Fuche Corporation Inc. v. Leung ( 2024 )

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Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
08-OCT-2024
07:54 AM
Dkt. 105 SO
NO. CAAP-XX-XXXXXXX
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI‘I
FUCHE CORPORATION INC., dba C & J BBQ & RAMEN,
Plaintiff-Appellant,
v.
BILL HIN BI LEUNG, NOGUCHI & ASSOCIATES, INC.,
Defendants-Appellees,
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. 1CC111000280)
SUMMARY DISPOSITION ORDER
(By: Leonard, Acting Chief Judge, Wadsworth and Nakasone, JJ.)
This appeal concerns orders entered on remand
following a 2018 appeal. 1 The orders precluded general damages,
punitive damages, and certain evidence, in connection with a
second trial (Second Trial) arising out of the defendants'
alleged failure to procure adequate insurance coverage for flood
1 Fuche Corp., Inc. v. Bill Hin Bi Leung, No. CAAP-XX-XXXXXXX, 2018
WL 774648 (Haw. App. Feb. 8, 2018) (SDO) (Fuche I).
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damage to a restaurant owned by Plaintiff-Appellant Fuche
Corporation, Inc. (Fuche Corp.).
Fuche Corp. appeals from the February 10, 2020
"Amended Final Judgment" entered by the Circuit Court of the
First Circuit (Circuit Court) 2 in favor of Defendants-Appellees
Bill Hin Bi Leung (Leung) and Noguchi & Associates, Inc.
(Noguchi) (together, Defendants).
On appeal, Fuche Corp. contends the Circuit Court
erred by (1) granting Defendants' motions for summary judgment
(Second MSJ) on general damages; (2) granting Leung's motion for
judgment as a matter of law (JMOL) on punitive damages in the
Second Trial; and (3) denying Fuche Corp.'s requests to
introduce new evidence of attorney's fees pertinent to punitive
damages in the Second Trial. 3
Upon careful review of the record and the briefs
submitted, and having given due consideration to the arguments
advanced and the issues raised by the parties, we resolve Fuche
Corp.'s contentions as follows, and vacate and remand.
The appeal in Fuche I arose out of underlying trial
proceedings in which there was a 2013 jury verdict in favor of
Fuche Corp. on its claims for professional negligence and breach
of contract, awarding Fuche Corp. special damages of $39,500,
and general damages of $110,000 (less 10% for contributory
negligence); the jury did not consider punitive damages because
the trial court granted Defendants' JMOL on that issue; the
general damages were reduced to zero via a post-trial motion for
2 The Honorable Dean E. Ochiai presided.
3 Though not properly identified as a point of error in conformity
with Hawai‘i Rules of Appellate Procedure (HRAP) Rule 28(b)(4), we nonetheless
consider this argument. See Marvin v. Plfueger, 127 Hawai‘i 490, 496, 280
P.3d 88, 94 (2012) (affording liberal review to allow cases to be heard on
the merits despite noncompliance with HRAP Rule 28, where remaining sections
of the brief provide necessary information to identify the party's argument).
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remittitur, and a new trial was ordered on general damages; and
the trial court then granted the Defendants' MSJ on general
damages in lieu of proceeding with the general-damages-only
trial. Fuche I, 2018 WL 774648, at *1-5.
In the 2018 Fuche I appeal, this court affirmed the
order granting a new trial on general damages, vacated the JMOL
on punitive damages as to Leung, 4 vacated the MSJ on general
damages, and remanded for further proceedings. See id. at *7.
In vacating the JMOL on punitive damages, this court held the
circuit court 5 erred because "there was sufficient evidence"
presented at trial "to support an award of punitive damages,"
and thus, "the determination of whether Fuche Corp. presented
clear and convincing evidence of wilful misconduct or an entire
want of care raising a presumption of a conscious indifference
to consequences by Leung should have been submitted to the
jury." Id. at *3. In vacating the MSJ on general damages, this
court held that the circuit court erred because there were
genuine issues of material fact precluding summary judgment as
to general damages, explaining that Defendants "did not
establish that Fuche Corp. had no valid claim as to reputational
harm sustained during the several months the restaurant was shut
down while [Fuche Corp.'s owner] was awaiting to hear from Leung
on the insurance claim." Id. at *6 (footnote omitted). In a
footnote (Footnote 4) to the above passage, however, this court
stated: "We note that on remand, Fuche Corp. would need to show
that its alleged reputational harm was caused by the lack of
coverage as opposed to the underlying drain back-up causing the
floods." Id. at *6 n.4.
4 Fuche I affirmed Noguchi's motion for partial summary judgment on
punitive damages. 2018 WL 774648, at *3-4.
5 Fuche I indicates that the Honorable Edwin C. Nacino presided
over the 2013 jury trial and related proceedings.
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Following the 2018 remand, on April 16, 2019,
Defendants filed their Second MSJ as to general damages. They
raised the same arguments as in the previous MSJ, but added the
following argument based on Footnote 4:
[I]n Footnote No. 4 of its Summary Disposition Order, the
ICA also imposed the following burden of proof upon
Plaintiff FUCHE with regard to its remaining claim for
general damages:
We note that on remand, Fuche Corp. would need to
show that its alleged reputational harm was caused by
the lack of coverage as opposed to the underlying
drain back-up causing the floods
See, Exhibit "7," ICA Summary Disposition Order, Footnote
No. 4 (p.10), emphasis added.
Defendants contend insofar as Plaintiff FUCHE has
failed to develop, much less offer any evidence, that its
alleged reputational harm was caused by the lack of
insurance coverage as opposed to the underlying drain back-
up causing the floods, upon application of the burden of
proof imposed upon Plaintiff FUCHE by the ICA in Footnote
No. 4 of its Summary Disposition Order, there can be no
genuine issue of any material fact that Defendants are
entitled to summary judgment as a matter of law as to
Plaintiff FUCHE's claim for general damages.
(First and last emphasis added) (Footnote 4 argument).
Defendants attached pertinent trial transcripts from the 2013
jury trial to their Second MSJ. In opposition, Fuche Corp.
argued that Defendants were ignoring the holding of Fuche I,
that "[t]he extent of damages caused by tortious conduct
normally constitutes a question of fact" for the jury, and that,
insofar "as damages caused by lack of insurance can be proven at
trial, [Fuche Corp.] is entitled to prove them up [sic]."
On July 8, 2019, the Circuit Court granted the Second
MSJ as to general damages (Order Granting Second MSJ) adopting
the Footnote 4 argument, finding that Fuche Corp. "did not
introduce any evidence at trial" or in the declarations attached
to the opposition memo "that any alleged reputational harm was
caused by the lack of coverage as opposed to the underlying
drain back-up causing the floods"; and concluding that Fuche
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Corp. "has failed to offer any evidence that its alleged
reputational harm was caused by the lack of insurance coverage
as opposed to the underlying drain back-up causing the floods,
sufficient to raise a genuine issue of material fact that [Fuche
Corp.] is entitled to recovery of general damages in this civil
action."
The Circuit Court then set trial on the remaining
punitive damages claim (Second Trial), but denied Fuche Corp.'s
request to introduce new evidence of testimony from its prior
attorneys as to the reasonableness of their fees, reasoning that
the scope of the Second Trial would not be expanded to include
testimony not given at the previous trial.
The Circuit Court conducted the Second Trial on
punitive damages, and after Fuche Corp. rested, Leung moved for
JMOL (Second Motion for JMOL), which was granted. The
November 12, 2019 order granting the motion under Hawai‘i Rules
of Civil Procedure (HRCP) Rule 50(a) 6 (Order Granting Second
JMOL) stated that Fuche Corp. "failed to prove by clear and
convincing evidence that [] Leung acted wantonly, oppressively,
with malice, willfully or gross negligence [sic] so as to have a
6 HRCP Rule 50, entitled "Judgment as a Matter of Law in Jury
Trials; Alternative Motion for New Trial; Conditional Rulings," states in
pertinent part:
(a) Judgment as a matter of law.
(1) If during a trial by jury a party has been fully
heard on an issue and there is no legally sufficient
evidentiary basis for a reasonable jury to find for that
party on that issue, the court may determine the issue
against that party and may grant a motion for judgment as a
matter of law against that party with respect to a claim or
defense that cannot under the controlling law be maintained
or defeated without a favorable finding on that issue.
(2) Motions for judgment as a matter of law may be
made at any time before submission of the case to the jury.
Such a motion shall specify the judgment sought and the law
and the facts on which the moving party is entitled to the
judgment.
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conscious indifference to the consequences of his alleged
actions[,]" and thus, "there was no legally sufficient
evidentiary basis" to submit the issue of punitive damages to
the jury. Following the entry of judgment as to the Order
Granting Second MSJ and Order Granting Second JMOL, Fuche Corp.
appealed.
(1) Regarding the Order Granting Second MSJ, Fuche
Corp. argues that this court already determined in Fuche I that
the record evidence supporting general damages was sufficient to
submit the claims to the jury to decide. Fuche Corp. contends
that, when an appellate court remands a case with instructions,
"the lower tribunal only has the authority to carry out the
appellate court's mandate[,]" and because the Circuit Court on
remand granted summary judgment against Fuche Corp. on the claim
for general damages based on the same testimony this court found
sufficient to submit to the jury to decide, the Circuit Court
"failed to 'carry out [that] mandate.'" It further argues the
Circuit Court erroneously interpreted footnote 4 of Fuche I as
"creat[ing] a new and indispensable element for [Fuche Corp.]'s
claims of reputational harm" that Fuche Corp. must prove to
survive summary judgment. Fuche Corp.'s argument has merit.
We review the grant or denial of summary judgment de
novo. Nuuanu Valley Ass'n v. City & Cnty. of Honolulu, 119
Hawai‘i 90, 96, 194 P.3d 531, 537 (2008).
In Fuche I, this court held that general damages
"should have been submitted to the jury" as follows:
Viewing the evidence in the light most favorable to the
non-moving party, there are genuine issues of material fact
precluding summary judgment. At minimum, Leung and Noguchi
did not establish that Fuche Corp. had no valid claim as to
reputational harm sustained during the several months the
restaurant was shut down while [Fuche Corp. owner] Chen was
awaiting to hear from Leung on the insurance claim. We
therefore conclude that the circuit court erred when it
granted Leung and Noguchi's summary judgment motion and
determine that Fuche Corp.'s claim for general damages
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should have been submitted to the jury for determination of
the facts surrounding the general damages claim. See
Washington State Physicians Ins. Exchange & Ass'n v. Fisons
Corp. [sic] 122 Wash.2d 299, 332, 858 P.2d 1054, 1071
(1993). ("Damages for loss of professional reputation are
not the type of damages which can be proved with
mathematical certainty and are usually best left as a
question of fact for the jury.").
2018 WL 774648, at *6 (emphases added) (footnote omitted).
Thus, this court clearly concluded that Fuche Corp. supplied
sufficient evidence of a genuine factual dispute to submit the
issue of general damages to the jury, and summary judgment was
improper. Accordingly, the Circuit Court erred in granting the
Second MSJ on Fuche Corp.'s claim for general damages. See
Nuuanu Valley Ass'n, 119 Hawai‘i at 96, 194 P.3d at 537.
(2) Regarding the Order Granting Second JMOL, Fuche
Corp. argues that the Circuit Court applied the wrong legal
standard in granting Leung's JMOL, and erred because Fuche I
already determined that the 2013 trial record reflected
"'sufficient evidence to support an award of punitive damages by
the jury against Leung[.]'" Fuche Corp.'s first argument has
merit.
We apply the same standard as the trial court in
reviewing the grant of a JMOL de novo. Aluminum Shake Roofing,
Inc. v. Hirayasu, 110 Hawai‘i 248, 251, 131 P.3d 1230, 1233
(2006) (quoting Miyamoto v. Lum, 104 Hawai‘i 1, 6–7, 84 P.3d 509,
514–515 (2004)). In Fuche I, we stated:
"A motion for JMOL may be granted only when after
disregarding conflicting evidence, giving to the non-
moving party's evidence all the value to which it is
legally entitled, and indulging every legitimate
inference which may be drawn from the evidence in the
non-moving party's favor, it can be said that there
is no evidence to support a jury verdict in his or
her favor." Miyamoto, [sic] 104 Hawai‘i at 7, 84 P.3d
at 515 (quoting Tabieros v. Clark Equipment Co.,
85 Hawai‘i 336, 350, 944 P.2d 1279, 1293 (1997)).
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Ray v. Kapiolani Med. Specialists, 125 Hawai‘i 253, 262,
259 P.3d 569, 578 (2011).
2018 WL 774648, at *2 (brackets omitted). We also stated
that to recover punitive damages,
[a plaintiff] must prove by clear and convincing
evidence that the defendant has acted wantonly or
oppressively or with such malice as implies a spirit
of mischief or criminal indifference to civil
obligations, or where there has been some wilful
misconduct or that entire want of care which would
raise the presumption of a conscious indifference to
consequences.
Masaki v. General Motors Corp., 71 Haw. 1, 16-17, 780 P.2d
566, 575 (1989).
Id. Thus, a trial court may only grant JMOL on the issue of
punitive damages if, disregarding all conflicting evidence, and
indulging all inferences in the non-movant's favor, there is "no
evidence" of "wilful misconduct" or "entire want of care" to
support a jury verdict of punitive damages; so long as there is
any evidence of such, it is for the factfinder to decide whether
such evidence meets the clear and convincing standard of proof
to justify an award of punitive damages. See id.Here, we conclude the Circuit Court did not apply the
correct legal standard in granting Leung's Second JMOL. The
Circuit Court quoted and applied the clear and convincing
standard set forth supra from Masaki, 71 Haw. at 16-17, 780 P.2d
at 575, stating:
Proof of conduct necessary to support an award
of punitive damages must be by clear and convincing
evidence. That is the standard that I must apply in
deciding at this point if this case moves forward to the
jury, which is the trier of fact.
The testimony of Mr. Chen [(Fuche Corp owner)] and
Ms. Lee [(Fuche Corp employee)] are factual, but they
have not been able to testify as to the state of mind
that Mr. Leung was operating under at the time of the
alleged tortious conduct. None of them have been able to
articulate any statements from Mr. Leung that indicate
that he has acted wantonly, oppressively, with malice
willfully or gross negligence so as to be -- have a
conscious indifference to the consequences in this case.
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Mr. Leung has stated he made a mistake. He
didn't get the requested insurance. It slipped
through the cracks. And he has already admitted to
that. There is already a judgment for negligence
against him.
Try as the Court may, in reviewing the
testimony over the last day and this morning, I
cannot find that there's any clear and convincing
evidence warranting the imposition of punitive
damages that goes to the jury. Clearly there's
negligence. That has already been addressed.
Therefore, the Court will grant the oral motion
and rule as a matter of law that plaintiff has failed
to meet his burden of proof of establishing by clear
and convincing evidence that he is entitled to have
the jury decide the issue of punitive damages.
(Emphases added). The Circuit Court did not cite to or apply
the JMOL standard under HRCP Rule 50 set forth supra, and
instead applied a trial burden of proof, of clear and convincing
evidence under Masaki, to determine whether Fuche Corp. was
"entitled to have the jury decide the issue of punitive
damages." The Circuit Court improperly credited Leung's
admissions that "he made a mistake" and that the insurance
coverage "slipped through the cracks[,]" rather than
disregarding conflicting evidence under the JMOL standard. See
Ray, 125 Hawai‘i at 262, 259 P.3d at 578. We conclude the
Circuit Court erred by not applying the correct standard when
ruling on the JMOL in this case. See Aluminum Shake Roofing,
Inc., 110 Hawai‘i at 251, 131 P.3d at 1233.
(3) Fuche Corp. contends the Circuit Court abused its
discretion in denying its requests to introduce new evidence of
attorney's fees at the punitive damages trial on remand.
We review the granting or denying of a motion in
limine for abuse of discretion. Miyamoto, 104 Hawai‘i at 7, 84
P.3d at 515. "[A] jury should be allowed to consider a
plaintiff's attorney fees in determining the amount of a
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punitive damages award." Kekona v. Bornemann, 135 Hawai‘i 254,
264, 349 P.3d 361, 371 (2015) (citations omitted). Thus,
evidence of attorney's fees is relevant to a punitive damages
claim, and "[a]ll relevant evidence is admissible[.]" Hawai‘i
Rules of Evidence (HRE) Rule 402. However, relevant evidence
"may be excluded if its probative value is substantially
outweighed by the danger of unfair prejudice, confusion of the
issues, or misleading the jury, or by considerations of undue
delay, waste of time, or needless presentation of cumulative
evidence." HRE Rule 403.
Here, when the Circuit Court denied Fuche Corp.'s
motions in limine to introduce new testimony supporting
attorney's fees, it reasoned that it had "previously ruled on
that [issue,]" and stated that "no additional witnesses other
than those in the [prior] trial" were allowed. It appears the
Circuit Court was referring to its denial of Fuche Corp.'s
previous motion to add additional witnesses, for which the court
gave the following reason:
This case is on remand. And the Court has stated at
the very beginning that it's not going to enlarge
this case at all. Whatever was done will be an
instant replay as guided by the appellate court for
the remaining issues that will be tried.
I'm not going to enlarge it in any way. So
accordingly keeping in line with what the appellate
court has told us in this case and the procedure that
I have elected to follow, the Court will deny the
motion.
By limiting the retrial to an "instant replay" and declining to
"enlarge" the scope "in any way[,]" the Circuit Court did not
consider the relevance of the proffered new testimony on its
merits. As attorney's fees are relevant to a punitive damages
claim, see Kekona, 135 Hawai‘i at 264, 349 P.3d at 371, the
Circuit Court abused its discretion by excluding such evidence.
See Miyamoto, 104 Hawai‘i at 7, 84 P.3d at 515.
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Based on the foregoing, we vacate the Circuit Court of
the First Circuit's (1) February 10, 2020 "Amended Final
Judgment"; (2) July 8, 2019 "Order Granting Defendants Noguchi &
Associates, Inc. and Bill Hin Bi Leung's Motion for Summary
Judgment as to Plaintiff's Claim for General Damages Filed
April 16, 2019"; and (3) November 12, 2019 "Order Granting
Defendant Bill Hin Bi Leung['s] Oral Motion for Judgment as a
Matter of Law made October 15, 2019." We remand for further
proceedings in accordance with this Summary Disposition Order.
DATED: Honolulu, Hawai‘i, October 8, 2024.
On the briefs:
/s/ Katherine G. Leonard
Peter Van Name Esser Acting Chief Judge
for Plaintiff-Appellant
/s/ Clyde J. Wadsworth
Patricia Kehau Wall Associate Judge
for Defendants-Appellees
/s/ Karen T. Nakasone
Associate Judge
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