O'Grady v. State

404 P.3d 292

Michael Patrick O'GRADY, individually; and Leiloni O'Grady, individually, Petitioners/Plaintiffs-Appellants,

v. STATE of Hawai'i and State of Hawai'i Department of Transportation, Respondents/Defendants-Appellees,andThe County of Hawai'i; Hawaiian Electric Company; Hawaiian Electric Light Company; Hawaiian Electric Industries, Inc.; Hulu Lolo, Inc.; and Does 1-100, inclusive, Defendants.

SCAP-14-0001363.

Supreme Court of Hawai'i.

SEPTEMBER 27, 2017

Ronald G. Self and Rebecca A. Copeland for petitioners.

Douglas S. Chin, Caron M. Inagaki, and Robin M. Kishi, Honolulu, for respondents, State of Hawai'i and State of Hawai'i Department of Transportation.

RECKTENWALD, C.J., McKENNA, POLLACK, AND WILSON, JJ., AND CIRCUIT COURT JUDGE CRABTREE, IN PLACE OF NAKAYAMA, J., RECUSED

OPINION OF THE COURT BY POLLACK, J.

I. INTRODUCTION

After this court filed its opinion in O'Grady v. State, 140 Hawai'i 36, 398 P.3d 625 (2017), Michael Patrick O'Grady and Leiloni O'Grady (collectively, the O'Gradys or Petitioners) moved for an award of attorney's fees in the amount of $15,842.14 and costs in the amount of $4,815.17, pursuant to sections 662-9 and 662-12 of the Hawai'i Revised Statutes (HRS) and Hawai'i Rules of Appellate Procedure (HRAP) Rule 39, against the State of Hawai'i (State) and the State of Hawai'i Department of Transportation (DOT) (collectively, Respondents). We grant the O'Gradys' request for costs but deny their request for attorney's fees.

II. DISCUSSION

A. Attorney's fees under HRS §§ 662-9 and 662-12

The O'Gradys contend that this court has the discretion to award attorney's fees pursuant to HRS § 662-9 (2016) and HRS § 662-12 (2016). Respondents oppose the O'Gradys' request for attorney's fees, arguing that under HRS § 662-12, "there must be a judgment in favor of Petitioners against the State," and that "there has been no judgment" in this case. Thus, Respondents assert that the O'Gradys' request for attorney's fees is "at best, premature." Further, Respondents contend that the fees requested cannot be awarded as sanctions because "the State was not the appealing party."

Our analysis commences with the statutory interpretation of HRS § 662-9 and HRS § 662-12. "Statutory interpretation is a question of law reviewable de novo." Boyd v. Haw. State Ethics Comm'n, 138 Hawai'i 218, 224, 378 P.3d 934, 940 (2016). The established canons of statutory interpretation advise us to begin with the plain-language interpretation of the provisions of the statute at issue, bearing in mind that "implicit in the task of statutory construction is our foremost obligation to ascertain and give effect to the intention of the legislature, which is to be obtained primarily from the language contained in the statute itself." Id. (quoting Estate of Roxas v. Marcos, 121 Hawai'i 59, 66, 214 P.3d 598, 605 (2009) ). A court may examine other sources, including a statute's legislative history, in order to "discern the underlying policy [that] the legislature sought to promulgate" in the enactment of the statute. State v. Abel, 134 Hawai'i 333, 339, 341 P.3d 539, 545 (2014) (alteration in original) (quoting State v. McKnight, 131 Hawai'i 379, 388, 319 P.3d 298, 307 (2013) ).

HRS § 662-9 states as follows: "In an action under this chapter, court costs and fees as set by law may be allowed to the prevailing party." HRS § 662-9 (emphasis added). HRS § 662-9 thus allows an award of "fees," which includes attorney's fees. See Fee, Black's Law Dictionary (10th ed. 2014) (defining "fee" as "[a] charge or payment for labor or services, esp. professional services" and includes "attorney's fees"). The amount of fees awarded by a court, however, must be determined as "set by law." HRS § 662-9. Accordingly, while HRS § 662-9 provides discretionary authority to the courts to award fees to the prevailing party, the allowable amount and the manner in which such fees is to be calculated are governed by another source of law. See id. HRS § 662-12, entitled "Attorney's fees," of the State Tort Liability Act is a statute that "set[s] by law" the manner in which attorney's fees may be determined and awarded by a court under HRS § 662-9. See State v. Alangcas, 134 Hawai'i 515, 527, 345 P.3d 181, 193 (2015) ("Laws in pari materia, or upon the same subject matter, shall be construed with reference to each other. ...." (quoting State v. Kamana'o, 118 Hawai'i 210, 218, 188 P.3d 724, 732 (2008) )).

In pertinent part, HRS § 662-12 reads as follows:

The court rendering a judgment for the plaintiff pursuant to this chapter ... may, as a part of such judgment, ... determine and allow reasonable attorney's fees which shall not, however, exceed twenty-five per cent of the amount recovered and shall be payable out of the judgment awarded to the plaintiff; provided that such limitation shall not include attorney's fees and costs that the court may award the plaintiff as a matter of its sanctions.

HRS § 662-12.

HRS § 662-12 provides courts with discretionary authority to "determine and allow reasonable attorney's fees," and it also governs the allowable amount of attorney's fees ("twenty-five per cent of the amount recovered") and the manner in which it may be awarded to the plaintiff ("payable out of the judgment awarded") subject to an exception (if the fees are "a matter of ... sanctions"). HRS § 662-12. Reading HRS § 662-12 in pari materia with HRS § 662-9, when the plaintiff is the prevailing party in a suit brought under the State Tort Liability Act, the court rendering a judgment for the plaintiff may, pursuant to HRS § 662-12, allow reasonable attorney's fees not to exceed twenty-five percent of the amount recovered and payable out of the judgment awarded to the plaintiff. HRS §§ 662-9, 662-12.¹

This interpretation is supported by Levy v. Kimball, 51 Haw. 540, 465 P.2d 580 (1970), which interpreted HRS § 662-12, and by the amendments to HRS § 662-12 that the legislature enacted subsequent to our decision in Levy. At the time that Levy was decided, HRS § 662-12 provided as follows: "The court rendering a judgment for the plaintiff pursuant to this chapter ... may, as a part of such judgment, award, or settlement, determine and allow reasonable attorney's fees which shall not, however, exceed twenty per cent of the amount recovered." 51 Haw. at 543, 465 P.2d at 582 (quoting HRS § 662-12 (1968)). The State in Levy argued that the phrase "as a part of such judgment" in HRS § 662-12 implied that the attorney's fees awarded under the statute would be paid out of the judgment, not in addition to it. Id. Rejecting the argument, this court held that " HRS § 662-12 authorizes the trial court to award an attorney's fee up to 20 per cent of the judgment, in addition to the judgment and not out of the judgment." Id. at 546, 465 P.2d at 584.

After Levy was decided, the legislature amended HRS § 662-12 in 1979, as follows:

Attorney's fees. The court rendering a judgment for the plaintiff pursuant to this chapter or the attorney general making a disposition pursuant to section 662-11 may, as a part of such judgment, award, or settlement, determine and allow reasonable attorney's fees which shall not, however, exceed [twenty] twenty-five per cent of the amount recovered and shall be payable out of the judgment awarded to the plaintiff; provided that such limitation shall not include attorney's fees and costs that the court may award the plaintiff as a matter of its sanctions.

1979 Haw. Sess. Laws Act 152, § 4 at 333.²

The original House Bill—H.B. 1634, H.D. 1, 10th Leg. Reg. Sess. (1979)—"would have repealed section 662-12... on the theory that such repeal would discontinue the present practice by judges of allowing attorney's fees in addition to judgments awarded in favor of plaintiffs." S. Stand. Comm. Rep. No. 861, in 1979 Senate Journal, at 1389. The accompanying House Standing Committee Report explains:

Your Committee heard testimony that because the 20% award is made over and above the judgment, it is 20% higher than would be made against any other defendant. Your Committee feels that there is no reasonable basis for such a differentiation and finds that the disallowance of such an award is desirable and necessary.

H. Stand. Comm. Rep. No. 619, in 1979 House Journal, at 1434.

The Senate Standing Committee amended the House Draft "to make attorney's fees payable out of judgments awarded to plaintiffs, thus treating the problem more directly," and this change was confirmed by the Conference Committee.³

The 1979 amendment and its accompanying committee reports reflect that the legislature intended to reverse Levy's holding that fees under HRS § 662-12 would be awarded in addition to the judgment. Thus, the language of HRS § 662-12, as it stands today, permits an award of attorney's fees, but the fee award of the court must not exceed twenty-five percent of the amount recovered and must be paid from the proceeds of the judgment, not in addition to it.⁴

The United States District Court for the District of Hawai'i recently reached the same result in Kauhako v. State of Hawai'i Board of Education Department of Education, Civil No. 13-00567 DKW-KJM, 2016 WL 7365206 (D. Haw. Nov. 28, 2016), adopted by No. CV 13-00567 DKW-KJM, 2016 WL 7362835 (D. Haw. Dec. 19, 2016). After looking at the 1979 amendments to HRS § 662-12, the district court held that the statute permits an award of fees payable out of the judgment, not in addition to it. Id. at *5. Under the circumstances, it declined to award attorney's fees to the plaintiff because doing so would only apportion the judgment without "increas[ing] the net result to the moving party." Id.

The O'Gradys, on the other hand, suggest an interpretation of HRS § 662-9 that would allow recovery of attorney's fees in full, in addition to the judgment. According to the O'Gradys, so long as they are the "prevailing part [ies]" within the meaning of that phrase under HRS § 662-9, they can recover the full amount of their attorney's fees under HRS §...