Articles Posted in Contracts

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The Supreme Court vacated the judgment of the Intermediate Court of Appeals (ICA) affirming the circuit court’s grant of judgment as a matter of law (JMOL) and reinstated the circuit court’s grant of partial summary judgment to Plaintiff as to Defendant’s liability under Haw. Rev. Stat. 481B-14. Plaintiff brought suit against Defendant-hotel on behalf of himself and other customers who paid a service charge to the hotel in connection with the purchase of food or beverages, claiming that the hotel’s conduct was an unfair or deceptive act or practice (UDAP) under sections 481B-14 and 480-2. The circuit court granted summary judgment as to liability only, ruling that Defendant was liable under section 481B-14. After a jury trial on damages, the jury awarded $269,114.73 to the class. The circuit court subsequently granted Defendant’s motion for JMOL on the theory that there was insufficient evidence that Plaintiffs suffered injury as a result of Defendant’s violation of the statute. The ICA affirmed on remand. The Supreme Court disagreed, holding that Plaintiff and the class sustained contract-based damages and damages under the UDAP statute. View "Kawakami v. Kahala Hotel Investors, LLC" on Justia Law

Posted in: Contracts

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Haw. Rev. Stat. 386-8, which governs a third party’s liability for workers’ compensation, provides the exclusive remedy for an employer to recover workers’ compensation benefits from a third-party tortfeasor. An employee of Hawaiian Dredging Construction Company, Inc. (HDCC) was injured in a workplace accident, allegedly due to the actions of HDCC’s subcontractor, Fujikawa Associates, Inc. (Fujikawa). HDCC sought reimbursement from Fujikawa, claiming that workers’ compensation benefits were within the scope of the subcontract’s indemnity clause. When Fujikawa refused to indemnify HDCC, HDCC filed a complaint alleging breach of the subcontract. The circuit court granted summary judgment in favor of Fujikawa. The Supreme Court affirmed, holding that summary judgment was appropriate because HDCC did not avail itself of the exclusive remedy provided in section 386-8. View "Hawaiian Dredging Construction Co. v. Fujikawa Associates, Inc." on Justia Law

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The Supreme Court affirmed its decision in Narayan I, in which the court held that Plaintiffs, a group of individual condominium owners, could not be compelled to arbitrate claims arising from the financial breakdown of a condominium project. Specifically, the court held in Narayan I that the arbitration clause was unenforceable because the terms of the documents at issue were ambiguous with respect to Plaintiffs’ intent to arbitrate and that portions of the arbitration clause were unconscionable. The United States Supreme Court vacated and remanded Narayan I for further consideration in light of its recent decision in DIRECTV, Inc. v. Imburgia, 577 U.S. __ (2015), which held that state law must place arbitration agreements on equal footing with all other contracts. After recognizing this principle, the Hawaii Supreme Court held that that the arbitration clause at issue in the present case was unconscionable under common law contract principles. View "Narayan v. Ritz-Carlton Development Co." on Justia Law

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In these consolidated cases (Garner and Kawashima), the Supreme Court held that the circuit court erred in determining that Regulation 5203 was a Haw. Rev. Stat. chapter 91 rule and in granting summary judgment in favor of Plaintiffs for their hourly back wages contract claims. Further, the court erred in finding in the Garner case that Plaintiffs were entitled to interest on their per diem and hourly back wages under Haw. Rev. Stat. 103-10. Plaintiffs in both cases - substitute and part-time temporary teachers (PTTs) who were employed by the State, Department of Education (DOE) - claimed they were underpaid by the State. In Garner, the circuit court awarded hourly back wages to Plaintiffs who worked in a part-time capacity and also awarded interest on both the per diem and hourly back wages owed. In Kawashima, the circuit court awarded the PTTs hourly back wages but ruled that the PTTs were not entitled to interest on their unpaid hourly wages. The Supreme Court reversed the judgment in Garner and affirmed in part and reversed in part the judgment in Kawashima, holding that Plaintiffs were not entitled to hourly back wages or interest on any back wages, whether per diem or hourly, under section 103-10. View "Kawashima v. State, Department of Education" on Justia Law

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Under the circumstances of this case, it was unconscionable to require an employee to pay half the estimated arbitration costs up front in order to access the arbitral forum, and therefore, the requirement was unenforceable. Plaintiff signed and submitted an employment contract that contained an arbitration provision. Plaintiff, however, never did work for Defendant. Plaintiff filed a complaint alleging that Defendant refused to hire her in retaliation for her filing a sexual harassment complaint. Defendant filed a motion to compel arbitration. Plaintiff opposed the motion to compel, arguing, inter alia, that the arbitration agreement was unconscionable because it required her to pay for the arbitration costs in a civil rights matter. The circuit court ultimately granted Defendant’s motion to compel arbitration. The court found it would be unconscionable for Plaintiff to pay half the arbitration estimate to access the arbitral forum but nonetheless concluded that the arbitration clause could be enforced by requiring Defendant to pay for all arbitration fees and costs. The Supreme Court vacated the circuit court’s order, holding that the circuit court (1) correctly concluded that the parties entered into a valid arbitration agreement; but (2) improperly reformed the arbitration agreement instead of invalidating the entire agreement. View "Gabriel v. Island Pacific Academy, Inc." on Justia Law

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This case arose out of dispute between the Association of Apartment Owners of Royal Aloha, its former property managers, and its former commercial tenants. The AOAO installed an electricity submetering system and submitted readings of each unit’s electricity submeter to the managing agent, who would bill each owner for electricity. For certain years, some commercial tenants were never billed for electricity, and some were erroneously billed for a portion of those electricity costs. The AOAO sued its former property managers for, inter alia, breach of contract for the billing errors. The AOAO also sued the commercial tenants to recover the unbilled or erroneously billed electricity costs. The circuit court granted summary judgment for all defendants, concluding that all claims were barred under the doctrine of laches. The Intermediate Court of Appeals reversed, concluding that the defense of laches applies only to equitable claims. The Supreme Court reversed, holding that laches is a defense to legal and equitable claims alike. View "Association of Apartment Owners of Royal Aloha v. Certified Management, Inc." on Justia Law

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Plaintiffs brought a wrongful death action against Kamehameha Investment Corporation (KIC), the developer of a hillside area, and Sato and Associates, Inc. and Daniel Miyasato (collectively, Sato), the civil engineer. KIC tendered defense against Plaintiffs’ claims to Sato pursuant to a hold harmless clause in a project consultant agreement between Sato and KIC. KIC filed a cross-claim against Sato, alleging that Sato had agreed to defend and indemnify KIC against Plaintiffs’ claims. The trial court granted KIC’s motion for partial summary judgment against Sato. Relying on Pancakes of Hawaii, Inc. v. Pomare Properties Corp., the Intermediate Court of Appeals (ICA) affirmed, concluding that Sato had a contractual duty to defend KIC in the wrongful death action. The Supreme Court vacated the ICA’s judgment, holding (1) Haw. Rev. Stat. 431:10-222 renders invalid any provision in a construction contract requiring the promisor to defend “the promisee against liability for bodily injury to persons or damage to property caused by or resulting from the sole negligence of willful misconduct of the promisee, the promisee’s agent or employees, or indemnitee”; (2) Pancakes does not apply to defense provisions in construction contracts; and (3) the scope of a promisor’s duty to defend imposed by a construction contract is determined at the end of litigation. Remanded. View "Arthur v. State, Dep’t of Hawaiian Home Lands" on Justia Law

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Plaintiffs, Clarence Furuya and Lona Furuya, filed the underlying suit against Association of Apartment Owners of Pacific Monarch, Inc. (AOAO) raising issues related to their interests in an apartment unit located at the Pacific Monarch Condominium (Pacific Monarch) and 106 parking stalls appurtenant to the unit. The circuit court concluded that there was no enforceable contract between AOAO and the Furuyas for the purchase of the leased fee interests associated with the unit and the parking stalls. The Intermediate Court of Appeals (ICA) ultimately affirmed. The Supreme Court affirmed, holding (1) the Furuyas failed to demonstrate error in the circuit court’s decision; and (2) the circuit court did not err in rejecting the Furuyas’ related claims for injunctive relief, declaratory relief, and ultra vires act. View "Furuya v. Ass’n of Apartment Owners of Pacific Monarch, Inc." on Justia Law

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Lloyd Anastasi loaned $2.4 million to a third party in exchange for a mortgage on a property supposedly owned by that third party. Fidelity Insurance Company insured that the third party had good title, but the warranty deed purporting to give title to the third party was forged. Anastasi was sued by the owners of the property, and Fidelity accepted tender of the claim under a reservation of rights. Anastasi later filed a bad faith and breach of contract claim against Fidelity, alleging that the lawsuit was used by Fidelity to delay paying him under the title insurance policy. The circuit court granted summary judgment in favor of Fidelity. The intermediate court of appeals (ICA) remanded in part and vacated in part. The Supreme Court (1) affirmed the ICA’s judgment insofar as it remanded to the circuit court an order allowing Fidelity to withhold certain documents that Anastasi requested during discovery under the attorney-client privilege and work product doctrine; and (2) vacated the ICA’s judgment insofar it it concluded that Anastasi failed to show any genuine issue of material fact that Fidelity acted in bad faith. View "Anastasi v. Fidelity Nat’l Title Ins. Co." on Justia Law

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Buyers bought a commercial property from Seller. Buyers subsequently filed a complaint against Seller challenging the adequacy of Seller’s disclosures. The circuit court dismissed the action without prejudice to allow the parties to engage in mediation. Because of a dispute between the parties regarding mediation, the mortgage payments were briefly interrupted. Seller subsequently brought a foreclosure action against Buyers. Seller then held a nonjudicial public foreclosure auction at which she purchased the property by submitting the highest bid. After a trial on Buyers’ claims for nondisclosure and misrepresentation, the circuit court ordered judgment in favor of Seller. The court also ordered judgment in favor of Seller and against Buyers on Seller’s counterclaims for breach of the note and mortgage and ejectment. The intermediate court of appeals affirmed. The Supreme Court vacated the judgments of the lower courts, holding (1) Seller’s failure to disclose certain facts regarding the property’s sewer system was actionable under the nondisclosure and misrepresentation causes of action; and (2) Seller’s nonjudicial foreclosure of the property and ejectment of Buyers was wrongful. View "Santiago v. Tanaka" on Justia Law