Hawaii Attorney Legal Blog

The Kaloko Dam flood was a terrible tragedy, about which I previously posted in September of 2007. I am happy to report that we have reached a successful settlement, which will allow our clients to restore their idyllic property.

Our clients' property, on the island of Kauai, was severely damaged by the Ka Loko Dam flood. I represented one of the largest property owners damaged by the Ka Loko Dam flood. Admittedly, I was part of a team of plaintiffs attorneys. (A case this size had to be handled by a team of attorneys). The case allowed me to work with some of Hawaii's best attorneys. It was also an honor to watch the manner in which this difficult case was handled by the Court. As an advocate, I was not always pleased with every ruling, however, the way the Court controlled the litigation was inspiring. I also participated in the mediation skillfully handled by Warren Price and Keith Hunter. It was conducted over several months and involved multiple parties and insurance carriers. This complex case involved every imaginable issue of law and procedure. The attorneys for the plaintiffs and the defendants handled this difficult case with the highest degree of courtesy and professionalism.

In my September 2007 Kaloko Dam blog, I wrote the following:

We are very proud to represent this family in their pursuit for justice. In a few years, we intend to write a follow up to this blog in which we will describe how we helped our clients restore their beautiful Kauai landscape.

This outcome will allow our clients to restore their home to the condition it was in before the flood. I also hope that this settlement allows the Kauai community to continue the process of healing from this tragedy.

Labels: Hawaii Real Estate Litigation, Mediation and Arbitration, Personal Injury

The Real Estate Settlement Procedures Act (RESPA), 12 U.S.C.A Section 26, et seq, was enacted by Congress to "effect certain changes in the settlement process for residential real estate that will result:"

(1) in more effective advance disclosures to home buyers and sellers of settlement costs;

(2) in the elimination of kickbacks or referral fees that tend to increase unnecessarily the costs of certain settlement services;

(3) in a reduction in the amounts home buyers are required to place in escrow accounts established to insure the payment of real estate taxes and insurance; and

(4) in slight reform and modernization of local recordkeeping of land title information.

12 U.S.C.A. Section 2601(b).

A particular RESPA disclosure that must be made by a lender includes the following:

Each person who makes a federally related mortgage loan shall disclose to each person who applies for the loan, at the time of application for the loan, whether the servicing of the loan may be assigned, sold, or transferred to any other person at the time while the loan is outstanding.

12 U.S.C.A Section 2605(a)(emphasis added).

The failure of a lender to make the above disclosure establishes a private right of action for the borrower against the lender. Sanborn v American Lending Network, 506 F.Supp.2d 917, 923 (D.Utah, 2007).

Labels: Hawaii Real Estate Litigation

The Truth in Lending Act (TILA) found in 15 U.S.C.A. section 1601, et. seq. was enacted to "protect consumers and promote the 'informed use of credit.'" Washington v Americquest Mortgage.Co., 2006 WL 1980201, *6 (N.D.Ill., 2006). As such, TILA requires creditors to conspiciously disclose certain terms and costs information prior to a credit transaction. Id. This information includes, but is not limited to, the annual percentage rate and "finance charge," order of disclosures, and use of different terminology. 15 U.S.C.A. section 1632(a).

The Statute of Limitation on a TILA action is one year for closed ended credit cases pursuant to 15 U.S.C.A. section 1640. The exception to the one year statute of limitation is when the remedy sought is to enforce the right of rescission under 15 U.S.C.A. section 1635. 15 U.S.C section 1635 provides that in any consumer credit transaction in which a security interest is retained or acquired in any real property which is used as the residence of the person to whom credit is extended, the obligor has the right to rescind the transaction until midnight of the third business day following the consummation of the transaction or the delivery of the disclosures required by the Truth in Lending Act, whichever is later, by notifying the creditor of his intention to rescind. 15 U.S.C section 1635. 15 U.S.C section 1635 applies to loans on unimproved lots that are intended for recreational or residential use. Charnita, Inc. v. F. T. C., 479 F.2d 684, 686-87, (C.A.3, 1973).

For a link to commercial litigation areas regularly practiced by this office please click here.

Labels: Commercial Litigation, Hawaii Real Estate Litigation

This blog will discuss (i) whether the seller of a home has a duty to disclose material facts regarding the property to a buyer and (ii) whether the realtor and/or seller of a home has a duty to disclose material facts regarding the property to a buyer. The short answer is that a seller has an absolute duty to disclose material facts to the buyer. Although this obligation is usually handled by the seller in the disclosure statement, the legal obligation arises from the common law and a variety of statutes.

For example, pursuant to HRS section 508, a seller (or an agent of a seller, ie. real estate agent) may be found liable for failure to disclose defects in property sold. HRS section 508D-1 requires "disclosure by seller (and extended to realtor) of "material facts" relating to property that are (1) within the knowledge or control of the seller, or (2) can be observed from a visible, accessible area, or are required under section 508D-15." Material fact is defined as "any fact, defect, or condition, past or present, that would be expected to measurably affect the value to a reasonable person of the residential property being offered for sale."
However, there are several defenses available to the seller. Accordingly, HRS section 508D-13 provides that:

Information in a disclosure statement that has not been disclosed or becomes inaccurate regarding a material fact as a result of an act, agreement, or occurrence (or otherwise becomes known to seller) after the statement is provided to the buyer does not violate this chapter.

Therefore, if the material defects arise after the buyer purchased the home, then there is no valid claim against the seller.

There must be evidence that the seller had prior knowledge of the defect. According to HRS section 508D-1, "the material fact that is required to be disclosed must be within the knowledge of the seller or visible to the seller."

Labels: Hawaii Real Estate Litigation

In my previous blog I discussed whether, under Hawaii law, a homeowner must pay for services provided by an unlicensed contractor. This blog will consider whether a subsequent procurement of a Hawaii license by a previously unlicensed contractor can validate a contract that was agreed upon while the contractor was still unlicensed.

It is my opinion that a subsequent procurement of a license by an unlicensed contractor will not validate a previously illegal contract. I will explain. In Hawaii, a contract made with an unlicensed contractor is, as a matter of law, an illegal contract since it is in violation of HRS chapter 444. Therefore, it seems likely that if a contractor obtains a license after the contract is created, he still will not be able to collect payment for work performed while previously unlicensed. See HRS 444-22. The statute itself provides that the failure to obtain a license shall prevent such persons from recovering for work done or material and supplies so long as "such person failed to obtain a license. . .prior to contracting for such work." (emphasis added). The clear language of the statute indicates that a license must be obtained before the contract was made in order to prevent the harsh consequences of HRS 444-22.

Although there is no Hawaii case directly on point, this is consistent with other state court rulings applying statutes similar to Hawaii's existing law. The North Carolina Supreme Court interpreted their statute strictly, holding that a contract "cannot be validated by the contractor's subsequent procurement of a license." Brady v Fulghum, 308 SE.2d 327, 331 (NC, 1983) affirmed by Jenco v Signature Homes, Inc., 468 S.E.2d 533, 535 (NC. App., 1996), and Currin & Currin Const., Inc. v Lingerfelt, 582 S.E.2d 321, 324 (NC. App., 2003). That North Carolina Court also rejected the unlicensed contractor's argument of "substantial compliance." Id. North Carolina courts have consistently read the statute strictly and without exceptions. Admittedly, North Carolina has subsequently changed its statute which superseded this holding. The current North Carolina statute expressly allows payment to a contractor who subsequently procures a license so long as that contractor substantially complied with the licensing requirements. California has also changed their statute to allow for "substantial compliance by the contractor". As of the creation of this blog, the Hawaii legislature has not so modified its statute.

The plain language of the Hawaii statute provides that the failure to obtain a license shall prevent such persons from recovering for work done or material and supplies so long as "such person failed to obtain a license. . . prior to contracting for such work." (emphasis added). It is likely that a Hawaii court will enforce this statute strictly and require that the procurement of a license must be made before the contractor (i) agrees to do the work and (ii) begins performance.

Labels: Hawaii Real Estate Litigation

We are occasionally asked whether an unlicensed contractor is entitled to collect compensation for work provided to a contracting party. A corollary of this issue is whether the monies already paid to the contractor must be refunded to the contracting party.

HRS 444-9 requires that no person shall "act or assume to act, or advertise" as a contractor (under the definition contained in HRS 444-1) without a license previously obtained by the licensing board. Further, HRS chapter 444 imposes penalties for violation of this statute, including but not limited to HRS 444-22. HRS 444-22 provides that:

The failure of any person to comply with any provision of this chapter shall prevent such person from recovering for work done, or materials or supplies furnished, or both on a contract or on the basis of reasonable value thereof, in a civil action, if such person failed to obtain a license under this chapter prior to contracting for such work.

HRS 444-22 prohibits unlicensed contractors from recovering for work performed, materials and/or supplies furnished. There is a strong public policy behind this rule. The Hawaii Supreme Court has explained this policy:

HRS chapter 444, providing for the licensing of contractors, expresses a very strong public policy that contractors in this state should apply for, and retrieve licenses, and the provisions of HRS 444-22, which are sweeping in their terms, are obviously intended to produce harsh results in furtherance of this policy.

Butler v Obayashi, 71 Haw. 174, 177 (1990).

It has been contended that parties contracting with unlicensed contractors should be barred from bringing suit since they too are parties to the illegal contract. However, the Hawaii Intermediate Court of Appeals ("ICA") in Jones v Phillipson found this argument unpersuasive. Jones v Phillipson, 92 Haw 117, 124-126 (1999). The ICA held that "a contract with an unlicensed contractor is not void ab initio, and this section [HRS 444-22] does not bar a member of the public, who is party to such a contract, from bringing suit to recover breach of contract damages from an unlicensed contractor". Id at 126. The ICA determined that any other result "would defeat the purpose of protecting the public by providing a shield from litigation for an unlicensed builder." Id; citing Domach v Spencer, 101 Cal.App.3d 308, 311 (1980) (In Jones the Hawaii Supreme Court cited Domach, a California case, because it recognized that the California statue was similar to the Hawaii statute).

Similarly, in Butler the Hawaii Supreme Court decided that, regardless of whether a contracting party knew that the contractor was unlicensed, an unlicensed contractor is still prohibited from recovering for work pursuant to HRS 444-22. Butler at 177. These two Hawaii cases, Butler and Jones, clearly establish that a party contracting with an unlicensed contractor may bring suit against the contractor regardless of whether they knew that the contractor was unlicensed.

In an analogous case, Domach v Spencer, the homeowners filed a claim against the contractor for breach of contract for failing to provide "workmanlike construction". Domach at 308. In that case, the contractor demanded greater compensation than was originally contracted for to complete the home. Id. at 310. Although the homeowners paid the contractor the agreed amount, at trial the homeowners demanded that all the monies be returned since the contractor was not licensed. The Domach court found in favor of the homeowners and awarded an amount necessary to pay for reparation of any "unworkmanlike" construction. Id. at 314. Regrettably, the Domach opinion does not explain the extent to which damages were awarded (including whether the homeowners were allowed to recover the money paid to the contractor or simply money paid for repair of the defective construction).

Labels: Hawaii Real Estate Litigation

The general rule regarding landlord liability is that a landlord "is not liable to his lessee or to others on the land for physical harm caused by any dangerous condition, whether natural or artificial, which existed when the lessee took possession." Restatement (Second) Torts 356.

Although it certainly appears from the plain language of this rule that a lessee or tenant may not have a case against their landlord if they are injured on rental property, there are exceptions to this rule.

Restatement (Second) Torts 358 is such an exception and provides as follows:

A lessor of land, who conceals or fails to disclose to his lessee any natural or artificial condition involving unreasonable risk of bodily harm to persons upon the land, is subject to liability for such harm caused thereby to the lessee and others on the land with the consent of the lessee or a sublessee after the lessee has taken possession, if

(a) the lessee does not know of the condition or the risk involved therein, and

(b) the lessor knows of the condition and realizes the risk involved therein and has reason to believe that the lessee will not discover the condition or realize the risk.

Restatement (Second) Torts 358; See also Restatement (Second) of Property, Landlord & Tenant 17.1 (emphasis added).

Relying on these Restatements for guidance, the Hawaii Supreme Court held that an "owner-lessor" has a "duty to warn the lessee of a known hazardous condition..." Kole v AMFAC, Inc., 69 Haw 530, 532-33 (1988). This is the current Hawaii law.

In addition to the landlord's duty to warn tenants or lessees of dangerous conditions on their property, Landlords may also owe a duty to eliminate the risk of harm foreseeably caused by the dangerous condition. The Hawaii Supreme Court explained this landlord duty and premises liability as follows:

In our view, the substance of our many cases, dealing with possessors of land, and their duty toward persons using the land, is that, if a condition exists upon the land which poses an unreasonable risk of harm to persons using the land, then the possessor of the land, if the possessor knows, or should have known of the unreasonable risk, owes a duty to the persons using the land to take reasonable steps to eliminate the unreasonable risk, or adequately to warn the users against it.

Corbett v. Association of Apartment Owners of Wailua Bayview Apartments, 70 Haw. 415, 417 (Hawaii,1989)(emphasis added).

Accordingly, based on our examination of this issue, we believe that a landlord will be held to a duty to a tenant or lessee to make a known dangerous condition on the property safe or to warn a tenant about a known dangerous condition. If the landlord fails to meet this duty, then the landlord risks liability. For a discussion of our Real Estate Litigation Practice click the following link, Real Estate Litigation.

Labels: Hawaii Real Estate Litigation

Our office was recently granted partial summary judgment by the United States District Court for the District of Hawaii (Hawaii Federal Court) in a case involving the Hawaii Uniform Land Sales Practices Act.

Specifically, the Hawaii Land Sales Practices Act provides that "no person may offer or dispose of any interest in subdivided lands located in this State, or offer or dispose in this State of any interest in subdivided lands located without this State before a preliminary or final order registering the subdivided land is entered in accordance with the chapter." H.R.S. 484-4. The registration requirements are very detailed and comprehensive to ensure that Hawaii buyers are provided with thorough information regarding the property. Further, Hawaii courts have jurisdiction over claims and causes of action under this chapter if "any offer or disposition of subdivided lands is made in this State, whether or not the offeror or offeree is then present in this State, if the offer originates within this State or is directed by the offeror to a person or place in this State and received by the person or at the place to which it is directed." H.R.S. 484-17. Meaning that the law applies to outside sellers who target Hawaii residents.

In our recent decision, the Court found, as a matter of law, that the mainland sellers violated H.R.S 484 by failing to register a mainland development project with the State of Hawaii before offering the undeveloped lots to Hawaii residents.

Labels: Hawaii Real Estate Litigation

In our September 3, 2008 entry we discussed the duties owed by a landlord to a tenant under Hawaii Law. A tenant owes certain duties to her landlord as well. A landlord is not responsible for repairing all defective conditions on the premises. Under Hawaii Law, a tenant is responsible for maintaining the premises. H.R.S 521-51 provides as follows:

Each tenant shall at all times during the tenancy:

(1) Comply with all applicable building and housing laws materially affecting health and safety;
(2) Keep that part of the premises which the tenant occupies and uses as clean and safe as the conditions of the premises permit;
(3) Dispose from the tenant's dwelling unit all rubbish, garbage, and other organic or flammable waste in a clean and safe manner;
(4) Keep all plumbing fixtures in the dwelling unit or used by the tenant as clean as their condition permits;
(5) Properly use and operate all electrical and plumbing fixtures and appliances in the dwelling unit or used by the tenant;
(6) Not permit any person on the premises with the tenant's permission to willfully destroy, deface, damage, impair, or remove any part of the premises which include the dwelling unit or the facilities, equipment, or appurtenances thereto, nor oneself do any such thing;
(7) Keep the dwelling unit and all facilities, appliances, furniture, and furnishings supplied therein by the landlord in fit condition, reasonable wear and tear excepted; and
(8) Comply with all obligations, restrictions, rules, and the like which are in accordance with section 521-52 and which the landlord can demonstrate are reasonably necessary for the preservation of the property and protection of the persons of the landlord, other tenants, or any other person.

H.R.S. 521-51.

Furthermore, if a tenant fails to comply with these duties, the landlord has the following option:

(a) If the tenant is in material noncompliance with section 521-51, the landlord, upon learning of any such noncompliance and after notifying the tenant in writing of the noncompliance and allowing a specified time not less than ten days after receipt of the notice, for the tenant to remedy the noncompliance:

(1) May terminate the rental agreement and bring a summary proceeding for possession of the dwelling unit or any other proper proceeding, action, or suit for possession if the tenant is in material noncompliance with section 521- 51(1); or
(2) May remedy the tenant's failure to comply and bill the tenant for the actual and reasonable cost of such remedy if the noncompliance can be remedied by the landlord by cleaning, repairing, replacing a damaged item, or the like, which bill shall be treated by all parties as rent due and payable on the next regular rent collection date or, if the tenancy has terminated, immediately upon receipt by the tenant.

H.R.S. 521-69 (emphasis added).

As such, the tenant is responsible for keeping the premises in "fit condition". The tenant is also responsible for using all of the electrical, plumbing fixtures, and appliances properly and keep them clean. If any defective condition results from improper care or usage by the tenant, he/she is responsible for fixing such conditions, not the landlord.

Labels: Hawaii Real Estate Litigation

The Residential Landlord-Tenant Code, Chapter 521, is the governing law in Hawaii for the Landlord-Tenant relationship (and found in Hawaii Revised Statutes (H.R.S.) 521). H.R.S. 521-8 defines "Landlord" as "the owner, lessor, sublessor, assigns or successors in interest of the dwelling unit...". H.R.S. 521-8. "Tenant" is "any person who occupies a dwelling unit for dwelling purposes under a rental agreement." Id.

A landlord owes certain legal obligations to its tenant(s). First, the "landlord shall, at the beginning of the term, deliver possession of the dwelling unit to the tenant..." H.R.S. 521-41. Further legal obligations include the following:

(a) The landlord shall at all times during the tenancy:

(1) Comply with all applicable building and housing laws materially affecting health and safety;
(2) Keep common areas of a multi-dwelling unit premises in a clean and safe condition;
(3) Make all repairs and arrangements necessary to put and keep the premises in a habitable condition;
(4) Maintain all electrical, plumbing, and other facilities and appliances supplied by the landlord in good working order and condition, subject to reasonable wear and tear;
(5) Except in the case of a single family residence, provide and maintain appropriate receptacles and conveniences for the removal of normal amounts of rubbish and garbage, and arrange for the frequent removal of such waste materials; and
(6) Except in the case of a single family residence, or where the building is not required by law to be equipped for the purpose, provide for the supplying of running water as reasonably required by the tenant.

Prior to the initial date of initial occupancy, the landlord shall inventory the premises and make a written record detailing the condition of the premises and any furnishings or appliances provided. Duplicate copies of this inventory shall be signed by the landlord and by the tenant and a copy given to each tenant. In an action arising under this section, the executed copy of the inventory shall be presumed to be correct. If the landlord fails to make such an inventory and written record, the condition of the premises and any furnishings or appliances provided, upon the termination of the tenancy shall be rebuttably presumed to be the same as when the tenant first occupied the premises.

H.R.S. 521-42 (emphasis added).

Moreover, "the landlord, upon written notification by the tenant of any defective condition on the premises...shall commence repairs of the condition within twelve business days of the notification with a good faith requirement that the repairs will be completed as soon as possible." H.R.S. 521-64(c). If a landlord fails to commence such repairs, "the tenant may immediately do or have done the necessary work in a competent manner and upon submission to the landlord of receipts amounting to at least the sums deducted, deduct from the tenant's rent no more that $500 for the tenant's actual expenditures for work done to correct the defective condition." H.R.S. 521-64(d).

Labels: Hawaii Real Estate Litigation

One of the questions I am frequently asked is whether I believe the value of real estate in Hawaii will decline. The fact is, I am a trial attorney and rely on real estate experts to advise me about issues related to the value of Hawaii real estate and the duties that real estate professionals owe to their clients. However, like almost everyone else, I read about real estate. In the July 11, 2008 issue of The Pacific Business News ("PBN"), there was a very interesting article concerning the price of home sales in Hawaii. According to the PBN, the prices of homes in Hawaii dipped, while condo prices actually rose because the available volume declined sharply. The article states as follows:

While the number of home sales around Hawaii dropped by an average of 29 percent during the first half of this year, compared with 2007, prices remained resilient in most markets with single-family homes showing small declines and condominiums showing increases.
Condo prices so far this year are up on all islands, by as much as 10 percent, as prices ease back on single-family homes. Sales on Oahu are down by more than 26 percent compared with the first six months of 2007, but prices are on a par with that period. The Big Island and Kauai saw the greatest drops in the number of sales, especially Kauai, where single-family homes sales were 40 percent lower than the first half of last year.

http://www.bizjournals.com/pacific/stories/2008/07/14/story6.html

Labels: Hawaii Real Estate Litigation

Today we had a hearing concerning diversity jurisdiction. In general, federal courts only have jurisdiction over two types of cases; (i) cases concerning a federal question (meaning that the case is based on federal law), and (ii) diversity cases. § 28 U.S.C. , § 28 U.S.C. .

For the federal court to have diversity jurisdiction over a case there must be two elements met; (i) the controversy must "exceed the sum of $75,000, exclusive of interests and costs" and (ii) be between "citizens of different states" or "citizens of a State and citizens or subjects of a foreign state" § 28 U.S.C. . Diversity of the parties requires that the plaintiffs and the defendants are from different states or countries. None of the plaintiffs can be "domiciled" in the same state or country of any of the defendants. Therefore, the threshold question in many cases become how do you determine a person's "domicile."

There are two things that are required in determining a person's domicile, (i) where the person is residing and (ii) whether the person intends to live there. Many factors can come into play like "current residence, voting registration and voting practices, location of personal and real property, location of brokerage and bank accounts, location of spouse and family, membership in unions and other organizations, place of employment or business, driver's license and automobile registration, and payment of taxes." Lew v Moss, 797 F2d 747, 749-750 (C.A.9., 1986). If the facts show that a person lives in a state or country and intends to stay there by meeting some of the factors mentioned above then that person will be deemed to be a domicile of that place for the purposes of determining diversity jurisdiction. If you are a plaintiff and your "domicile" state is not the same as any of the defendants (and your claim meets the jurisdictional minimum of $75,000), then the federal court likely has jurisdiction to hear your case.

Labels: Civil Procedure and Trial Practice, Commercial Litigation, Hawaii Real Estate Litigation, Personal Injury

Before

After

Our practice on Kauai continues to grow. We have been retained by a family whose property on the island of Kauai was severely damaged by the Ka Loko Dam flood. Prior to the flood, our clients' home was surrounded by a lush tropical oasis. Beautiful landscaping nestled their spacious home from outsiders creating the ideal Kauai sanctuary.

Then, on March 14, 2006, the Ka Loko Dam breached, and almost 400 million gallons of water, 1.6 million tons, rushed down from the reservoir above towards Kilauea Bay, wiping out everything in its path, including trees and buildings. Most tragically, seven people lost their lives.

Our clients lost their home's beautiful idyllic landscape in a matter of seconds. What was once an area flourishing in island vegetation was replaced with dirt and rubble. The massive trees and beautiful native plants on the property were uprooted and swept away with the rest of the landscape.

We are very proud to represent this family in their pursuit for justice. In a few years, we intend to write a follow up to this blog in which we will describe how we helped our clients restore their beautiful Kauai landscape.

Labels: Hawaii Real Estate Litigation, Personal Injury

Choosing the right Hawaii personal injury lawyer is one of the most important decisions a client will make when seeking compensation for injuries.
If you are searching for a personal injury lawyer in Hawaii, there are certain factors you should look for to make sure that you choose the personal injury lawyer that is right for you:

Select an attorney that is experienced with personal injury cases. By choosing a lawyer that is experienced in personal injury claims, you can be sure that he or she they will know how to handle your case. Not all attorneys are familiar with the nuances associated with civil litigation and personal injuries.

Select a lawyer with an effective track record. Make sure your attorney is capable of taking your case to trial. Not all personal injury attorneys are trial attorneys. I believe that the best way to obtain compensation for your injuries is to prepare your case for trial. If the defense attorney does not respect your counsel (and understand that you are ready and willing to go to trial), they will likely not negotiate in good faith.

Your personal injury lawyer should have many years of experience handling a wide variety of cases.

Select a personal injury lawyer that is in good standing with the Hawaii bar. You can visit the Hawaii State Bar Association (www.hsba.org) to confirm that the attorney you are considering is in good standing.

Make sure your attorney has malpractice insurance. It is your right to know whether your attorney has adequate malpractice insurance. If you ask your potential attorney whether he has this insurance, and he refuses to respond, simply hire another attorney.

Make sure that your personal injury attorney will take control of your compensation requests. Accident victims need time to heal. They should not be distracted by the "red tape" generated by the medical insurance industry. Your personal injury attorney should be ready and willing to assist you with these issues or you should hire a different attorney.

Finally, you should trust your attorney. The attorney client relationship is the same as any other personal relationship in the sense that there must be complete candor if it is to succeed. Tell your attorney what you are seeking and ask him or her if that is a realistic goal. And be skeptical of attorneys who are willing to promise you extraordinary results in your first meeting. Ask tough questions and listen to the responses. If your potential attorney is the right person for the job, he or she should certainly be able to respond clearly and honestly to your questions.

Good luck.

Labels: Civil Procedure and Trial Practice, Commercial Litigation, Hawaii Real Estate Litigation, Personal Injury, The Legal Profession

Occassionally, individual defendants try to hide assets by placing them in a corporation. In such cases, the attorney is forced to attempt to "pierce the corporate veil". The rule at common law was that, "officers, directors or shareholders of a corporation are not personally liable for the tortious conduct of the corporation or its other agents, unless there can be found some active or passive participation in such wrongful conduct by such persons." Cahill v. Hawaiian Paradise Park Corp., 56 Haw. 522, 526 (1975). However, in 1973, the Hawaii Supreme Court held that a "corporate entity should be disregarded because of circumstances that reveal that the shareholders treated and regarded the corporation as their alter ego." Kahili, Inc. v. Yamamoto, 54 Haw. 267, 271 (1973). This exception has since been called the "piercing the corporate veil" doctrine because it permits officers, directors, or shareholder to be found personally liable for their actions regardless of the general rule at common law.

There are two overarching elements required by most jurisdictions (including Hawai'i) to pierce the corporate veil. Id. First, there must be evidence that an individual in a corporation "treated and regarded the corporation" as his/her "alter ego", and "using the corporation as an agency or instrumentality or a conduit through which they were conducted his/her personal business." Kahili, Inc. at 271. Second, the circumstances must indicate that "recognition of the fictional corporation" would sanction a fraud or promote "injustice and inequity". Id.

There are many factors to consider in determining whether "the separate personalities of the corporation and the individual no longer exist" thus satisfying the first element of piercing the corporate veil. Associated Vendors, Inc. v. Oakland Meat Co., Inc., 26 Cal.Rptr. 806, 813-815 (Cal., 1962) cited by Murdock v. Ventures Trident II (Not Reported in Cal.Rptr.2d) 2003 WL 21246596. Generally, courts in Hawai'i have allowed for piercing of the corporate veil when there are enough factors satisfied to show that there were no separate identities between the corporation and an individual. For example, the Hawaii Supreme Court allowed for the "piercing of the corporate veil" when; (1) two shareholders owned all stock, (2) corporation was undercapitalized, and (3) shareholders' behavior in lease negotiations suggested they were acting for their behalf rather than for the corporation. Kahili, Inc. at 269-272.

As mentioned, it is important to also provide evidence that will convince the court that if it does not pierce the corporate veil, inequity and injustice or fraud will prevail. For example, if there is evidence that an individual was "manipulating the corporation" to "foster" her individual interests to the disadvantage of other members of her corporation, then it is only fair that she be found liable (personally) for her actions rather than the corporation. Riddle at 112. Furthermore, the Hawaii Supreme Court held that evidence that an individual used the corporation to commit fraud or another illegal act constitutes promoting inequity and injustice therefore justifies piercing of the corporate veil. Chung v Animal Clinic Inc., 63 Haw. 642, 646-647 (1981). Finally, actual fraud does not need to be shown, just that by "piercing of the corporate veil" the Court will prevent fraud or injustice. Associated Vendors, Inc. at 813.

Labels: Civil Procedure and Trial Practice, Commercial Litigation, Hawaii Real Estate Litigation, Personal Injury

Last month we received an arbitration award and judgment in excess of Six Million Dollars, against a mainland contractor on behalf of a mainland couple victimized while building their dream home on the island of Kauai. We persuaded the Arbitrator to award our clients treble damages pursuant to H.R.S. 480-2, the Hawaii Unfair and Deceptive Trade Practices Act. In awarding treble damages, the Arbitrator found that the contractor committed several Unfair and Deceptive Acts including the following:

a. At the time of the creation of the Agreement, the Contractors represented that they were licensed contractors. They were not.

b. Contractors collected $434,702.40 in unsubstantiated payments. The action of requesting payment for work that was not performed is both "unfair" and "deceptive."

c. Contractors represented to the homebuilders that they would retain qualified subcontractors and staff the project with craftsmen qualified to construct a residence of this size and magnitude. Contractors did not.

d. Representing that the Kauai House would be built like a specific Scottsdale, Arizona Home that had been viewed by our clients, and that materials and craftsmen used on the Scottsdale Home would be used on the Kauai House. They were not.

e. Contractors did not disclose all information required under H.R.S. § 444-25.5 (Supp.2000) which is a per se violation of H.R.S. § 480-2.

In addition, the Arbitrator found that since an individual contractor acted in his personal capacity, he was "jointly and severally liable with the corporation."

Obviously, we are very proud of the work that we performed to obtain this award for our clients.

Labels: Civil Procedure and Trial Practice, Commercial Litigation, Hawaii Real Estate Litigation

In a lawsuit, the first document filed with the Court is usually the Complaint which contains, among other things, information on the parties involved and a concise statement of the facts of the case. The Complaint is accompanied by a Summons which is signed by a clerk of the Court. The next step involves service of the Complaint on the Defendant. According to Rule 4(1)-(8)of the Hawaii Rules of Civil Procedure, service of the Complaint can be made various ways depending on the type of defendant. These methods are listed in Rule 4 of the Hawaii Rules of Civil Procedure as follows:

(1) Upon an individual other than an infant or an incompetent person, (A) by delivering a copy of the summons and of the complaint to the individual personally or in case the individual cannot be found by leaving copies thereof at the individual's dwelling house or usual place of abode with some person of suitable age and discretion then residing therein or (B) by delivering a copy of the summons and of the complaint to an agent authorized by appointment or by law to receive service of process.

(2) Upon an infant, by delivering a copy of the summons and of the complaint personally (A) to the guardian of the infant's property or if there is no guardian of the infant's property or service cannot be made upon such guardian then as provided by order of the court and (B) if the infant be of the age of 16 years or over, also to the infant; and upon an incompetent person, by delivering a copy of the summons and of the complaint personally (A) to the guardian of the incompetent's property, or if the incompetent is living in an institution then to the director or chief executive officer of the institution, or if service cannot be made upon either of them, then as provided by order of the court, and (B) unless the court otherwise orders, also to the incompetent person.

(3) Upon a domestic or foreign corporation or upon a partnership or other unincorporated association which is subject to suit under a common name, by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process and, if the agent is one authorized by statute to receive service and the statute so requires, by also mailing a copy to the defendant.

(4) Upon the State by delivering a copy of the summons and of the complaint to the attorney general of the State or to the assistant attorney general or to any deputy attorney general who has been appointed by the attorney general.

(5) Upon an officer or agency of the State by serving the State and by delivering a copy of the summons and of the complaint to such officer or agency. If the agency is a corporation, the copies shall be delivered as provided in paragraph (3) of this subdivision of this rule.

(6) Upon a county, as provided by statute or the county charter, or by delivering a copy of the summons and of the complaint to the corporation counsel or county attorney or any of his or her deputies.

(7) Upon an officer or agency of a county, by serving the county and by delivering a copy of the summons and of the complaint to such officer or agency. If the agency is a corporation the copies shall be delivered as provided in paragraph (3) of this subdivision of this rule.

(8) Upon a defendant of any class referred to in paragraph (1) or (3) of this subdivision of this rule, it is also sufficient if the summons and complaint are served in the manner prescribed by any statute.

H.R.C.P. 4(1) - (8)

Labels: Civil Procedure and Trial Practice, Commercial Litigation, Hawaii Real Estate Litigation, The Legal Profession

In certain cases, clients can prevail in a case by filing a Motion for Summary Judgment.

Under Rule 56(c) of the Hawaii Rules of Civil Procedure, summary judgment is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Summary judgment can be defeated if a party shows that a genuine and material issue of fact is in dispute, State v. Midkiff, 49 Haw. 456, 421 P.2d 550 (1966).

[S]ummary judgment is only appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. See Hawaii Rules of Civil Procedure ( HRCP) Rule 56(c) (1990). "A fact is material if proof of that fact would have the effect of establishing or refuting one of the essential elements of a cause of action or defense asserted by the parties." Hulsman v. Hemmeter Dev. Corp., 65 Haw. 58, 61, 647 P.2d 713, 716 (1982) (citations omitted). Konno v. County of Hawaii, 85 Hawaii, 61, 70, 937 P.2d 397, 406 (1997) (quoting Dunlea v. Dappen, 83 Hawaii 28, 36, 924 P.2d 196, 204 (1996)).

"The evidence must be viewed in the light most favorable to the non-moving party." State ex rel. Bronster v. Yoshina, 84 Hawaii 179, 186, 932 P.2d 316, 323 (1997) (citing Maguire v. Hilton Hotels Corp., 79 Hawai'i 110, 112, 899 P.2d 393, 395 (1995)). "[W]e must view all of the evidence and the inferences drawn therefrom in the light most favorable to [the party opposing the motion]." Maguire, 79 Hawaii at 112, 899 P.2d at 395 (citation omitted). State Farm Mutual Automobile Insurance Co. v. Murata, 88 Hawaii 284, 287-88, 965 P.2d 1284, 1287-88 (1998) (citation omitted) (brackets in original); See also United States Steel Corp., 82 Hawaii at 38-39, 919 P.2d at 300-01.

"The moving party bears the ultimate burden of persuasion. This burden always remains with the moving party and requires the moving party to convince the court that no genuine issue of material fact exists and that the moving party is entitled to summary judgment as a matter of law." Pioneer Mill Co., Ltd. v. Dow, 1999 WL 174460, 6 (Haw. 1999). "The moving party's burden of proof is a stringent one, since the inferences to be drawn from the underlying facts alleged in the relevant materials considered by the court in deciding the motion must be viewed in the light most favorable to the non-moving party." Id. at 7. "Summary judgment is a drastic remedy. To avoid improperly depriving a party to a lawsuit of the right to a trial on disputed factual issues, summary judgment must be "cautiously invoked." Id. at 6.

Although Courts grant summary judgment in only the strongest cases, for obvious reasons, its an outcome that we are always trying to achieve.

Labels: Civil Procedure and Trial Practice, Commercial Litigation, Hawaii Real Estate Litigation, The Legal Profession

Hawaii Revised Statutes § 480-2 provides a powerful tool to protect investors or consumers who have been injured by misleading or deceptive advertising. The Hawaii Supreme Court has concluded that if advertising has a "capacity to mislead" it may violate the Hawaii Unfair and Deceptive Trade Practices Act.

The reason this tool is so helpful to investors or consumers is two-fold. First, it is much easier to prove a violation of H.R.S. § 480-2 than it is to prove a claim of fraud. Unlike a fraud claim, to prevail in a H.R.S. § 480-2 case, the victim does not have to demonstrate that the advertiser intended to mislead the consumer. Indeed, the consumer must only demonstrate that the advertising has a "capacity to mislead." A far easier standard of proof.

The second reason H.R.S. § 480-2 is so important in the protection of Hawaii consumers is the damages that are recoverable. An investor or consumer injured under H.R.S. § 480-2 may recover actual damages trebled (multiplied by three), attorneys fees and costs. Obviously, when faced with the prospect of paying treble damages and attorneys fees, a company in Hawaii should be highly motivated to truthfully advertise its products. As such, H.R.S. § 480-2 is a vital weapon in the fight for truth in advertising.

Labels: Civil Procedure and Trial Practice, Commercial Litigation, Hawaii Real Estate Litigation, The Legal Profession