Cedillos v. Masumoto.

*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
Electronically Filed
Supreme Court
SCWC-13-0000107
04-DEC-2015
09:24 AM
IN THE SUPREME COURT OF THE STATE OF HAWAIʻI
---oOo---
________________________________________________________________
PHILIP CEDILLOS, Petitioner/Plaintiff/
Counterclaim Defendant-Appellant,
vs.
PATRICIA MASUMOTO, Respondent/Defendant/
Counterclaim Plaintiff-Appellee.
________________________________________________________________
SCWC-13-0000107
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-13-0000107; DC-CIVIL NO. 12-1-2171)
DECEMBER 4, 2015
RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.
OPINION OF THE COURT BY McKENNA, J.
I. Introduction
This case is a landlord-tenant dispute between
Petitioner/Plaintiff/Counterclaim Defendant-Appellant Philip
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
Cedillos (“Cedillos”), pro se, and
Respondent/Defendant/Counterclaim Plaintiff-Appellee Patricia
Masumoto (“Masumoto”). Cedillos timely applied for writ of
certiorari on August 31, 2015 from a July 2, 2015 Judgment
entered by the Intermediate Court of Appeals (“ICA”) pursuant to
its May 27, 2015 Summary Disposition Order (“SDO”). The ICA
affirmed the District Court of the Second Circuit’s (“district
court[’s]”) “January 17, 2013 Judgment for Possession and Writ
of Possession” in favor of Masumoto.
In his Application for Writ of Certiorari
(“Application”), Cedillos presents three questions:
A. Did the ICA commit grave error of law and fact by
determining that despite the harmless error, the grant
of summary possession was still correct because
Petitioner did not set forth any evidence or establish
retaliatory eviction in accordance with the provisions
and restrictions of HRS 521-74, HRS 521-21 and HRS 521-
71?
B. Did the ICA commit grave error of fact and is its
summary decision inconsistent with Hawaii case and
statutory law by finding — in direct contradiction to
the district court’s determination of bifurcation and
record of proceedings— that the district court afforded
Petitioner the opportunity to present affirmative
defenses pursuant to HRS 521-42 and HRS 521-64, as they
concerned repairs made and/or reported, that went
unresolved and unpaid?
C. Did the ICA commit grave error of fact by wrongfully
affirming the denial of a rent trust fund and
incorrectly asserting that Petitioner’s request for
establishment of a rental trust fund was improper?
For the reasons discussed herein, the ICA erred in
affirming the district court’s Judgment for Possession and Writ
of Possession based on an October 6, 2012 45-day notice to
2
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
vacate. Furthermore, there were no grounds to remove Cedillos
based on a failure to pay rent for November 2012.
II. Background
A. Factual Background
Cedillos and Masumoto entered into an agreement for
the rental of “271 Makaena Place, back unit” (“property”) on
November 1, 2011 for a period of six months. The written rental
agreement and two addenda did not include an attorney’s fee
provision. Rent was $800 per month with Cedillos performing
yard service worth $150 per month. The lease ended on May 31,
2012, and automatically converted to month-to-month terms
thereafter.
During the initial lease period, Masumoto e-mailed
Cedillos on February 19, 2012 stating: (1) a prior tenant had
issues with the legality of the rental units at 271 Makaena
Place; (2) to Masumoto’s knowledge, she had “brought all
building construction and risk hazards up to code,” and (3) the
only “remaining illegality” was the stove in Cedillos’s rental
unit. She asked Cedillos to remove the stove by the end of
February.
After the lease converted to month-to-month terms, on
August 2, 2012, Masumoto e-mailed Cedillos: “Beginning September
1, 2012, there will be a rent increase of $25/month.” By letter
dated August 6, 2012, Cedillos asserted to Masumoto that:
3
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
Hawaii Revised Statute[s] chapter 521-74 prohibits you from
raising the rent or evicting me from my particular unit
until you have brought the unit into compliance with
applicable building and rental housing law.
On February 12, 2012 you informed me via email
that the unit you rented to me was not a legal rental unit
under Hawaii landlord-tenant law.
Even if you were able to legally raise the rent
at my unit, your notice is defective and unenforceable
under Hawaii Revised Statute 521-21. . . .
Additionally, I have submitted, with this
correspondence, an itemized invoice billing you, in part,
for the mandated firewall installation between the separate
dwellings at this address. Please refer to the applicable
provision in Hawaii Revised Statute 521-64 if you have
questions about this billed item.
(Emphasis added). Masumoto replied by e-mail dated August 7,
2012 stating that the unit’s illegality was due to a stove that
was left in Cedillos’s unit “to accommodate [him] and [despite]
knowing it was an illegal stove, [Cedillos] chose to use it
anyway.” Thus, the e-mail served to give Cedillos “1 month’s
notice that [Masumoto was] going to change the lease to mention,
‘No stove included.’” Masumoto then intended to remove the
stove after the notice period, and thereafter raise the rent by
“$25/ per month, or 85 cents per day, prorated.” Masumoto also
took issue with Cedillos’s invoice for erecting a firewall in
another tenant’s unit, as she was unaware Cedillos took such
action until she received Cedillos’s invoice. Masumoto noted
that “[Cedillos’s] having done such a thing constitutes reasons
for an eviction.”
Masumoto e-mailed Cedillos on August 28, 2012, stating
that she would “respond to each [of Cedillos’s invoices] soon,”
and asking for “September rent, without deductions [for
4
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
Cedillos’s invoices], and add the $25.” Cedillos paid $825 to
Masumoto by checks dated September 1, 2012 and October 1, 2012.
According to the stamps on the checks, the first check was
deposited on or around September 12, 2012, and the second check
was cashed on October 1, 2012.
By letter dated September 1, 2012, among other things,
Cedillos (1) identified that Masumoto’s notice of the $25 rent
increase did not comply with HRS § 521-21 (2006), because it did
not provide forty-five consecutive days of notice, and (2)
asserted that after numerous notices to Masumoto of safety
deficiencies in the rental units, he repaired the firewall in
his unit and the upstairs unit pursuant to HRS § 521-64(c)
(2006), and submitted receipts for the repair.
The first time Masumoto informed Cedillos that she
wished him to leave the premises was on October 1, 2012. She
gave him 30-days’ notice. Cedillos responded by e-mail dated
October 1, 2012, stating that the eviction notice violated HRS §
521-71 (2006) and was retaliatory under HRS § 521-74, and that
he planned to initiate legal proceedings to protect himself.
Cedillos filed a complaint in district court on October 5, 2012.
It was served on Masumoto the same day. See infra Part II.B.
On October 6, 2012, Masumoto served a 45-day eviction
notice on Cedillos, which stated the lease would be terminated
November 20, 2012.
5
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
On October 30, 2012, Cedillos mailed his November rent
to Masumoto at her P.O. Box address by way of USPS certified
mail. According to Masumoto, she did not pick it up because she
often “pick[s] up [her] mail at night” in Pukalani due to her
spending a lot of time in Lahaina taking care of her mother.
Because Masumoto did not pick up and sign for the certified mail
during business hours, the post office stamped the certified
envelope as being routed for return to Cedillos on November 19,
2012.
Through her attorney, Masumoto sent a “Five-Day Notice
to Pay Rent or Quit [Premises]” letter dated November 26, 2012
to Cedillos. The letter stated that if Cedillos challenged the
45-day lease termination notice, rent for the month of November
2012 amounting to $950 ($800 plus $150 for non-performed yard
work) was past due, and that payment in full was required within
five days or else the lease would be terminated. If Cedillos
did not challenge the 45-day lease termination notice, rent was
due for the period of November 1 to November 20, 2012 ($633.33)
plus $31.66 per day starting November 21, 2012.1 Masumoto
emphasized: “[P]lease note that it is our position that the
rental agreement has been terminated based upon the 45 days
1
The letter stated that the prorated amount would begin October 21, 2012,
although that date appears to be a typographical error given the letter’s
content.
6
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
notice. Still, if you dispute this fact, this notice is to
provide you notice that your rental agreement will be terminated
due to past due rent if payment is not made in a timely manner.”
The “Five-Day Notice to Pay Rent or Quit [Premises]”
letter was received by Cedillos on November 27, 2012.2 By letter
dated November 27, 2012, Cedillos informed Masumoto’s attorney
that he received the letter that morning; that the deliverer
threatened Cedillos and therefore a police report was filed to
document the harassment; and that
I dispute your assertions that rent has not been paid and I
have enclosed here copies of certified mail sent to
[Masumoto] that she refused to pick up and collect. The
content of the certified mail was the rent for November. I
will be also sending December rent in a timely manner using
the same certified process.
I also dispute the assertion that yard
maintenance was not performed during this period.
. . . .
Please contact me immediately if you have any
questions or desire to be the recipient of the refused
certified mail that contained the November rent.
On November 27, 2012, Masumoto’s attorney e-mailed
Cedillos stating:
We have not [received] rent payment for the month of
November that you are now alleging was mailed on October
30, 2012. If the check has been returned to you, please
forward it to my office within five business days from
November 26, 2012. If the check has not been returned,
please re-issue a new check and place a stop order on the
prior check as we have not received it, and deliver the new
check on or before five business days from November 26,
2012.
2
Although no specific finding was made by the trial court with respect to the
date Cedillos received the five-day notice, there is no dispute in the record
that Masumoto’s attorney sent Cedillos the notice on November 26, 2012, the
date of the letter, but Cedillos did not receive the notice until November
27, 2012.
7
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
In addition, to prevent further issues, please
forward all rent payments to [Masumoto] c/o my
office . . . .
Cedillos did not receive the returned certified mail
envelope containing the November rent until November 29, 2012.
Cedillos did not re-mail the returned envelope upon receipt.
Having written out a new check, on November 29, 2012, Cedillos
again submitted rent to Masumoto at her P.O. Box address by
certified mail. The mailing receipt from USPS indicated the
expected delivery date was November 30, 2012. There is no
record of the actual delivery date. The check was for $825 and
the memo line stated “Rent 12/12.” According to a bank stamp on
the check and Masumoto’s endorsement, it was deposited by
Masumoto on December 4, 2012.
On December 12, 2012, Cedillos responded to the
November 27 e-mail by letter addressed to Masumoto’s attorney
stating:
[I]n my Opposition to Defendant’s Motion for Leave to File
Counterclaim [filed on December 4, 2012], I informed the
court that I would be in possession of the unclaimed and
returned certified mail of November rent for 271 Makaena
Pl, Makawao 96768 sent to Patricia Masumoto. Now that the
hearing is concluded I am giving you possession of the mail
as you have previously requested. I will also be
submitting further rent payments directly to your office.
The certified envelope containing the November rent was included
with the December 12, 2012 letter. The attorney received the
letter and November rent envelope on or around December 12,
2012. Masumoto’s attorney did not give the certified envelope
8
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
to Masumoto until the date of trial, January 7, 2013. Masumoto
acknowledged receipt of the letter and certified envelope.
On December 31, 2012, Cedillos sent his January 2013
rent payment of $825 to Masumoto by certified mail, which was
received by Masumoto.
Cedillos asserted he performed the requisite monthly
yard maintenance on November 3 and November 24, 2012, so his
rent was $800, not $950. Masumoto disputed this assertion.
B. District Court Proceedings3
As noted earlier, on October 5, 2012, Cedillos filed a
complaint in district court alleging claims for retaliatory
eviction, fraudulent misrepresentation, fraudulent inducement,
failure to disclose, unfair or deceptive acts and practices, bad
faith, and injunctive relief. The specific violations alleged
by Cedillos included, among others:
20. In early May of 2012, [Masumoto] entered [Cedillos’s]
rental premises, in violation of HRS 521-53, and demanded
that [Cedillos] fix her other neighboring (271A) rental
unit’s broken washing machine hose. [Cedillos] complied
and executed the repair immediately.
. . . .
25. On August 2, 2012 [Masumoto] sent to [Cedillos] a
demand for rental increase in violation of HRS 521-21 and
HRS 521-74. . . .
. . . .
34. [O]n October 1, 2012, [Cedillos] was served with an
eviction notice that was not in conformity with the law.
Cedillos requested “damages and civil penalties,” “punitive
damages,” and “establishment of a rental trust fund, pursuant to
3
Presided by the Honorable Blaine J. Kobayashi.
9
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
HRS 666-21, in which the court shall direct [Masumoto] to
deposit all disputed rental overpayments and for [Cedillos] to
deposit future rental payments to be secured by the court until
all litigation has concluded in this case.”
At a hearing on October 15, 2012, the district court
(1) denied Cedillos’s request for a rental trust fund, (2)
referred the parties to mediation, and (3) continued the matter
for a status conference on December 10, 2012. Cedillos filed a
Motion for Reconsideration on October 29, 2012, urging the court
to establish a rental trust fund and to “order [Masumoto] to
deposit rental overpayments into the Fund and [Cedillos’s]
deposit of future rental payments, until the conclusion of the
litigation.” Cedillos also asked that Masumoto be “enjoin[ed] .
. . from further statutory violations and from further
attempting to illegally dispossess [Cedillos] during the
duration of [Cedillos’s] litigation against [Masumoto] for
retaliatory eviction.”
On October 22, 2012, Masumoto filed a non-hearing
motion for leave to file a counterclaim for summary possession.
Cedillos opposed the motion, and asserted that Masumoto’s motion
was premature as he had not yet “overstayed the deadline of any
legal eviction notice and post-deadline notices,” and that
Masumoto’s counterclaim can become actionable “only if the court
does not enjoin [Masumoto] in [Cedillos’s] retaliatory eviction
10
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
case from further pursuing the illegal dispossession, and the
time and notice requirements of statutory rules fulfilled.”
Further, Cedillos contested Masumoto’s assertion that Cedillos
refused to mediate. Thus, in addition to responding to
Masumoto’s motion, Cedillos moved for Rule 11 sanctions against
Masumoto and her attorney, arguing that there were “outrageous
misstatements of fact” in Masumoto’s motion. Cedillos pointed
to a letter from Mediation Services of Maui dated October 25,
2012 (which did not indicate when Cedillos contacted the
mediator’s office), stating that “[Cedillos] has contacted our
office and would like to invite you in to mediation. . . .
Please contact our office . . . by Friday, November 9, 2012 for
more information.” In reply, Masumoto’s attorney declared that
Cedillos previously stated, “mediation will be an exercise of
futility,” in an e-mail dated October 1, 2012, which was prior
to the district court’s October 15, 2012 order requiring
mediation. The district court denied Masumoto’s motion on
November 13, 2012.
At a hearing on November 26, 2012, the district court
denied Cedillos’s motion for reconsideration and motion for
sanctions. The district court also noted that 45 days had
passed since Masumoto issued the October 6, 2012 eviction
notice. On November 27, 2012, Masumoto filed a motion for leave
to file a summary possession counterclaim, asserting that
11
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
Cedillos had not yet vacated the property despite the 45-day
notice terminating the lease, and that Cedillos had not paid any
rent required under the lease. Cedillos’s written opposition to
the motion focused on Masumoto’s failure to pick up the November
rent envelope, stated that he would bring the returned certified
mail to court on December 10, 2012, and asserted that because
Masumoto’s rental unit was “illegal,” she could not avail
herself of legal remedies. In his opposition, Cedillos did not
specifically challenge the 45-day notice terminating the lease
based on the fact that it was issued after he notified Masumoto
of various violations of the Landlord-Tenant code and filed and
served his district court complaint against Masumoto for those
violations; he did, however, assert: “[T]here is no new evidence
or cause to grant [Masumoto’s] motion. Circumstances have not
changed since the denial by this court of the original non-
hearing motion . . . .” The district court granted the motion
on December 10, 2012, and set a hearing on various pre-trial
motions and trial on possession for January 7, 2013. The
hearing and trial proceeded as scheduled.
At the hearing preceding the trial, the district court
heard arguments on three motions filed by Cedillos (Motion for
Alternative Dispute Resolution, Motion for Pre-Trial Admission
of Evidence, and Motion to Compel Discovery) and a Motion to
Compel filed by Masumoto. Without providing any specific
12
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
rationale on the record, the court denied each of the motions.
The court also granted Masumoto leave to submit a request for
attorney’s fees associated with defending against Cedillos’s
three motions.
At trial, Masumoto’s attorney called as witnesses
Masumoto and another tenant of a unit near the property.
Cedillos, pro se, called Masumoto as a witness. Cedillos
questioned Masumoto about the $25 per month rental increase
beginning September 2012, and the court accepted Exhibit 4,
which contained an e-mail communication between Cedillos and
Masumoto about the rent increase, into evidence. When Cedillos
attempted to submit evidence with respect to whether Masumoto
agreed to compensate Cedillos for purchasing and pouring caustic
soda into the cesspool, the court and Cedillos had the following
colloquy:
THE COURT: What’s the relevance?
[CEDILLOS]: As far as rent, rental payments[?]
THE COURT: You understand the issue in this case is
you didn’t pay November rent in a timely fashion.
[CEDILLOS]: Yes, I do, your Honor. But I’m still a
little confused[.]
THE COURT: Okay, so.
[CEDILLOS]: [B]ecause [Masumoto’s attorney] indicated
at the outset that there’s two separate issues here, and
we’re only concentrating on whether or not rent was paid
for the unit and/or if the 45 day notice was, in fact,
legal.
We’re only concentrating on whether rental payments
were, in fact, made in a timely manner, then I’ll confine
my questioning to that. But I think that the issues [. .
.] the issues are intertwined and you can’t really separate
them if the Court is going to consider whether or not her
45 day notice to me was, in fact, legal.
THE COURT: All right. I don’t see what the problem
is or the confusion. It’s either you did or didn’t pay the
November rent in a timely fashion; and secondly, whether or
13
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
not notice was given to you. So I don’t know why showing
me evidence of payments and correspondence concerning rent
and deductions for January 2012 is relevant to that issue.
[CEDILLOS]: Okay. So the issue that the Court is
considering is whether or not I, in fact, did pay rent in a
timely manner, and as counsel and as [Masumoto] has putting
forth, that the reason for the counterclaim is because of
nonpayment of rent.
THE COURT: Okay. You sat through her testimony this
morning; right?
[CEDILLOS]: Correct.
THE COURT: And the testimony that came out from the
witness was that you didn’t timely pay November 2012’s
rent; right?
[CEDILLOS]: Okay. Yes.
THE COURT: So that’s the basically the thrust of her
testimony.
[CEDILLOS]: All right. There were issues brought up,
your Honor, concerning repairs made. Is the Court
considering that?
THE COURT: Not at this time. That’s not relevant to
the issue of possession as far as the Court’s concerned for
today.
Ultimately, of the nine exhibits identified on Cedillos’s
exhibit list, only two pages of Exhibit 1 (cancelled rental
checks for September and October 2012) and Exhibit 4
(communication regarding the $25 monthly rental increase) were
admitted. At the end of Cedillos’s case-in-chief the court and
Cedillos exchanged the following:
[CEDILLOS]: No more witnesses, your Honor.
THE COURT: Okay. Are you going to be testifying?
[CEDILLOS]: No, your Honor. I’d like to rest on my
declarations and the exhibits I’ve submitted in my answer
and all previous filings. Unless [Masumoto’s attorney]
wants to call me as a witness.
THE COURT: You had questions you want to ask him?
[MASUMOTO’S ATTORNEY]: No.
THE COURT: Okay. So the Court will take the matter
under advisement. Give the Court an opportunity to review
the exhibits that were submitted to the Court.
Court will continue the matter to January
14 at 10:00 o’clock a.m. for ruling by the Court on the
issue of possession.
14
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
On January 14, 2013, the district court ruled in favor
of Masumoto, stating that Masumoto was “entitled to the
property” and ordering the issuance of a writ of possession and
judgment for possession. Cedillos requested a stay of the writ,
which was denied. The writ and judgment for possession issued
on January 17, 2013, and a status conference was set for
February 11, 2013.
Masumoto filed “Defendant’s Declaration in Support of
Fees” on January 14, 2013. On January 23, 2015, the district
court issued a Judgment against Cedillos awarding Masumoto
$1,755.00 in attorney’s fees “based upon the Court denying
Plaintiff’s Motions for Alternative Dispute Resolution, Motion
for Pre-Trial Admission of Evidence and Motion to Compel
Discovery.” Both the January 23 Judgment and Masumoto’s
attorney’s Declaration in Support of Fees failed to indicate the
legal basis for fees.
After granting Cedillos’s non-hearing motion for
findings of fact and conclusions of law, the district court
filed its “Findings of Fact, Conclusions of Law, Decision and
Order” on January 31, 2013. The Findings of Fact state in the
entirety:
1. [Masumoto] is the owner of property located at 271
Makaena Street, Makawao, Maui, Hawaii (“the Subject
Property”).
2. [Masumoto] was the landlord, and [Cedillos] was the
tenant, of the Subject Property pursuant to a Rental
15
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
Agreement dated November 1, 2011 (Defendant’s Exhibit
A).
3. Pursuant to the terms of the Rental Agreement, the
rental term commenced on December 1, 2011, and ended
on May 31, 2012, after which the Rental Agreement
would automatically convert to a month-to-month
tenancy. Rent was $800.00/month.
4. Within two (2) days of the written notice dated
October 5, 2012, [Masumoto] hand delivered [Cedillos]
a 45-day notice to vacate the Subject Property
(Defendant’s Exhibit C).
5. Defendant testified that she did not receive rent
from Plaintiff for the month of November 2012.
6. By letter dated November 26, 2012, counsel for
[Masumoto] informed [Cedillos] that he was in default
of rent for November, 2012, specifically, the time
period of November 1-20, 2012 (Defendant’s Exhibit
D). [Cedillos] was also informed that if he did not
believe that the rental agreement had been terminated
via the written notice dated October 5, 2012, he was
required to pay [Masumoto] the amount of rent in
default in five (5) business days otherwise the
rental agreement would be terminated.
7. In response to [Cedillos’s] claim that he had mailed
November’s rent to [Masumoto] (which [Masumoto]
testified that she never received in the mail) on
October 30, 2012, counsel for [Masumoto] informed
[Cedillos] to make payment to counsel for [Masumoto]
within five (5) business days from November 26, 2012
(Defendant’s Exhibit E).
8. [Masumoto] testified that to date, she has not
received rent for the month of November 2012.
9. The Court finds the testimony of [Masumoto] to be
more credible than [Cedillos].
10. If any of the foregoing Findings of Fact are
Conclusions of Law, they shall be so deemed.
The Conclusions of Law state in the entirety:
1. Section 521-71(a) f [sic] the Hawaii Revised Statutes
(“HRS”) states, in pertinent part:
When the tenancy is month-to-month, the
landlord may terminate the rental agreement by
notifying the tenant, in writing, at least
forty-five days in advance of the anticipated
termination. . . .
2. The term of the Rental Agreement ended on May 31,
2012. Thereafter, the Rental Agreement automatically
converted to a month-to-month tenancy.
3. [Masumoto] notified [Cedillos] in writing, of the
termination of the tenancy via notices dated October
5, 2012, and/or November 26, 2012. Despite receiving
said written notices, [Cedillos] continued to remain
on the Subject Property.
16
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
4. [Masumoto] is entitled to immediate possession of the
Subject Property.
5. If any of the foregoing Conclusions of Law are
Findings of Fact, they shall be so deemed.
On January 25, 2013, Cedillos filed a motion for
continuance of the February 11 status conference, explaining
that he was “currently on Oahu until February 19, 2013 [and was]
unable to return before that date due to [his] father’s illness
who is currently in a care home.” The district court denied the
motion on February 5, 2013. By an e-mail dated February 8, 2013
to Masumoto’s attorney, Cedillos stated: “[I] will not [be]
deter[red] . . . from the appeal of the possession and the
continuation of the retaliatory suit. . . . As you know Judge
Kobayashi denied my request for a continuance and it will be
impossible for me to be at hearing on Monday. I have not
received or been able to pick up any mail to my po box since
1/20/13. I will not return until the 19th.” At the February 11
status conference, Cedillos did not appear. Masumoto’s attorney
represented that Cedillos notified him that the district court
had denied Cedillos’s motion to continue the status hearing and
that Cedillos presently lived on Oahu. Pursuant to the court
minutes, the court then stated that it “will dismiss
[Cedillos’s] claim with prejudice as to case-in-chief. Court
will enter default on [Cedillos] as to the counterclaim.” The
17
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
court minutes and court document summary do not indicate that
default was actually entered by the district court.
After Cedillos filed a Notice of Appeal with the ICA
in February 2013, see infra Part II.C., on March 6, 2013,
Masumoto filed a Non-hearing Motion for Default Judgment.
Masumoto’s requested attorney’s fees included fees already
approved and granted by way of the January 23, 2013 Judgment.
Masumoto’s motion included a “Declaration Regarding Attorney’s
Fees and Costs” stating that the request for these fees was
pursuant to “[HRS] § 607-14 (assumpsit)” and “[HRS] § 666-14
(summary possession).” The Notice of Motion stated: “Any
response to this Motion must be in writing . . . and filed with
the Court no later than . . . 12 days [from the date shown on
the Certificate of Service below] when the Motion is mailed.”
The Motion was mailed to Cedillos on March 6, 2013.
On March 12, 2013, the district court granted the
motion and entered Default Judgment in favor of Masumoto and
against Cedillos for $16,439.30, where $2,813.67 was attributed
to “Total Rent, Holdover & Damages,” $373.13 to other filing and
service fees, and $13,352.50 to attorney’s fees. On March 13,
2013, a First Amended Judgment was filed, and listed the same
award amount as the March 12, 2013 order. On March 18, 2013,
Cedillos timely filed his response to Masumoto’s Motion for
Default Judgment. On March 22, 2013, both the March 6 Default
18
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
Judgment and March 13 First Amended Judgment were sua sponte set
aside by the court as Cedillos’s March 18 response was timely.
No specific reference was made to the January 23, 2013 Judgment.
The record on appeal does not reflect further ruling
on the issue of default or default judgment of claims raised in
Cedillos’s case-in-chief.4 Notably, the district court did
subsequently issue orders denying Cedillos’s Motion for Stay of
Proceedings Pending Appeal and his Motion for Stay of Execution
of Judgement Awards and Attorney Fees Pending Appeal.
C. Appeal to the ICA
Cedillos filed a Notice of Appeal on February 22,
2013. Cedillos stated he wished to appeal from:
the Judgment for Possession and Writ of Possession filed on
January 17, 2013; Judgment filed on January 23, 2013;
Findings of Fact, Conclusions of Law, Decision and Order
filed January 31, 2013; Order Denying Plaintiff’s Stay of
Writ of Possession received by the court January 14 and
filed January 31, 2013; Order Denying Plaintiff’s Motion to
Compel Discovery filed January 23, 2013; Order Granting
Defendant’s Motion For Leave to File Counterclaim filed
unknown; Order Denying Plaintiff’s Motion for
Reconsideration filed December 7, 2013 and Order Denying
Motion for Continuance filed January 25, 2013.
In his opening brief, Cedillos asserted five points of
error by the district court:
1. [The court e]rred in granting leave to [Masumoto] to
bring a summary possession counter claim.
2. [The court e]rred and abused its discretion in
allowing the counterclaim for summary possession to
4
There has been recent activity in the district court, however, that is not
included in the record on appeal. As reflected in the Hoohiki database for
Case No. 2RC12-1-002171, Masumoto filed a “Motion for Entry of Default
Judgment Against Plaintiff” on September 8, 2015. A hearing on the motion
occurred on October 19, 2015. A status hearing is set for December 21, 2015.
19
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
be heard before [Cedillos’s] original underlying
claim of retaliatory eviction was adjudicated and in
bifurcating and refusing to consider [Cedillos’s]
affirmative defenses to the possession counterclaim.
The original complaint and defenses directly affected
[Cedillos’s] right of possession and would have
precluded [Masumoto] from recovering possession.
3. [The court e]rred in not establishing a rental trust
fund pursuant to HRS 521-78.
4. [The court e]rred in granting summary possession and
finding and concluding that [Cedillos] did not pay
rent for November 2012.
5. [The court e]rred in denying a stay of the writ of
possession.
(citations omitted). Cedillos did not present any specific
argument with respect to the district court’s entry of Judgment
dated January 23, 2013 for attorney’s fees related to certain
pre-trial motions.
The ICA found each of Cedillos’s five contentions to
be without merit.
As to the first point of error, the ICA stated that
Cedillos “failed to provide any argument as to how the
[d]istrict [c]ourt abused its discretion in allowing [Masumoto]
to file a counterclaim or state how he was prejudiced when the
[d]istrict [c]ourt allowed the counterclaim to be filed.”
Cedillos v. Masumoto, No. CAAP-13-0000107, at 2 (App. May 27,
2015) (SDO).
With respect to the second issue, the ICA noted that
“[c]ontrary to Cedillos’s contention, the [d]istrict [c]ourt did
not prevent him from presenting evidence of retaliatory eviction
as a defense to [Masumoto]’s claim for possession.” Id.
20
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
Further, citing to KNG Corp. v. Kim, 107 Hawaii 73, 79 n.10, 110
P.3d 397, 403 n.10 (2005), the ICA concluded the district court
“did not abuse its discretion by adjudicating Masumoto’s summary
possession claim prior to considering Cedillos’s complaint.”
Cedillos, SDO at 3. The ICA observed that Cedillos did not
present any evidence of retaliatory eviction under HRS § 521-74,
and that any repairs made by Cedillos “were [already] resolved
to Cedillos’s satisfaction.” Id. at 4.
The ICA found the third issue to be without merit
because Cedillos’s request for a rent trust fund that also
required Masumoto to deposit money into it was not required
under the law. Id. (citing HRS § 521-78(a) (2006)).
As to the fourth issue, the ICA concluded that any
error by the district court with respect to finding that
Cedillos did not pay November 2012 rent was harmless because
Cedillos did not properly leave the premises in accord with the
forty-five-day notice to vacate. Id. at 5.
Lastly, with respect to whether the district court
erred by denying Cedillos’s motion to stay the writ of
possession, the ICA noted the record was bare of transcripts of
the hearing at which the court orally denied Cedillos’s request,
and therefore there was no support for Cedillos’s assertion that
the district court refused to hear arguments with respect to the
motion to stay. Id. The ICA also noted that Cedillos was not
21
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
entitled to a stay because he did not comply with the
requirements of HRS § 666-14 (1993), which requires that
Cedillos actually pay Masumoto for past due rent, including
interest, and costs and expenses related to the summary
possession proceedings prior to the issuance of the writ in
order to obtain a stay. Id. at 6.
Based on the foregoing, the ICA affirmed “the
[d]istrict [c]ourt’s Judgment for Possession and Writ of
Possession, both filed on January 17, 2013.” Id. The ICA did
not address the Judgment dated January 23, 2013.
The three questions raised by Cedillos in his Application relate
to issues 4, 2, and 3, respectively, as addressed by the ICA.
III. Standards of Review
A. Questions of Law
Questions of law are reviewed upon appeal under the
right/wrong standard of review. Maile Sky Court Co. v. City &
Cnty. of Honolulu, 85 Hawaii 36, 39, 936 P.2d 672, 675 (1997)
(citation omitted).
B. Interpretation of a Statute
“‘The interpretation of a statute is a question of law
reviewable de novo.’” Ka Paakai O Kaaina v. Land Use Comm’n, 94
Hawaii 31, 41, 7 P.3d 1068, 1078 (2000) (quoting Amantiad v.
Odum, 90 Hawaii 152, 160, 977 P.2d 160, 168 (1999)).
22
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
IV. Discussion
As a preliminary matter, the following facts were
undisputed at trial:
1. As of June 1, 2012, Cedillos was on a month-to-month
tenancy of the property.
2. On August 2, 2012, Masumoto notified Cedillos that
monthly rent for the property would increase by $25 as of
September 1, 2012.
3. On August 6, 2012, Cedillos contested the rent
increase with Masumoto as forty-five-days’ notice was not
provided as required by HRS § 521-21. Cedillos also
tendered an invoice to Masumoto for work performed on the
property.
4. As of August 28, 2012, Masumoto continued to demand
that the rent due in September 2012 include the $25
increase. Masumoto also had not yet responded to
Cedillos’s request to be reimbursed for tendered invoices.
5. Cedillos timely tendered rent payments in the amount
of $825 to Masumoto for September 2012 and October 2012.
6. On October 1, 2012, Masumoto notified Cedillos that
she wanted him to leave in 30 days.
7. On October 5, 2012, Cedillos filed a complaint in
district court, alleging among other things that Masumoto
violated HRS § 521-53 (2006) (requiring “at least two days
23
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
notice of the landlord’s intent to enter”), HRS § 521-21
(2006) (requiring “written notice given forty-five
consecutive days prior to the effective date of [any rent]
increase” for month-to-month tenancies), and HRS § 521-74
(prohibiting retaliatory evictions and rent increases).
8. Also on October 5, 2012, Masumoto was served with
Cedillos’s complaint.
9. On October 6, 2012, Masumoto issued a forty-five-day
eviction notice to Cedillos, terminating the lease as of
November 20, 2012.
10. On October 30, 2012, Cedillos submitted his November
rent to Masumoto at her P.O. Box via USPS certified mail.
11. As of November 19, 2012, the November rent envelope
was not picked up by Masumoto. It was then returned by
USPS to Cedillos, who received it on November 29, 2012.
12. On November 27, 2012, Cedillos received Masumoto’s
“Five-Day Notice to Pay Rent or Quit [Premises].” The
notice required Cedillos to pay November rent within “five
. . . business days of receipt of this notice / posting,”
else the “rental will be terminated.”5 Five business days
from November 27, 2012 was December 4, 2012.
5
The district court made no finding with respect to the date Cedillos
received the “Five-day Notice to Quit” letter. Rather, the court found: “By
letter dated November 26, 2012, counsel for [Masumoto] informed [Cedillos]
that he was in default of rent for November, 2012, . . . .” The date of
(continued . . .)
24
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
13. By December 4, 2012, Masumoto had received and cashed
a check from Cedillos in the amount of $825.
14. On or around December 12, 2012, Masumoto’s attorney
received the November rent envelope from Cedillos.
15. Masumoto’s attorney handed the November rent envelope
to Masumoto on January 7, 2013, the date of trial.
The sequence of events is important because it impacts
whether various statutory rights and obligations under the
Residential Landlord-Tenant Code, HRS Chapter 521 (“Landlord-
Tenant Code”), are triggered. The following discussion examines
the issues raised by Cedillos in the order he presents them in
his Application: (1) whether the ICA erred in determining that
the trial court’s determination that Cedillos was required to
vacate due to his failure to pay November rent was harmless
error, (2) whether the ICA erred in determining that the trial
court did not err in the manner in which it handled the trial
such that Cedillos was prevented from presenting evidence
relating to repairs, and (3) whether the ICA erred in affirming
(. . . continued)
actual receipt of the notice, as opposed to the date of issuance, is the date
from which the five-business-day period commences. See HRS § 521-68(a) (“A
landlord . . . may, any time after rent is due, demand payment thereof and
notify the tenant in writing that unless payment is made within a time
mentioned in the notice, not less than five business days after receipt
thereof, the rental agreement will be terminated.” (emphasis added)).
25
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
the trial court’s denial of Cedillos’s request to set up a
rental trust fund.
A. The Forty-five-day Notice to Vacate
The record shows that it is undisputed that at a
minimum, Cedillos was current on his rent payments through
October 31, 2012. The record also shows that on October 5,
2012, Cedillos filed his complaint alleging Masumoto violated
various sections of HRS Chapter 521 — including issuing an
eviction notice on October 1, and raising his monthly rent by
$25, both without adequate notice — and served Masumoto with the
complaint the same day. Thus, the filing and service of the
complaint occurred prior to Cedillos being served on October 6,
2012 with Masumoto’s 45-day notice to vacate.
HRS § 521-74(a) states in relevant part:
[S]o long as the tenant continues to tender the usual rent
to the landlord . . . , the landlord [shall not] otherwise
cause the tenant to quit the dwelling unit involuntarily .
. . after:
(1) The tenant has complained in good faith to the .
. . landlord, . . . or any other governmental agency[6]
6
The legislature, in amending HRS § 521-74 to include complaints to “the
landlord, . . . or any . . . governmental agency,” stated:
The provisions of section 521-74 are expanded by
prohibiting the landlord from evicting or raising the rent
of a tenant who has complained in good faith to the
landlord, building department, Office of Consumer
Protection, or any other governmental agency. Presently,
the landlord is prohibited from raising the rent or
evicting a tenant who has complained to the Department of
Health. This section is expanded because there exists
other problems not restricted to health which could lead to
these actions following a dispute between the landlord and
tenant.
(continued . . .)
26
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
concerned with landlord-tenant disputes of conditions in or
affecting the tenant’s dwelling unit which constitutes a
violation of . . . any provision of this chapter . . . .
In sum, pursuant to HRS § 521-74, a tenant need not demonstrate
actual retaliation. Rather, absent certain exceptions, so long
as the tenant continues to submit rent, once a tenant has
“complained in good faith” to the landlord or a governmental
agency, the landlord is expressly prohibited from (1)
maintaining an action or proceeding to recover possession of the
premises, (2) otherwise causing the tenant to quit
involuntarily, (3) raising the tenant’s rent, and (4) decreasing
the services to which the tenant is entitled. See HRS § 521-74.
By concluding that “[d]espite receiving [the] written
notice[] [to vacate on October 6, 2012], [Cedillos] continued to
[improperly] remain on the Subject Property,” the district court
determined as a matter of law that the October 6, 2012 notice
was valid, and that Cedillos’s failure to comply and vacate the
Property was grounds for granting Masumoto a writ and judgment
for possession as a matter of law. To arrive at this
determination, the district court implicitly determined that HRS
§ 521-74 did not apply to alter the legal efficacy of the
October 6, 2012 notice. We examine this issue, beginning with
whether Cedillos’s complaint was submitted in good faith.
(. . . continued)
Conf. Comm. Rep. No. 3, in 1975 House Journal, at 869, 1975 Senate Journal,
at 827.
27
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
Cedillos’s complaint had alleged various violations of
the Landlord-Tenant Code. The allegations included that
Masumoto: (1) raised Cedillos’s rent without giving the
statutorily required 45-day’s notice; (2) Masumoto had failed to
respond to Cedillos’s request for reimbursement for repairs done
on the property; and (3) on October 1, 2012, had given him only
thirty days’ notice of eviction in violation of HRS § 521-71.
At trial, Masumoto testified as to the first and third matters,
acknowledging: (1) that on August 2, 2012, she imposed a $25
rent increase beginning September 1, 2012;7 and (2) that she had
“ask[ed] . . . Cedillos to move out in 30 days” on October 1.
There was no submission of evidence regarding payment for
repairs as the court declined to consider that issue.
Thus, Masumoto acknowledged by her own trial
testimony, which the district court credited, that she gave
Cedillos insufficient notice of both the $25 rent increase and
initial request to vacate. These facts together with Cedillos’s
continued timely rent payments, leave no room to dispute whether
Cedillos’s complaint, which was filed in district court and
served on Masumoto on October 5, 2012 (prior to Cedillos’s
7
Masumoto also testified that Cedillos agreed that despite her giving him
less than the statutorily mandated amount of notice prior to the rent
increase, “he would agree to pay a higher rent amount of $25.00 per month” as
of October 1 so long as she paid his submitted repair invoices.7 However, the
record is bare as to whether Cedillos and Masumoto had resolved the rent
increase issue prior to the filing of his complaint because the court
declined to consider the issue of payment for repairs.
28
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
receipt of a 45-day notice to vacate), was made in good faith,
thereby satisfying HRS § 521-74(a)(1).8 Accordingly, when
Masumoto issued her October 6, 2012 45-day notice to vacate to
Cedillos, HRS § 521-74(a) rendered the notice ineffective
because Masumoto was prohibited from “caus[ing] . . . [T]enant
to quit the dwelling unit involuntarily.”9
Cedillos has consistently argued before the district
court, ICA, and this court, that the October 6, 2012 notice to
vacate was “illegal.” For example, in Cedillos’s “Response and
Declaration in Support of Denial of Defendant’s Motion for Leave
to File Counterclaim” dated October 29, 2012, Cedillos argued,
“The current, and latest, notice of eviction was dated October
6, 2012. Only if, and when, [Cedillos] has overstayed the
deadline of any legal eviction notice and post-deadline notices,
will [Masumoto] have any actionable cause for summary
possession.” In his opening brief before the ICA, Cedillos
elaborated on the issue of the timing of a landlord’s notice of
8
Cedillos’s August 6, 2012 letter to Masumoto would also appear to satisfy
the requirements of HRS § 521-74(a)(1), as Masumoto’s testimony also
corroborates Cedillos’s allegations of improper notice as to the rent
increase.
9
Additionally, the exception identified in HRS § 521-74(b)(7), did not apply
to Masumoto. See HRS § 521-74(b)(7) (“Notwithstanding subsection (a), the
landlord may recover possession of the dwelling unit if . . . [t]he landlord
is seeking to recover possession on the basis of a notice to terminate a
periodic tenancy, which notice was given to the tenant previous to the
complaint or request of subsection (a).” (emphasis added)).
29
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
termination with respect to a tenant’s complaint against a
landlord:
[T]he record is clear that [Masumoto] had already violated
HRS 521-21 concerning rent increases as detailed in
Argument #1. Both HRS 521-74(a)(1) and HRS 521-71(f)
restricted [Masumoto’s] right to issue a notice of
termination and sue for possession. Consider the result
should this court . . . agree with the district court . . .
. The implication would lead to an open house on tenants
who initiate statutory Code proceedings against a landlord
and then continue to timely pay rent to the landlord in a
most proof positive and secured manner [certified mail]
only to have the landlord knowingly refuse to collect.
[The] [l]andlord then falsely claims non payment of rent
and sues for possession.
(Emphasis in original).
Accordingly, as consistently argued by Cedillos, the
October 6, 2012 45-day notice to vacate was invalid because it
was issued while Cedillos was current with his rent payments,
and after Cedillos filed a complaint in good faith in district
court and served it on Masumoto. No other 45-day notice to
vacate was issued following Cedillos’s alleged failure to pay
November rent.
Thus, the ICA erred in concluding that even if the
district court erred in determining that Cedillos failed to pay
rent for November 2012, that such error was harmless because
Masumoto was entitled to summary possession pursuant to the 45-
day notice to vacate and Cedillos’s “fail[ure] to establish
retaliatory eviction.” Cedillos, SDO at 5.
First, such error would not have been harmless, as
there was no basis to grant summary possession to Masumoto
30
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
pursuant to the October 6, 2012 45-day notice, which was filed
after the October 5, 2012 good-faith complaint. Additionally,
to the extent the ICA faulted Cedillos for failing to “testify
[]or present other evidence that he made a complaint that
constituted a violation of a health law, regulation, or any
provision of HRS Chapter 521,” the ICA’s observation is
inaccurate for two reasons. One, the court proceeding was
itself initiated by Cedillos’s October 5, 2012 complaint that
alleged violations by Masumoto of HRS Chapter 521, and therefore
a copy of the complaint was not required to have been submitted
as evidence for the purpose of determining the validity of the
October 6, 2012 45-day notice. And two, Exhibit 4, which was
admitted into evidence by the district court, included pre-
October 6, 2012 communications between Cedillos and Masumoto,
indicating that Cedillos complained to Masumoto about her
violations of the Landlord-Tenant code, including the lack of
requisite notice prior to the increase in rent and Cedillos’s
request for reimbursement for required repairs.
Second, to clarify, the ICA’s reference to Windward
Partners v. Delos Santos, 59 Haw. 104, 117, 577 P.2d 326, 334
(1978), when concluding that Cedillos had the “burden of proving
retaliatory eviction under HRS § 521-74 by a preponderance of
the evidence,” was misplaced. That case concerned the use of
the affirmative defense of retaliatory eviction in equity, and
31
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
not pursuant to HRS § 521-74. See id. at 114, 577 P.2d at 333
(concerning alleged retaliation by landlord for tenant’s
exercise of rights outside the Landlord-Tenant code).
B. The Five-Day Notice to Pay Rent or Quit Premises Based on
Cedillos’s Alleged Failure to Pay November 2012 Rent
The ICA did not directly address Cedillos’s fourth
point of error: “The district court . . . [e]rred in granting
summary possession and finding and concluding that [Cedillos]
did not pay rent for November 2012.” (citation omitted).
Instead, as previously noted, the ICA concluded any such error
was harmless as Masumoto “was entitled to possession of the
premises, regardless of whether [Cedillos] tendered or paid rent
for November 2012” pursuant to the October 6, 2012 45-day notice
to vacate. As discussed supra Part IV.A., the ICA erred in so
concluding. The record compels a contrary result.
Cedillos accurately pointed out to the ICA that the
district court’s finding of fact #8, “[Masumoto] testified that
to date, she has not received rent for the month of November
2012,” is clearly erroneous. Indeed, Masumoto testified that as
of the date of the hearing, she was in receipt of the November
rent envelope and that her attorney had the November rent
envelope in his possession since on or about December 12, 2012.
Further, even if this court were to disregard the fact
that the November rent envelope sat for nearly three weeks at
32
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
the post office housing Masumoto’s post office box, uncollected
by Masumoto, Cedillos properly tendered rent in compliance with
Masumoto’s five-day notice. Although the five-day notice
demanded $950 for November rent, the district court determined
that “[r]ent was $800.00/month” and made no findings with
respect to the effect of lawn maintenance on the rent amount.
Neither party challenged this finding. By the fifth-business-
day deadline, December 4, 2012, Masumoto had received a check
from Cedillos in the amount of $825 and deposited it.
Accordingly, it appears Cedillos timely satisfied the rent
demanded in the five-day notice.
The district court, however, did not make this
finding. Instead, it emphasized that Masumoto did not receive
rent for November 2012.10 Thus, presumably the court determined
as a matter of fact that the check deposited on December 4, 2012
applied to December rent. With the money going toward December
rent, it would appear that Cedillos remained in default and
subject to eviction because Masumoto did not receive November
10
We note that Hawaii Rules of Evidence Rule 303 states:
A presumption established to . . . facilitate the
determination of the particular action in which the
presumption is applied imposes on the party against whom it
is directed the burden of producing evidence. . . . [One
such presumption is that] [t]he payment of earlier rent or
installments is presumed from a receipt for later rent or
installments[.]
HRE Rule 303(a), (c)(5). The presumption does not apply in this case because
Cedillos informed the court that the rent received by Masumoto in December
was for the “December rental payment.”
33
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
rent by the five-day deadline of December 4. Indeed, this is
what Masumoto’s attorney appeared to assert during trial when
examining Masumoto.
Q. . . . You received December’s rent in December from
[Cedillos]; correct?
A. Yes.
Q. And the first time you received November’s rent was .
. . basically today when your attorney handed you.
A. Right, right, today.
Yet, even if this were the case, Masumoto would still not be
entitled to summary possession based on the five-day notice as a
matter of law.
As a preliminary matter, because summary possession
proceedings cannot be initiated until after the expiration of
the five-day notice period and termination of the agreement,
Masumoto did not “bring” any legal proceedings against Cedillos
until December 10, 2012, when the district court granted her
leave to file a claim for summary possession. See HRS § 521-
68(a) (2006) (“A landlord . . . may, any time after rent is due,
demand payment thereof and notify the tenant in writing that
unless payment is made within a time mentioned in the notice,
not less than five business days after receipt thereof, the
rental agreement will be terminated. . . . If the tenant
remains in default, the landlord may thereafter bring a summary
proceeding for possession of the dwelling unit or any other
proper proceeding, action, or suit for possession.” (Emphasis
added)). Thus, HRS § 666-5 (1993), did not apply to Masumoto at
34
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
the time she accepted Cedillos’s check on December 4, 2015 and
does not affect how the court construes that payment. The
statute provides:
When any legal proceedings are brought by a landlord to
evict a tenant, whether by summary possession proceedings
or an action in the nature of an action of ejectment or
otherwise, the acceptance of rent by the landlord during
the litigation shall not be construed as a recognition of
the tenancy and shall be without prejudice to the
landlord’s legal rights at the inception of the
proceedings.
In the event the eviction proceedings of whatever
nature are successful any rent so paid shall be construed
as damages for withholding the occupancy of the premises
involved from the landlord.
HRS § 666-5 (emphasis added). Accordingly, any payments made by
Cedillos to Masumoto prior to December 10, 2012 can be construed
as Masumoto’s recognition of some form of tenancy.
Here, pursuant to the five-day notice, the rental
agreement would not terminate until after December 4, 2012,
i.e., December 5, 2012. See HRS § 521-68(a). Thus, as of
December 4, 2012, when Masumoto accepted Cedillos’s check for
“December rent” and deposited it, the rental agreement was still
in effect. By accepting Cedillos’s rental payment, Masumoto
extended his periodic tenancy through at least December 31,
2015. Therefore, although Masumoto may not have waived her
right to collect rent for November 2012, she did waive her right
to evict Cedillos — based on Cedillos’s alleged failure to pay
November rent by December 4, 2012 — during the extended tenancy
35
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
under the existing rental agreement.11 Further, on December 12,
2012, during the continued tenancy, Masumoto, through her
attorney, received the November rent envelope, thus resolving
any issues of late rent and leaving no cause of action for
Masumoto to pursue under HRS § 521-68.
Thus, regardless of whether the rent check deposited
by Masumoto on December 4, 2012 was applied to November rent or
December rent, Masumoto was not entitled to summary possession
based on Cedillos’s alleged failure to pay November rent.
C. Whether the District Court Erred in Its Handling of the
Trial
The ICA correctly stated that “‘[t]he court has the
discretion in a summary possession case to sever the issue of a
determination of the landlord’s right to summary possession from
other issues.’” Cedillos, SDO at 2 (quoting KNG Corp., 107
Hawaii at 79 n.10, 110 P.3d at 403 n.10). Indeed, that the
district court first set trial for summary possession was not
illogical. If Cedillos had failed to pay rent and the rental
agreement was accordingly terminated, HRS § 521-74 (retaliatory
11
Notably, as of the date of trial, Masumoto had received a $825 rent payment
for January 2013. According to an image of the cashed January 2013 check,
which was submitted as an exhibit attached to a post-trial motion, the check
was deposited on January 4, 2013, prior to trial. Although HRS
§ 666-5 applies to the January payment (because it was made after Masumoto
filed her summary possession counterclaim), it has no practical effect on how
the payment is construed. This is because Masumoto had no “legal right” to
evict Cedillos based on either his rental payment history or the 45-day
notice to vacate delivered to Cedillos on October 6, 2012. Accordingly,
Masumoto’s acceptance of the January 2013 rent payment further extended
Cedillos’s periodic tenancy under the rental agreement.
36
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
eviction) would not be at issue because the statute applies only
to those tenants who “continue[] to tender the usual rent”;
therefore, a determination that Masumoto was entitled to summary
possession for Cedillos’s failure to pay rent could then follow.
Similarly, if Cedillos had timely tendered rent, Masumoto would
not be entitled to summary possession. See supra Parts IV.A—B.
Some of the issues raised by Cedillos in his complaint
directly related to both whether November rent was timely paid,
and whether he met the elements of HRS § 521-74 thereby
prohibiting his eviction. For example, at trial Cedillos
attempted to submit evidence “concern[ing] repairs made and/or
reported, that went unresolved and unpaid,” but such attempts
were limited or denied by the district court. Cedillos had
billed Masumoto for such repairs on August 6, 2012, yet as of
August 28, 2012, the cost of the repairs had not been credited
to Cedillos’s rent. This is relevant to: (1) Cedillos’s
affirmative defense under HRS § 521-74 that Masumoto’s October
6, 2012 notice to vacate was issued in retaliation for
Cedillos’s request for reimbursement for property repairs; and
(2) the amount of rent for November 2012 required of Cedillos by
the end of the five-day-pay-or-quit period, if any, if offsets
for repairs were considered. Thus, the district court abused
its discretion when it determined that it would not consider
evidence of communication regarding “repairs made” as that issue
37
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
was “not relevant to the issue of possession as far as the
Court’s concerned for today.”
In his second point of error before the ICA, Cedillos
challenged this decision of the district court.12 The ICA’s
conclusions with respect to this issue, however, which were
based on the district court’s discretion, were erroneous. The
district court’s discretion in deciding the order in which it
addresses claims raised in a landlord-tenant dispute does not
permit it to preclude Cedillos from presenting evidence that is
relevant to both Masumoto’s summary possession counterclaim and
Cedillos’s own claims filed on October 5, 2012. Indeed, the
district court appeared to steer Cedillos into only offering
evidence regarding actual payment of rent or receipt of the
forty-five-day notice to vacate. For example, in response to
Cedillos expressing confusion as to why he could not present
evidence regarding “whether or not [the] 45 day notice . . .
was, in fact, legal,” an apparent affirmative defense unrelated
to the testimony presented by Masumoto, the court stated, “I
12
2. The district court . . . [e]rred and abused its
discretion in allowing the counterclaim for summary
possession to be heard before [Tenant’s] original
underlying claim of retaliatory eviction was adjudicated
and in bifurcating and refusing to consider [Tenant’s]
affirmative defenses to the possession counterclaim. The
original complaint and defenses directly affected
[Tenant’s] right of possession and would have precluded
[Landlord] from recovering possession.
(Emphasis added).
38
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
don’t see what the problem is or the confusion. It’s either you
did or didn’t pay the November rent in a timely fashion; and
secondly, whether or not notice was given to you.”
Additionally, the district court did not clearly state whether
it would consider the exhibits attached to certain of Cedillos’s
pre-trial filings.
Accordingly, the ICA incorrectly noted that
“[c]ontrary to [Cedillos’s] contention, the [d]istrict [c]ourt
did not prevent him from presenting evidence of retaliatory
eviction as a defense to [Masumoto’s] claim for possession.”
Cedillos, SDO at 2. Indeed, the ICA’s observation — that “while
there was some evidence introduced that repairs were made to the
property, the record demonstrates that those issues were
resolved to [Cedillos’s] satisfaction” — demonstrates why the
district court’s refusal to admit Cedillos’s evidence or to
clarify that some or all of Cedillos’s exhibits and declarations
submitted pre-trial was error: the ICA’s observation was wholly
based on evidence submitted by Masumoto, with no consideration
of Cedillos’s evidence because none was specifically admitted at
trial. Cedillos, SDO at 4 (referring to Exhibits F and Q).
For the foregoing reasons, the ICA erred in
determining that the district court did not prevent Cedillos
from fully presenting evidence (specifically evidence about
39
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
repairs) for the court’s consideration on the issue of summary
possession.
D. Whether the ICA Erred In Affirming the District Court’s
Decision to Deny the Establishment of a Rent Trust Fund
In his October 5 complaint, Cedillos requested the
“establishment of a rental trust fund, pursuant to HRS § 666-21,
in which the court shall direct [Masumoto] to deposit all
disputed rental overpayments and for [Cedillos] to deposit
future rental payments to be secured by the court until all
litigation has concluded in this case.” (Emphasis added). The
district court denied both the initial request and Cedillos’s
motion for reconsideration of that denial. The record is bare
as to the court’s reasons for denying Cedillos’s request.
Notably, however, the court’s minutes focused on Cedillos’s
request that Masumoto deposit alleged overpayments into the
fund: “[Cedillos’s] request for [Masumoto] to deposit monies
into rental trust fund denied by court.”
HRS § 666-21 (1993) and HRS § 521-78 (2006) are
identical and provide:
(a) At the request of either the tenant or the landlord in
any court proceeding in which the payment or nonpayment of
rent is in dispute, the court shall order the tenant to
deposit any disputed rent as it becomes due into the court
as provided under subsection (c), and in the case of a
proceeding in which a rent increase is in issue, the amount
of the rent prior to the increase; provided that the tenant
shall not be required to deposit any rent where the tenant
can show to the court’s satisfaction that the rent has
already been paid to the landlord; provided further that if
the parties had executed a signed, written instrument
agreeing that the rent could be withheld or deducted, the
40
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
court shall not require the tenant to deposit rent into the
fund. No deposit of rent into the fund ordered under this
section shall affect the tenant’s rights to assert either
that payment of rent was made or that any grounds for
nonpayment of rent exist under this chapter.
. . .
(c) The court in which the dispute is being heard shall
accept and hold in trust any rent deposited under this
section and shall make such payments out of money collected
as provided herein. The court shall order payment of such
money collected or portion thereof to the landlord if the
court finds that the rent is due and has not been paid to
the landlord and that the tenant did not have any basis to
withhold, deduct, or otherwise set off the rent not paid.
The court shall order payment of such money collected or
portion thereof to the tenant if the court finds that the
rent is not due or has been paid, or that the tenant had a
basis to withhold, deduct, or otherwise set off the rent
not paid.
HRS §§ 521-78, 666-21.
Thus, the ICA did not err in stating: “The plain
language of HRS § 521-78 allows the [d]istrict [c]ourt to order
a tenant, not a landlord, to deposit disputed rent into the rent
trust fund.” Cedillos, SDO at 4. Accordingly, neither HRS §
521-78 nor HRS § 666-21 require the district court to
“establish[] . . . a rental trust fund, pursuant to HRS 666-21,
in which the court shall direct [Masumoto] to deposit all
disputed rental overpayments and for [Cedillos] to deposit
future rental payments to be secured by the court until all
litigation has concluded in this case.” (Emphasis added).
Although the district court could have exercised its discretion
to grant in part Cedillos’s request, and require that his rent
payments be deposited with the court, Cedillos’s memorandum in
41
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
support for his motion for reconsideration shows that Cedillos’s
primary concern was over Masumoto’s payments, not his own.
Given the limitations of the record and the nature of
Cedillos’s request in the conjunctive, it does not appear that
the ICA erred in affirming the district court’s denial of the
establishment of a rent trust fund for the purposes requested by
Cedillos.
E. Judgment dated January 23, 2013 Relating to Attorney’s Fees
Associated with Certain Pre-trial Motions
The February 22, 2013 Notice of Appeal filed by
Cedillos identified the “Judgment filed on January 23, 2013” as
one of the district court judgments or orders from which he was
appealing to the ICA. Although the district court had initially
granted the motion on March 12, 2013, and filed a First Amended
Judgment on March 13, 2013, it subsequently sua sponte set aside
those judgments. In his August 25, 2013 opening brief before
the ICA, Cedillos noted that it was his understanding that
Masumoto’s March 6, 2013 Non-hearing Motion for Default Judgment
sought “to amend the Judgment dated January 23, 2013” in
addition to seeking allegedly unpaid rent. He also argued that
since the district court failed to rule on the motion following
the filing of his timely opposition, that the motion was deemed
denied pursuant to HRAP Rule 4(a)(3). The ICA did not address
the January 23, 2013 Judgment in its SDO.
42
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
Although Cedillos’s Application does not raise a
specific issue regarding the January 23, 2013 Judgment, the
Judgment should nevertheless be vacated. Neither Masumoto’s
“Declaration in Support of Fees” or the January 23, 2013
Judgment reflect the legal basis for which the fees were
granted. Even if it could be assumed the district court granted
fees to Masumoto for defending against Cedillos’s Motion to
Compel Discovery pursuant to District Court Rule of Civil
Procedure 37(a)(4), there is no indication as to what grounds
justified the award of fees with respect to defending against
Cedillos’s other motions. Notably, the rental agreement did not
include an attorney’s fee provision, and therefore fees were
unavailable under HRS § 521-35 (2006) (permitting rental
agreements to include an attorney’s fee provision within certain
parameters). Additionally, the record does not reflect that the
fees were issued as a sanction against Cedillos, or that the
district court found Cedillos’s motions to have been frivolous.
See, e.g., HRS § 607-14.5 (Supp. 1999).
In the light of the district court’s lack of
explanation, it appears from the record that the district court
granted fees for the pre-trial motions due to Masumoto having
“prevailed” on the summary judgment proceeding, as the January
23 Judgment issued after the district court issued the Writ of
Possession and Judgment for Possession. That Masumoto requested
43
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
attorney’s fees (including those already awarded by the January
23, 2013 Judgment) on March 6, 2013 and indicated that it was
in-part pursuant to HRS § 607-14 (Supp. 1997),13 underscores this
interpretation. Under these circumstances, the January 23
Judgment should be vacated as a matter of course when the Writ
of Possession and Judgment for Possession are also vacated.
V. Conclusion
For the foregoing reasons, the ICA’s July 2, 2015
Judgment on Appeal entered pursuant to its May 27, 2015 SDO is
vacated. The district court’s “January 17, 2013 Judgment for
Possession and Writ of Possession” and Judgment dated January
23, 2013 are vacated. This matter is remanded to the district
court for (1) for a determination of damages under HRS § 521-
74(c) (2006),14 owed to Cedillos on account of his improper
removal from the property on January 20, 2013, and (2) a re-
13
In all the courts, in all actions in the nature of
assumpsit . . . there shall be taxed as attorneys’ fees, to
be paid by the losing party and to be included in the sum
for which execution may issue, a fee that the court
determines to be reasonable . . . provided that this amount
shall not exceed twenty-five per cent of the judgment.
HRS § 607-14.
Masumoto also checked the box for “[HRS] § 666-14 (summary possession)” as a
basis for attorney’s fees. However, that statute concerns the payment of
attorney’s fees by a party requesting a stay of the execution of a writ of
possession, which was not at issue in March 2013 given that the writ was
already executed in January 2013.
14
“Any tenant from whom possession has been recovered or who has been
otherwise involuntarily dispossessed, in violation of this section, is
entitled to recover the damages sustained by the tenant and the cost of suit,
including reasonable attorney’s fees.” HRS § 521-74(c).
44
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
examination as to whether and why attorney’s fees for various
pre-trial motions should be awarded to Masumoto, alongside
resolution of Cedillos’s claims in his case-in-chief.
Philip Cedillos, /s/ Mark E. Recktenwald
petitioner pro se
/s/ Paula A. Nakayama
Matson Kelley,
for respondent /s/ Sabrina S. McKenna
/s/ Richard W. Pollack
/s/ Michael D. Wilson
45