Young v. Lin ( 2024 )

NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER
Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
31-MAY-2024
03:31 PM
Dkt. 48 SO
NO. CAAP-XX-XXXXXXX
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI‘I
CLIFTON SAU TSUN YOUNG, Plaintiff-Appellee,
v.
JEAN CHEN CHUN LIN; KENNY LIN, Defendants-Appellants,
and
JOHN DOES 1-10; JANE DOES 1-10; DOE PARTNERSHIPS 1-10; DOE
CORPORATIONS 1-10, AND DOE ENTITIES 1-10, Defendants
APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CIVIL NO. 18-1-0504)
SUMMARY DISPOSITION ORDER
(By: Leonard, Acting Chief Judge, Wadsworth and Nakasone, JJ.)
This appeal concerns whether summary judgment was
properly granted on Plaintiff-Appellee Clifton Sau Tsun Young's
(Plaintiff) claim that a transfer of a condominium was
fraudulent. Defendants-Appellants Jean Chen Chun Lin (Jean Lin)
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and Kenny Lin 1 (collectively, the Lins) appeal from the
(1) November 20, 2018 "Order Granting [Plaintiff]'s Motion for
Partial Summary Judgment on Count I of Complaint Against [the
Lins], Filed on August 10, 2018" (Order Granting MSJ);
(2) August 14, 2019 "Order Granting in Part and Denying in Part
[Plaintiff]'s Motion to Dismiss Counts II to IV and Enter Final
Judgment Filed on June 12, 2019" (Dismissal Order); 2 and
(3) August 14, 2019 Final Judgment, all filed and entered by the
Circuit Court of the First Circuit (Circuit Court). 3
On appeal, the Lins raise four points of error (POEs)
as follows:
1) the trial judge errored [sic] to find defendants
committed fraud through a summary judgment motion in
violation of their constitutional right because the trial
judge was not the finder of fact in this case when the jury
trial was demanded.
2) the trial judge errored [sic] in failure [sic] to apply
the proper evidential [sic] standards ("most favor [sic] to
non-movant") for summary judgment motion where the
contradictory arguments were presented on the same
evidence, in failure [sic] to honor the evidential [sic]
admissibility rule, and in failure to apply [sic] "clear
and convincing" standard.
3) the trial judge further errored [sic] on the evidential
[sic] ruling on the authentication of the ESI exhibit which
was a [sic] self-authenticated evidence [sic] under Rule
902(7) and it should not be treated as a hearsay statement.
4) Final Judgment should have not been entered if [sic] the
trial court properly reviewed the 11/20/2018 Order and the
other issues presented in the proceedings.
1 Kenny Lin is the ex-husband of Jean Lin.
2 The Lins' Opening Brief contains no point or argument pertaining
to the Dismissal Order, and any challenge is waived. See Hawaiʻi Rules of
Appellate Procedure (HRAP) Rule 28(b)(7) ("Points not argued may be deemed
waived.").
3 The Honorable Keith K. Hiraoka presided over the October 10, 2018
hearing on Plaintiff's Motion for Partial Summary Judgment (MSJ) and filed
the November 20, 2018 Order Granting MSJ. The Honorable James S. Kawashima
entered the August 14, 2019 Final Judgment.
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For each POE, the Lins provide a one-sentence statement of the
alleged error, and do not cite to "where in the record the
alleged error occurred" and "where in the record the alleged
error was objected to or the manner in which the alleged error
was brought to the attention of the court" as required by HRAP
Rule 28(b)(4)(ii) and (iii). Although we "are not obligated to
search the record to crystallize the Lins' arguments," Haw.
Ventures, LLC v. Otaka, Inc., 114 Hawaiʻi 438, 469 n.16, 164 P.3d
696, 727 n.16 (2007) (citation omitted), and noncompliance with
HRAP Rule 28(b) can alone be sufficient to affirm the Circuit
Court's judgment, Bettencourt v. Bettencourt, 80 Hawaiʻi 225,
228, 909 P.2d 553, 556 (1995) (citation omitted), we endeavor to
afford "litigants the opportunity to have their cases heard on
the merits, where possible." Marvin v. Pflueger, 127 Hawaiʻi
490, 496, 280 P.3d 88, 94 (2012) (cleaned up). While the
Opening Brief is difficult to follow, we address the merits if
"the remaining sections of the brief provide the necessary
information to identify the party's argument[,]" id., and
"discernible argument in support" of the party's contention is
presented. In re Guardianship of Carlsmith, 113 Hawaiʻi 236,
246, 151 P.3d 717, 727 (2007).
On April 2, 2018, Plaintiff filed a Complaint against
the Lins alleging, inter alia, Fraudulent Transfer under Hawaii
Revised Statutes (HRS) Chapter 651C. 4 Plaintiff filed a "Demand
for Jury Trial."
On August 10, 2018, Plaintiff filed an MSJ requesting
to set aside Jean Lin's transfer of the Property for fraudulent
4 Counts 2 through 4 were dismissed in the August 14, 2019
Dismissal Order.
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transfer under HRS § 651C-5(a). 5 The following background comes
from the attached exhibits to Plaintiff's MSJ. On January 20,
2012, Plaintiff loaned $36,000 to Jean Lin's daughter, Betty
Lin, for the benefit of Jean Lin. On May 25, 2016, Jean Lin
transferred a condominium apartment located in the Seaside
Towers Condominium Project in Honolulu, Hawaiʻi (Property) to
Kenny Lin pursuant to a Purchase Agreement dated March 1, 2016,
under which Kenny Lin would pay "$232,918.01" to pay off Jean
Lin's reverse mortgage on the Property and grant Jean Lin a ten-
year tenancy for a room at the Property. 6 On April 28, 2017,
5 HRS § 651C-5(a) (2016), entitled "Transfers fraudulent as to
present creditors," states:
(a) A transfer made or obligation incurred by a debtor is
fraudulent as to a creditor whose claim arose before
the transfer was made or the obligation was incurred if
the debtor made the transfer or incurred the obligation
without receiving a reasonably equivalent value in
exchange for the transfer or obligation and the debtor
was insolvent at that time or the debtor becomes
insolvent as a result of the transfer or obligation.
Thus, the elements of fraudulent transfer under this section are: (1)
the creditor's claim arose before the transfer; (2) no reasonably
equivalent value was received in exchange for the transfer; and (3) the
debtor was or becomes insolvent as a result of the transfer. See id.
HRS § 651C-7(a)(1) (2016) provides that a creditor may obtain avoidance
of the transfer as a remedy for fraudulent transfer, which is the
relief Plaintiff sought in the MSJ.
6 Plaintiff's MSJ attached the March 1, 2016 Purchase Agreement,
which contained the following "conditions and stipulations":
1] The unit presently has [sic] loan from CELINK REVERSE
MORTGAGE of $232,918.01 [sic] Kenny Lin agreed to paid
[sic] off in full amounts immediately upon agreement has
[sic] signed, in order to release [sic] lien. . . .
2] [Jean Lin] shall move all furniture's [sic] personal
belongings within 60 days from this date. All existing
bill [sic] paid in clear and ready to transfer without
delay for [Kenny Lin] to renovate the unit.
3] . . . [Kenny Lin] will grant special consideration to
provide a room for [Jean Lin] as a single individual living
space for [sic] period of Ten[10] years [(ten-year
tenancy)], this date set on the completion of renovation.
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Plaintiff filed a breach of contract claim for repayment of the
2012 loan to Jean Lin's daughter Betty Lin in the District Court
of the First Circuit, Civil No. 1RC171003046, and obtained a
September 11, 2017 Judgment against Jean Lin for $36,190.00
(District Court Judgment).
Plaintiff's MSJ argued that all elements in HRS
§ 651C-5(a) were met because the "claim from 2012 against []
Jean Lin arose before her 2016 transfer"; Jean Lin "became
insolvent as a result of the transfer"; and the Property "was
not transferred for reasonably equivalent value." Plaintiff
argued that Jean Lin only received $232,918.01 for the transfer
of the Property to pay off her reverse mortgage; that the
transfer "prevented [Plaintiff] from collecting" on his $36,000
loan; and that the amount received for the transfer was "not
reasonably equivalent to the $350,000 [appraised] value" of the
Property. Plaintiff attached pertinent exhibits and
declarations to the MSJ supporting these arguments.
The Lins' October 1, 2018 opposition argued that the
transfer of the Property occurred before the 2017 District Court
Judgment; the transfer of the Property was made for
"$232,918.01" and a "10-year conditional tenancy"; Jean Lin
"believed that she was never in debt to Plaintiff prior to the
2017 [Judgment]"; Jean Lin "was not insolvent after she
transferred the [P]roperty"; and Jean Lin is in "a better
As a new resident in #901 Jean . . . Lin, shall [sic]
responsible [sic] monthly Unit Maintenance Fee, Cable TV,
all Utilities due to Seaside Tower Owner's Association
[(maintenance fees and utilities obligation)].
4] Kenny Lin, reserves exclusive right and power to
terminate article stipulation [3] to cancel [Jean Lin's]
special offer as a residence [sic] in unit 901, in [sic]
she has violate [sic] association rules, or not complied
with this agreement. In this case Kenny Lin will issue 6
months written notice to terminate her residency.
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financial condition" because "she got out of the reverse
mortgage trap." (Bolding omitted). Attached to the opposition
were various exhibits.
At the October 10, 2018 MSJ hearing, the Circuit Court
indicated it could "not consider any of the exhibits" attached
to the Lins' opposition, because they were "not properly
authenticated by a witness with personal knowledge" and "no
foundation" was laid. The Circuit Court also noted there were
no declarations by the Lins attached to the opposition, and
granted Plaintiff's MSJ.
On November 15, 2018, the Lins filed a motion for
reconsideration, which the Circuit Court denied.
On November 20, 2018, the Order Granting MSJ was
filed. Following the entry of the August 14, 2019 Final
Judgment, the Lins timely appealed.
"On appeal, the grant or denial of summary judgment is
reviewed de novo." Ralston v. Yim, 129 Hawaiʻi 46, 55, 292 P.3d
1276, 1285 (2013) (citation omitted). "Summary judgment is
appropriate if the pleadings, depositions, answers to
interrogatories and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to
judgment as a matter of law." Id. (cleaned up). A court "must
view all of the evidence and inferences drawn therefrom in the
light most favorable to the party opposing the motion." Id. at
56, 292 P.3d at 1286 (citation omitted).
POEs 1 and 2: The Lins' first contention appears to
be that the Circuit Court could not be the factfinder and
determine whether the value at issue was "reasonably
equivalent," and thus, the granting of summary judgment violated
the Lins' constitutional right to a jury trial. The Lins'
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second contention appears to be that the Circuit Court failed to
apply the proper evidentiary summary judgment standard of
viewing the evidence in the light most favorable to the non-
movant where "contradictory arguments were presented on the same
evidence," and by "fail[ing] to apply [the] 'clear and
convincing' standard" of proof. The Lins argue that "summary
judgment should have been denied" due to, inter alia, "the
contradictory interpretations in opposing parties' arguments
[that] were based on the same evidence[.]" The Lins
specifically claim that Jean Lin received "reasonably
equivalent" value for the Property, where the Purchase Agreement
conferred additional "value" beyond the $232,918.01 that Jean
Lin received due to the "10 years of tenancy (the 10 years'
rental value)."
Plaintiff, relying on In re Chu, No. 12-00986, 2014 WL
2547718 (Bankr. D. Haw. June 5, 2014), 7 responds that Jean Lin
"did not receive reasonably equivalent value" from Kenny Lin, as
there was a "value discrepancy of $117,081.99." Plaintiff
argues that "the right for [Jean Lin] to stay in the [P]roperty
for 10 years . . . [wa]s offset by her obligation to pay the
monthly unit maintenance fee, cable TV, and all utilities to the
Owners Association at the peril of having her right canceled for
any violation."
The Hawaiʻi Supreme Court has held that the higher
"clear and convincing" standard of proof applies in fraudulent
transfer cases, which consists of the "degree of proof which
7 In Chu, the Bankruptcy Court granted the plaintiff's motion for
summary judgment for fraudulent transfer based on a value discrepancy of
$305,000.00, which the court held was "too great to meet the test of
reasonable equivalence." 2014 WL 2547718, at *3. Chu is distinguishable
from this case where the value discrepancy is less, and as explained infra,
the values of the ten-year tenancy and the maintenance fees and utilities
obligation are not known.
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will produce in the mind of the trier of fact a firm belief or
conviction as to the allegations sought to be established."
Kekona v. Abastillas, 113 Hawaiʻi 174, 181, 150 P.3d 823, 830
(2006) (brackets omitted). In determining whether "reasonably
equivalent value" was received for purposes of a fraudulent
transfer claim, "[a] court must first determine whether the
debtor received value, and then examine whether the value is
reasonably equivalent to what the debtor gave up." In re
Knippen, 355 B.R. 710, 726 (N.D. Ill. Dec. 12, 2006) (citation
omitted). 8 "Whether 'reasonably equivalent value' has been given
is a question of fact that depends on the circumstances
surrounding the transaction." Id. (citation omitted). The
Hawaiʻi Supreme Court has held that: "reasonableness can only
constitute a question of law suitable for summary judgment when
the facts are undisputed and not fairly susceptible of divergent
inferences, because, where, upon all the evidence, but one
inference may reasonably be drawn, there is no issue for the
jury." Adams v. Haw. Med. Serv. Ass'n, 145 Hawai‘i 250, 256,
450 P.3d 780, 786 (2019) (citation omitted).
Here, viewing the evidence of the Purchase Agreement
and the inferences drawn therefrom "in the light most favorable"
to the Lins, see Ralston, 129 Hawaiʻi at 56, 292 P.3d at 1286,
there is a genuine issue of material fact as to whether Jean Lin
received "reasonably equivalent value" for the transfer of the
Property. See HRS § 651C-5(a). It is unclear what "value," if
8 Knippen construed 11 U.S.C. § 548(a)(1)(B) as "analogous" to
Section 5 of the Uniform Fraudulent Transfer Act (UFTA). 355 B.R. at 731.
HRS Chapter 651C was modeled after the UFTA of 1984, and HRS § 651C-5(a) is
identical to Section 5 of the UFTA. See Shigezo Haw., Inc. v. Soy to the
World Inc., No. CAAP-XX-XXXXXXX, 2016 WL 4542016, at *3 n.8 (Haw. App. Aug.
31, 2016) (SDO). We may thus look to cases that have construed the uniform
provision. See Schmidt v. HSC, Inc., 145 Hawai‘i 351, 361, 452 P.3d 348, 358
(2019) (considering case law from Ohio, which has also adopted the Model
UFTA, in determining when the statute of limitations begins to run under HRS
§ 651C-9(1)).
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any, Jean Lin received for the ten-year tenancy in light of the
maintenance fees and utilities obligation, beyond the
$232,918.01 she received from Kenny Lin for the Property.
Plaintiff argues that the ten-year tenancy had zero value in
light of the maintenance fees and utilities obligation, but the
record contains no proof "that the calculated value of the
benefit [wa]s zero." See Chu, 2014 WL 2547718, at *3 (holding
that where a plaintiff contends a transfer resulted in no value
to the debtor, "'the plaintiff must ordinarily prove that the
calculated value of the benefit is zero'"(citations omitted)).
Nor does the record establish that whatever value Jean Lin
received was "reasonably equivalent" to the value of the
transferred Property, where "reasonableness" is generally an
"issue for the jury" under Hawaiʻi law. See Adams, 145 Hawaiʻi at
256, 450 P.3d at 786 (citation omitted); Knippen, 355 B.R. at
726. In light of the above, and the higher clear and convincing
standard of proof for fraudulent transfer claims, we conclude
summary judgment was erroneously granted. See Ralston, 129
Hawaiʻi at 55, 292 P.3d at 1285; Kekona, 113 Hawaiʻi at 181, 150
P.3d at 830.
In light of our disposition, we need not address the
Lins' remaining POEs.
For the foregoing reasons, we vacate the (1) November
20, 2018 "Order Granting Plaintiff Clifton Sau Tsun Young's
Motion for Partial Summary Judgment on Count I of Complaint
Against Defendants Jean Chen Chun Lin and Kenny Lin, Filed on
August 10, 2018," (2) August 14, 2019 Final Judgment, both filed
and entered by the Circuit Court of the First Circuit; and we
remand for further proceedings consistent with this order. The
August 14, 2019 "Order Granting in Part and Denying in Part
Plaintiff Clifton Sau Tsun Young's Motion to Dismiss Counts II
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to IV and Enter Final Judgment Filed on June 12, 2019" is
affirmed.
DATED: Honolulu, Hawai‘i, May 31, 2024.
On the briefs:
/s/ Katherine G. Leonard
Wen Sheng Gao,
Acting Chief Judge
for Defendants-Appellants.
/s/ Clyde J. Wadsworth
Dennis W. King,
Associate Judge
for Plaintiff-Appellee.
/s/ Karen T. Nakasone
Associate Judge
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