Ass'n of Owners of Kalele Kai v. Yoshikawa

149 Hawai‘i 417

493 P.3d 939

ASSOCIATION OF OWNERS OF KALELE KAI, Respondent/Plaintiff-Appellee,

v.Hitoshi YOSHIKAWA, Petitioner/Defendant-Appellant.

SCWC-16-0000812

Supreme Court of Hawai‘i.

AUGUST 12, 2021

James W. Rooney (Terrance M. Revere, Kailua, with him on the briefs) for Yoshikawa

John D. Zalewski, Honolulu (Jana M. Naruse, Honolulu, with him on the briefs) for the Association

RECKTENWALD, C.J., NAKAYAMA, McKENNA, WILSON, AND EDDINS, JJ.

OPINION OF THE COURT BY McKENNA, J.

I. Introduction

This certiorari proceeding addresses attorneys’ fees and costs awarded to the Association of Owners of Kalele Kai ("Association") by the Circuit Court of the First Circuit ("circuit court") in connection with a dispute over whether Hitoshi Yoshikawa ("Yoshikawa") was allowed to moor his boat in the Kalele Kai marina. The circuit court granted the Association's motion for summary judgment, awarded attorneys’ fees and costs, and entered final judgment in favor of the Association. On appeal, the Intermediate Court of Appeals ("ICA") vacated the summary judgment but affirmed the related attorneys’ fees and costs awards because Yoshikawa had not specifically addressed them in his appellate briefs.

Yoshikawa's application for certiorari ("Application") presents a single question: "Did the ICA commit grave error in vacating the Circuit Court's Final Judgment Order, thereby reversing summary judgment and remanding the case for further proceedings to the Circuit Court but refusing to vacate the underlying attorneys’ fee award?"

We hold as follows: (1) when a judgment upon which attorneys’ fees and costs were based has been vacated, attorneys’ fees and costs arising out of that judgment should also be vacated; and (2) the ICA abused its discretion by limiting the issues on remand to prevent the circuit court from considering attorneys’ fees and costs awarded based on the vacated summary judgment.

We therefore vacate in part the ICA's January 6, 2021 judgment on appeal to the extent it affirmed the $79,514.50 in attorneys’ fees and costs awarded by the circuit court on November 5, 2015, which arose from the vacated summary judgment.¹ We also vacate the November 5, 2015 order of the circuit court awarding fees and costs. We remand this case to the circuit court for further proceedings consistent with this opinion.

II. Background

A. Arbitration and circuit court proceedings

The Association operated the Kalele Kai condominium project in Hawai‘i Kai, which included part of the Kalele Kai marina. The Association's Declaration of Condominium Property Regime ("Declaration") provided that "boat moorings shall be restricted to use by boats no larger than twenty-three (23) feet in length[.]"

Yoshikawa owned a Kalele Kai condominium unit ("the Apartment") and six appurtenant mooring spaces ("mooring spaces"). In 2013, Yoshikawa purchased a boat 49 feet in length, which he moored parallel to the dock in the mooring spaces. The Association issued a notice of violation demanding that Yoshikawa remove his boat.

The Association and Yoshikawa entered arbitration, and the arbitrator found in favor of Yoshikawa.² The arbitrator deemed the Declaration's 23-foot limitation inapplicable due to a settlement agreement between the Association and Richard Rosic ("Rosic"), the previous owner of the Apartment and the mooring spaces. The settlement agreement "authorized the subsequent owner to moor a boat in excess of 23 feet." The arbitrator also found the Association had allowed other owners to keep boats in excess of 23 feet for at least a decade.

On January 21, 2015, the Association filed a complaint in the circuit court demanding a trial de novo, followed by a first amended complaint ("complaint") on February 20, 2015.³ Relevant to the issues on certiorari, the Association filed a motion for summary judgment on March 17, 2015, arguing Yoshikawa's boat exceeded the Declaration's length restriction. A hearing was held on April 28, 2015, and the circuit court took the matter under advisement.⁴

The day after this hearing, Yoshikawa filed an answer to the complaint along with a counterclaim against the Association and a "cross-claim" against two new parties, who were Association board members ("counterclaim"). Yoshikawa's counterclaim asserted: breach of contract, breach of fiduciary duty, bad faith, intentional infliction of emotional distress, violations of the Restatement of Servitudes, "prima facia tort," abuse of process, misrepresentation, and violations of HRS Chapter 514B pertaining to "Condominiums."

The Association filed a motion to dismiss the counterclaim on May 27, 2015, which was heard on July 30, 2015. On August 6, 2015, the circuit court entered its order dismissing Yoshikawa's counterclaim.

Then, on August 14, 2015, the circuit court entered findings of fact ("FOFs"), conclusions of law ("COLs"), and an order granting the Association's motion for summary judgment. The circuit court ordered Yoshikawa to remove his boat within ten days and permanently enjoined him from mooring the boat in the Kalele Kai marina.

On August 26, 2015, Yoshikawa filed a motion to stay the circuit court's order to remove the boat and/or to extend the deadline for removal. The circuit court extended the deadline but denied a stay. Also on August 26, 2015, Yoshikawa filed a motion for leave to file an amended counterclaim/cross-claim, which the circuit court also denied.

On August 28, 2015, the Association filed a motion for attorneys’ fees and costs totaling $84,093. The Association argued it was the prevailing party because the circuit court dismissed Yoshikawa's counterclaim and granted summary judgment in its favor. The Association maintained it was entitled to fees based on HRS § 514B-157 (Supp. 2004) and Yoshikawa's breach of contractual obligations under the Declaration. On November 5, 2015, the circuit court granted in part the Association's August 28, 2015 motion for attorneys’ fees and costs, awarding a total of $79,514.50.

On November 13, 2015, the Association filed a motion for supplemental attorneys’ fees and costs in the amount of $21,507 as the prevailing party on Yoshikawa's August 26, 2015 motions to stay the August 14, 2015 injunction and for leave to file an amended counterclaim/cross-claim.⁵ The Association contended it had already established its entitlement to an award of attorneys’ fees and costs as the prevailing party based on the circuit court's November 5, 2015 award of attorneys’ fees. On January 5, 2016, the circuit court granted in part this motion for supplemental fees and costs, awarding $21,180.35.

On November 9, 2016, the circuit court entered its first amended final judgment in favor of the Association ("final judgment"), which included the November 5, 2015 and January 5, 2016 fees and costs awards.

B. ICA proceedings

Yoshikawa filed a notice of appeal of the final judgment on November 16, 2016. The notice of appeal included an appeal of the November 5, 2015 and January 5, 2016 fees and costs awards.

Yoshikawa's sole point of error in his appellate briefs was that the circuit court erred in granting summary judgment in favor of the Association. Yoshikawa's briefs did not specifically address attorneys’ fees and costs based on the grant of summary judgment or any other rulings reflected in the final judgment.

On December 8, 2020, the ICA issued a memorandum opinion vacating the final judgment with respect to the circuit court's grant of summary judgment. AOAO Kalele Kai v. Yoshikawa, CAAP-16-0000812, 2020 WL 7230766 (App. Dec. 8, 2020) (mem.). The ICA determined the Association did not satisfy its summary judgment burden because of the settlement between Rosic and the Association and evidence that multiple Kalele Kai unit owners had "purchased and reconfigured boat moorings to accommodate boats longer than 23 feet." AOAO Kalele Kai, mem. op. at 6-13.

The ICA affirmed the remainder of the final judgment, however, including the November 5, 2015 and January 5, 2016 awards of attorneys’ fees and costs to the Association. AOAO Kalele Kai, mem. op. at 16. The ICA noted Yoshikawa's opening brief did not discuss attorneys’ fees and costs. Id. The ICA further ruled it had "discretion to limit the issues to be decided on remand" and that the orders awarding attorneys’ fees and costs, including those awarded pursuant to the November 5, 2015 and January 5, 2016 orders, were "not subject to litigation on remand." AOAO Kalele Kai, mem. op. at 16-17 (citing Miyamoto v. Lum, 104 Hawai‘i 1, 10, 84 P.3d 509, 518 (2004) ).

III. Discussion

A. When a judgment upon which attorneys’ fees and costs were based has been vacated, the attorneys’ fees and costs should also be vacated

Yoshikawa's Application presents a single question: whether the ICA erred in refusing to vacate the award of attorneys’ fees. Yoshikawa argues the award of attorneys’ fees should have been vacated because "once the underlying matter ... is vacated or reversed, then the subsequent orders based on that are also considered reversed."

This court has previously ruled that an award of attorneys’ fees is inappropriate where the underlying judgment is vacated. We have held that a request for attorneys’ fees is premature where the judgment on appeal vacates the circuit court's judgment and remands for further proceedings. O'Grady v. State, 141 Hawai‘i 26, 31, 404 P.3d 292, 297 (2017). We have also held that there is no "prevailing party" for the purpose of attorneys’ fees where the underlying judgment is vacated and remanded for further proceedings. Nelson v. Univ. of Hawai‘i, 99 Hawai‘i 262, 54 P.3d 433 (2002) (holding that a judgment on appeal that vacates a trial court judgment does not provide grounds for an award of attorneys’ fees); see also Ass'n of Apt. Owners of Maalaea Kai, Inc. v. Stillson, 108 Hawai‘i 2, 16, 116 P.3d 644, 658 (2005) (vacating the award of attorneys’ fees after vacating the underlying judgment and remanding for further proceedings).

Other state courts are in accord. In Board of Managers...