked capacity to
contract, or that he didn't authorize Okuda to communicate his
settlement offer to Karlin's attorney. Karlin unconditionally
accepted Abraham's offer on September 26, 2017, by email from
Young to Okuda. Consideration was exchanged. All elements of
contract formation exist. Abraham nevertheless makes three
arguments that the family court erred by enforcing the parties'
settlement.
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(A) Abraham first argues that there were genuine
issues of material fact about: (1) whether Karlin was unduly
influenced by Drummond; (2) whether Karlin misrepresented her
financial condition; and (3) Karlin's breach of her obligation to
release Abraham from the mortgage and liens on the Mānoa and
Pearl City houses before seeking to enforce the agreement.
(1) Abraham argues that Drummond exerted undue
influence over Karlin. It isn't material whether Drummond unduly
influenced Karlin. In this case, Abraham "was the party who
initiated settlement negotiations and suggested the mutual
concessions in support of the agreement." Sylvester, 72 Haw. at
569, 825 P.2d at 1058. Karlin unconditionally accepted Abraham's
offer. Even if Drummond had somehow influenced Karlin to accept
Abraham's settlement offer, that would have benefitted Abraham.
Under the circumstances of this case, Abraham's undue influence
argument has no merit.
(2) Abraham argues that Karlin misrepresented her
financial condition. The uncontroverted evidence showed that
Young and Okuda met on May 10, 2017, to exchange the parties'
financial information. Karlin responded to interrogatories
served by Abraham. The parties exchanged documents by Dropbox in
July and August 2017.
Abraham argues: "it seems clear that Karlin's 5/10/2017
financials were incorrect, or are now incorrect[,]" when compared
to her August 3, 2018 financial disclosures (emphasis added). He
points out that as of August 2018, Karlin's disability income was
greater,5 and the mortgage balance on the Mānoa house was lower,
so that "the information provided to me by Karlin in May, 2017
5
The parties don't argue, and we don't decide, whether disability
insurance benefits constitute income, or must be listed as assets, gifts, or
inheritances on the parties' Property Division Chart. We note that Karlin's
income wasn't relevant to calculation of child support because she and Abraham
had no minor children, nor was it relevant to calculation of spousal support
because Karlin's complaint didn't seek spousal support and Abraham's answer
admitted that he wasn't entitled to spousal support.
4
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was either incorrect, or has materially changed from that time to
now."
The settlement agreement was formed on September 26,
2017, when Karlin accepted Abraham's offer. Karlin's
declarations established that she had "suffered a stroke in 2014
that caused left-sided paralysis and partial blindness[,]" and
explained that her disability income increased after May 2017 —
after her initial financial disclosures — "to help cover the
extra expenses of specialist care and the resulting ancillary
costs such as assisted travel" after her physical condition
deteriorated. She also explained that the mortgage balance on
the Mānoa house had decreased because she "made consistent
payments on the mortgage." Abraham offered no evidence that
Karlin's May 2017 financial disclosures were false when made; his
unsupported speculation that Karlin may have misrepresented her
financial condition before he made his settlement offer was
insufficient to create a genuine issue of material fact about the
settlement's enforceability.
(3) Abraham argues that Karlin "had not performed, and
there were genuine issues of fact as to whether KARLIN was able
to perform, her [sic] to remove and release ABRAHAM from all
loans, liens, and encumbrances relating to the [Mānoa and Pearl
City houses], before the Divorce Decree was entered." The record
contains the following uncontroverted evidence:
On January 9, 2018, Young informed Okuda that Karlin
was trying to get pre-approval from a bank for a loan to remove
Abraham from the mortgage and home equity line of credit for the
Mānoa and Pearl City houses. Young asked for confirmation that
if Karlin obtained a pre-approval letter, Abraham would sign the
divorce decree attached to Young's email. On February 13, 2018,
Young emailed Okuda confirming her voicemail messages that Karlin
had obtained a loan to take Abraham "off of the mortgages."
Okuda replied by email the same day, asking Young to "email me
the details and I will check with [Abraham] if the proposal is
acceptable."
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On March 1, 2018, Okuda requested escrow instructions
from Young. On March 2, 2018, Young emailed escrow instructions
approved by Title Guaranty, and a form of divorce decree to be
attached to the escrow instructions, to Okuda. On April 26,
2018, Okuda emailed Young that he "will be making some revisions
to [the] proposed decree."
On May 17, 2018, Okuda emailed to Young an "Agreement
to Facilitate Divorce," which he stated "intended to provide a
framework to address both [Karlin]'s lender's stated need to have
certain documents executed, and [Abraham]'s concern that all
documents and agreements be conditioned upon the completion of
the divorce." On May 21, 2018, Young emailed Okuda with three
points of clarification on the Agreement to Facilitate Divorce.
Karlin's declaration stated that from October 1, 2017 to July 31,
2018, she spent $24,485.47 in attorneys fees and costs, $415 with
Finance Factors on a loan, and $981.49 with Title Guaranty, to
comply with her settlement obligations.
The Divorce Decree was filed on January 18, 2019. As
to the Mānoa house, the Divorce Decree stated:
[Karlin] shall be responsible for all loans or encumbrances
covering the property, and shall obtain the release of
[Abraham] for such loans, liens or encumbrances prior to the
Family Court's entry of this Decree. [Karlin] and [Abraham]
shall cooperate to execute any documents necessary to
transfer the [Mānoa] Property to [Karlin] only.
(Emphasis added.) As to the Pearl City house, the Divorce Decree
stated:
[Abraham] shall be awarded the real property held jointly by
the parties and located at . . . Pearl City . . . .
[Karlin] shall be responsible for all loans or encumbrances
covering the property, and shall obtain the release of
[Abraham] for [sic] such loans, liens or encumbrances prior
to the Family Court's entry of this Decree. [Karlin] and
[Abraham] shall cooperate to execute any documents necessary
to transfer the [Pearl City house] to [Abraham] only.
(Emphasis added.)
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Abraham signed the Divorce Decree on November 15, 2018.
Abraham's attorney Steven Kim6 approved the form of the Divorce
Decree on November 15, 2018. The record contains no indication
that Abraham moved for relief under Hawai#i Family Court Rules
Rule 60(b) after the Divorce Decree was filed on January 18,
2019, on the grounds that Karlin failed to comply with a
condition precedent to entry of the Divorce Decree. There is no
evidence in the record that Karlin failed to perform her
obligations concerning the ownership of, or the debt on, the
Mānoa or Pearl City houses before the family court entered the
Divorce Decree.
(B) Abraham next argues that the family court erred
because "the Settlement Agreement was ambiguous, and in any
event, did not constitute the full, complete, integrated
agreement of the parties."
(1) A contract is ambiguous when its terms are
reasonably susceptible to more than one meaning. Hawaiian Ass'n
of Seventh-Day Adventists v. Wong, 130 Hawai#i 36, 45, 305 P.3d
452, 461 (2013). The determination whether a contract is
ambiguous is a question of law that is freely reviewable on
appeal. Id. Abraham doesn't specify which terms of his
settlement offer — which was unconditionally accepted by Karlin —
were ambiguous. We conclude that Okuda's September 24, 2017
email to Young, containing the terms of Abraham's settlement
offer to Karlin, was not ambiguous.
(2) Hawaii divorce cases involve a maximum of four
discrete parts: (1) dissolution of the marriage; (2) child
custody, visitation, and support; (3) spousal support; and
(4) division and distribution of property and debts. Eaton v.
Eaton, 7 Haw. App. 111, 118, 748 P.2d 801, 805 (1987). Abraham's
settlement offer addressed parts (1) and (4). Parts (2) and (3)
weren't at issue because the parties had no minor children,
6
Okuda withdrew and Steven Kim appeared as Abraham's counsel on
May 30, 2018.
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Karlin's complaint for divorce didn't seek spousal support, and
Abraham's answer admitted that he wasn't entitled to spousal
support. Thus, Abraham's settlement offer addressed all issues
presented by the divorce case. "A compromise or settlement
agreement disposes of all issues the parties intended to settle."
Sylvester, 72 Haw. at 570, 825 P.2d at 1059. Karlin's
unconditional acceptance resolved all issues in the divorce case.
(C) Finally, Abraham argues that "the family court
erred in deciding the issue of whether the settlement agreement
was unconscionable, without holding an evidentiary hearing on the
issue of whether the agreement was unfairly one-sided and whether
Karlin’s prior financial disclosures were materially misleading
concerning her actual financial condition, constituting unfair
surprise."
(1) Abraham cites Lewis v. Lewis, 69 Haw. 497, 748
P.2d 1362 (1988) and Balogh v. Balogh, 134 Hawai#i 29, 332 P.3d
631 (2014) in support of his argument that the settlement offer
he made was unconscionable to himself. In Balogh the supreme
court held that
the family court must enforce all valid and enforceable
postmarital and separation agreements. A postmarital or
separation agreement is enforceable if the agreement is "not
unconscionable and has been voluntarily entered into by the
parties with the knowledge of the financial situation of the
[other] spouse." See Lewis v. Lewis, 69 Haw. 497, 501, 748
P.2d 1362, 1366 (1988) . . . .
Unconscionability encompasses two principles: one-
sidedness and unfair surprise. Lewis, 69 Haw. at 502, 748
P.2d at 1366. One-sidedness (i.e., substantive
unconscionability) means that the agreement "leaves a post-
divorce economic situation that is unjustly
disproportionate." Id. Unfair surprise (i.e., procedural
unconscionability) means that "one party did not have full
and adequate knowledge of the other party's financial
condition when the [marital] agreement was executed." Id.
A contract that is merely "inequitable" is not
unenforceable. Id. at 500, 748 P.2d at 1366. The
unconscionability of an agreement regarding the division of
property is evaluated at the time the agreement was
executed.
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Balogh, 134 Hawai#i at 40–41, 332 P.3d at 642–43 (bold italics
added) (footnotes and some citations omitted). The supreme court
has also held that settlement agreements "are binding without
regard to which party gets the best of the bargain or whether all
the gain is in fact on one side and all the sacrifice on the
other." Sylvester, 72 Haw. at 566, 825 P.2d at 1057 (citation
omitted). In divorce cases:
parties may have legitimate reasons for entering into a
somewhat one-sided postmarital agreement, and may do so
knowingly and voluntarily. Permitting the family court to
invalidate such agreements without requiring a showing of
extraordinary one-sidedness would frustrate the purpose of
HRS § 572–22,[7] which permits spouses to enter into
enforceable contracts with each other.
Balogh, 134 Hawai#i at 42, 332 P.3d at 644.
Unconscionability is a question of law, reviewable de
novo. Balogh, 134 Hawai#i at 42-43, 332 P.3d at 644-45. We
conclude that Abraham failed to show that his September 24, 2017
settlement offer was extraordinarily one-sided against himself
when he made it, or two days later when Karlin unconditionally
accepted it.
(2) As discussed in section (A)(2), Abraham offered no
evidence that Karlin's May 2017 financial disclosures were false
when made. His unsupported speculation that Karlin may have
misrepresented her financial condition before he made his
settlement offer is insufficient to establish a genuine issue of
material fact about unfair surprise that would render the
settlement unenforceable.
For the foregoing reasons, we affirm the "Order re:
Plaintiff's Motion to Enforce Settlement Agreement, Impose
Sanctions and Award Attorney's Fees and Costs," entered by the
7
HRS § 572-22 (2018) provided, in relevant part:
A married person may make contracts, oral and written,
sealed and unsealed, with his or her spouse, or any other
person, in the same manner as if he or she were sole.
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family court on October 4, 2018; and the "Decree Granting
Absolute Divorce" entered by the family court on January 18,
2019.
DATED: Honolulu, Hawai#i, April 20, 2023.
On the briefs:
/s/ Keith K. Hiraoka
Steven J. Kim, Presiding Judge
for Defendant-Appellant.
/s/ Karen T. Nakasone
Rebecca A. Copeland, Associate Judge
for Plaintiff-Appellee
Paige T. C. Drummond, /s/ Sonja M.P. McCullen
Personal Representative Associate Judge
of the Estate of Karlin
Kinuyo Cho.
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