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Trustees of Estate of Bishop v. Au

Intermediate Court of Appeals of Hawaii

December 22, 2017

THE TRUSTEES OF THE ESTATE OF BERNICE PAUAHI BISHOP, ALSO KNOWN AS KAMEHAMEHA SCHOOLS, Plaintiffs-Counterclaim Defendants/Appellees,
v.
RONALD G.S. AU, Defendant-Counterclaimant/Appellant

         APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT (CIVIL NO. 13-1-0420-02)

          NAKAMURA, C.J., and FUJISE and REIFURTH, JJ.

          ORDER PARTIALLY GRANTING APPELLEES' REQUEST FOR ATTORNEYS' FEES AND COSTS BY NAKAMURA, C.J.

         Plaintiffs-Counterclaim Defendants/Appellees Trustees of the Estate of Bernice Pauahi Bishop, also known as Kamehameha Schools (KS), seek attorneys' fees and costs as the prevailing party in this appeal, which was brought by Defendant-Counterclaimant/Appellant Ronald G.S. Au (Au). KS requests attorneys1 fees in the amount of $67, 236.04 pursuant to Hawaii Revised Statutes (HRS) § 607-14 (2016)[1] and costs in the amount of $566.50 pursuant to Hawai'i Rules of Appellate Procedure (HRAP) Rule 39 (2016) .[2] Au objects to KS's request, arguing among other things that the amount of the requested attorneys' fees is unreasonable and that KS failed to properly apportion its fees between work done on assumpsit claims recoverable 'under HRS § 607-14 and non-assumpsit tort claims not recoverable under HRS § 607-14.

         KS's request for attorneys' fees raises a question for which there is no controlling authority in Hawai'i - whether under HRS § 607-14, a prevailing party in an assumpsit case is entitled to recover attorneys' fees incurred in litigating its fee request.[3] KS's request for attorneys' fees also raises questions concerning: (1) the reasonableness of the amount of fees requested by KS; (2) the appropriate apportionment of fees between work done on claims raised in KS's Complaint and Au's First Amended Counterclaim (Counterclaim); and (3) the appropriate apportionment between the work done on the assumpsit and the non-assumpsit claims raised in Au's Counterclaim.

         As explained in greater detail below, we conclude that under HRS § 607-14, a prevailing party in an assumpsit case is entitled to recover attorneys' fees incurred in litigating its fee request. We further conclude that after evaluating the reasonableness of KS's fee request and performing the appropriate apportionments, KS is entitled to attorneys' fees in the reduced amount of $22, 853.39 and that it is entitled to $566.50 in costs as requested.

         BACKGROUND

         I.

         KS filed a Complaint against Au, alleging that Au breached the terms of a settlement agreement and a lease between the parties and seeking damages resulting from these breaches and the termination of the lease. Au filed a Counterclaim, which asserted eleven claims for relief: (1) "breach of lease, settlement agreement, and amendment of lease"; (2) "unreasonable withholding of consent of assignment"; (3) "settlement agreement of April 24, 2012, should be set aside and determined to be void, voidable and unenforceable"; (4) "breach of the covenant of good faith and fair dealing"; (5) "breach of promise"; (6) "intentional or negligent misrepresentation"; (7) "fraudulent inducement"; (8) "tortious interference with third-party contract"; (9) "retaliatory eviction"; (10) "tortious breach of the lease and amended lease"; and (11) "HRS 480 unfair and deceptive practices."

         KS filed a motion for summary judgment on its Complaint. The Circuit Court of the First Circuit (Circuit Court)[4] granted KS's motion, terminated the lease, and awarded KS damages in the principal amount of $130, 735.40. KS subsequently filed a motion for summary judgment on Au's Counterclaim. The Circuit Court granted this motion and entered summary judgment in favor of KS and against Au on all claims set forth in Au's Counterclaim.

         KS filed a post-judgment motion for attorneys' fees pursuant to HRS § 607-14. KS asserted that it incurred $114, 969.69 in attorneys' fees in pursuing the claims raised in the Complaint and that it incurred $180, 663.70 in attorneys' fees in defending against the claims in the Counterclaim. With respect to the attorneys' fees incurred in pursuing the Complaint, the Circuit Court, applying the "twenty-five percent of the judgment" cap on attorneys' fees set forth in HRS § 607-14, awarded KS twenty-five percent of the judgment amount of $130, 735.40 or $32, 683.85 in attorneys' fees. With respect to the attorneys' fees incurred in defending against the Counterclaim, the Circuit Court awarded KS $85, 000.00 in reasonable attorneys' fees out of the $180, 663.70 sought by KS.[5] The Circuit Court stated that it reduced the amount sought by KS "after a careful review" and noted that "some of the legal services rendered reference only the tort claims, to wit, retaliatory eviction, Chapter 480, misrepresentation, etc.; therefore, this Court is apportioning the attorneys' fees between assumpsit and non-assumpsit claims."

         II.

         On appeal, Au challenged the Circuit Court's: (1) grant of summary judgment in favor of KS on KS's Complaint; (2) grant of summary judgment in favor of KS on Au's Counterclaim; (3) denial of Au's motion to vacate or for reconsideration of the Circuit Court's grant of summary judgment on the Complaint and the Counterclaim; and (4) grant in part of KS's motion for attorneys' fees. By an Amended Summary Disposition Order, we affirmed the Circuit Court's decisions challenged by Au on appeal. Therefore, KS is clearly the prevailing party in this appeal.

         KS has moved for appellate attorneys' fees pursuant to HRS § 607-14 and costs pursuant to HRAP Rule 39. With respect to its request for attorneys' fees, KS asserts that it has incurred a total of $80, 042.90 in attorneys' fees for this appeal.[6] This consists of 256 hours at $250 per hour for Dennis W. Chong Kee (Chong Kee) and 75.4 hours at $165 per hour for Christopher T. Goodin (Goodin) plus general excise tax ($64, 000.00 $12, 441.00 = $76, 441 $3, 601.90 (4.712% general excise tax) = $80, 042.90). KS apportions its fees on appeal as 16 percent attributable to the Complaint and 84 percent attributable to the Counterclaim; it does not make any apportionment between assumpsit and non- assumpsit claims in the Counterclaim and seeks recovery of all appellate fees relating to the Counterclaim. KS acknowledges that it has already been awarded the maximum permissible fees under HRS § 607-14 for the Complaint. KS requests a total of $67, 236.04 in appellate fees, or the 84 percent of its total fees it asserts were attributable to the Counterclaim ($80, 042.90 x .84 = $67.236.04).

         As part of its attorneys1 fees motion, KS argues that it is entitled to recover attorneys' fees it has incurred and will incur in litigating its attorneys' fees motion. Included in the total $80, 042.90 in fees KS claims it incurred on appeal is $11, 261.78 in fees that KS asserts it has incurred and will incur in litigating the attorneys' fees motion.[7] When KS's 84 percent apportionment is applied to this $11, 261.78 amount, KS is seeking an award of $9, 459.90 in fees attributable to KS's litigation of its fee motion.

         DISCUSSION

         I.

         We first address the question of whether under HRS § 607-14, a prevailing party in an assumpsit case is entitled to recover attorneys' fees incurred in litigating its fee request. As noted, there is no controlling authority in this jurisdiction on this question under HRS § 607-14. The Hawai'i Supreme Court has addressed the question of entitlement to recovery of fees incurred in litigating fee requests in other contexts with conflicting results.

         A.

         In County of Hawai'i v. C & J Coupe Family Limited Partnership, 124 Hawai'i 281, 242 P.3d 1136 (2010), the supreme court addressed whether the defendant in an eminent domain action that had been dismissed was entitled to recover fees incurred in litigating its fee request. The supreme court held that the defendant was entitled to recover such fees based on HRS § 101-21,[8] which authorized the defendant in an eminent domain action in which the plaintiff failed to complete the taking of the property to recover "all such damage . . . sustained . . . by reason of the bringing of the proceedings." C & J Coupe, 124 Hawai'i at 306, 242 P.3d at 1161 (ellipsis points in original). The supreme court reasoned that the County was liable for the fees incurred by the defendant to litigate its fee request because those fees would not have been incurred by the defendant if the County had not brought its unsuccessful condemnation action. Id. The supreme ...


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