CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS. CAAP-13-0002084; CIV. NO. 3RC12-1-297H.
Lottie Tagupa, petitioner, pro se.
Robert D. Triantos and Edmund W.K. Haitsuka, for respondent.
RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON JJ.
[135 Hawai'i 470]
At issue in this case is the authority of a trial court to condition the voluntary dismissal of a complaint upon the plaintiff's payment of the defendant's attorney's fees and costs. We hold that such authority exists under the Hawai'i District Rules of Civil Procedure (HDCRCP) Rule 41(a)(2) (1996), but it is subject to certain procedural requirements. Additionally, the exercise of this authority must comport with equitable factors to accord substantial justice to the parties.
1. District Court Complaint
On October 26, 2012, Lettie Tagupa, pro se, filed a standard form one-page complaint (Complaint) against VIPDesk in the District Court of the Third Circuit (district court). The Complaint asserted that " [o]n or about Jun 2010-Sep 2011, Defendant(s) owed money to Plaintiff(s) as follows: For time spent taking photos, creating, researching and writing blogs on travel recommendations and travel information for the sole purpose of supporting VIPdesk's marketing efforts." The Complaint stated that the district court " ha[d] jurisdiction over this matter and venue [was] proper."
In the Complaint, Tagupa initially indicated that the amount claimed was $35,000 and asked for judgment in that amount, but a handwritten amendment to her Complaint reduced the amount to $25,000.
2. Tagupa's Motion to Dismiss for Lack of Subject Matter Jurisdiction
On May 8, 2013, Tagupa, with newly acquired
[135 Hawai'i 471] legal representation, filed a motion to dismiss the case for lack of subject matter jurisdiction (motion to dismiss) pursuant to Hawai'i Rules of Civil Procedure (HRCP) Rules 7, 9, and 12(b)(1). Tagupa asserted that the district court did not have jurisdiction " over the subject matter of th[e] case" because her claims " derive from violations of federal law--the Fair Labor Standards Act of 1938 [FLSA], 29 U.S.C. 201 et. seq. " Tagupa acknowledged that she filed the case, pro se, in the wrong court, and attached a " draft lawsuit for the correct court," i.e., the United States District Court for the District of Hawai'i, to her motion to dismiss.
VIPdesk filed a memorandum in opposition to Tagupa's motion to dismiss in which it argued that the district court had jurisdiction over Tagupa's claims. VIPdesk maintained that Tagupa's Complaint alleged claims that could arise solely out of Hawai'i state law and that even if Tagupa intended to pursue a FLSA claim, the district court had subject matter jurisdiction over such a claim. Alternatively, VIPdesk requested, pursuant to the HDCRCP Rule 41(a)(2), that if the Court granted Tagupa's motion to dismiss, the dismissal should be with prejudice and conditioned upon Tagupa's payment of the attorney's fees and costs incurred by VIPdesk in the case.
3. District Court's Orders and Judgment
At a hearing on May 23, 2013, the district court granted Tagupa's motion to dismiss without prejudice, basing its decision not on lack of subject matter jurisdiction, but, rather, " on [Tagupa] wanting to file [the] case in federal court instead of state court." 
At the hearing, Tagupa's counsel requested that no attorney's fees and costs be awarded to VIPdesk in light of Tagupa's pro se status at the time that she filed the Complaint. The district court found that Tagupa " admittedly filed [the case] in the wrong court" and expressed concern that " if pro se plaintiffs file complaints [and] the defendant hires an attorney to defend and spends a lot of time on the case [and] then plaintiff decides to get counsel [and] . . . then states that they would like to file this claim in federal court, the defendant has incurred the expense of hiring an attorney to prepare it's [sic] defense." The court concluded, " Defendant should not have to bear the expense because [Tagupa] filed in the wrong court."
At the conclusion of the hearing, the district court awarded VIPdesk attorney's fees and costs pursuant to HDCRCP Rule 41(a)(2). The district court subsequently filed its order granting Tagupa's motion to dismiss on June 4, 2013. The order stated that VIPdesk " is to be awarded reasonable attorney's fees and costs incurred in defending this case in this Court" and instructed VIPdesk to file a declaration with its attorney's fees incurred by June 3, 2013, and for Tagupa to file a response or objection within ten days of receipt of VIPdesk's declaration. The order stated that the court would " decide the issue of [VIPdesk's] attorney fees [135 Hawai'i 472] and costs to be awarded via non-hearing motion."
On June 5, 2013, VIPdesk filed its motion for attorney's fees (attorney's fees motion) in which it maintained that it " incurred a total of $16,800.41 in attorney's fees (inclusive of general excise taxes) and $288.87 in costs defending this case in this Court." Tagupa filed her memorandum in opposition on June 12, 2014. In her memorandum, Tagupa argued that VIPdesk should not be awarded attorney's fees as VIPdesk had not prevailed in the action, and there " ha[d] been no determination by this Court that [Tagupa's] legal claims are unreasonable, frivolous, meritless or vexatious." Tagupa contended that the " work performed by [VIPdesk] will be used by [VIPdesk] in the furtherance of this case in Federal Court," VIPdesk " will use the same discovery in the Federal Court case," and VIPdesk was not prejudiced by the dismissal.
On June 17, 2013, the district court issued an Order Awarding Attorney's Fees, in which it granted VIPDesk's nonhearing attorney's fees motion and awarded VIPdesk the entire amount requested in the amount of $16,800.41 " as reasonable attorney's fees" and $288.87 in costs, for a total amount of $17,089.28. The district court handwrote on the Order Awarding Attorney's Fees that " pursuant to HDCRCP 41(a)(2) and [Hawai'i Revised Statutes (HRS)] § 607-14.5[, the] Court finds that the Plaintiff's claim for jurisdiction amount was frivolous under Section 607-14.5(b)."  On July 18, 2013, Tagupa filed a notice of appeal to the ICA from the Judgment filed on June 17, 2013.
II. Appellate Proceedings
In her Opening Brief, Tagupa argued that the district court erred in its Order Awarding Attorney's Fees. Tagupa contended that the district court granted VIPdesk's attorney's fees and costs prematurely, before the merits of the case had been decided and before a prevailing party was properly identified.
Tagupa noted that the district court awarded attorney's fees pursuant to HDCRCP 41(a)(2) and HRS § 607-14.5 (Supp. 2013) even though VIPdesk " cited only rules 7(b) and 41(a)(2) [of the HDCRCP] as the basis for granting attorney's fees." Tagupa argued that to award attorney's fees under HRS § 607-14.5, the court must find, in writing, that all or a portion of the claims or defenses made by the party were frivolous and not reasonably supported by the facts and the law in the civil action. Tagupa contended that despite the district court's authority to award attorney's fees and costs, the fact that she revised her ...