Jou v. Argonaut Insurance Company.Â

*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
Electronically Filed
Supreme Court
SCWC-30606
05-JUN-2014
11:30 AM
IN THE SUPREME COURT OF THE STATE OF HAWAI#I
--- o0o ---
EMERSON M.F. JOU, M.D., Petitioner/Plaintiff-Appellant,
v.
ARGONAUT INSURANCE COMPANY, An Entity, Form Unknown;
CITY AND COUNTY OF HONOLULU, A Self-Insured Governmental Entity;
HEMIC, aka Hawaii Employers Medical Insurance Company, An Entity,
Form Unknown; and MARRIOTT CLAIM SERVICES CORPORATION,
a Corporation, Respondents/Defendants-Appellees.
(ICA NO. 30606; CIV. NO. 03-1-1445)
----------------------------------------------------------------
EMERSON M.F. JOU, M.D., Petitioner/Plaintiff-Appellant,
v.
HEMIC, aka Hawaii Employers Medical Insurance Company,
An Entity, Form Unknown, Respondents/Defendants-Appellees.
(ICA NO. 30607; CIV. NO. 09-1-1529)
SCWC-30606
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
JUNE 5, 2014
NAKAYAMA, ACTING C.J., MCKENNA, AND POLLACK, JJ., AND
CIRCUIT JUDGE TRADER, IN PLACE OF RECKTENWALD, C.J., RECUSED, AND
CIRCUIT JUDGE BROWNING, IN PLACE OF ACOBA, J., RECUSED
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
OPINION OF THE COURT BY POLLACK, J.
The sole issue in this case is whether Petitioner
Emerson M.F. Jou, M.D. (Jou) is eligible to be awarded appellate
costs. Jou filed separate appeals to the Intermediate Court of
Appeals (ICA) regarding two orders of the Circuit Court of the
First Circuit (circuit court) that had granted motions in favor
of Respondent Hawaii Employers Medical Insurance Company (HEMIC).
The ICA vacated one order, but denied Jou’s request for costs
related to the appeal of that order, relying on Hawaiian Ass’n of
Seventh-Day Adventists v. Wong, 130 Hawai#i 36, 305 P.3d 452
(2013). We hold that the ICA misapplied Seventh-Day Adventists
in denying Jou’s request for costs related to that appeal.
Accordingly, we vacate the order and judgment of the ICA that
pertained to its denial of appellate costs.
I.
On July 11, 2003, Jou filed Civil No. 03-1-1445
(the 2003 Case) against Argonaut Insurance Company (Argonaut),
the City and County of Honolulu, HEMIC, and Marriott Claim
Services Corporation (Marriott), alleging insurer bad faith,
interference, and statutory torts. On April 22, 2005 the circuit
court entered a judgment in favor of Argonaut, the City and
County of Honolulu, HEMIC, and Marriott as to all counts in the
- 2 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
complaint, and awarded HEMIC $8,750.00 in attorneys’ fees and
$833.20 in costs.1
Jou appealed the circuit court’s decision to the
ICA. While the appeal was pending, Jou settled with Argonaut,
and a partial dismissal of the appeal was approved by the ICA.
On April 5, 2007, the ICA entered a summary disposition order
affirming the circuit court’s decision. The ICA entered an order
awarding attorneys’ fees and costs related to the appeal:
$4,804.50 to Marriott, $6,275.40 to the City and County of
Honolulu, and $9,462.20 to HEMIC.
Thereafter, Jou and HEMIC began settlement
negotiations regarding the awards of attorneys’ fees and costs by
the circuit court and the ICA. In a settlement conference held
at the circuit court on May 4, 2009, HEMIC, Jou, and the court
signed a handwritten document (Settlement Document).2
1
The circuit court awarded Argonaut $12,500.00 in attorneys’ fees,
and the City and County $5,321.50 in attorneys’ fees and $238.69 in costs.
2
The document states:
1. $8,000 (JOU ÷ HEMIC).
2. JOU global release & indemnity (& dismissal)—incl. class DCD
appeal vs. HEMIC of all claims accrued to date of R & IA.
3. JOU & related providers … initiate administrative, judicial, or
other proceeding for 10 yrs after R & IA executed, arising out of
SVS provided by JOU or related providers (incl. Employers).
4. Stip dismiss all—own attys fees & costs.
- 3 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
A.
Following the apparent settlement agreement, Jou
initiated Civil No. 09-1-1529 (the 2009 Case) on July 6, 2009
against HEMIC, alleging that, during the May 4, 2009 settlement
negotiations, HEMIC concealed the fact that it had recorded a
judgment lien against Jou’s property. Jou further alleged that
the lien resulted in a denial of a real estate loan. Jou filed
an amended complaint on July 9, 2009 that asserted claims of
tortious judgment lien, settlement fraud, intentional infliction
of emotional distress, and negligence.
On February 19, 2010, HEMIC filed two motions. The
first, a Motion to Enforce Settlement was filed in the 2003 Case.
The second, a Motion to Enforce Settlement by Dismissing Action,
was filed in the 2009 Case.
The circuit court held a consolidated hearing and
orally granted both motions on May 28, 2010. The circuit court
entered two orders: (1) an “Order Granting Defendant HEMIC’s
Motion to Enforce Settlement” (Order Enforcing Settlement) in the
2003 Case, which enforced the Settlement Document as a binding
agreement; and (2) an “Order Granting Defendant HEMIC’s Motion to
Enforce Settlement by Dismissing Action” (Order Dismissing
Action), which dismissed the 2009 Case. Judgment pursuant to the
- 4 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
orders was entered on July 8, 2010.
B.
Jou filed separate appeals to the ICA of the Order
Enforcing Settlement and the Order Dismissing Action. The
appeals, Appeal Nos. 30606 and 30607, were consolidated by the
ICA as Appeal No. 30606 (Consolidated 30606 Appeal). However,
the ICA continued to refer to the original appeal numbers in
addressing and deciding the issues that pertained to each appeal
in its memorandum opinion and subsequent order pertaining to
costs.
In Appeal No. 30606, Jou argued that the circuit
court’s Order Enforcing Settlement in the 2003 Case was contrary
to law. Jou contended that the Settlement Document was merely a
proposal for a release that required the execution of a signed
release and indemnity agreement (indemnity agreement), and HEMIC
waived a material condition in the release by not pursuing the
execution of an indemnity agreement. The ICA disagreed, holding
that the Settlement Document sufficiently represented the terms
of the settlement and a separate indemnity agreement was not
required. Jou v. Argonaut Ins. Co., No. 30606, 2013 WL 6043901
at *2 (App. Nov. 15, 2013) (mem.). The ICA therefore affirmed
the Order Enforcing Settlement. Id.
In Appeal No. 30607, Jou argued that the circuit
- 5 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
court’s Order Dismissing Action in the 2009 Case was also in
error. Jou contended that the circuit court erred by enforcing
the Settlement Document as a global release of claims that had
accrued after May 4, 2009. Id.
The ICA reviewed HEMIC’s Motion to Enforce
Settlement as a motion for summary judgment because it found the
Order Dismissing Action was based “in part on a substantive
determination as to the merits of the claims asserted in [the
2009 case].” Id. at *3. The ICA concluded summary judgment was
improper because HEMIC failed to establish that there were no
genuine issues of material fact that either Jou’s claims in the
2009 Case had accrued by the time the Settlement Document was
executed, or that the dismissed claims were precluded by the
Settlement Document. Id. at *3-4. Further, the ICA found that
the substantive merits in regards to Jou’s fraud claims were not
properly raised or addressed by the parties. Id. at *4. The ICA
therefore vacated the judgment entered by the circuit court and
the Order Dismissing Action. Id. at *5.
C.
Following the ICA’s entry of judgment, Jou filed a
Request and Declaration of Counsel for Costs (Request for Costs).
1.
Jou requested reimbursement of $1,396.85 in costs
- 6 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
associated with the Consolidated 30606 Appeal based on the
following breakdown:
Item Cost - 30606 Cost - 30607
Filing Fees: $275.00 $275.00
Transcript: $151.83 $291.80
Copy: $224.91 $116.75
USPS Postage: $46.66 $14.90
Total: $698.40 $698.45
In regards to Appeal No. 30607, which pertained to the
Order Dismissing Action in the 2009 Case, Jou argued that costs
should be awarded because the ICA ruled in his favor by vacating
the circuit court’s judgment in favor of HEMIC.
In regards to Appeal No. 30606, which pertained to the
Order Enforcing Settlement in the 2003 Case, Jou argued that the
thrust of HEMIC’s Motion to Enforce Settlement was to achieve
dismissal of the tort claims in the 2009 Case. Therefore,
according to Jou, the ICA’s decision vacating the judgment in
Appeal No. 30607 granted him “the remedy he sought (and obtained)
in [Appeal No. 30606]; that is, saving the [2009 Case] tort
claims from the effects of the previously signed settlement
document.” Jou argued that he thereby was rendered the
prevailing party on the main issue in Consolidated Appeal 30606.
2.
On December 30, 2013 HEMIC filed an “Objection and Memo
in Opposition to [Jou’s] Request and Declaration of Counsel for
Costs.” HEMIC argued that Jou would not be able to repudiate the
- 7 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
Settlement Document on remand, and would be barred from filing
any claims to the extent that the claims accrued during the time
covered by the Settlement Document.
HEMIC contended “the central issue in both appeals was
whether the parties had entered into an enforceable settlement.”
Because the Settlement Document was enforceable, HEMIC was the
“prevailing party” in both appeals.
HEMIC further argued that the ICA’s affirmation that
the Settlement Document was enforceable was significant because
the circuit court, on remand, would determine when Jou’s claims
accrued and whether those claims were barred. Similarly, HEMIC
argued that the settlement agreement would preclude Jou from
asserting future claims.3
3.
On January 6, 2014, Jou filed “[Jou’s] Reply to
[HEMIC’s] Objection and Memorandum in Opposition to [Jou’s]
Request and Declaration of Counsel for Costs.” Jou argued HEMIC
failed to identify, or to prevail on, the disputed main issue in
Appeal Nos. 30606 and 30607, which was the 2009 tort action and
not the Settlement Document. Jou also contended that HEMIC’s
underlying motivation for filing the Motion to Enforce Settlement
in the 2003 Case, more than six months after the filing of the
3
HEMIC did not otherwise object to specific costs itemized by Jou.
- 8 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
complaint in the 2009 Case, was an attempt to rid itself of
potential liability resulting from the 2009 tort action, and not
a concern with the Settlement Document.
4.
On January 17, 2014, the ICA filed an “Order Denying
Petitioner’s Request and Declaration of Counsel for Costs” (Order
Denying Costs). In denying the Request for Costs related to
Appeal No. 30606, the ICA held Jou was not the prevailing party.
The ICA explained that:
On appeal, Appellant Jou had argued that the circuit court
erred in upholding the settlement agreement as an effective
agreement and release. This court determined Appellant
Jou’s arguments were without merit, affirmed the circuit
court, and thus Appellant Jou was not the prevailing party
on appeal as to appeal No. 30606.
In denying the Requests for Costs related to Appeal No.
30607, the ICA relied on Hawaiian Ass’n of Seventh-Day Adventists
v. Wong, 130 Hawai#i 36, 305 P.3d 452 (2013). The ICA held a
prevailing party had yet to be determined and accordingly denied
the motion. The ICA explained:
In appeal No. 30607, we vacated the Judgment entered in [the
2009 Case], as well as the [Order Dismissing Action], and
remanded to the circuit court for further proceedings.
Appellate costs are not awardable absent a prevailing party
in the case. Hawaiian Ass’n of Seventh-Day Adventists v.
Wong, 130 Hawai#i 36, 50, 305 P.3d 452, 466 (2013); SCWC-12-
0000535 Mickelson v. United Servs. Auto. Ass’n, 2013 WL
5509088 at *1. In Hawaiian Ass’n of Seventh-Day Adventist,
the supreme court vacated this court’s order awarding costs
on appeal “because a prevailing party has yet to be
determined.” Id. Here, in appeal No. 30607, this court
- 9 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
remanded the case to the circuit court and no prevailing
party has been determined. Pursuant to Hawaiian Ass’n of
Seventh-Day Adventists, we thus deny Appellant Jou’s request
for costs in appeal No. 30607.
(Emphases added). Consequently, the ICA denied Jou’s Request for
Costs because “[a]ppellate costs are not awardable absent a
prevailing party in the case.” The ICA filed a Judgment on
Appeal RE: Costs on January 21, 2014.
D.
Jou timely filed his Application for Writ of Certiorari
(Application) with this court on February 15, 2014.4 Jou
presents the following questions for review:
Whether Schefke v. Reliable Collection Agency Ltd., 96 Haw
408, 409, 32 P.3d 52 (2001) required the ICA to provide a
readily discernible rationale for its denial of costs (based
on no prevailing party)?
Whether the ICA was required to base its denial of costs to
petitioner Dr. Jou based on long-settled standards, restated
by his court in Nelson v. Hawaiian Homes Comm’n, 130 Haw
162, 166, 307 P.3d 142, 146 (2013)?
Whether, on balance, Petitioner Dr. Jou was the prevailing
party in ICA No. 30606, in that the entire proceeding,
initiated by Respondent HEMIC to enforce a settlement
agreement, was to bar Petitioner’s tort claims in No. 30607,
arising from the settlement, including fraud?
Whether, in ICA No. 30607, Petitioner is the prevailing
party at the ICA level because, despite remand, the ICA
vacated the Circuit Court’s dismissal?
1.
On the first issue, Jou argues the ICA’s sole legal
criterion in denying the Requests for Costs in the Consolidated
4
HEMIC did not file a response.
- 10 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
30606 Appeal was that Jou was not the prevailing party or that no
prevailing party has been determined. Jou contends that the ICA
was required to provide a readily discernible rationale for a
denial of costs, and no rationale is apparent from the record.
Because the ICA did not provide a readily discernible rationale
for its denial of costs, Jou argues the denial of costs in the
Consolidated 30606 Appeal should be remanded to the ICA.
2.
In regards to the denial of the Request for Costs in
Appeal No. 30606, Jou argues the ICA erred by failing to apply
the balancing test recognized by Hawai#i case law. Jou contends
that he is “on-balance” the prevailing party and therefore
entitled to costs. In support of his position, Jou advances
several arguments.
First, Jou contends that the thrust of HEMIC’s Motion
to Enforce Settlement in the 2003 Case was to block the tort
claims in the 2009 Case. Jou supports this argument by quoting
from HEMIC’s answering brief, which states that “Plaintiff Jou’s
filing of the underlying action is barred by the plain language
of the settlement agreement he signed.” Jou maintains that
HEMIC’s focus was not on its own settlement agreement, but on
eliminating liability from the tort claims in the 2009 Case. As
HEMIC’s liability under the 2009 Case was the main disputed issue
- 11 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
in the Consolidated 30606 Appeal, Jou asserts that under the
ICA’s ruling in regards to Appeal No. 30606 (the 2003 Case), the
tort claims in the 2009 Case can now proceed. Thus, Jou argues
that he prevailed as to the main issue in the Consolidated 30606
Appeal and is entitled to appellate costs in Appeal No. 30606.
Second, Jou contends that the ICA failed to follow
Hawai#i case law in determining the prevailing party in a case:
“This court has previously given guidance on determining which
party prevailed in a case in which the relief granted was not
solely in favor of . . . the successful party in the case, based
on the pleadings and proof.” Jou contends that, on balance, he
was the prevailing party in Appeal No. 30606.
Third, Jou argues that “the ICA’s lack of guidance to
the trial court on remand is complicated by its reliance on
Hawaiian Ass’n of Seventh-Day Adventists v. Wong[.] There, the
Hawaii Supreme Court stated ‘in light of our decision that
Paragraph 16 is ambiguous, we conclude that neither party had
prevailed on appeal.’” Jou distinguishes Seventh-Day Adventists
because that case was remanded based on a finding of ambiguity,
which is missing in the instant case. Here, Jou contends that he
“is not being placed back where he started; rather, the
settlement agreement the ICA upheld no longer bars his tort
claims against HEMIC in No. 30607. [Jou] is substantially better
- 12 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
off than when he started.”
3.
In regards to the denial of the Request for Costs in
Appeal No. 30607, Jou states that “where a party prevails on the
disputed main issue, even though not to the extent of his
original contention, he will be the successful party for the
purposes of taxing costs and attorneys’ fees.” Jou concludes he
“should have been assigned the prevailing party status even
though there was a remand.” Therefore, Jou contends that he is
entitled to costs in Appeal No. 30607.
II.
The questions presented by Jou relate to the
appropriate award of appellate costs pursuant to Hawai#i Rules of
Appellate Procedure (HRAP) Rule 39.
A.
As to the ICA’s denial of costs in Appeal No. 30607,
the core issue raised by Jou relates to the construction of HRAP
Rule 39 and the ICA’s application of Seventh-Day Adventists.
1.
HRAP Rule 39 provides, in relevant part:
(a) Civil Costs; To Whom Allowed. Except in criminal cases
or as otherwise provided by law, if an appeal or petition is
dismissed, costs shall be taxed against the appellant or
petitioner upon proper application unless otherwise agreed
by the parties or ordered by the appellate court; if a
- 13 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
judgment is affirmed or a petition denied, costs shall be
taxed against the appellant or petitioner unless otherwise
ordered; if a judgment is reversed or a petition granted,
costs shall be taxed against the appellee or the respondent
unless otherwise ordered; if a judgment is affirmed in part
and reversed in part, or is vacated, or a petition granted
in part and denied in part, the costs shall be allowed only
as ordered by the appellate court. If the side against whom
costs are assessed has multiple parties, the appellate court
may apportion the assessment or impose it jointly and
severally.
HRAP Rule 39(a) (2007) (emphasis added).
A request for costs following an appellate judgment or
order pursuant to HRAP Rule 39(a) must necessarily conform to one
of the four categories set forth in the rule. Under the first
three categories, costs are taxed: (1) against the appellant, if
the appeal is dismissed; (2) against the appellant/petitioner, if
the judgment is affirmed or the petition is denied; or (3)
against the appellee or respondent, if the judgment is reversed
or the petition granted. HRAP Rule 39(a). Under the fourth
category however, when the “judgment is affirmed in part and
reversed in part, or is vacated, or a petition granted in part
and denied in part, the costs shall be allowed only as ordered by
the appellate court.” Id. (emphases added).
HRAP Rule 39(a) therefore provides clear guidance for
the allowance of costs under the first three categories:
dismissal, reversal or affirmance. However, under the fourth
category, costs are only allowed as ordered by the court. When a
judgment is vacated, or a judgment or petition is either affirmed
- 14 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
or granted in part, or reversed or denied in part, an award of
costs is subject to the discretion of the appellate court.
2.
The application of HRAP Rule 39(a)’s fourth category
was explained in Leslie v. Estate of Tavares:
The intent of [HRAP Rule 39] is to allow the party
prevailing on appeal to recover those costs reasonably
incurred in prosecuting the appeal. Although this court did
not “reverse” a circuit court’s “judgment,” but, rather,
vacated the circuit court’s final order, the effect of the
decision on appeal was to grant Leslie the remedy he sought,
thereby causing him to “prevail” on appeal.
93 Hawai#i 1, 7, 994 P.2d 1047, 1053 (2000) (emphases added).
The Leslie court, therefore, reviewed the HRAP Rule 39 request
for costs based upon evaluating the remedy sought by the
appellant in conjunction with the remedy granted on appeal.
In Nelson v. Hawaiian Homes Commission, this court
provided further guidance by defining “prevailing party”:
The first step in analyzing whether Plaintiffs are entitled
to attorneys’ fees (and costs) is to determine whether they
are the prevailing party. The prevailing party is the one
who prevails on the disputed main issue. Even if the party
does not prevail to the extent of his original contention,
he will be deemed to be the successful party for the purpose
of taxing costs and attorney’s fees.
The [] court is required to first identify the principle
issues raised by the pleadings and proof in a particular
case, and then determine, on balance, which party prevailed
on the issues.
130 Hawai#i 162, 165, 307 P.3d 142, 145 (2013) (emphases added)
(citations, brackets, and quotation marks removed). Under
- 15 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
Nelson, even in cases where appellate relief is not granted
solely in favor of one party, a party may still be the prevailing
party for the purposes of an award of fees and costs if the party
is, on balance, the successful party on appeal. Id. at 166, 307
P.3d at 146.
Therefore, under HRAP Rule 39 and the decisions in
Leslie and Nelson, when a judgment is affirmed in part and
reversed in part, or is vacated, or a petition is granted in part
and denied in part, costs may be granted, subject to the
discretion of the appellate court to determine the party that, on
balance, prevailed on the main disputed appellate issue(s).
3.
Pursuant to Leslie and this court’s subsequent
decisions, costs under HRAP Rule 39(a)’s fourth category have
been routinely granted.
In Leslie, the petitioner filed a notice of dismissal
with prejudice in the circuit court pursuant to a signed release
and settlement agreement, but later filed a motion to vacate the
notice of dismissal, which was denied by the circuit court.
Leslie, 93 Hawai#i at 3, 994 P.2d at 1049. The petitioner in
Leslie raised three points of error in the underlying case. This
court agreed with the first two points of error, but remanded for
further proceedings as to the third point of error. Leslie v.
- 16 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
Estate of Tavares, 91 Hawai#i 394, 396, 994 P.2d 1220, 1222
(1999). Although the petitioner’s request for attorneys’ fees
was denied, the petitioner’s HRAP Rule 39 request for costs was
granted without objection from the respondent. Leslie, 93
Hawai#i at 7-8, 994 P.2d at 1053-54.
In Nelson v. University of Hawaii, the trial court
granted the defendant’s motion for judgment notwithstanding the
verdict, and entered judgment in favor of the defendant on all
counts. 99 Hawai#i 262, 264, 54 P.3d 433, 435 (2002). This
court vacated the trial court’s judgment in part and remanded for
a new trial on three of the six counts. Id. Subsequently, the
plaintiff’s HRAP Rule 39 request for costs on appeal was granted
without objection from the defendant, although the request for
attorneys’ fees was denied. Id.
In Willis v. Swain, the plaintiff-appellant sought
uninsured motorist coverage under her personal automobile policy.
113 Hawai#i 246, 248, 151 P.3d 727, 729 (2006). A motion for
summary judgment on the coverage issue filed by the defendant-
appellee was granted by the circuit court. Id. This court
vacated the circuit court’s decision and remanded for further
proceedings. Id. Subsequently, the plaintiff-appellant’s HRAP
Rule 39 request for costs was granted, without objection from the
- 17 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
defendant-appellee. Id. at 250, 151 P.3d at 731.
In Kaleikini v. Yoshioka, the petitioner filed a
complaint seeking six counts of declaratory injunctive relief
against the City and County of Honolulu. 129 Hawai#i 454, 461,
304 P.3d 252, 259 (2013). The circuit court granted summary
judgment in favor of the City. Id. at 458, 304 P.3d at 256. On
appeal, this court vacated summary judgment on four counts and
affirmed on two counts. Id. at 461, 304 P.3d at 259. Appellate
costs pursuant to HRAP Rule 39(a) were granted. Id. at 476, 304
P.3d at 274.
In Nelson v. Hawaiian Homes Commission, the circuit
court granted summary judgment in favor of the petitioners on two
of the four counts. 130 Hawai#i at 166, 307 P.3d at 146. The
ICA vacated the circuit court’s order granting summary judgment.
Id. The petitioners sought review in this court on one count.
Although this court held in favor of the petitioners, it
concluded that the respondents were the “prevailing party” for
purposes of appellate attorneys’ fees. Id. The respondents
filed a HRAP Rule 39 request for costs, but their request did not
include supporting documentation such as invoices, bills,
vouchers, and receipts. Id. at 173, 307 P.3d at 153. The
petitioners objected on the grounds that respondents’ request for
- 18 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
costs failed to comply with HRAP Rule 39(d) governing the form of
the request for costs. Id. Respondents filed a Reply that
included supporting documentation, but this court dismissed the
request because HRAP did not allow an opposing party to file a
response to the Reply with objections to any of the itemized
costs. However, the dismissal was made without prejudice to the
respondents, allowing them to renew their request for appellate
costs before the circuit court where the petitioners would be
able to file objections. Id.
Therefore, in situations in which a judgment is
affirmed in part and reversed in part, or is vacated, or a
petition granted in part and denied in part, courts have
routinely ordered an award of appellate costs to the party that
prevailed on the main disputed issue on appeal.
4.
Seventh-Day Adventists properly applied the
Leslie/Nelson rule. In Seventh-Day Adventists, Appellant
Seventh-Day Adventists’ (SDA) complaint alleged five counts
seeking, inter alia, a declaratory judgment on count I. 130
Hawai#i at 41, 305 P.3d at 457. Cross–Appellant Wong’s (Wong)
counterclaim alleged four counts. Id. The parties filed
multiple motions for summary judgment. The circuit court granted
summary judgment: in favor of Wong on counts I-IV of the SDA
- 19 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
complaint, in favor of SDA on count VI,5 and in favor of SDA on
the four counts in the counterclaim. Id. at 43, 305 P.3d at 459.
SDA appealed the circuit court’s judgment as to count I
of the complaint, and Wong appealed the circuit court’s judgment
as to counts I-III of the counterclaim. Id. at 43-44, 305 P.3d
at 459-60. The ICA reversed summary judgment as to count I of
the SDA complaint and remanded to the circuit court for further
proceedings, and affirmed summary judgment as to counts I-III of
Wong’s counterclaim. Id. at 44, 305 P.3d at 460. The ICA also
vacated the circuit court’s award of fees and costs to Wong. Id.
The ICA’s rulings were in favor of SDA on all issues presented to
it; therefore, at that point, SDA was the prevailing party on
appeal.
SDA then filed a HRAP Rule 39 motion for attorneys’
fees and costs with the ICA. Id. Relying on the holding in
Leslie, the ICA denied attorneys’ fees, but granted appellate
costs. Order Denying Request For Attorney’s Fees and Awarding
Costs in the Reduced Amount, at 2, Hawaiian Ass’n of Seventh-Day
5
The five counts in SDA’s complaint were numbered Counts I, II,
III, IV and VI. Seventh-Day Adventists, 130 Hawai#i at 41, 305 P.3d at 457.
Although the circuit court initially granted summary judgment in favor of SDA
on count VI, the circuit court apparently recognized that this ruling
contradicted its granting of summary judgment to Wong with regards to Count I
of the complaint. Thus, the circuit court later dismissed Count VI of the
complaint, and SDA did not appeal that dismissal. Seventh-Day Adventists, 130
Hawai#i at 43 n.6-7, 305 P.3d at 459 n.6-7.
- 20 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
Adventists v. Wong, No. 28592, 2012 WL 1293093 (App. 2012)
(mem.), aff’d in part, vacated in part, 130 Hawai#i 36, 305 P.3d
452 (2013) (SCWC-28592 ICA Docket No. 63). The ICA held that
“[a]n award of costs is appropriate, irrespective of the fact
that a ‘losing party’ cannot as yet be determined, because the
‘party [that] prevails on appeal’ can be determined.” Id.
(emphasis added); see also Seventh-Day Adventists, 130 Hawai#i at
44, 305 P.3d at 460.
In his application for certiorari to this court, Wong
contended that the ICA erred in: vacating the circuit court’s
grant of summary judgment in his favor on count I of the SDA
complaint; affirming summary judgment against him on counts I-III
of his counterclaim; and vacating the circuit court’s award of
his attorneys’ fees and costs at trial. Id. at 44, 305 P.3d at
460.
This court affirmed the ICA’s holding as to count I of
the SDA complaint, but for reasons other than those stated by the
ICA. Id. at 50, 305 P.3d at 466. This court also affirmed the
ICA’s ruling in favor of SDA on count I of the counterclaim, but
vacated the ICA’s judgment in favor of SDA on counts II and III
of Wong’s counterclaim. Id. Therefore, in the decision of this
court, SDA was denied summary judgment in its favor as to count I
- 21 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
of the complaint, and “[i]n light of our decision that [the
relevant contract provision in Count I was] ambiguous,” this
court concluded “that neither party [] prevailed on appeal.” Id.
(emphasis added).
This court then vacated the ICA’s order granting
appellate costs in favor of SDA, stating:
[b]ecause SDA has not prevailed on appeal, however, we
vacate the ICA’s order awarding costs to SDA. See Hawai#i
Rules of Appellate Procedure Rule 39(a) (“[I]f a judgment is
affirmed in part and reversed in part, or is vacated, or a
petition granted in part and denied in part, the costs shall
be allowed only as ordered by the appellate court.”).
Id. at 50, 305 P.3d at 466 (emphasis added). Therefore, this
court determined that SDA was not entitled to recover appellate
costs because it had not, on balance, prevailed on the main
disputed issues on appeal.6
6
Although the opinion in Seventh-Day Adventists did not explain its
rationale for vacating the ICA award of costs to SDA, HRAP Rule 39(a) provides
that an allowance of costs is awarded in the discretion of the appellate
court. A statement of a rationale is not specifically required under HRAP
Rule 39(a), however it is noted that SDA’s position on appeal in regards to
count I of the complaint was that there were no disputed facts and it was
entitled to summary judgment as a matter of law. This court determined there
were disputed issues of material fact as to SDA’s count I, and vacated summary
judgment in favor of SDA on counts II and III of Wong’s counterclaim. Thus,
there was a manifest basis for this court, in its exercise of discretion, to
conclude SDA did not, on balance, prevail on the main disputed issues on
appeal and to vacate the award of costs.
- 22 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
5.
In the present case, the ICA misapplied Seventh-Day
Adventists. The ICA denied appellate costs to Jou by apparently
relying on language in the section of Seventh-Day Adventists
entitled Conclusion that summarized the holdings of the court.
The sentence states “[w]e also vacate the ICA’s order awarding
costs on appeal to SDA because a prevailing party has yet to be
determined.” Seventh-Day Adventists, 130 Hawaii at 50, 305 P.3d
at 466. The sentence does not state that a prevailing party has
yet to be determined in the case. However, the ICA Order Denying
Costs to Jou reads that phrase into the Conclusion from Seventh-
Day Adventists, stating “[a]ppellate costs are not awardable
absent a prevailing party in the case,” (emphasis added), citing
to the Conclusion of Seventh-Day Adventists as support for this
proposition.
Any perceived ambiguity in the Conclusion section of
Seventh-Day Adventists is resolved by the explicit holding of the
opinion. In the section of the opinion entitled “Attorneys’ Fees
and Costs,” it is clearly stated that “[b]ecause SDA has not
prevailed on appeal, however, we vacate the ICA’s order awarding
costs to SDA.” Seventh-Day Adventists, 130 Hawai#i at 50, 305
- 23 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
P.3d at 466 (emphasis added). The opinion specifically states
the following:
In light of our decision that Paragraph 16 is ambiguous, we
conclude that neither party has prevailed on appeal . . . .
Because SDA has not prevailed on appeal, however, we vacate
the ICA’s order awarding costs to SDA. See Hawai#i Rules of
Appellate Procedure Rule 39(a) (“[I]f a judgment is affirmed
in part and reversed in part, or is vacated, or a petition
granted in part and denied in part, the costs shall be
allowed only as ordered by the appellate court.”)
Id. (emphases added). Additionally, interpreting the holding of
Seventh-Day Adventists in the manner adopted by the ICA would
contravene HRAP Rule 39(a), Leslie, Nelson, and prior decisions
of this court, which Seventh-Day Adventists did not profess to
overrule. Therefore, the Leslie/Nelson rule is dispositive, and
the ICA’s Order Denying Costs to Jou must be vacated as it
applied an erroneous legal standard.
6.
The ICA granted Jou the sole remedy he sought in Appeal
No. 30607, which was to vacate the circuit court’s judgment
entered by the circuit court and the order dismissing the 2009
Case. This disposition falls squarely within the fourth category
of HRAP Rule 39(a), which states that “if a judgment . . . is
vacated . . . the costs shall be allowed only as ordered by the
appellate court.” HRAP Rule 39(a). Consistent with our past
- 24 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
decisions, Jou is the prevailing party on the singular disputed
issue on appeal because the 2009 Case has been reinstated, and
Jou is therefore eligible for an award of costs related to Appeal
No. 30607 including: filing costs of $275, transcript costs of
$221.52,7 copying costs of $116.75, and postage costs of $14.90,
for a total award in the amount of $628.17.
B.
Jou also contends that he is entitled to an award of
costs in regards to Appeal No. 30606. Jou argues that the sole
purpose of HEMIC’s Motion to Enforce Settlement in the 2003 Case
was to bar Jou’s tort claims in the 2009 Case and because the
ICA’s decision allowed the 2009 Case to proceed, Jou was “on
balance” the prevailing party. Jou also contends that the ICA
was required to provide a readily discernible rationale for the
denial of costs.
1.
7
Jou requested an award of $291.80 in transcript costs associated
with Appeal No. 30607. Jou submitted documentation demonstrating amounts paid
for transcript costs, including invoices for $151.83 and $139.37, totaling
$291.20. However, the receipt for $139.37 indicates that the cost was for
both the 2003 Case and the 2009 Case, although Jou only assigned the costs to
Appeal No. 30607 (relating to the 2009 Case). In contrast, the receipt for
transcript costs of $151.83 indicates that it was entirely for the 2009 case.
In its memorandum in opposition to Jou’s Request for Costs, HEMIC did not
object specifically to the transcript costs. Therefore, HRAP Rule 39 allows
an award of costs for $151.83 and one-half of the $139.37 amount, for a total
award of $221.52.
- 25 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
Jou argues the ICA erred by failing to apply the
standards stated in Nelson v. Hawaiian Homes Commission. Nelson
provides that in cases where appellate relief is not granted
solely in favor of one party, a party may still be the prevailing
party for the purposes of an award of fees and costs if the party
is, on balance, the successful party on appeal. Nelson, 130
Hawai#i at 166, 307 P.3d at 146.
In his first point of error to the ICA in regards to
Appeal No. 30606, Jou contended that “the circuit court erred in
upholding the [Settlement Document] as an effective settlement
agreement and release.” Jou, 2013 WL 6043901, at *2. However,
the ICA’s holding in Appeal No. 30606 upheld the circuit court’s
determination that the Settlement Document was an effective
agreement. Id. at *2 (“the [Order Enforcing Settlement] is
therefore affirmed.”). As Jou was the appellant and the judgment
was affirmed, Jou is not entitled to be awarded costs related to
Appeal No. 30606. HRAP Rule 39(a) (“[I]f a judgment is affirmed
. . . costs shall be taxed against the appellant unless otherwise
ordered”). Therefore, the ICA’s decision denying costs to Jou
related to Appeal No. 30606 is affirmed.
2.
- 26 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
Jou also argues that the ICA was required to provide a
“readily discernible rationale” for its denial of costs, pursuant
to Schefke v. Reliable Collection Agency Ltd., 96 Hawai#i 408, 32
P.3d 52 (2001).
The “readily discernible rationale” principle in
Schefke was applied in the context of statutory fee awards in
employment discrimination cases under Hawaii Revised Statutes
§§ 378-5(c) and 388-11(c). Schefke, 96 Hawai#i at 458-59, 32
P.3d at 102-03. The principle has not previously been applied to
a HRAP Rule 39(a) request for costs. Additionally, the ICA
provided a “readily discernible rationale” for denying Jou’s
requests for costs when it stated “[t]his court determined
[Jou’s] arguments were without merit, affirmed the circuit court,
and thus [Jou] was not the prevailing party on appeal as to
Appeal No. 30606.” [ICA Dkt 84:2]
III. CONCLUSION
The ICA’s Order Denying Costs filed January 17, 2014
and Judgment on Appeal RE: Costs filed January 21, 2014 are
vacated. In regards to Appeal No. 30607, costs in favor of Jou
in the amount of $628.17 are awarded against HEMIC. In regards
to Appeal No. 30606, Jou’s request for an award of costs is
- 27 -
*** FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
denied.
Stephen M. Shaw /s/ Paula A. Nakayama
for petitioner
/s/ Sabrina S. McKenna
/s/ Richard W. Pollack
/s/ Rom A. Trader
/s/ R. Mark Browning
- 28 -