Brown v. BWC Hawaii, LLC

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
27-FEB-2023
08:36 AM
Dkt. 147 SO
NO. CAAP-XX-XXXXXXX
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI#I
LYNN BROWN AND WARREN BROWN, AS SUCCESSOR TRUSTEES
OF THE FOLEY FAMILY TRUST, Plaintiffs-Appellees,
v.
BWC HAWAII, LLC., A HAWAII LIMITED LIABILITY COMPANY,
THURSTON K. ROBINSON AND DOUGLAS M. PATTERSON,
Defendants-Appellants
APPEAL FROM THE CIRCUIT COURT OF THE THIRD CIRCUIT
(CIVIL NO. 10-1-0196)
MEMORANDUM OPINION
(By: Ginoza, Chief Judge, Hiraoka and Nakasone, JJ.)
Defendants-Appellants, BWC Hawaii, LLC, a Hawaii
Limited Liability Company, Thurston K. Robinson (Robinson), and
Douglas M. Patterson (Patterson) (collectively, BWC) appeal from
the (1) July 19, 2017 Final Judgment Pursuant to Haw. R. Civ. P.
58 in Favor of Plaintiffs Lynn Brown and Warren Brown (Brown), in
Their Capacities as Successor Trustees of the Foley Family Trust
(collectively, Trust) and Against Defendants BWC Hawaii, LLC,
Thurston K. Robinson and Douglas M. Patterson (Final Judgment);
(2) June 14, 2017 Order Partially Granting Plaintiff's Motion for
an Award of Attorney's Fees Against Defendants BWC Hawaii, LLC,
Thurston K. Robinson, and Douglas M. Patterson, Jointly and
Severally, Filed on March 8, 2017 (Order Granting Attorney's
Fees); (3) February 27, 2018 Order Granting Defendant's Motion
for Review by the Court of the Order of the Clerk of the Court
Taxing Costs in the Amount of $24,339.14, Filed February 22,
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2017, and Awarding Costs in the Amount of $9,540.74 (Order
Awarding Costs);1 and (4) December 28, 2016 Findings of Fact,
Conclusions of Law, and Order (FOFs/COLs), all filed and entered
by the Circuit Court of the Third Circuit (Circuit Court).2
On appeal, BWC raises three points of error (POEs)
contending that the Circuit Court erred by: (1) "entering
judgment in favor of the Trust because the record does not
support its determination that BWC breached the lease or that BWC
was unjustly enriched, neither the Second Amended Complaint nor
the evidence support the [Circuit Court]'s tenancy at sufferance
decision, and there was no relevant or reliable evidence to
support the [Circuit Court]'s erroneous market rental damage
award," and challenging FOFs 12-16, 18-27, 29-42, 44-135, and
COLs 1-56; (2) "holding Robinson and Patterson jointly and
severally liable and in refusing to apply the time is of the
essence provision of the Option to the entire option/purchase
procedure," and challenging FOFs 9-10, 22-24, and COLs 1-32; and
(3) abusing its discretion in awarding the Trust attorneys' fees,
certain expert witness fees, and deposition costs that are "not
permitted under Hawaii law and not reasonable[.]"3
We hold that the Circuit Court did not err in entering
judgment in favor of the Trust based on its determination that
BWC breached the Lease, did not err in finding Robinson and
Patterson jointly and severally liable, and did not abuse its
discretion in the award of attorneys' fees and costs. We thus
affirm.
1
The Honorable Henry T. Nakamoto presided over the April 5, 2017
hearing on the Motion for Review by the Court of the Order of the Clerk of the
Court Taxing Costs in the Amount of $24,339.14 (Motion for Review) and
Plaintiffs' Motion for an Award of Attorney's Fees Against Defendants BWC
Hawaii, LLC, Robinson and Patterson, Jointly and Severally (Motion for
Attorney's Fees), and filed the Final Judgment, Order Granting Attorney's
Fees, and Order Awarding Costs.
2
The Honorable Glenn S. Hara presided over the 2016 bench trial and
filed the FOFs/COLs.
3
While BWC lists numerous FOFs and COLs in its POEs section, BWC
does not present specific arguments relating to the challenged FOFs and COLs.
See Hawai#i Rules of Appellate Procedure (HRAP) Rule 28(b)(7) (requiring
argument on the points of error and stating "[p]oints not argued may be deemed
waived").
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I. BACKGROUND
This lengthy dispute concerns a lease of premises
consisting of several adjacent parcels, which included a
warehouse style building, a commercial laundry operation, and
offices for support staff located at 865 Kinoole Street
(Premises) in Hilo, Hawai#i.
On June 1, 1994, Edward F. Foley (Foley), as
predecessor trustee of the Trust, and Michael Gorelangton
(Gorelangton) and Patricia Gorelangton, on behalf of SWL, Inc.,
entered into a 25-year lease agreement (Lease) for the Premises.
The Lease included an option to purchase the Premises (Option),
which could be exercised during a specified time frame between
May 20, 2009 to June 10, 2009; however, the Option contained no
specified purchase price.4 In 1997, SWL, Inc. assigned its
4
In summary, the Option required that within ten days of
exercising the Option, the parties were required to submit escrow instructions
to consummate the sale and close the sale by July 1, 2009. However, if the
parties failed to agree upon a purchase price, then the parties were required
to go through an appraisal process pursuant to subsection (f). Subsection (f)
required that each party "appoint a duly licensed (Hawaii) real estate
appraiser" and the chosen appraisers "appoint a third all of whom will
appraise the fair market value of the Premises." The average of the two
appraised values which were the closest would then be the purchase price.
The relevant Option terms were as follows:
(a) Lessor does hereby grant to Lessee an option to
purchase the Premises and the Lessor's interest under this
Lease, upon the terms and conditions herein set forth.
(b) Lessee must exercise the option to purchase, if it is
to be exercised at all, during the period from May 20, 2009
to June 10, 2009, hereinafter referred to as the "Option
Period".
(c) In order to exercise the option to purchase herein
granted, Lessee must give written notice of the exercise of
the option to Lessor and Lessor must receive the same during
the Option Period, time being of the essence, and if not so
given and received, this option shall automatically expire.
At the same time the option is exercise [sic], Lessee must
deliver to Lessor a cashier's check for $100,000, payable to
Foley Family Trust, to be part of the purchase price.
(d) The provisions of paragraph 39, including the provision
relating to default of Lessee set forth in paragraph 39.4 of
this Lease are conditions of the Option;
(e) If Lessee shall exercise the option to purchase during
the Option Period, the transfer of title to Lessee and the
(continued...)
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interest in the Lease and the Option to BWC (Assignment).
Concurrently with the Assignment, Robinson and Patterson, who
were members of BWC, signed a Guaranty of Lease and Indebtedness
(Guaranty), guaranteeing all payments due from BWC to the Trust
under the terms of the Lease and the Option.
Exercise of the Option, appointment of appraisers
On June 8, 2009, pursuant to the Option, BWC timely
exercised its right to purchase the Premises and paid $100,000 to
the Trust. BWC provided an appraisal report by Glenn Kunihisa
(Kunihisa); however, the Trust noted that the appraisal was done
for the "purposes of obtaining federally-related mortgage
financing" and not "intended for any other use." BWC then
retained Kunihisa to do the appraisal for the Option and
submitted another appraisal report of the Premises on July 15,
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(...continued)
payment of the purchase price to Lessor shall occur on July
1, 2009, and until that time the terms of this Lease shall
remain in full force and effect.
(f) The purchase price to be paid by Lessee to Lessor for
the Premises . . . shall be all cash. If Lessor and Lessee
are unable to agree on a price, then Lessor and Lessee shall
each appoint a duly licensed (Hawaii) real estate appraiser
and these two shall appoint a third all of whom will
appraise the fair market value of the Premises. The average
of the two appraised values which are closest shall be the
purchase price.
(g) Within ten (10) days of the date the option to purchase
is exercised, Lessor and Lessee shall give instructions to
consummate the sale to First American Title Insurance
Company, who shall act as escrow holder, on the normal and
usual escrow forms then used by such escrow holder, as
follows:
(i) Escrow shall close on the date previously called
for in paragraph (e) of this Addendum;
(ii) Lessor shall deposit the check referred to in
paragraph (c) of this Addendum into escrow upon
opening thereof . . .
. . . .
(v) Interest, if any, and rents will be prorated to
the close of escrow . . . .
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2009. The parties were unable to agree on a purchase price, and
commenced the appraisal process under the Option.
The Trust retained Jan Medusky (Medusky) as their
appraiser. In order to obtain an accurate appraisal of the
Premises, Medusky needed to retain a cost estimator for the
specialized improvements on the Premises and wanted access to the
interior of the Premises. BWC initially refused to provide
Medusky and the cost estimator access to the Premises and
demanded as a precondition that escrow be opened and the monies
deposited. BWC eventually accommodated Medusky and the estimator
for a viewing of the Premises, and Medusky submitted his report
on January 18, 2010.
Appointment of third appraiser
After the appraisals were completed by each side's
appraiser, BWC and the Trust disagreed over escrow instructions
and the process of appointing the third appraiser. Eventually
the dispute was submitted to the Circuit Court for resolution, at
which time the parties agreed that the third appraiser would be
selected by Medusky and Kunihisa, and that information to the
third appraiser would be limited to "necessary information to
conduct an appraisal in conformance with usual and standard
appraisal practices." After the initial third appraiser was
appointed, BWC accused this appraiser of being "tainted" by
Kunihisa and Medusky with improper information. Because of the
allegations, Kunihisa refused to participate further and resigned
on June 9, 2011.
BWC refused to reappoint another appraiser and the
parties had additional disagreements about the process.
Eventually, on June 29, 2011, BWC appointed Steven Chee (Chee) as
their new appraiser. Chee and Medusky agreed on the third
appraiser, Paul Cool (Cool). BWC again claimed that Cool was
"tainted" by Medusky because of improper ex parte communications.
BWC filed a motion to disqualify Cool, which was denied, and Cool
submitted his appraisal report on January 23, 2013.
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After the appraisals were completed, BWC had trouble
obtaining financing secured by the Premises. On April 27, 2015,
nearly six years after the exercise of the Option, BWC purchased
the Premises for $1,539,000.00. From July 1, 2009 until the
April 27, 2015 closing, BWC had remained in possession of the
Premises and paid no rent to the Trust.
Action filed to collect rent from July 1, 2009
On July 8, 2010, the Trust filed a complaint against
BWC seeking to recover unpaid rents from July 1, 2009 until the
2015 closing, alleging that the Lease was still in effect until
escrow closed. On September 20, 2010, BWC filed its answer and a
counterclaim, alleging that the Trust was responsible for
delaying the closing, breaching the contract, along with other
counterclaims. The Trust filed an amended complaint alleging,
inter alia, that it was excused from performing its obligations
under the Option, and adding Robinson and Patterson as
defendants.
2016 Trial
Following a bench trial in May and June of 2016, the
Circuit Court entered its FOFs/COLs finding, inter alia, that BWC
breached the Lease when it withheld rent because the Lease did
not terminate on July 1, 2009 upon the exercise of the Option,
and that any representations by Foley to BWC were made on the
basis that escrow would close and title transferred. The Circuit
Court concluded that if the parties failed to agree on a purchase
price, the July 1, 2009 closing date was unreasonable pursuant to
the appraisal process in subsection (f) of the Option, and that
the parties did not assume what would occur if the parties failed
to agree on a purchase price by July 1, 2009. Further, the
Circuit Court concluded that BWC breached the covenants of good
faith and fair dealing relating to the Option when it interfered
with the appraisal process on or around June 9, 2011, when
Kunihisa withdrew as BWC's appraiser and BWC refused to reappoint
a new appraiser. Additionally, the Circuit Court found that BWC
caused delays by attempting to control the appraisal process such
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as by consistently requesting to pick the third appraiser,
alleging the third appraisers were "tainted," and refusing access
to the Premises for the Trust to complete its appraisal.
Fees and Costs
On February 22, 2017, the Trust filed Plaintiffs'
Request for Taxation of Costs by the Clerk of the Court Against
Defendants BWC Hawaii, LLC, Robinson and Patterson, Jointly and
Severally (Request for Taxation of Costs), which the Clerk
granted in the amount of $24,339.14. On March 3, 2017, BWC filed
their Motion for Review. On March 8, 2017, the Trust also filed
their Motion for Attorney's Fees.
On April 5, 2017, a hearing on the Motion for Review
and Motion for Attorney's Fees was held. At the hearing, the
Circuit Court awarded $9,540.74 in costs to reflect the removal
of expert witness fees. On June 14, 2017, the Circuit Court
filed its Order Granting Attorney's Fees in the amount of
$230,082.71, finding that the fees awarded were reasonable under
the Lease.
On July 19, 2017, the Circuit Court entered Final
Judgment in favor of the Trust for $1,013,385.17. This timely
appeal followed.
II. STANDARDS OF REVIEW
A. FOFs/COLs
"[A] trial court's FOFs are subject to the clearly
erroneous standard of review. An FOF is clearly erroneous when,
despite evidence to support the finding, the appellate court is
left with the definite and firm conviction that a mistake has
been committed." Chun v. Bd. of Trs. of the Emps.' Ret. Sys. of
the State of Haw., 106 Hawai#i 416, 430, 106 P.3d 339, 353 (2005)
(citations and internal quotation marks omitted). "An FOF is
also clearly erroneous when the record lacks substantial evidence
to support the finding. [The Hawai#i Supreme Court has] defined
'substantial evidence' as credible evidence which is of
sufficient quality and probative value to enable a person of
reasonable caution to support a conclusion." Leslie v. Est. of
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Tavares, 91 Hawai#i 394, 399, 984 P.2d 1220, 1225 (1999)
(citations and internal quotation marks omitted).
A COL is not binding upon an appellate court and is freely
reviewable for its correctness. [The appellate court]
ordinarily reviews COLs under the right/wrong standard.
Thus, a COL that is supported by the trial court's FOFs and
that reflects an application of the correct rule of law will
not be overturned. However, a COL that presents mixed
questions of fact and law is reviewed under the clearly
erroneous standard because the court's conclusions are
dependent upon the facts and circumstances of each
individual case.
Chun, 106 Hawai#i at 430, 106 P.3d at 353 (citations and internal
brackets omitted) (quoting Allstate Ins. Co. v. Ponce, 105
Hawai#i 445, 453, 99 P.3d 96, 104 (2004)).
B. Taxation of Costs
The award of a taxable cost is within the discretion of the
circuit court and will not be disturbed absent a clear abuse
of discretion. An abuse of discretion occurs when the
circuit court has clearly exceeded the bounds of reason or
disregarded rules or principles of law or practice to the
substantial detriment of a party litigant.
Pulawa v. GTE Hawaiian Tel, 112 Hawai#i 3, 10-11, 143 P.3d 1205,
1212-13 (2006) (citations, brackets, and internal quotation marks
omitted).
C. Attorneys' Fees
The trial court's grant or denial of attorney's fees and
costs is reviewed under the abuse of discretion standard.
The trial court abuses its discretion if it bases its ruling
on an erroneous view of the law or on a clearly erroneous
assessment of the evidence. In other words, an abuse of
discretion occurs where the trial court has clearly exceeded
the bounds of reason or disregarded rules or principles of
law or practice to the substantial detriment of a party
litigant.
Ass'n of Apartment Owners of Discovery Bay v. Mitchell, 134
Hawai#i 251, 254, 339 P.3d 1052, 1055 (2014) (citations and
internal quotation marks omitted).
III. DISCUSSION
A. POE 1: Breach of the Lease
BWC contends that the Circuit Court erred in entering
judgment in favor of the Trust because the record does not
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support its determination that BWC breached the Lease. BWC
argues that if BWC is found not liable on the basis of breach of
contract, the Circuit Court also erred in holding that BWC was
liable to the Trust under the alternative theories of doctrine of
tenancy at sufferance and unjust enrichment, and that the award
of market rental damages under these alternative theories were
based on unreliable and irrelevant testimony. We address the
arguments based on breach of the Lease as that issue is
dispositive, and we do not reach BWC's alternative arguments in
this POE.
The Circuit Court's mixed finding and conclusion, that
the Lease did not terminate until escrow closed, was
not clearly erroneous.
BWC argues that upon the exercise of the Option, the
Lease terminated on July 1, 2009, and that Foley made
representations that upon the timely exercise of the Option, no
further rent would be sought after July 1, 2009. BWC points to
the specific July 1, 2009 closing date and Gorelangton's
testimony that at the time of negotiating the Option, Gorelangton
believed that "even if there was a delay in the closing, . . .
the lease would terminate as of July 1, 2009." BWC also points
to the testimonies of its previous attorney, Robinson, and
Patterson, in arguing that Foley made representations that no
rent would be sought after July 1, 2009, and the $100,000 would
be placed in an escrow account and applied to the purchase price.
The Circuit Court found in FOFs 26, 30, and 31:
26. When Gorelangton negotiated the terms of the Option, it
never occurred to him that the purchase price might not be
determined by July 1, 2009. [Gorelangton trial testimony,
50:12-18]
. . . .
30. Although BWC claims that the rents payable on the lease
would have terminated on July 2009, there are no explicit
provisions in the option supporting this position. Any
statements that may have been made by Foley that rents would
have ended on July 1, 2009 are consistent with a sale that
would have closed on July 1, 2009, because at such time, BWC
would be both the holder of the fee simple interest in the
Premises and the lessee. In such a circumstance after BWC's
purchase of the Premises, it would be up to BWC as to how to
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treat the lease and to forgo any rents or to cancel the
lease.
31. The court finds that if there were any representations
by Foley made to the effect that lease rents would be
terminated upon the exercise of the option, it can only be
construed to have meaning within the context of completing
the sale under the option.
In COLs 9, 10, and 16, which present mixed questions of fact and
law, the Circuit Court concluded:
9. The Option did not affect the lease except for the
occurrence of the sale of the premise [sic] to the lessee.
In particular, if the option was not exercised it is obvious
that the lease would continue to run until the term
specified in the lease unless there was some other reason
for an earlier termination. It is not logical that if there
were an attempted but ineffective attempt to exercise the
option, or a successful exercise but an unsuccessful
execution of the terms of the option to sale, that the terms
of the lease would be terminated.
10. There was no agreement in the Lease or the Option,
express or implied that the obligation of the tenant to pay
rent would terminate on the exercise of the Option by the
leases.
. . . .
16. The interpretation of paragraph "(e)" of the Option that
most reasonably reflects the intention of the parties as
manifested by the Option in its entirety is that the terms
of the Lease until the close of the sale of the Premises if
not on July 1, 2009, then within a reasonable time to
accomplish the sale. The lease terms and the obligations
continued to apply through the date that title was
transferred and the purchase price was paid, namely, April
27, 2015.
In Porter v. Hu, 116 Hawai#i 42, 59-60, 169 P.3d 994,
1011-12 (App. 2007) (quoting State v. Eastman, 81 Hawai#i 131,
139, 913 P.2d 57, 65 (1996)), this court stated:
It is for the trial judge as fact-finder to assess the
credibility of witnesses and to resolve all questions of
fact; the judge may accept or reject any witness's testimony
in whole or in part . . . . An appellate court will not pass
upon the trial judge's decisions with respect to the
credibility of witnesses and the weight of the evidence,
because this is the province of the trial judge.
BWC's arguments are based on its contrary view of the evidence,
relying on its own witnesses, and are unavailing. See id. It
was properly within the Circuit Court's province to weigh the
evidence and consider the witnesses' testimonies in determining
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that the Lease did not terminate on July 1, 2009 upon the
exercise of the Option; that this interpretation reasonably
reflected the intent of the parties; and that any representations
made by Foley were made on that basis. BWC offers no argument
why the FOFs and COLs set forth supra are clearly erroneous. See
HRAP Rule 28(b)(7); Chun, 106 Hawai#i at 430, 106 P.3d at 353.
BWC fails to demonstrate error. See HRAP Rule 28(b)(7); Haw.
Ventures, LLC v. Otaka, Inc., 114 Hawai#i 438, 480, 164 P.3d 696,
738 (2007) (finding that the appellants failed to demonstrate
error because they "do not point to anything in the record or
provide any analysis that would guide th[e] court in determining
the validity of their contention"). We conclude there is
substantial evidence to support the Circuit Court's determination
that the lease terms and obligations continued to apply through
the date title transferred and the purchase price was paid on
April 27, 2015.
The Circuit Court's findings that BWC, not the Trust,
caused the delays, were not clearly erroneous.
BWC argues that the record established that as of July
1, 2009, BWC was willing and ready to close escrow; however, the
Trust caused unilateral delays by refusing to abide by the "time
is of the essence" clause and failing to open an escrow account.
BWC points to various emails to the Trust's attorney and
Robinson's testimony, to argue that BWC consistently asked the
Trust to open an escrow account, to deposit the $100,000 into the
account, and to follow the terms of the Option. BWC also refers
to Robinson's testimony that BWC was willing to purchase the
Premises, but the Trust repeatedly failed to agree to a purchase
price and had no sense of "urgency."
The Circuit Court found in FOFs 56 and 57, that the
Option "places no time limit" on when an agreement on the
purchase price must be reached, and that as of July 1, 2009, the
parties were "still trying to reach [an] agreement[.]" The
Circuit Court found that the appraisal process in subsection (f)
of the Lease was "triggered" because of the lack of agreement on
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a purchase price, and that BWC caused the delays in the appraisal
process, as follows:
66. On July 3, 2009, Watts [(the Trust's former attorney)]
sought permission for Medusky to inspect the Premises on
July 7, 2009. Fasi [(BWC's former attorney)] responded that
July 7th was not a good day for the inspection. [Exhibit P-
33]
67. Because Medusky was going to the Big Island on another
job on July 7th, he stopped by the Premises on that date but
was denied permission to inspect the interior.
. . . .
70. On September 8, 2009, Watts informed Fasi that a
decision had been made to hire a building consultant and
that both Medusky and the building consultant would need
access to the interior of the building. [Exhibit P-39] Fasi
responded with a message stating that, "Before your
consultant is allowed onto the property, my client demands
that the escrow be opened and the deposit monies deposited
into same and that a third appraiser be chosen or at least
the process of selecting the third appraiser is begun by Mr.
Medusky providing some names to me to select from." [Exhibit
P-40]
. . . .
75. Although both Foley and BWC prepared and attempted to
agree on escrow instructions, so that escrow could be
opened, they were unsuccessful in reaching agreement until
they signed the Commercial Escrow Instructions dated January
23, 2015.
. . . .
95. BWC attempted to control the process for determination
of the purchase price, and, as a result, the determination
of the purchase price was delayed.
. . . .
97. Initially, BWC took the position that the parties could
provide the third appraiser with information relative to the
value of the Premises. This early position of BWC is shown
in the form of escrow instructions that BWC proposed on July
10, 2009, . . . .
98. However, after Medusky published his appraisal report on
January 18, 2010, BWC took the position that the parties
could convey no information concerning their opinion of
the value of the Premises to the third appraiser. This
change in position was first stated by BWC in the escrow
instructions that Fasi sent to Watts on May 6, 2010.
[Exhibit P-58]
99. Because of BWC's change in position, Foley and BWC were
unable to agree on a procedure for selecting the third
appraiser.
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. . . .
102. After the court's decision, Kunihisa and Medusky
conferred and tentatively appointed appraiser James
Hallstrom as the third appraiser. However, BWC became
concerned that [the initial third appraiser] may have been
provided with improper information and, acting through Fasi,
instructed Kunihisa to withdraw his appointment. [Kunihisa
Deposition Transcript 19:21-21 :12; 26:7-14; 28:13-20]
103. Kunihisa became upset with BWC's attempt to interfere
in the process of selecting a third appraiser and on June 9,
2011, "resigned" from the selection process. [Kunihisa
Deposition Transcript 28:21-29:19; 41:24-43:15]
104. Following Kunihisa's resignation, Foley demanded that
BWC appoint a new appraiser and that the new appraiser
perform his own appraisal, as required by the Option.
[Exhibit P-66]
105. Initially, BWC refused to appoint a new appraiser and
took the position that it could continue to use the Kunihisa
appraisal and could select the third appraiser itself.
[Exhibit P-67] Watts responded that Foley would not agree
to amend the Option to allow BWC to select the third
appraiser. [Exhibit P-68]
The Circuit Court concluded in COL 55, a mixed finding and
conclusion, that:
55. For the period between June 8, 2009 when the Option was
exercised to June 9, 2011, BWC has failed to prove, by the
preponderance of the evidence, that Foley or Plaintiffs have
breached the implied covenant of good faith and fair dealing
by proof that conduct of a party (the Trust/lessor)
constituted evasion of the spirit of the bargain, lack of
diligence and slacking off, willful rendering of imperfect
performance, abuse of a power as to specific terms, [or]
interference with or failure to cooperate in the other
party's performance, the conduct is not actionable unless it
results in monetary damage to the party claiming the breach.
Restatement (Second) of Contracts § 205 cmt. d (1979);
[Kuroda v. SPJS Holdings, LLC], 971 A. 2d 872, 888 (Del. Ch.
2009); [Francis v. Lee Enterprises], 89 Haw. 234, 971 P. 2d
707 (1999). To the contrary, the court finds that the
delays in the closing of the sale which may have resulted in
the payments of rents that could have been avoided by an
earlier sale resulted from the conduct of BWC as specified
above.
(Emphasis added).
The Circuit Court as fact-finder found that BWC was
responsible for causing delays in the process. COL 55. See
Porter, 116 Hawai#i at 59-60, 169 P.3d at 1011-12. BWC's
argument relies on its contrary view of the evidence based on its
own witnesses, and is unavailing. See id. BWC offers no
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argument why these FOFs and mixed FOF and COL above are clearly
erroneous based on a lack of substantial evidence. See Chun,
106 Hawai#i at 430, 106 P.3d at 353. BWC fails to demonstrate
error. See HRAP Rule 28(b)(7); Haw. Ventures, LLC, 114 Hawai#i
at 480, 164 P.3d at 738.
The Circuit Court's finding, that the "time being of
the essence" provision in subsection (c) of the Option
refers only to the exercise of the Option, was not
clearly erroneous.
BWC argues that the "time being of the essence"
provision in subsection (c) applied to the entire Option,
including the appraisal process.5 BWC relies on the testimonies
of its own witnesses — — Gorelangton, Robinson, and Patterson
— — to argue that the "time being of the essence" provision
applied to the entire Option including the appraisal process, and
that this reading reasonably reflected the intent of the parties.
The Circuit Court found in FOFs 22-25 that "time being
of the essence" applied only to the Option:
22. The court construed the "time being of the essence"
language in Paragraph (c) of the option to refer only to the
exercise of the option. It is clear from the manner in which
the phrase is employed in the first sentence in Paragraph
(c) that it is only to be applied as to the matter and
timing of the exercise of the option by the lessee. The
"time being of the essence" provision in Paragraph (c), does
not apply generally to the other terms and provisions of the
Option[.]
23. The longest time between the earliest date the Option
could be exercised and the sale closing date of July 1,
2009, is about 41 days (May 20, 2009 to July 1, 2009). The
shortest time between the latest date the Option could be
exercised and the sale closing date is about 21 days (June
10, 2009 to July 1, 2009).
24. It was the intention of the parties to close the sale as
quickly as practicable once the option was exercised. If the
parties had agreed on a price at or about the time the
option was exercised, the stated closing of July 1, 2009 was
reasonable[.]
25. Upon the failure of the parties to reach an agreement as
to price, however, the option called for a process of
appraisals and under those circumstances the closing date of
July 1, 2009 was not reasonable, as borne out by: (1) what
5
This argument was raised in connection with POE 2, but we address
it in our discussion here of POE 1.
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transpired in fact after this process was resorted to by the
parties, (2) given that the appraisal process called for the
selection of an appraiser by each of the parties and that
the two selected appraisers then selecting a third
appraiser, and (3) as borne out by the appraisals submitted
by the parties in evidence, the fact that the appraisal
concerned a commercial/industrial property, and other unique
aspects of the Premises including its location, and the
scarcity of a comparable fee simple properties in the Hilo
area.
The Circuit Court as the fact-finder weighed all
witnesses' testimonies and found that the "time being of the
essence" provision only applied to the exercise of the Option.
See Porter, 116 Hawai#i at 59-60, 169 P.3d at 1011-12. BWC's
argument based on its contrary view of the evidence is
unavailing. See id. BWC offers no argument why the above FOFs
are clearly erroneous based on a lack of substantial evidence.
See Chun, 106 Hawai#i at 430, 106 P.3d at 353. BWC fails to
demonstrate error. See HRAP Rule 28(b)(7); Haw. Ventures, LLC,
114 Hawai#i at 480, 164 P.3d at 738.
B. POE 2: Joint and several liability
BWC argues that the Circuit Court erred in holding
Robinson and Patterson jointly and severally liable because Foley
induced them to sign the Guaranty through material
representations that the Lease would terminate on July 1, 2009
upon exercise of the Option. BWC contends that "[t]he decision
whether to hold a party jointly and severally liable is decided
on a case-by-case basis, depending on whether it is appropriate
under the circumstances," citing Smith v. Cutter Biological,
Inc., a Div. of Miles Inc., 72 Haw. 416, 431, 823 P.2d 717, 725
(1991). BWC argues that it was not "appropriate" to hold
Robinson and Patterson jointly and severally liable where they
were induced by Foley's representations that no rent would be
sought after July 1, 2009.
The Circuit Court found in FOFs 106 and 31 (quoted
supra) that Robinson and Patterson signed the Guaranty, which
6
FOF 10 stated: "On October 9, 1997, Robinson and Patterson signed
personal guarantees pursuant to which they guaranteed all payments due from
BWC to the Trust and under the terms of the Lease and Option. . . ."
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guaranteed all payments due from BWC to the Trust under the terms
of the Lease and Option, and that any representations made by
Foley were to the effect that escrow would close and title
transferred. The Circuit Court concluded in COL 18 that, "As
guarantors of BWC's performance under the Lease, Robinson and
Patterson are jointly and severally liable for BWC's breach of
its obligation to pay rent."
BWC does not dispute that Robinson and Patterson signed
the Guaranty and fails to explain how the FOFs set forth above
were not supported by "substantial evidence." See Chun, 106
Hawai#i at 430, 106 P.3d at 353. The Circuit Court's findings
reflect a rejection of BWC's argument that Robinson and Patterson
never would have signed the Guaranty but-for Foley's material
representations, and BWC fails to demonstrate error. See HRAP
Rule 28(b)(7); Haw. Ventures, LLC, 114 Hawai#i at 480, 164 P.3d
at 738.
C. POE 3: Fees and Costs
Expert witness fees
BWC argues that the Circuit Court abused its discretion
when it failed to set aside "the additional travel costs because
they were more appropriately classified as expert witness fees."
BWC cites only to the transcript of the hearing on the Motion for
Review and the Trust's Request for Taxation of Costs. BWC does
not specifically cite to or identify which travel costs were more
appropriately expert witness fees. This argument is waived. See
HRAP Rule 28(b)(7); Haw. Ventures, LLC, 114 Hawai#i at 480, 164
P.3d at 738 (citation omitted) ("[T]his court is not obligated to
sift through the voluminous record to verify [a party's]
inadequately documented contentions.").
Deposition costs
BWC contends that some of the deposition costs awarded
were not permitted because (1) they included copies of
depositions, citing Nani Koolau Co. v. K & M Constr., Inc., 5
Haw. App. 137, 143-44, 681 P.2d 580, 586 (1984); and (2) the cost
of Brown's entire deposition was unreasonable, as only one page
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of his deposition was used at trial and he was not called as a
witness, citing Mist v. Westin Hotels, Inc., 69 Haw. 192, 201,
738 P.2d 85, 92 (1978) (holding that deposition costs are taxable
when deemed reasonable). HRS § 607-97 has been amended since
Nani Koolau Co. to include "expenses for deposition transcript
originals and copies," and BWC's argument that the deposition
copies awarded were not permitted is without merit. HRS § 607-9.
BWC claims that the cost of Brown's entire deposition
was unreasonable because Brown "was not called as a witness at
trial" and that only "a small part of one page" of his deposition
was used at trial. BWC's argument is without merit. See Canalez
v. Bob's Appliance Serv. Ctr., Inc., 89 Hawai#i 292, 308, 972
P.2d 295, 311 (1999) (holding that the trial court had the
discretion to award cost for a deposition testimony that was not
used at trial because the testimony was strategically on hand to
possibly rebut the opposing party's case in chief); Yoneji v.
Yoneji, 137 Hawai#i 299, 319-20, 370 P.3d 704, 724-25 (App. 2016)
(explaining that whether a deposition cost is reasonable is
within the discretion of the trial court and "'hinges upon the
trial court's factual evaluation of the course and progress of
the proceeding and the nature of the evidence'") (citation
omitted). The Circuit Court did not abuse its discretion in
awarding these deposition costs. See Pulawa, 112 Hawai#i at
10-11, 143 P.3d at 1212-13.
7
HRS § 607-9(b) (2016) provides:
All actual disbursements, including but not limited to,
intrastate travel expenses for witnesses and counsel,
expenses for deposition transcript originals and copies, and
other incidental expenses, including copying costs,
intrastate long distance telephone charges, and postage,
sworn to by an attorney or a party, and deemed reasonable by
the court, may be allowed in taxation of costs. . . .
(Emphases added).
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Attorney's Fees
BWC contends that the Circuit Court abused its
discretion when it failed to further reduce attorney's fees
because, inter alia, the fees associated with a dismissed claim
were not permitted; the fees should be apportioned between
assumpsit and non-assumpsit claims; there were improper block
billing entries; and time entries for ministerial and clerical
work were improperly included. [OB at 33-34.]
Dismissed claim. BWC argues that "the fees associated
with the Trust's claim[,] that it was excused from performance of
the Option[,] were not permitted because that claim was
voluntarily dismissed by the Trust, therefore making BWC the
prevailing party for purposes of Section 607-14,"8 citing Ranger
Ins. Co. v. Hinshaw, 103 Hawai#i 26, 31, 79 P.3d 119, 124 (2003)
(holding that, as a presumption, the prevailing party should
recover costs).
A party "will be deemed to be the successful party for
the purpose of taxing costs and attorney's fees where that party
prevails on the disputed main issue, even though not to the
extent of his original contention." Kaleikini v. Yoshioka,
129 Hawai#i 454, 461, 304 P.3d 252, 259 (2013) (internal
quotation marks and brackets omitted) (quoting Food Pantry Ltd.
v. Waikiki Bus. Plaza, Inc., 58 Haw. 606, 618, 575 P.2d 869, 878
(1978)); see Food Pantry, 58 Haw. at 620, 575 P.2d at 879(holding that although the trial court refused to allow the
lessor to cancel the lease, the lessor was the prevailing party
because "[t]he grant of relief was expressly conditioned upon
either the lessee (1) cancelling the assignments and subleases or
8
HRS § 607-14 (2016) states in pertinent part:
In all the courts, in all actions in the nature of assumpsit
and in all actions on a promissory note or other contract in
writing that provides for an attorney's fee, 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[.]
(Emphasis added).
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(2) paying the lessor a higher rental for the remainder of the
term").
Here, a Stipulation or Dismissal of Certain Claims and
Order was filed on February 9, 2015, in which the claim asserted
in Count II of the First Amended Complaint, that "Foley's
performance and obligations under the Option are excused," was
dismissed without prejudice. See Oahu Publ'ns., Inc. v.
Abercombie, 134 Hawai#i 16, 26, 332 P.3d 159, 169 (2014) ("[A]
dismissal without prejudice does not alter the legal relationship
of the parties because the defendant remains subject to risk of
re-filing.") (citations and internal quotation marks omitted).
The pleadings and proof in this case raised one basic issue:
whether the Trust was entitled to rental income from July 1, 2009
to April 27, 2015.9 The Final Judgment awarded the Trust
$1,013,385.17 for rental payments from July 1, 2009 to April 27,
2015. Because the Trust prevailed on the "disputed main issue,"
the Trust was the "successful party for the purpose of taxing
costs and attorney's fees" under HRS § 607-14. See Kaleikini,
129 Hawai#i at 461, 304 P.3d at 259; Oahu Publ'ns., Inc.,
134 Hawai#i at 26, 332 P.3d at 169. The Circuit Court did not
abuse its discretion in awarding attorney's fees associated with
Count II of the First Amended Complaint regarding the claim that
the Trust's performance and obligations under the Option were
excused. See Ass'n of Apartment Owners of Discovery, 134 Hawai#i
at 254, 339 P.3d at 1055.
Non-assumpsit claims. BWC argues that "the fees
incurred by the Trust should be apportioned between those
expended on the assumpsit claims versus the fees expended on
defending against the non-assumpsit claims," citing TSA Int'l
9
The Circuit Court's FOFs, COLs, and Order stated,
The ultimate issue to now be decided in this case is whether
defendant BWC Hawaii, LLC, ("BWC") as tenant owed any rents
to landlord, Lynn Brown and Warren Brown as successor
trustees of the Foley Family Trust ("Trust") after BWC
exercised an option to purchase the demised premise[s] on
June 8, 2009. . . .
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Ltd. v. Shimizu Corp., 92 Hawai#i 243, 264, 990 P.2d 713, 734
(1999) (holding that in deciding to award fees under HRS § 607-
14, the court must determine the nature of the lawsuit where both
assumpsit and non-assumpsit claims are asserted).
BWC's argument is misplaced. The Circuit Court found
in its Order Granting Attorney's Fees that the fees were
"reasonable under the terms of the Lease[,]" and that the
"request for fees is not based solely on assumpsit, but based on
contract." BWC presents no argument why the attorneys' fees were
unreasonable or unauthorized under the terms of the Lease. See
DFS Group, L.P. v. Paiea Props., 110 Hawai#i 217, 222, 131 P.3d
500, 505 (2006) (explaining that when a "'contract in writing
that provides for an attorney's fee,' the determinative issue is
whether the language of the lease authorizes the recovery of
attorneys' fees in the present case") (quoting HRS § 607-14
(Supp. 1997)). BWC fails to demonstrate that the Circuit Court
abused its discretion. See Ass'n of Apartment Owners of
Discovery Bay, 134 Hawai#i at 254, 339 P.3d at 1055.
Block billing. BWC argues that many of the fees
"amount to improper block billing making it impossible for the
lower court (or this Court) to determine the reasonableness of
the time spent on the various tasks undertaken," citing Haw.
Ventures, LLC, 116 Hawai#i at 475, 173 P.3d at 1132. BWC does
not explain how improper block billing occurred under the
authority it relies on. In Haw. Ventures, LLC, the Hawai#i
Supreme Court found that "block billing" occurred because the
court was unable to distinguish between compensable and
noncompensable billing entries, not the reasonableness of the
fees. Id.; see Crowe v. Ass'n of Apartment Owners of Waikiki
Marina Condo., Nos. CAAP-XX-XXXXXXX and CAAP-XX-XXXXXXX, 2019 WL
1715767, at *5 (App. Apr. 17, 2019) (SDO) (explaining that Haw.
Ventures, LLC was distinguishable because "the Circuit Court was
examining the 'reasonableness' of the fees, not differentiating
between compensable and noncompensable billing entries"). BWC
does not offer any analysis or legal citations regarding how the
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Circuit Court erred in awarding attorneys' fees based on block-
billed time entries because the reasonableness of the time spent
on various tasks could not be determined, and BWC fails to
demonstrate that the Circuit Court abused its discretion. See
HRAP Rule 28(b)(7); Ass'n of Apartment Owners of Discovery Bay,
134 Hawai#i at 254, 339 P.3d at 1055.
Clerical/ministerial work. BWC argues that the Trust
improperly included "legal time entries reflecting billing for
ministerial and/or clerical work," citing Jeremiah B. v. Dep't of
Educ., Civil No. 09—00262 DAE-LEK, 2010 WL 346454, at *5 (D. Haw.
Jan. 29, 2010) (holding that "[c]lerical or ministerial costs are
part of an attorney's overhead and are reflected in the charged
hourly rate") (finding that communications regarding "hearing
dates" and "due dates" are clerical in nature) (citation
omitted).
The Circuit Court had the discretion to determine that
the challenged fees were "reasonable." See Gailliard v.
Rawsthorne, 150 Hawai#i 169, 178, 498 P.3d 700, 709 (2021)
(explaining that it is within the court's discretion in
determining whether a fee is reasonable and finding that proofing
and revising a brief was reasonable). BWC does not explain how
any of the challenged fees were unreasonable because of their
alleged "clerical" or "ministerial" nature, and fails to
demonstrate an abuse of discretion. See HRAP Rule 28(b)(7);
Ass'n of Apartment Owners of Discovery Bay, 134 Hawai#i at 254,
339 P.3d at 1055.
IV. CONCLUSION
For the foregoing reasons, we affirm the (1) July 19,
2017 Final Judgment Pursuant to Haw. R. Civ. P. 58 in Favor of
Plaintiffs Lynn Brown and Warren Brown, in Their Capacities as
Successor Trustees of the Foley Family Trust and Against
Defendants BWC Hawaii, LLC, Thurston K. Robinson and Douglas M.
Patterson; (2) June 14, 2017 Order Partially Granting Plaintiff's
Motion for an Award of Attorney's Fees Against Defendants BWC
Hawaii, LLC, Thurston K. Robinson, and Douglas M. Patterson,
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Jointly and Severally, Filed on March 8, 2017; (3) February 27,
2018 Order Granting Defendant's Motion for Review by the Court of
the Order of the Clerk of the Court Taxing Costs in the Amount of
$24,339.14, Filed February 22, 2017, and Awarding Costs in the
Amount of $9,540.74; and (4) December 28, 2016 Findings of Fact,
Conclusions of Law, and Order, all filed and entered by the
Circuit Court of the Third Circuit.
DATED: Honolulu, Hawai#i, February 27, 2023.
On the briefs: /s/ Lisa M. Ginoza
Chief Judge
Rebecca A. Copeland,
(Law Office of Rebecca A. /s/Keith K. Hiraoka
Copeland, LLC), Associate Judge
for Defendants-Appellants
BWC Hawaii, LLC, Thurston K. /s/ Karen T. Nakasone
Robinson, and Douglas M. Associate Judge
Patterson.
Thomas T. Watts,
(Thomas Watts, Attorney at
Law, A Law Corporation),
for Plaintiffs-Appellees
Lynn Brown and Warren Brown,
as Successor Trustees of the
Foley Family Trust.
22