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Hiatt v. Williams

Intermediate Court of Appeals of Hawaii

September 30, 2019

JERRY M. HIATT, Plaintiff-Appellee,
v.
SHERMAN WILLIAMS, TIFFANY WILLIAMS, and KONA SUNSET POOLS & SPAS, LLC, a Domestic Limited Liability Company, Defendants-Appellees, and CONTRACTORS LICENSE BOARD, Intervenor-Appellant

          APPEAL FROM THE CIRCUIT COURT OF THE THIRD CIRCUIT (CIVIL NO. 15-1-068K)

          Ronald T. Michioka, Diane W. Wong, Zale T. Okazaki, (Chong, Nishimoto, Sia, Nakamura & Goya), for Intervenor-Appellant.

          Jerry M. Hiatt, Mahilani E.K. Hiatt, (Hiatt & Hiatt), for Plaintiff-Appellee.

          Curtis T. Tabata, (Matsubara, Kotake & Tabata), for Real Estate Commission of the State of Hawai'i.

          GINOZA, CHIEF JUDGE, LEONARD AND HIRAOKA, JJ.

          OPINION

          LEONARD., T.

         Plaintiff-Appellee Jerry M. Hiatt (Hiatt) obtained a judgment against a licenced contractor who performed defective work at Hiatt's residence. After Hiatt unsuccessfully tried to collect on the judgment, he applied for payment from the Contractors Recovery Fund (the Fund), but objected to assigning all of his right, title and interest in the judgment to the Fund. We hold that the applicable statute, Hawaii Revised Statutes (HRS) § 444-32 (2013), clearly requires the assignment of all of Hiatt's rights in the judgment to the Fund upon Hiatt's receipt of any payment from the Fund. As the trial court concluded otherwise, this case must be remanded for further proceedings.

         Intervenor-Appellant Contractors License Board (the Board) appeals from the September 12, 2017 Third Amended Final Judgment (Third Amended Judgment), entered by the Circuit Court of the Third Circuit (Circuit Court), [1] in favor of Hiatt and against Defendants Sherman Williams, Tiffany Williams, and Kona Sunset Pools & Spas, LLC (collectively, the Williams Parties), and the Board-. The Board also challenges the Circuit Court's October 8, 2015 Order Granting in Part and Denying in Part Plaintiff Jerry M. Hiatt's Application for Order Directing Payment Out of the Contractors' Recovery Fund (Order Directing Payment).

         I. BACKGROUND

         On February 24, 2015, Hiatt filed a Complaint against the Williams Parties, alleging that they failed to complete construction and installation of an outdoor pool at Hiatt's residence, and asserting claims for breach of contract and intentional misrepresentation or fraud. In Defendants' Answer to Complaint dated March 5, 2015, [2] and filed pro se on March 10, 2015, the Williams Parties admitted "each and every allegation of the Complaint" and prayed for the entry of a final judgment in favor of Hiatt and against themselves, jointly and severally, for the relief sought in the Complaint. Pursuant to a Stipulation and Order for Entry of Final Judgment filed on March 17, 2015, [3] the Circuit Court entered judgment in favor of Hiatt and against the Williams Parties, jointly and severally, for $30, 361, "reserv[ing] jurisdiction to enter such orders as are necessary as to the Contractors License Board and the Contractors' Recovery Fund."

         On May 12, 2015, Hiatt filed a Verified Claim Against All Defendants, seeking to recover from the Fund pursuant to HRS § 444-26 (2013) and HRS § 444-28 (2013).[4] In his Declaration, Hiatt's averments included: (1) his fruitless efforts to obtain payment from the Williams Parties towards the $30, 361 awarded to Hiatt; (2) his research and inquiries to determine whether the Williams Parties had any assets to satisfy the judgment against them; (3) his timely notification to the Board of the action against the Williams Parties; and (4) his compliance with all other statutory prerequisites for entry of an order directing payment under HRS § 444-28.[5] On June 4, 2015, Hiatt filed an Application for Order Directing Payment Out of the Contractors' Recovery Fund (Application for Order Directing Payment), requesting an order directing payment from the Fund of the statutory amount of $12, 500, plus reasonable attorneys' fees and costs in the amount of $28, 809.68 for "having to pursue the lengthy process" of recovering from the Fund.

         At the August 6, 2015 hearing on the Application for Order Directing Payment, the Board moved to intervene, and the Circuit Court orally granted the Board's motion. Thereafter, the Board filed a written Motion to Intervene, As of Right. The Circuit Court's written order granting the Board's motion to intervene was entered on September 10, 2015. On August 7, 2015, the Board filed a memorandum in opposition to the Application for Order Directing Payment, arguing that Hiatt's recovery from the Fund should be limited to $12, 500, inclusive of any reasonable attorneys' fees and costs, pursuant to HRS § 444-26(a). The Board also asserted subrogation pursuant to HRS § 444-32 (2013)[6] and requested that - in the event the Circuit Court ordered payment from the Fund - the Circuit Court also order Hiatt to assign to the Board all of his right, title, and interest in the judgment against the Williams Parties.

         In reply, Hiatt agreed with the Board that his recovery was limited to $12, 500 but argued that: (1) HRS § 444-32 was ambiguous for its failure to address the instant situation, where the amount of the judgment is in excess of the amount paid from the Fund, and that it did not apply in this case; (2) it would be inequitable and a violation of due process for the Board to limit Hiatt's recovery from the Fund to $12, 500 while simultaneously requiring assignment to the Board of the full amount of the judgment against 'the Williams Parties; and (3) assignment of the full amount of the judgment would result in a windfall for the Board and deny Hiatt any future opportunity for recovery on the judgment.

         At the August 25, 2015 further hearing on the Application for Order Directing Payment, Hiatt reiterated the arguments in his reply and further argued that assignment to the Board of more than $12, 500 of the judgment against the Williams Parties would be an unjust enrichment as well as an unconstitutional taking. The Board argued that the statute plainly does not limit the amount of the assignment of the judgment to the Board and asserted that the unambiguous language of the statute mandated Hiatt's assignment of the full amount of his right, title, and interest in the judgment against the Williams Parties. The Board further contended that Hiatt's refusal to assign all of his rights, title, and interest in the judgment to the Board constituted noncompliance with the statutory prerequisites for recovery from the Fund and thus operated to waive his right to any recovery from the Fund under HRS § 444-33 (2013).[7]

         On October 8, 2015, the Circuit Court entered the Order Directing Payment, [8] which included the following:

1. The Court finds that [Hiatt] has met all of the statutory requirements pursuant to [HRS] Chapter 444 and is entitled to be awarded the total sum of Twelve Thousand Five Hundred Dollars and No/100 ($12, 500.00) from the Contractors Recovery Fund ("Fund") and the Court hereby orders [the Board] to make payment of this sum to [Hiatt] within thirty (30) days of the filing of this Order.
2. [Hiatt] has withdrawn his request for attorneys' fees and costs, therefore that part of [Hiatt]'s Application is denied.
3. The Court orders that, upon payment from the Contractors Recovery Fund, [Hiatt] shall execute and deliver an assignment of a\l his right, title and interest in the Judgment up to Twelve Thousand Five Hundred Dollars and No/100 ($12, 500.00) and interest to [the Board] to be delivered in exchange for, and contemporaneously with, [Hiatt]'s receipt of the $12, 500.00 from the Fund.

         Also on October 8, 2015, the Circuit Court entered an Amended Final Judgment (First Amended Judgment) from which the Board timely appealed, initiating appellate case CAAP-15-0000802. This court dismissed that appeal for lack of appellate jurisdiction, based on the First Amended Judgment's failure to identify the claims on which the Circuit Court intended to enter judgment. On November 7, 2 016, the Circuit Court entered a Second Amended Final Judgment (Second Amended Judgment), and the Board again filed a timely notice of appeal, initiating the instant appeal. On September 12, 2017, pursuant to this court's August 23, 2017 Order Temporarily Remanding Case to Circuit Court with Instructions to Enter a Judgment That Resolves All Claims, the Circuit Court entered the Third Amended Judgment.

         II. POINTS OF ERROR

         The Board asserts two points of error on appeal, [9] contending that the Circuit Court erred in: (1) ordering Hiatt to assign only part of his right, title, arid interest in the judgment against the Williams Parties, contrary to HRS § 444-32; and (2) failing to determine that Hiatt's refusal to assign all of his right, title, and interest in the judgment against the Williams Parties constituted a waiver of Hiatt's rights to any recovery from the Fund.[10]

         II. APPLICABLE ...


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