NEIL YONEJI, Successor Trustee of the Mitsuo Yoneji Revocable Trust dated November 27, 1985 and NEIL YONEJI and CLAIRE YONEJI, individually and as Trustees of the Yoneji Revocable Family Trust Dated August 31, 1998, Plaintiffs-Appellants,
MARY KAZUMI YONEJI, Defendant-Appellee
CHARLENE YONEJI, JOHN DOES 1-10, JANE DOES 1-10, DOE PARTNERSHIPS, CORPORATIONS OR ENTITIES 1-20, Defendants MARY KAZUMI YONEJI, Counterclaimant,
NEIL YONEJI, Successor Trustee of the Mitsuo Yoneji Revocable Trust dated November 27, 1985 and NEIL YONEJI and CLAIRE YONEJI, as Trustees of the Yoneji Revocable Family Trust Dated August 31, 1998, Counterclaim Defendants
APPEAL FROM THE CIRCUIT COURT OF THE FIFTH CIRCUIT (CIVIL NO. 09-1-0282)
Patrick K. Shea Sara Jo Buehler (Shea & Kamiya) and Rebecca A. Copeland for Plaintiffs/Counterclaim Defendants/Appellants.
Ryan G.S. Au for Defendant/Counterclaimant/ Appellee.
FOLEY, PRESIDING J., LEONARD AND GINOZA, JJ.
Plaintiffs/Counterclaim Defendants/Appellants Neil Yoneji (Neil), Successor Trustee of the Mitsuo Yoneji Revocable Trust dated November 27, 1985 (Mitsuo Trust), and Neil and Claire Yoneji (Claire), individually and as Trustees of the Yoneji Revocable Family Trust Dated August 31, 1998 (Yoneji Family Trust) (together, Yonejis) appeal from the (1) May 1, 2013 "Order Granting in Part and Denying in Part Defendant Mary Kazumi Yoneji's Motion for Summary Judgment (Filed 2/26/13)" (MSJ Order), and (2) the March 7, 2014 "Amended Final Judgment, " filed in the Circuit Court of the Fifth Circuit (circuit court).
On appeal, the Yonejis argue the circuit court erred by
(1) granting-in-part the motion for summary judgment (MSJ) of Defendant/Counterclaimant/Appellee Mary Yoneji (Mary);
(2) excluding several pieces of evidence and testimony at trial; (3) denying the Yonejis' request for a punitive damages instruction; and
(4) denying several of the Yonejis' requests for costs.
This case involves the Mitsuo Trust, a family trust funded by rental income generated from two income-producing properties (together, Properties) originally owned by grantor, Mitsuo Yoneji (Mitsuo). The trust left interests in the Properties to Mitsuo's two sons, Neil and Owen Yoneji (Owen), and any children Mitsuo's sons may have. Neil was married to Claire. Owen was married to Defendant Charlene Yoneji (Charlene) and had one child, Mary. Owen passed away before the start of the Yonejis' lawsuit.
The Properties were co-owned by four family trusts in varying amounts: the Mitsuo Trust, the Revocable Trust of Owen Kazuo Yoneji, dated January 11, 1994 (Owen Trust), the Revocable Trust of Charlene Tsuruko Yoneji, dated January 11, 1994 (Charlene Trust), and the Yoneji Family Trust. All profits and expenses related to the Properties were handled through a single trust bank account at the First Hawaiian Bank (FHB), which operated under the Mitsuo Trust (Mitsuo Trust Account).
On October 26, 2009, the Yonejis filed a Complaint alleging that Mary and Charlene improperly emptied the Mitsuo Trust Account, and wrongfully redirected the rental income from the Properties co-owned by the various family trusts to Mary in her personal capacity. The Yonejis alleged that Mary was liable for conversion, constructive fraud, conspiracy, prima facie tort, unjust enrichment, and constructive trust. Specifically, the Yonejis alleged:
15. On April 11, 2008, [Mary] wrote a check drawn on FHB Account No 30-069056 in the amount of $67, 031.14 to [FHB] which on the same day issued an Official Bank Check
payable in the same amount to [Charlene], Mary's mother. The Official Bank Check indicated that [Mary] had purchased same "for [Owen] & [Neil]."
16. [Neil] did not authorize the April 11, 2008 disbursement of funds from the Mitsuo Trust checking account.
17. On April 28, 2008, [Mary] wrote a counter check drawn on FHB Account No 30-069056 in the amount of $85, 081.99 payable to [FHB] which on the same day, issued an Official Bank Check payable in the same amount to [Owen]. The Official Bank Check indicated that [Mary] had purchased the same for (or on behalf of) the Mitsuo Trust.
18. [Neil] did not authorize the April 28, 2008 disbursement of funds from the Mitsuo Trust checking account.
19. After April 28, 2008, no further rent deposits were made at any financial institution for the benefit of the Mitsuo Trust. Mary collected in excess of Twenty-Five Thousand Dollars ($25, 000.00) in rents from the tenants occupying [Properties] individually, or on behalf of [Owen], individually until [Owen] died in the Fall of 2008.
20. After Owen's death, [Mary] held herself out as the individual owner of the [Properties], and instructed the tenants of the [Properties] to make rent payments to her individually, and received certain rent payments from certain tenants, payable to her individually.
21. Moreover, [Mary] wrongfully failed and refused to allow [Neil] access to either of the [Properties].
On December 22, 2009, Mary and Charlene filed their Answer. On May 1, 2012, the circuit court approved a "Stipulation for Appointment of Special Master" (Stipulation). Both parties had stipulated to the use of a Special Master to resolve the following issues:
1. With respect to the [Properties], an accounting of all loans, sales, distributions, revenues, expenses, received, spent, used and/or withdrawn by any one or more or the Parties during the period March 1, 2008 to the present ("Subject Period"); and
2. With respect to the management of the [Properties] for the Subject Period, any discovered improprieties or mismanagement (diversion or non-reporting of income, improper expenses, improper distributions, withdrawals, etc.) including without limitation, the dates, the parties involved and the amount of any loss.
The Special Master was tasked with
1. [Conducting] an audit of the assets, revenues, and expenses of the [Properties] from March 1, 2008 to present.
2. [Determining] the interests of the co-owners of the [Properties] and their past and present entitlement to profits and responsibility for expenses.
3. [Determining] the final account among the co-owners, taking into consideration all distributions and the proceeds/credit from the sale of the [Properties].
4. [Determining] the parties' rights to the amounts related to the [Properties] held, in custody and/or control by any of the parties and the clerk of the Court.
The parties stipulated:
6. Upon completion of the investigation, the Special Master shall circulate a proposed report, entertain comments thereto, and make a final report to the [circuit court] including findings and recommendations determining accounts as set forth above. After filing of the final report, the parties shall have an opportunity to object to any portion of the report before the [circuit court adopts findings and issues a judgment. The [circuit court] shall determine any whether there are any genuine issues of material fact to be determined by the trier of fact.
All parties also agreed that "the trier of fact shall rely on the report of the Special Master in determining the amounts, if any, owed by and between all parties in the above entitled action, subject to their determination of any disputed genuine issue of material fact (as set forth by the [circuit court])." The Stipulation provided that fees and costs associated with the Special Master would be distributed as follows:
10. The fees and costs associated with the appointment of the Master shall be finally determined by agreement or by Court Order, provided that any required advance for such fess [sic] and cost shall be made (without prejudice) as follows: 42.5% by [Yoneji Family Trust], 42.5% by [Owen Trust and Charlene Trust] and 15% by the Mitsuo Trust. For purposes of the Master's timekeeping, the Master shall keep time for his or her analysis for matter from March 1, 2008 to August 15, 2009, separate from his or her analysis from August 15, 2009, to the present.
On July 30, 2012, the circuit court issued its "Order Setting Trial Date, " ordering all exhibits to be delivered to the circuit court and served by March 8, 2013.
A. Motion for Summary Judgment
On February 26, 2013, before the March 8, 2013 deadline to deliver all exhibits to the circuit court, Mary filed a motion for summary judgment (MSJ) on the Yonejis' conversion, constructive fraud, conspiracy, prima facie tort, unjust enrichment, and constructive trust claims. Mary also requested that the court grant summary judgment in her favor as to the claims brought in Neil and Claire's individual capacities, arguing that "they have no ownership interest to the Properties in their individual capacities." On March 25, 2013, the Yonejis filed their opposition to Mary's MSJ (Opposition to MSJ).
On April 2, 2013, the circuit court held a hearing on Mary's MSJ, where it granted in part and denied in part Mary's request for summary judgment. The circuit court denied Mary's request for summary judgment as to the Yonejis' conversion and unjust enrichment claims, pending the receipt of the Special Master's report holding:
The Court is granting in part and denying in part [Mary's MSJ]. In particular, as to each specific count, the Court again pending the receipt of the final report of the master finds that there are genuine issues of material fact with respect to whether Mary withdrew more money than she was authorized to withdraw.
And so, summary judgment is denied on the issue of the conversion. As to constructive fraud, conspiracy, prima facia [sic] tort and constructive trust, the Court finds that there are no genuine issue [sic] of material fact, and the Court is granting summary judgment in [Mary's] favor. As to the issue of unjust enrichment, just as the Court is waiting on the final report of the master, and there is issue [sic] of whether Mary withdrew more than she was authorized to withdraw, the Court finds that there are genuine issue [sic] of material facts.
In its MSJ Order filed May 1, 2013, the circuit court reduced its decision to a written order granting summary judgment in Mary's favor on the Yonejis' claims for constructive fraud, conspiracy, prima facie tort, and constructive trust and denying summary judgment as to the Yonejis' conversion and unjust enrichment claims. The circuit court also awarded Mary $38, 158.05 in attorneys' fees and $6, 173.74 in costs because Neil and Claire brought claims in their individual capacities. B. Motion in Limine
On March 4, 2013, in preparation for trial,  Mary filed a motion in limine to exclude testimony of Kent Tanigawa (Tanigawa), a witness for the Yonejis, and any reference to a quitclaim deed that allegedly deeded the Charlene Trust and Owen Trust interests in the Properties to Tanigawa. Mary's motion in limine argued that Tanigawa should not be permitted to testify during trial because the matter to which he was to speak "[was] not relevant and ha[d] no probative value in proving that Defendants Mary and Charlene withdrew $152, 113.13 from the one single Mitsuo Trust bank account in April 2008."
The Yonejis' opposition to Mary's motion in limine alleged that on December 10, 2010, after an apparent partition action and after the Yonejis had filed their Complaint, Mary executed a quitclaim deed to Tanigawa for a collective 42.5% interest in the Properties from the Charlene Trust and Owen Trust. The Yonejis alleged that the transfer of those interests contravened a previously confirmed sale of the Properties to Neil. The Yonejis alleged that Neil, as trustee of the Yoneji Family Trust, was supposed to close escrow on the sale of the Properties by March 30, 2011, but the Yonejis could not close as planned because they had to wait for Mary to execute another quitclaim deed transferring title from Tanigawa back to the Charlene Trust and Owen Trust. The Yonejis alleged that the delay resulted in two months worth of missed rent revenue from the Properties that should have been included in the damages calculations.
On April 17, 2013, the circuit court held a hearing on Mary's motion in limine and orally granted her motion, finding that Tanigawa's testimony and evidence of the quitclaim deed were irrelevant to the current proceedings. On April 24, 2013, the circuit court entered a written order granting Mary's motion in limine to exclude Tanigawa's testimony.
C. Special Master's Report and Testimony
On April 10, 2013, the Special Master issued his report. On April 15, 2013, the Yonejis filed a "Request for Judicial Notice of the Report of Special Master" (Request for Judicial Notice) to have the report admitted into evidence. Shortly thereafter, and in adherence with the stipulated procedure for objections to the Special Master's report, Mary filed an objection to the report on April 16, 2013, claiming (1) "[t]he Court should use the 'Available Cash Balance' on Page 11 of the Final Report as the Special Master has allocated the monies to each of the four owners based on their pro rata ownership interest in the Properties as the original basis before applying any credits or debits to any person or party"; (2) "the Final Report fails to address Mary's Counterclaim"; and (3) "the Final Report incorrectly states that Mary's attorney is holding $152, 772.46, which is incorrect, as it has been deposited with the Court."
At the April 22, 2013 hearing, the circuit court considered and then denied the Request for Judicial Notice because (1) the Yonejis' request was an improper subject for judicial notice and (2) Mary objected to the introduction of the report. During the hearing, the circuit court also determined that Special Master, Carleton Williams (Special Master Williams), would not be allowed to testify during the Yonejis' case-in-chief because the Yonejis did not name him as a witness. The circuit court did instruct, however, that the Yonejis were still free to call Special Master Williams as a rebuttal witness during trial. On April 24, 2013, the circuit court filed its "Order Denying Plaintiffs' Request For Judicial Notice of Report of Special Master (Filed 4/15/13)."
At the April 25, 2013 hearing, the Yonejis again attempted to introduce the Special Master's report into evidence by orally requesting that the circuit court adopt the report. The circuit court took the matter under advisement, but never issued a ruling on the Yonejis' request.
On April 29, 2013, the Yonejis requested to introduce Special Master Williams as a rebuttal witness. The court denied the Yonejis' request, reasoning the following:
The Court, considering the stipulation for appointment of a special master, the Court noting that the [Yonejis] have not named [Special Master Williams] as a witness, and the Court noting the expert testimony that has already been received by way of exhibits and testimony, the Court is denying the [Yonejis'] request to call [Special Master Williams] as the rebuttal witness.
The circuit court specifically indicated that its decision to not allow Special Master Williams to testify was
based on what I have pointed out to the parties. It's based on the fact that [Special Master Williams] is not named as [Yonejis'] witness. It's based on the fact that the special master was intended to be a neutral party.
It's also based on the fact that counsel have had the benefit of reviewing the final report by the master and that this has provided guidance to you, and it's based on what's provided in [Hawai'i Rules of Civil Procedure (HRCP)] Rule 53.
The trial then proceeded without the Special Master's report and without the testimony from Special Master Williams.
D. Third Check for $16, 384.20
On April 15, 2013, the Yonejis filed a "Motion for Leave to Amend Complaint" (Motion to Amend Complaint) in order to amend their original October 26, 2009 Complaint to include facts pertaining to an additional $16, 384.20 check from April 14, 2008, which the Yonejis did not include in their original Complaint. In their Motion to Amend Complaint, the Yonejis alleged, inter alia:
19. On April 14, 2008, [Mary] wrote a counter check drawn on the bank account in the amount of $16, 384.20 Payable to [FHB] which, on the same day, issued an Official Bank Check payable in the same amount to [Owen] in the same amount, which Official Bank Check was deposited in [Mary's] individual bank account on Kaua'i Government Employee's [Federal Credit Union].
The Motion to Amend Complaint alleged that the Yonejis did not plead evidence of the third check for $16, 384.20 because they did not know about the check when they filed their original Complaint and only learned of the third check "[d]uring the course of discovery[.]" The Yonejis did not indicate the exact date on which they learned of the third check. On April 17, 2013, Mary filed her opposition.
On April 23, 2013, the Yonejis attempted to admit the check in to evidence to refresh Mary's recollection during her cross-examination. Mary testified that she prepared two official bank checks from the Mitsuo Trust Account in the amounts of $67, 031.14 and $85, 081.99. The Yonejis repeatedly asked Mary whether she made any other withdrawls from the Mitsuo Trust Account in April 2008. Mary indicated that she "[could not] recall at [that] time." The Yonejis attempted to refresh Mary's recollection by introducing the third check for $16, 384.20 into evidence. Mary's counsel objected based on the circuit court's denial of the Yonejis' Motion to Amend Complaint. The circuit court sustained Mary's objection. The Yonejis argued that the check was relevant because Mary claimed that she could not remember whether there were any other withdrawals. The Yonejis argued that "justice require[d] that [they] at least put it in evidence and let the jury decide." The circuit court sustained Mary's objection.
On April 24, 2013, the circuit court entered its written order denying the Yonejis' Motion to Amend Complaint.
On April 25, 2013, the Yonejis again attempted to admit testimony related to the third check but the circuit court refused to allow the testimony. While on direct examination, the Yonejis' counsel questioned Neil about the amounts of the checks that Mary had withdrawn from the Mitsuo Trust Account. As Neil began to list the amounts, Mary's counsel preemptively objected, claiming that "[Neil] want[ed] to mention the $16, 384.20, which the Court denied." Unlike previous attempts to admit the check, the Yonejis claimed that the testimony of the third check went to Mary's modus operandi and credibility, and that "Mary had done this twice, and this is the third withdrawl." The Yonejis argued that they should be allowed to ...