Tagupa v. VIPDESK. ( 2015 )

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Electronically Filed
Supreme Court
SCWC-13-0002084
29-JUN-2015
02:00 PM
IN THE SUPREME COURT OF THE STATE OF HAWAIʻI
---o0o---
LOTTIE TAGUPA,
Petitioner/Plaintiff-Appellant,
vs.
VIPDESK
Respondent/Defendant-Appellee.
SCWC-13-0002084
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-13-0002084; CIV. NO. 3RC12-1-297H)
June 29, 2015
RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON JJ.
OPINION OF THE COURT BY POLLACK, J.
At issue in this case is the authority of a trial
court to condition the voluntary dismissal of a complaint upon
the plaintiff’s payment of the defendant’s attorney’s fees and
costs. We hold that such authority exists under the Hawaii
District Rules of Civil Procedure (HDCRCP) Rule 41(a)(2) (1996),
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but it is subject to certain procedural requirements.
Additionally, the exercise of this authority must comport with
equitable factors to accord substantial justice to the parties.
I. BACKGROUND
1. District Court Complaint
On October 26, 2012, Lettie Tagupa, pro se, filed a
standard form one-page complaint (Complaint) against VIPDesk in
the District Court of the Third Circuit (district court). The
Complaint asserted that “[o]n or about Jun 2010-Sep 2011,
Defendant(s) owed money to Plaintiff(s) as follows: For time
spent taking photos, creating, researching and writing blogs on
travel recommendations and travel information for the sole
purpose of supporting VIPdesk’s marketing efforts.” The
Complaint stated that the district court “ha[d] jurisdiction
over this matter and venue [was] proper.”
In the Complaint, Tagupa initially indicated that the
amount claimed was $35,000 and asked for judgment in that
amount, but a handwritten amendment to her Complaint reduced the
amount to $25,000.
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2. Tagupa’s Motion to Dismiss for Lack of
Subject Matter Jurisdiction
On May 8, 2013, Tagupa, with newly acquired legal
representation, 1 filed a motion to dismiss the case for lack of
subject matter jurisdiction (motion to dismiss) pursuant to
Hawaii Rules of Civil Procedure (HRCP) Rules 7, 9, and
12(b)(1). 2 Tagupa asserted that the district court did not have
jurisdiction “over the subject matter of th[e] case” because her
claims “derive from violations of federal law--the Fair Labor
Standards Act of 1938 [FLSA], 29 USC 201 et. seq.” Tagupa
acknowledged that she filed the case, pro se, in the wrong
court, and attached a “draft lawsuit for the correct court,”
i.e., the United States District Court for the District of
Hawaii, to her motion to dismiss.
VIPdesk filed a memorandum in opposition to Tagupa’s
motion to dismiss in which it argued that the district court had
jurisdiction over Tagupa’s claims. VIPdesk maintained that
1
A Notice of Appearance of Venetia K. Carpenter-Asui for Tagupa
was filed on May 8, 2013.
2
HRCP Rule 7 (2000) pertains to the form of motions, and HRCP Rule
9 (2000) pertains to pleading special matters. HRCP Rule 12(b) (2000)
provides in relevant part:
Every defense, in law or fact, to a claim for relief in any
pleading, whether a claim, counterclaim, cross-claim, or
third-party claim, shall be asserted in the responsive
pleading thereto if one is required, except that the
following defenses may at the option of the pleader be made
by motion: (1) lack of jurisdiction over the subject matter
. . . .
3
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Tagupa’s Complaint alleged claims that could arise solely out of
Hawaii state law and that even if Tagupa intended to pursue a
FLSA claim, the district court had subject matter jurisdiction
over such a claim. Alternatively, VIPdesk requested, pursuant
to the HDCRCP Rule 41(a)(2), 3 that if the Court granted Tagupa’s
motion to dismiss, the dismissal should be with prejudice and
conditioned upon Tagupa’s payment of the attorney’s fees and
costs incurred by VIPdesk in the case.
3. District Court’s Orders and Judgment
At a hearing on May 23, 2013, the district court
granted Tagupa’s motion to dismiss without prejudice, basing its
decision not on lack of subject matter jurisdiction, but,
rather, “on [Tagupa] wanting to file [the] case in federal court
instead of state court.” 4
3
HDCRCP Rule 41(a)(2) provides as follows:
Except as provided in paragraph (1) of this subdivision of
this rule, an action shall not be dismissed at the
plaintiff’s instance save upon order of the court and upon
such terms and conditions as the court deems proper. If a
counterclaim has been pleaded by a defendant prior to the
service upon that defendant of the plaintiff’s motion to
dismiss, the action shall not be dismissed against the
defendant’s objection unless the counterclaim can remain
pending for independent adjudication by the court. Unless
otherwise specified in the order, a dismissal under this
paragraph is without prejudice.
4
The record in this case does not contain any transcripts.
References to statements made by the court or the parties during the hearing
are not direct quotes from the parties, but, rather, quotes from the court
clerk’s minutes, which are part of the record on appeal pursuant to Hawaiʻi
Court Record Rules Rule 4(f) (2012).
4
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At the hearing, Tagupa’s counsel requested that no
attorney’s fees and costs be awarded to VIPdesk in light of
Tagupa’s pro se status at the time that she filed the Complaint.
The district court found that Tagupa “admittedly filed [the
case] in the wrong court” and expressed concern that “if pro se
plaintiffs file complaints [and] the defendant hires an attorney
to defend and spends a lot of time on the case [and] then
plaintiff decides to get counsel [and] . . . then states that
they would like to file this claim in federal court, the
defendant has incurred the expense of hiring an attorney to
prepare it’s [sic] defense.” The court concluded, “Defendant
should not have to bear the expense because [Tagupa] filed in
the wrong court.”
At the conclusion of the hearing, the district court
awarded VIPdesk attorney’s fees and costs pursuant to HDCRCP
Rule 41(a)(2). The district court subsequently filed its order
granting Tagupa’s motion to dismiss on June 4, 2013. The order
stated that VIPdesk “is to be awarded reasonable attorney’s fees
and costs incurred in defending this case in this Court” and
instructed VIPdesk to file a declaration with its attorney’s
fees incurred by June 3, 2013, and for Tagupa to file a response
or objection within ten days of receipt of VIPdesk’s
declaration. The order stated that the court would “decide the
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issue of [VIPdesk’s] attorney fees and costs to be awarded via
non-hearing motion.”
On June 5, 2013, VIPdesk filed its motion for
attorney’s fees (attorney’s fees motion) in which it maintained
that it “incurred a total of $16,800.41 in attorney’s fees
(inclusive of general excise taxes) and $288.87 in costs
defending this case in this Court.” Tagupa filed her memorandum
in opposition on June 12, 2014. In her memorandum, Tagupa
argued that VIPdesk should not be awarded attorney’s fees as
VIPdesk had not prevailed in the action, and there “ha[d] been
no determination by this Court that [Tagupa’s] legal claims are
unreasonable, frivolous, meritless or vexatious.” Tagupa
contended that the “work performed by [VIPdesk] will be used by
[VIPdesk] in the furtherance of this case in Federal Court,”
VIPdesk “will use the same discovery in the Federal Court case,”
and VIPdesk was not prejudiced by the dismissal.
On June 17, 2013, the district court issued an Order
Awarding Attorney’s Fees, in which it granted VIPDesk’s
nonhearing attorney’s fees motion and awarded VIPdesk the entire
amount requested in the amount of $16,800.41 “as reaasonable
attorney’s fees” and $288.87 in costs, for a total amount of
$17,089.28. The district court handwrote on the Order Awarding
Attorney’s Fees that “pursuant to HDCRCP 41(a)(2) and [Hawaiʻi
Revised Statutes (HRS)] § 607-14.5[, the] Court finds that the
6
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Plaintiff’s claim for jurisdiction amount was frivolous under
Section 607-14.5(b).” 5 On July 18, 2013, Tagupa filed a notice
of appeal to the ICA from the Judgment filed on June 17, 2013.
II. Appellate Proceedings
A. Briefs
In her Opening Brief, Tagupa argued that the district
court erred in its Order Awarding Attorney’s Fees. Tagupa
contended that the district court granted VIPdesk’s attorney’s
fees and costs prematurely, before the merits of the case had
been decided and before a prevailing party was properly
identified.
Tagupa noted that the district court awarded
attorney’s fees pursuant to HDCRCP 41(a)(2) and HRS § 607-14.5
(Supp. 2013) even though VIPdesk “cited only rules 7(b) and
41(a)(2) [of the HDCRCP] as the basis for granting attorney’s
fees.” Tagupa argued that to award attorney’s fees under HRS §
5
HRS § 607-14.5(b) (Supp. 1999) provides, in relevant part:
(b) In determining the award of attorneys’ fees and costs
and the amounts to be awarded, the court must find in
writing that all or a portion of the claims or defenses
made by the party are frivolous and are not reasonably
supported by the facts and the law in the civil action. In
determining whether claims or defenses are frivolous, the
court may consider whether the party alleging that the
claims or defenses are frivolous had submitted to the party
asserting the claims or defenses a request for their
withdrawal as provided in subsection (c). If the court
determines that only a portion of the claims or defenses
made by the party are frivolous, the court shall determine
a reasonable sum for attorneys’ fees and costs in relation
to the frivolous claims or defenses.
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607-14.5, the court must find, in writing, that all or a portion
of the claims or defenses made by the party were frivolous and
not reasonably supported by the facts and the law in the civil
action. Tagupa contended that despite the district court’s
authority to award attorney’s fees and costs, the fact that she
revised her Complaint prior to filing “does not, in and of
itself, demonstrate that [her] claim against [VIPdesk] was
‘manifestly and palpably without merit.’”
Tagupa stated that her Complaint had been refiled in
the federal district court as a FLSA class action and that it
was, at that time, pending trial. Tagupa argued that based on
the pending nature of the claim in federal court, the district
court had no basis to make a determination as to whether her
claim was frivolous, and, therefore, the district court abused
its discretion in granting attorney’s fees pursuant to HRS §
607-14.5.
Tagupa further claimed that the district court was
“simply penalizing [Tagupa], a pro se party, for filing her
complaint in the wrong court” and that this was not a proper
purpose for an award of attorney’s fees. Lastly, Tagupa argued
that, as a general rule, each party is responsible for paying
his or her own litigation expenses.
VIPdesk filed its Answering Brief, which requested
that the Order Awarding Attorney’s Fees and Judgment be upheld
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and affirmed on appeal. 6 VIPdesk argued that the district court
did not err in awarding VIPdesk’s attorney’s fees and costs
under HDCRCP Rule 41(a)(2). VIPdesk maintained that in
considering a dismissal under HDCRCP Rule 41(a)(2), a trial
court should consider the totality of the circumstances,
including equitable factors such as prejudice to the parties.
VIPdesk contended that courts typically impose costs and
attorney’s fees upon the plaintiff in such cases. Thus, VIPdesk
argued that the district court was well within its discretion to
award VIPdesk’s attorney’s fees and costs under HDCRCP Rule
41(a)(2), based on the record and its findings that VIPdesk
should not have to bear the expense of preparing its defense
because Tagupa filed in the wrong court.
VIPdesk next argued that the district court did not
err in awarding VIPdesk’s attorney’s fees and costs under HRS §
607-14.5. VIPdesk noted that the district court satisfied the
requirements of HRS § 607-14.5 by making a specific finding that
Tagupa’s claim regarding the jurisdiction amount in her
Complaint was frivolous under HRS § 607-14.5(b), and VIPdesk
asserted that this finding was sufficiently supported by the
6
Tagupa identified the district court’s Order Awarding Attorney’s
Fees as the alleged error in this case. Attorney’s fees had previously been
awarded by the district court’s June 4, 2013 order granting Tagupa’s motion
to dismiss, although no amount had been specified. VIPdesk presented a
counterstatement of Tagupa’s point of error: “Whether the [district court]
erred in awarding [VIPdesk’s] attorney’s fees and costs.”
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record because Tagupa admitted that she intentionally reduced
the amount of her claim to fall within the jurisdiction of the
district court.
VIPdesk also argued that the pendency of Tagupa’s
federal court claim had no bearing on the issue of attorney’s
fees because the Order Awarding Attorney’s Fees “was not based
on the merits of [Tagupa’s] FLSA claim but on the
‘jurisdictional amount’ of the claims that she brought in the
[district court].” Lastly, VIPdesk contended that even if the
district court erred by awarding VIPdesk attorney’s fees and
costs under HRS § 607-14.5(b), such error was harmless and did
not warrant setting aside the Order Awarding Attorney’s Fees
because the district court was within its discretion to award
VIPdesk’s attorney’s fees and costs under HDCRCP Rule 41(a)(2).
B. ICA Summary Disposition Order
The ICA issued its Summary Disposition Order (SDO) on
August 12, 2014, which affirmed the Judgment and the Order
Awarding Attorney’s Fees.
The ICA found that Tagupa’s appeal lacked merit,
specifically because the district court was expressly authorized
under HDCRCP Rule 41(a)(2) to condition dismissal of the
Complaint “upon such terms and conditions as the court deem[ed]
proper.” The ICA noted that Tagupa provided no argument against
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the district court’s award of attorney’s fees and costs pursuant
to HDCRCP Rule 41(a)(2).
The ICA held that “in imposing conditions under HRCP
Rule 41(a)(2),[7] the court should endeavor to insure that
substantial justice was accorded to both parties.” In
determining whether a plaintiff’s motion for voluntary dismissal
is proper under HRCP Rule 41(a)(2), the ICA stated that a trial
court “will consider the expense and inconvenience to the
defendant and will deny the motion if the defendant will be
prejudiced seriously by a dismissal.” (Quoting Moniz v.
Freitas, 79 Hawaiʻi 495, 500—01, 904 P.2d 509, 514—15 (1995))
(internal quotation mark deleted). The ICA explained that a
court may additionally examine whether “any harm to the
defendant may be avoided by imposing terms and conditions on the
dismissal.” (Quoting id.) (internal quotation mark deleted).
The ICA concluded that the district court acted within its
discretion in awarding VIPdesk’s attorney’s fees and costs in
order to alleviate any prejudice resulting from the dismissal.
Finally, based on its conclusion that there was no
abuse of discretion in the award of attorney’s fees pursuant to
HDCRCP Rule 41(a)(2), the ICA found that it need not reach
7
The ICA noted that HRCP Rule 41(a)(2) contains text identical to
that of HDCRCP Rule 41(a)(2) and that, therefore, case law interpreting HRCP
Rule 41 informed the court in its application of HDCRCP Rule 41 to this case.
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Tagupa’s argument that the district court erred by awarding
VIPdesk’s attorney’s fees and costs under HRS § 607-14.5 because
any alleged error in the district court’s application of HRS §
607-14.5 would be harmless based on HDCRCP Rule 61. 8 The ICA’s
Judgment on Appeal affirmed the Order Awarding Attorney’s Fees.
C. Application for Writ of Certiorari
On October 30, 2014, Tagupa filed her Application
seeking review of the ICA’s SDO. Tagupa argues that there is no
supporting authority under Hawaii law providing that HDCRCP Rule
41(a)(2) constitutes authorization for an award of attorneys’
fees and costs and that the rule only “applies to a ‘voluntary
dismissal’ initiated by a plaintiff.” Tagupa contends that
VIPdesk, rather than Tagupa, invoked HDCRCP Rule 41(a)(2) in
this case and that the court sua sponte converted her motion to
dismiss the case for lack of subject matter jurisdiction under
HDCRCP Rule 12(b)(1) to a motion for dismissal under Rule
41(a)(2). Tagupa argues that, in awarding attorney’s fees under
8
HDCRCP Rule 61 (1996) provides:
HARMLESS ERROR.
No error in either the admission or the exclusion of
evidence and no error or defect in any ruling or order or
in anything done or omitted by the court or by any of the
parties is ground for granting a new trial or for vacating,
modifying, or otherwise disturbing a judgment or order,
unless refusal to take such action appears to the court
inconsistent with substantial justice. The court at every
stage of the proceeding must disregard any error or defect
in the proceeding which does not affect the substantial
rights of the parties.
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Rule 41(a)(2), the district court appeared “to confuse or
conflate the issue of ‘prejudice’ to VIP[d]esk with that
concerning its request for litigation expenses already
incurred.”
Tagupa further argues that, contrary to HDCRCP Rule
78, 9 the district court “reserved the question of the amount of
attorney’s fees to a non-hearing motion after appropriate
submissions by the parties on the issue only.” Tagupa contends
that had the district court conducted an “in-person hearing on
the amount of attorney’s fees and costs,” it would have had “the
opportunity to withdraw [its] converted ‘voluntary’ dismissal
motion or otherwise have the Order set aside on the grounds that
the amount of the fees and costs imposed would be too onerous.”
Tagupa also asserts that the district court erred by ruling that
her downward adjustment of her monetary claim was frivolous. 10
9
HDCRCP Rule 78 (1996) states as follows:
Unless local conditions make it impracticable, each
district court shall establish regular times and places, at
intervals sufficiently frequent for the prompt dispatch of
business, at which motions requiring notice and hearing may
be heard and disposed of; but the judge at any time or
place and on such notice, if any, as the judge considers
reasonable may make orders for the advancement, conduct,
and hearing of actions.
To expedite its business, the court may make provisions by
rule or order for the submission and determination of
motions without oral hearing upon brief written statements
of reasons in support and opposition.
10
Tagupa also contends that permitting attorney’s fees for non-
movants in voluntary dismissal actions without any specific limitation on the
amount awarded is contrary to public policy. Tagupa maintains that no
(continued . . .)
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VIPdesk filed a Response to Tagupa’s Application,
asking that Tagupa’s Application be denied. VIPdesk argues that
the ICA did not err in affirming the district court’s award of
attorney’s fees and costs under HDCRCP 41(a)(2). VIPdesk
maintains that while there are not any Hawaii cases that discuss
an award of attorney’s fees and costs under HDCRCP 41(a)(2),
there is ample authority for a court’s ability to impose
conditions on a plaintiff’s voluntary dismissal of her case.
VIPdesk argues that federal courts applying FRCP Rule 41(a)(2),
which is virtually identical to HDCRCP Rule 41(a)(2), have held
that the rule affords courts broad discretion in imposing
appropriate conditions in the dismissal of a case, including the
payment of attorney’s fees and costs.
III. DISCUSSION
Tagupa’s motion to dismiss for lack of subject matter
jurisdiction was converted by the district court into a
voluntary dismissal by order of the court pursuant to HDCRCP
(. . . continued)
limitation will discourage otherwise meritorious voluntary dismissals by
plaintiffs, resulting in an unnecessary cluttering of the district court
docket. We do not address this contention because it was not raised at the
district court or the ICA, as Tagupa acknowledges in her Application, and,
therefore, was waived. See Kemp v. State of Haw. Child Support Enforcement
Agency, 111 Hawaiʻi 367, 391, 141 P.3d 1014, 1038 (2006) (holding that an
argument not raised at the trial court “will be deemed to have been waived on
appeal”); Enoka v. AIG Haw. Ins. Co., 109 Hawaiʻi 537, 546, 128 P.3d 850, 859
(2006) (accord).
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Rule 41(a)(2). 11 The district court granted the motion upon the
condition that Tagupa pay VIPdesk’s attorney’s fees. In
imposing this condition, the district court relied upon HDCRCP
Rule 41(a)(2) and HRS § 607-14.5.
Three issues are presented to this court: (1) whether
the district court, after converting Tagupa’s motion to a
request for a voluntary dismissal under HDCRCP Rule 41(a)(2),
possessed the authority to impose payment of attorney’s fees as
a condition of the dismissal; (2) whether Tagupa was improperly
deprived of the opportunity to withdraw her motion to dismiss or
otherwise have the Order set aside on the grounds that the
amount of the fees and costs imposed would be too onerous; and
(3) whether the Complaint was frivolous under HRS § 607-14.5,
which triggered a separate basis for the award of attorney’s
fees and costs.
11
Initially, Tagupa moved, “pursuant to rules 7, 9, [and] 12(b)(1)”
of the HRCP, to dismiss the case for lack of subject matter jurisdiction.
However, Rule 12, under both the HRCP and the HDCRCP, governs defenses that
may be asserted in pleadings responsive to a complaint and does not provide
relief for a plaintiff seeking to dismiss one’s own claim. In any event, as
VIPdesk argued, the district court did have jurisdiction over Tagupa’s claim
because the Complaint did not allege any federal causes of action, and the
district court had subject matter jurisdiction over Tagupa’s state law causes
of action. See, e.g., HRS § 387-12(c) (Supp. 1999) (wage and hour claims
“may be maintained in any court of competent jurisdiction by any one or more
employees”). Even if Tagupa had alleged a claim under the FLSA, as she
argued in her motion to dismiss, FLSA claims may be pursued in both federal
and state courts and, thus, the district court would maintain subject matter
jurisdiction over her purported FLSA claim. See 29 U.S.C. § 216(b) (2012) (a
FLSA action may be “maintained against any employer . . . in any Federal or
State Court of competent jurisdiction”). Thus, Tagupa’s motion to dismiss
for lack of subject matter jurisdiction could have been denied on the merits.
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A. Payment of Attorney’s Fees as a Condition for Voluntary
Dismissal under HDCRCP Rule 41(a)(2)
HDCRCP Rule 41(a)(2), 12 in relevant part, provides
that “an action shall not be dismissed at the plaintiff’s
instance save upon order of the court and upon such terms and
conditions as the court deems proper.” Dismissal under HDCRCP
Rule 41(a)(2) is without prejudice “[u]nless otherwise specified
in the order.” Generally, in evaluating a motion for voluntary
dismissal under Rule 41(a)(2), the court “will consider the
expense and inconvenience to the defendant and will deny the
motion if the defendant will be prejudiced seriously by a
12
HDCRCP Rule 41(a) (1996) provides the following:
(a) Voluntary dismissal: Effect thereof.
(1) By plaintiff; by stipulation. An action may be dismissed by
the plaintiff without order of court (i) by filing a notice
of dismissal at any time before the return date as provided
in Rule 12(a) or service by the adverse party of an answer or
of a motion for summary judgment, or (ii) by filing a
stipulation of dismissal signed by all parties who have
appeared in the action. Unless otherwise stated in the notice
of dismissal or stipulation, the dismissal is without
prejudice, except that a notice of dismissal operates as an
adjudication upon the merits when filed by a plaintiff who
has once dismissed in any court of the United States, or of
any state, territory or insular possession of the United
States an action based on or including the same claim.
(2) By order of court. Except as provided in paragraph (1) of
this subdivision of this rule, an action shall not be
dismissed at the plaintiff’s instance save upon order of the
court and upon such terms and conditions as the court deems
proper. If a counterclaim has been pleaded by a defendant
prior to the service upon that defendant of the plaintiff’s
motion to dismiss, the action shall not be dismissed against
the defendant’s objection unless the counterclaim can remain
pending for independent adjudication by the court. Unless
otherwise specified in the order, a dismissal under this
paragraph is without prejudice.
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dismissal.” Moniz, 79 Hawaiʻi at 500, 904 P.2d at 514 (quoting 9
Charles Alan Wright & Arthur R. Miller, Federal Practice and
Procedure § 2364 (2d ed. 1994) [hereinafter Federal Practice
2d]). Alternatively, if the court finds that the defendant will
be prejudiced by dismissal, in lieu of denying the motion to
dismiss, “[t]he court will examine the possibility that any harm
to the defendant may be avoided by imposing terms and conditions
on the dismissal.” Id. The trial court has discretion to
impose “such terms and conditions as the court deems proper,”
considering the totality of the circumstances “to insure that
substantial justice is accorded to both parties.” Id. (emphasis
added); HDCRCP Rule 41(a)(2).
While this court has not previously addressed whether
attorney’s fees may be imposed as a term or condition of
voluntary dismissal under HDCRCP Rule 41(a)(2), there is
abundant authority interpreting comparable provisions of the
Federal Rules of Civil Procedure (FRCP), 13 and, to a lesser
extent, the Hawaii Rules of Civil Procedure (HRCP), 14 which
addresses this issue.
13
FRCP Rule 41(a)(2) states, in relevant part, “Except as provided
in Rule 41(a)(1), an action may be dismissed at the plaintiff’s request only
by court order, on terms that the court considers proper.” (Emphasis added).
14
HRCP Rule 41(a)(2) and HDCRCP Rule 41(a)(2) are identical and
state, in relevant part, “Except as provided in paragraph (1) of this
subdivision of this rule, an action shall not be dismissed at the plaintiff's
instance save upon order of the court and upon such terms and conditions as
(continued . . .)
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Since HDCRCP Rule 41(a)(2) is identical to HRCP Rule
41(a)(2) (2012) and essentially identical to FRCP Rule 41(a)(2)
(2010), cases interpreting and applying HRCP Rule 41(a)(2) and
FRCP Rule 41(a)(2) may be consulted for guidance in interpreting
HDCRCP Rule 41(a)(2). See Kawamata Farms, Inc. v. United Agri
Prods., 86 Hawaii 214, 252, 948 P.2d 1055, 1093 (1997) (holding
that authorities interpreting a federal rule of civil procedure
are highly persuasive in interpreting an essentially identical
Hawaiʻi rule of civil procedure where there is an absence of case
law interpreting the latter); accord State v. Shannon, 118
Hawaii 15, 40, 185 P.3d 200, 225 (2008).
Although the two Hawaii cases that address the
imposition of terms and conditions under HRCP Rule 41(a)(2) did
not consider whether attorney’s fees may be imposed as a
condition of voluntary dismissal, both support the conclusion
that attorney’s fees may be properly imposed as a condition of
dismissal under HRCP Rule 41(a)(2). See Sapp v. Wong, 3 Haw.
App. 509, 654 P.2d 883 (1982); Moniz, 79 Hawaii 495, 904 P.2d
509 (1995).
In Sapp, the plaintiffs filed a motion for voluntary
dismissal under HRCP Rule 41(a)(2) and noted in a supporting
(. . . continued)
the court deems proper.” HDCRCP Rule 41(a)(2), HRCP Rule 41(a)(2) (emphasis
added).
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memorandum that they intended to pursue their claims in federal
court rather than in state court. Id. at 511, 654 P.2d at 885.
Although the plaintiffs submitted a proposed order to dismiss
the case without prejudice, the trial court ultimately ordered
that the case be dismissed with prejudice. Id. at 512—13, 654
P.2d at 885—86. In ordering this disposition, the trial court
considered the circumstances of the case and found that the
defendant would be unduly prejudiced if the plaintiffs were
permitted to refile the case in state court. Id. The
plaintiffs appealed, arguing that the trial court erred by
imposing a “with prejudice” condition on their voluntary
dismissal. Id. The ICA concluded that the trial court was
permitted to order, as a condition under HRCP Rule 41(a)(2), the
case to be dismissed with prejudice; however, the ICA remanded
the case to the trial court to allow the plaintiffs the
opportunity to withdraw their motion. 15 Id. at 514, 654 P.2d at
887.
15
In finding that dismissal with prejudice was warranted by the
circumstances of the case, the ICA noted the following facts:
[P]laintiffs had identical actions pending in federal and
state courts since 1973 and 1974, respectively. . . . Lis
pendens were filed by plaintiffs in 1974 and since then
have encumbered 44 parcels of real property owned by
defendants. The matter was tried once below and plaintiffs
lost. After reversal and remand, defendants were prepared
to go to trial again when plaintiffs made their [Rule
41(a)(2)] motion. Defendants have undoubtedly been put to
great expense in this matter alone. We find that these
circumstances amount to a quantum of prejudice to the
defendant that supports the action of the court below.
(continued . . .)
19
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In Moniz, this court considered whether the trial
court had the authority to reinstate an arbitration award as a
condition of voluntary dismissal under HRCP Rule 41(a)(2).
Moniz, 79 Hawaii at 500—01, 904 P.2d at 514—15. The court noted
that “when imposing such conditions, a trial court should
consider the totality of the circumstances consistent with
substantial justice, taking into account equitable factors such
as prejudice to either party.” Id. Under the facts of that
case, we held that the trial court had discretion to reinstate
an arbitration award as a condition of dismissal under HRCP Rule
41(a)(2). Id.
In light of the conditions imposed under Sapp and
Moniz, including dismissal with prejudice, which is the harshest
of sanctions, 16 we hold that it is within the discretion of the
trial court to require the payment of attorney’s fees as a
condition of dismissal under HRCP Rule 41(a)(2). This
conclusion is consistent with federal courts that have held that
attorney’s fees may be properly awarded as a term of voluntary
dismissal under FRCP Rule 41(a)(2). See 9 Charles Alan Wright &
(. . . continued)
Sapp, 3 Haw. App. at 515, 654 P.2d at 884.
16
See Malone v. U.S. Postal Serv., 833 F.2d 128, 132 n.1 (9th Cir.
1987) (stating that dismissal with prejudice is “the ultimate sanction”
(quoting Callip v. Harris Cnty. Child Welfare Dep’t, 757 F.2d 1513, 1521 (5th
Cir. 1985))); Bergstrom v. Frascone, 744 F.3d 571, 575 (8th Cir. 2014)
(characterizing dismissal with prejudice as “drastic and extremely harsh”
(quoting Sterling v. United States, 985 F.2d 411, 412 (8th Cir. 1993))).
20
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Arthur R. Miller, Federal Practice and Procedure § 2366, at 522—
49 (3d ed. 2008 & Supp. 2014) [hereinafter Federal Practice
3d]). 17
We note that although the trial court is permitted to
award attorney’s fees upon voluntary dismissal under FRCP Rule
41(a)(2), the court is not obligated to do so. See Stevedoring
Servs. of Am. v. Armilla Int’l B.V., 889 F.2d 919, 921 (9th Cir.
1989) (payment of attorney’s fees is not a prerequisite to an
order granting voluntary dismissal); DWG Corp. v. Granada Inv.,
Inc., 962 F.2d 1201, 1202 (6th Cir. 1992) (noting that “no
requirement or rule” mandating the award of attorney’s fees for
voluntary dismissals “exists in this or in any other Circuit”
and that “as a matter of law [] defense costs need not be
awarded”); N.Y., C & St. L.R. Co. v. Vardaman, 181 F.2d 769,
771—72 (8th Cir. 1950)).
B. Notice and Opportunity to Withdraw
While a trial court has discretion to impose terms and
conditions when granting a motion for voluntary dismissal under
Rule 41(a)(2), courts of Hawaiʻi and other jurisdictions provide
the plaintiff with an opportunity to withdraw the motion to
17
See also Westlands Water Dist. v. United States, 100 F.3d 94, 97
(9th Cir. 1996) (stating that the “defendants’ interests can be protected by
conditioning the dismissal without prejudice upon the payment of appropriate
costs and attorney fees”); Pontenberg v. Bos. Scientific Corp., 252 F.3d
1253, 1260 (11th Cir. 2001) (district court acted within its discretion by
conditioning the dismissal on the payment of costs to defendant should
plaintiff refile the case).
21
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dismiss in light of the conditions imposed “to insure that
substantial justice is accorded to both parties.” Moniz, 79
Hawaii at 500, 904 P.2d at 514 (quoting 9 Wright & Miller,
Federal Practice 2d § 2364) (emphasis added).
When a plaintiff requests voluntary dismissal but does
not mention conditions, the trial court can specify conditions
on which it will allow dismissal, and “[i]f the conditions are
too onerous, the plaintiff need not accept the dismissal on
those terms.” Id. Not affording the plaintiff an opportunity
to withdraw the motion for voluntary dismissal is tantamount to
an abuse of discretion. See Sapp, 3 Haw. App. 509, 654 P.2d
883. In Sapp, discussed supra, the plaintiffs had identical
actions pending in both state and federal courts for nearly a
decade. Sapp, 3 Haw. App. at 512—13, 654 P.2d at 885—86. In
the state action, the plaintiffs lost at trial and appealed.
Id. On appeal, the judgment was vacated and the case was
remanded for a new trial. Id. On remand, the plaintiffs
opposed the defendants’ motion to set a trial date and
subsequently filed a motion to dismiss the action without
prejudice under HRCP Rule 41(a)(2). Id. The trial court
granted the plaintiffs’ Rule 41(a)(2) motion but conditioned the
dismissal as being with prejudice. Id. The plaintiffs
appealed, arguing that the trial court erred by imposing a “with
prejudice” condition on the dismissal. Id.
22
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The ICA found that the “defendants ha[d] undoubtedly
been put to great expense in this matter” and “that [the]
circumstances [of the case] amount to a quantum of prejudice to
the defendant.” Id. Thus, the ICA concluded that the trial
court was permitted to order, as a condition under HRCP Rule
41(a)(2), that the case be dismissed with prejudice. Id.
However, the ICA found that the “conditions imposed were not
requested by [the] plaintiffs and they were not given the
opportunity to choose between accepting the condition or
proceeding with the case.” Id. at 514, 654 P.2d at 887. The
ICA “deem[ed] this omission to be an abuse of discretion” and
remanded the case “to allow [the] plaintiffs to withdraw their
[Rule 41(a)(2)] motion if they [felt] the condition [was] too
onerous.” 18 Id.
The legal principle enunciated by the Sapp court--that
plaintiffs should be given notice of the conditions that the
court intends to impose upon dismissal, if any, and the
opportunity to withdraw the request for dismissal if a plaintiff
finds the conditions to be unacceptable--is broadly supported by
cases from other jurisdictions. See Lau v. Glendora Unified
18
Although the ICA noted that “[i]t is a better practice when
imposing conditions under Rule 41(a)(2), HCRP, to allow [the] plaintiff the
option not to dismiss if he feels that the conditions are too onerous,”
Sapp, 3 Haw. App. at 514, 654 P.2d at 887, the ICA determined that it was an
abuse of discretion not to have allowed the plaintiff an opportunity to
withdraw the motion to dismiss.
23
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Sch. Dist., 792 F.2d 929, 930 (9th Cir. 1986) (remanding the
case “to allow the plaintiff a reasonable time within which to
withdraw her motion for a voluntary dismissal and proceed to
trial or consent to the dismissal despite the attachment of
conditions”); Mortg. Guar. Ins. Corp. v. Richard Carlyon Co.,
904 F.2d 298, 301 (5th Cir. 1990) (“Ordinarily, the plaintiff
has the option to refuse a Rule 41(a)(2) voluntary dismissal and
to proceed with its case if the conditions imposed by the court
are too onerous”; however, the plaintiff must timely move to
withdraw its motion to dismiss); United States v. One Tract of
Real Prop. Together With all Bldgs., Improvements, Appurtenances
& Fixtures, 95 F.3d 422, 426 (6th Cir. 1996) (concluding that
the district court abused its discretion by not giving plaintiff
an opportunity to withdraw its motion to dismiss once conditions
were imposed). 19
Accordingly, we hold that although a trial court has
discretion to impose terms and conditions, including attorney’s
19
See also Mother & Father v. Cassidy, 338 F.3d 704, 713 (7th Cir.
2003) (stating that FRCP 41(a)(2) “grants plaintiff the option of withdrawing
his motion if the district court’s conditions are too onerous, and proceeding
instead to trial on the merits” (quoting Marlow, 19 F.3d at 304) (internal
quotation mark omitted)); Gravatt v. Columbia Univ., 845 F.2d 54, 56 (2d Cir.
1988) (holding “that fundamental fairness requires interpreting Rule 41(a)(2)
to afford the plaintiff an opportunity to withdraw his motion and proceed
with the litigation in the event that a district judge proposes to convert a
voluntary dismissal to one with prejudice” (citing Andes v. Versant Corp.,
788 F.2d at 1037)); GAF Corp. v. Transamerica Ins. Co., 665 F.2d 364, 367-68
(D.C. Cir. 1981) (concluding that “a plaintiff has the choice between
accepting the conditions and obtaining dismissal and, if he feels that the
conditions are too burdensome, withdrawing his dismissal motion and
proceeding with the case on the merits”).
24
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fees and costs, when granting a motion for voluntary dismissal
under Rule 41(a)(2), the court, in order “to ensure that
substantial justice [is] accorded to both parties,” also must
provide the plaintiff with the opportunity to either (1)
withdraw the request for dismissal if the plaintiff finds the
conditions to be unacceptable or (2) accept the terms and
conditions of the dismissal. See Moniz, 79 Hawaii at 500, 904
P.2d at 514; Sapp, 3 Haw. App. at 514, 654 P.2d at 8879; 9
Wright & Miller, Federal Practice 3d § 2366, at 522—23. 20
In this case, during the hearing on Tagupa’s motion to
dismiss, the court inquired as to Tagupa’s position on VIPdesk’s
motion for attorney’s fees should the court grant the motion to
dismiss. Tagupa requested that she not be required to pay
VIPdesk’s attorney’s fees because she inadvertently commenced
her action in the wrong court. Tagupa’s attorney represented to
the district court that the action would be reinstituted in
federal court once it was dismissed by the district court. The
20
In appropriate circumstances, a court may consider staying the
proceedings pending resolution of the same case filed in another forum or
jurisdiction. See City of Honolulu v. Ing, 100 Hawaiʻi 182, 193 n.16, 58 P.3d
1229, 1240 n.16 (2002) (“[T]he power to stay proceedings is incidental to the
power inherent in every court to control the disposition of the causes on its
docket with economy of time and effort for itself, for counsel, and for
litigants. How this can best be done calls for the exercise of judgment,
which must weigh competing interests and maintain an even balance.” (quoting
Air Line Pilots Ass’n v. Miller, 523 U.S. 866, 880 (1998))); Blake v. Cnty.
of Kaua’i Planning Comm’n, 131 Hawaiʻi 123, 137—38, 315 P.3d 749, 763-64
(2013) (accord); cf., Pence v. Lightning Rod Mut. Ins. Co., 203 F. Supp. 2d
1025, 1029 (S.D. Ind. 2002) (upon defendant’s motion, court stayed
declaratory judgment claim to await resolution of the same claim pending in
state court).
25
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district court granted the motion to dismiss and awarded VIPdesk
reasonable attorney’s fees and costs pursuant to Rule 41.
After the hearing, the court filed its order granting
Tagupa’s motion to dismiss, in which the court noted, inter
alia, that VIPdesk “is to be awarded reasonable attorney’s fees
and costs incurred in defending this case in this court.”
Thereafter, VIPdesk indicated that it incurred a total of
$16,800.41 in attorney’s fees (inclusive of general excise
taxes) and $288.87 in costs defending the case in the district
court. Tagupa filed an opposition pleading, and the court
awarded the full amount of VIPdesk’s requested fees and costs.
As Tagupa argued in her Application, because the court
did not conduct a hearing on the amount of attorney’s fees and
costs it imposed upon dismissal of the case, Tagupa did not have
“the opportunity to withdraw her converted ‘voluntary’ dismissal
motion or [to] have the Order set aside on the grounds that the
amount of the fees and costs would be too onerous.” Thus, the
district court abused its discretion in the manner of its
dispostion of the motion to dismiss, and this case must be
remanded to provide Tagupa with the opportunity to reject the
terms and conditions of the dismissal order, withdraw the
motion, and continue litigating the case at the district court,
or accept the terms and conditions that may be imposed upon
remand and have the case dismissed without prejudice. See Sapp,
26
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3 Haw. App. at 514, 654 P.2d at 887; Lau, 792 F.2d at 930;
Mortg. Guar. Ins. Corp., 904 F.2d at 301.
C. Attorney’s Fees for Frivolous Claims under HRS § 607-14.5
As an additional ground for awarding attorney’s fees
in this case, the judge hand-wrote on the Order Awarding
Attorney’s Fees that the fees were awarded “pursuant to HDCRCP
41(a)(2) and §§ 607-14.5 HRS” and that the “court finds that the
Plaintiff [sic] claim for jurisdiction amount was frivolous
under Section 607-14.5.” 21
Pursuant to HRS § 607-14.5(a) and (b), to award
attorney’s fees for a frivolous claim, the court must make “a
specific finding” in writing “that all or a portion of the
21
HRS section 607-14.5 states, in relevant part:
Attorneys' fees and costs in civil actions.
(a) In any civil action in this State where a party seeks
money damages or injunctive relief, or both, against
another party, and the case is subsequently decided, the
court may, as it deems just, assess against either party,
whether or not the party was a prevailing party, and enter
as part of its order, for which execution may issue, a
reasonable sum for attorneys’ fees and costs, in an amount
to be determined by the court upon a specific finding that
all or a portion of the party’s claim or defense was
frivolous as provided in subsection (b).
(a) In determining the award of attorneys’ fees and costs
and the amounts to be awarded, the court must find in
writing that all or a portion of the claims or defenses
made by the party are frivolous and are not reasonably
supported by the facts and the law in the civil action.
(Emphases added).
27
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claims . . . made by the party are frivolous and are not
reasonably supported by the facts and law in the civil action.”
A frivolous claim is a “claim so manifestly and
palpably without merit, so as to indicate bad faith on the
[pleader’s] part such that argument to the court was not
required.” Coll v. McCarthy, 72 Haw. 20, 29—30, 804 P.2d 881,
887 (1991) (quoting Kawaihae v. Hawaiian Ins. Cos., 1 Haw. App.
355, 361, 619 P.2d 1086, 1091 (1980)). A finding of
frivolousness is a high bar; it is not enough that a claim be
without merit, there must be a showing of bad faith. See
Canalez v. Bob’s Appliance Serv. Ctr., Inc., 89 Hawaiʻi 292, 300,
972 P.2d 295, 303 (1999) (in a personal injury action, even
assuming that the plaintiff’s counsel made untrue or inaccurate
statements regarding the plaintiff’s injuries, the claim was not
deemed frivolous because there was no showing of bad faith); Lee
v. Hawaii Pac. Health, 121 Hawaiʻi 235, 246—47, 216 P.3d 1258,
1269—70 (App. 2009) (although the plaintiff’s arguments were
without merit, the commencement of the action was not frivolous
because the plaintiff did not act in bad faith).
Here, other than the court’s handwritten one-sentence
notation on its order finding Tagupa’s “jurisdiction amount” to
be frivolous, the court made no other finding, written or
otherwise, that Tagupa’s claim was frivolous. Additionally,
prior to the court’s ruling on this ground, VIPdesk had never
28
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claimed that Tagupa’s claim was frivolous; in fact, VIPdesk
itself asserted that the claim could be brought in either the
district court or federal court.
When Tagupa filed her Complaint, pro se, she reduced
the amount in controversy from $35,000 to $25,000 to bring her
claim within the district court’s jurisdiction. Although there
is authority intimating that an excessive and unreasonable
amount of damages may be an “indication of the frivolous and bad
faith nature” of an action, Bright v. Superior Court, 780 F.2d
766, 722 n.8 (9th Cir. 1986), VIPdesk cites no authority to
suggest that choosing--for reasons of strategy, expense, or
otherwise--to claim a lesser amount of damages than Tagupa may
otherwise be entitled indicates frivolousness or bad faith.
There is simply no evidence in the record that Tagupa
filed her complaint and pursued her case in bad faith or that
the amount of her claim was otherwise frivolous. Inasmuch as
the record does not support the district court’s conclusion that
Tagupa’s claim was frivolous so as to indicate bad faith on the
pleader’s part such that argument to the court was not required,
the district court abused its discretion in granting attorney’s
fees pursuant to HRS § 607-14.5.
29
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D. Remand to the District Court and Guidance in Determining
Fees and Costs
The district court erred in failing to provide Tagupa
with the opportunity to withdraw her motion to dismiss.
Accordingly, we vacate the district court’s Judgment and the ICA
Judgment on Appeal. Upon remand, the district court must
determine the amount of attorney’s fees and costs, if any, that
is justified by the relevant equities in this case so as to
accomplish substantial justice. See Moniz, 79 Hawaii at 500,
904 P.2d at 514; McCants v. Ford Motor Co., 781 F.2d 855, 857
(11th Cir. 1986). Upon being informed of the conditions of a
dismissal, if any, including the amount of attorney’s fees and
costs that she must pay VIPdesk, Tagupa will have the
opportunity to withdraw the motion to dismiss if she finds the
conditions unacceptable. See Moniz, 79 Hawaii at 500, 904 P.2d
at 514; Sapp, 3 Haw. App. at 514, 654 P.2d at 8879; 9 Wright &
Miller, Federal Practice 3d § 2366, at 522—23.
Because we vacate the judgment of the district court
and remand this case to that court in order to provide Tagupa
with the opportunity to withdraw the motion to dismiss, to
provide guidance on remand, we briefly discuss the approach that
should guide a trial court in setting the amount of attorney’s
fees and costs when they are made a condition of voluntary
dismissal. See, e.g., Gap v. Puna Geothermal Venture, 106
30
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Hawaiʻi 325, 341—43, 104 P.3d 912, 928–30 (2004) (offering
guidance to circuit court on remand as to setting appropriate
sanction); Nelson v. Univ. of Haw., 97 Hawaiʻi 376, 385 n.6, 38
P.3d 95, 104 n.6 (2001) (addressing evidentiary issues to
provide guidance to the court on remand).
Payment of attorney’s fees and costs to a defendant is
merely a species of the various terms and conditions that a
trial court may impose upon a plaintiff’s motion for voluntary
dismissal. See 9 Wright & Miller, Federal Practice 3d § 2366,
at 540 (stating that, aside from the “payment of money,”
conditions may include a requirement “that the plaintiff produce
documents or agree to allow any discovery in the dismissed
action to be used in any subsequent action or otherwise reduce
the inconvenience to the defendant caused by the dismissed
case”); see, e.g., Moniz, 79 Hawaiʻi at 500—01, 904 P.2d at 514—
15 (conditioning voluntary dismissal on the reinstatement of an
arbitration award); In re Wellbutrin XL, 268 F.R.D. 539, 544
(E.D. Pa. 2010) (conditioning voluntary dismissal on the
plaintiff’s compliance with a previous court-ordered discovery).
Before imposing attorney’s fees and costs (as is the case when
imposing any other condition), a court should strive “to insure
that substantial justice is accorded to both parties.” Moniz,
79 Hawaiʻi at 500, 904 P.2d at 514 (emphasis added) (quoting 9
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Wright & Miller, Federal Practice 2d § 2364); HDCRCP Rule
41(a)(2).
Because the substantial justice standard is not
susceptible to exact exposition, its application necessarily
will produce different results depending on, and tailored to,
the particular circumstances present in a case. The trial court
should balance all of the “relevant equities” so as to “do
justice between the parties in each case,” and if attorney’s
fees and costs are to be imposed, they should be reasonable and
“deemed appropriate.” McCants, 781 F.2d at 857.
For example, there might be instances where
substantial justice is most effectively realized if the amount
of attorney’s fees and costs awarded excludes “expenses for
items that will be useful in another action.” 9 Wright &
Miller, Federal Practice 3d § 2366, at 532; see Westlands Water
Dist., 100 F.3d at 97—98 (holding that “the defendants should
only be awarded attorney fees for work which cannot be used in
any future litigation of these claims”); McLaughlin v. Cheshire,
676 F.2d 855, 856—57 (D.C. Cir. 1982) (“[W]here a plaintiff
seeks voluntary dismissal in one forum to pursue pending
litigation against the defendant in another forum, the defendant
is not entitled to reimbursement for expenses incurred in
preparing work product that has been or will be useful in the
continuing litigation.”); Davis v. USX Corp., 819 F.2d 1270,
32
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1276 (4th Cir. 1987) (holding that there is no reason to award
attorneys’ fees for work and resources that “will be easily
carried over to litigation of the plaintiff’s cause of action”
in another jurisdiction); Thoubboron v. Ford Motor Co., 809 A.2d
1204, 1211 (D.C. 2002) (“Attorney’s fees and costs are limited
to the amount expended for work that cannot be applied to the
subsequent lawsuit concerning the same claims . . . .”). 22
The justification for excluding expenses for items
that will be useful in another action is grounded in the twofold
purpose of awarding attorney’s fees and costs as a term or
condition of voluntary dismissal: “to compensate the defendant
for the unnecessary expense that the litigation has caused,”
Cauley v. Wilson, 754 F.2d 769, 772 (7th Cir. 1985), “and to
deter vexatious litigation,” Bishop v. W. Am. Ins. Co., 95
F.R.D. 494, 495 (N.D. Ga. 1982) (citing 5 J. Moore, J. Lucas &
J. Wicker, Moore's Federal Practice §§ 41.05[1], 41.06 (2d ed.
1982)). Where the plaintiff is voluntarily dismissing an action
22
Some courts have allowed the defendant to recoup all litigation-
related expenses from the plaintiff even if some of the work and materials
could be used in a subsequent litigation of the same case. See, e.g.,
LeBlang Motors, Ltd. v. Subaru of Am., Inc., 148 F.3d 680, 685—86 (7th Cir.
1998) (allowing defendant to recoup all trial-preparation expenses because
plaintiff moved for voluntary dismissal at the eve of trial, court informed
plaintiff that it would consider granting the motion only if plaintiff agrees
to the condition, and plaintiff expressly agreed); Am. Cyanamid Co. v.
McGhee, 317 F.2d 295, 297—98 (5th Cir. 1963) (condition requiring plaintiff
to pay defendant’s costs and reasonable attorney’s fees, without limiting the
award to only those that had been rendered useless by the voluntary
dismissal, was not an abuse of discretion because trial court considered
“elements[] traditionally called upon to underpin our concepts of
reasonableness and fairness”).
33
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in order to commence the same action in a different forum or
jurisdiction, the defendant faces the risk of incurring
duplicative litigation costs. See Cauley, 754 F.2d at 772;
Taragan v. Eli Lilly & Co., 838 F.2d 1337, 1340 (D.C. Cir.
1988). At the same time, because the defendant inevitably will
have to defend against the same action, it would generally be
inequitable to allow the defendant to recoup all attorney’s fees
and costs because some of them were expended for work and
materials that can be carried over to, and utilized in, the
subsequent litigation. 23
We therefore hold that in applying the substantial
justice standard to the amount of attorney’s fees and cost
imposed as a condition to voluntary dismissal, the court should
consider such factors as (1) the reasonableness of the amount of
attorney’s fees and costs; (2) whether another cause of action
concerning the same subject matter is contemplated by the
plaintiff against the defendant; (3) whether some work or
materials produced for the case subject to dismissal could be
utilized in the litigation of the later-filed case; and (4) the
23
In such a case, recoupment of all attorney’s fees and costs not
only would compensate the defendant for the prejudice that the voluntary
dismissal would cause, which is fair and proper, see Cauley, 754 F.2d at 772,
but would also provide the defendant with a potentially unjust windfall, see
GAF Corp., 665 F.2d at 369—70 (holding that payment for “expenses incurred in
preparing work product that will be useful in the ongoing litigation in”
another jurisdiction “would amount to a windfall to” the defendant).
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prejudicial effect of dismissal to the defendant beyond the
prospect of subsequent litigation.
In its motion for attorney’s fees, VIPDesk submitted a
summary of its fees and expenses incurred in defending against
Tagupa’s claims, totaling $16,800.41 in attorney’s fees and
$288.87 in costs. The court granted the full amount of
VIPdesk’s requested fees and costs, and it appears that the
court simply accepted VIPdesk’s accounting of fees and costs and
did not engage in the requisite weighing of the relevant
equities to arrive at its award to VIPdesk. See McCants, 781
F.2d at 857. The district court’s order reflects no finding
that the amount of attorney’s fees and costs were calculated to
accomplish substantial justice in light of the facts and
circumstances of this case. 24 Hence, upon remand, the district
court should also consider the foregoing approach in setting the
amount of attorney’s fees and costs if the court, in its
discretion, decides to impose such a condition for voluntary
dismissal.
IV. CONCLUSION
Although we find that the trial court has discretion
to impose attorney’s fees as a term or condition of voluntary
dismissal under HDCRCP Rule 41(a)(2), in this case the district
24
Further, the district court could not have conducted an in-court
balancing of the factors in this case because no hearing was ever held.
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court abused its discretion by not providing Tagupa with an
opportunity to choose between accepting this condition or
withdrawing her motion to dismiss. Finally, we find that the
district court abused its discretion by failing to evaluate, and
make findings on, whether the award and amount of attorney’s
fees and costs accords substantial justice to both parties.
Accordingly, we vacate the judgment of the ICA and the district
court’s June 17, 2013 Judgment and June 17, 2013 Order Granting
Defendant’s Motion for Award of Attorney’s Fees and Costs and
remand the case to the district court for proceedings consistent
with this opinion.
Lottie Tagupa /s/ Mark E. Recktenwald
petitioner pro se
/s/ Paula A. Nakayama
Robert D. Triantos and
Edmund W.K. Haitsuka /s/ Sabrina S. McKenna
for respondent
/s/ Richard W. Pollack
/s/ Michael D. Wilson
36