Arquette v. State. , 128 Haw. 423 ( 2012 )

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Electronically Filed
Supreme Court
SCWC-11-0000416
14-DEC-2012
09:04 AM
IN THE SUPREME COURT OF THE STATE OF HAWAI#I
---o0o---
ALDEN JAMES ARQUETTE,
Petitioner/Plaintiff-Appellant/Cross-Appellee,
vs.
STATE OF HAWAI#I, STEPHEN H. LEVINS, and MICHAEL J.S. MORIYAMA,
Respondents/Defendants-Appellees/Cross-Appellants.
SCWC-11-0000416
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-11-0000416; CIV. NO. 08-1-0118)
December 14, 2012
NAKAYAMA, ACTING C.J, ACOBA, MCKENNA, AND POLLACK, JJ., AND
CIRCUIT JUDGE CRANDALL, IN PLACE OF RECKTENWALD, C.J., RECUSED
OPINION OF THE COURT BY ACOBA, J.
We hold, first, that a plaintiff may bring an action in
tort for the maintenance of a malicious prosecution as well as
for the initiation of a malicious prosecution. Second, we hold
that the Circuit Court of the First Circuit (the court)1 properly
1
The Honorable Karl K. Sakamoto presided.
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granted the December 24, 2009 motion for summary judgment filed
by Respondents/Defendants-Appellees/Cross-Appellants State of
Hawai#i (the State), Stephen H. Levins (Levins), and Michael J.S.
Moriyama (Moriyama) (collectively, Respondents) with respect to
the claim of Petitioner/Plaintiff-Appellant/Cross-Appellee Alden
James Arquette (Petitioner) for initiation of a malicious
prosecution, because there was no genuine issue of material fact
that Moriyama had probable cause to file a complaint against
Petitioner and that Moriyama did not act with malice. Third, we
conclude that although the court did not recognize a cause of
action for maintenance of a malicious prosecution, the court
properly granted Respondents’ April 12, 2010 motion for summary
judgment, because there was no genuine issue of material fact
that Moriyama maintained the prosecution with probable cause and
without malice. Fourth, Hawai#i Revised Statutes (HRS) § 487-1
(2008)2 does not set forth a standard of care in a claim for
negligence. Fifth, we reaffirm that when denying costs to the
prevailing party, the court must state its reasons for doing so
2
HRS § 487-1 states:
Legislative Intent. The public health, welfare
and interest require a strong and effective consumer
protection program to protect the interests of both
the consumer public and the legitimate business
person. Toward this end, a permanent office of
consumer protection is created to coordinate the
services offered to the consumer by various state and
county agencies, together with private organizations,
and to aid in the development of preventive and
remedial programs affecting the interest of the
consumer public.
2
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on the record, and therefore the court erred in failing to state
its rationale for granting in part Petitioner’s July 28, 2010
Motion for Review and/or to Set Aside Taxation of Costs (Motion
for Review of Costs). Finally, we conclude that the Intermediate
Court of Appeals (ICA) did not abuse its discretion in denying
Petitioner’s November 29, 2011 Motion for Recusal of Substitute
Judge, the Honorable Associate Judge Katherine G. Leonard (Motion
for Recusal), because the facts as alleged were insufficient to
warrant her recusal.
For the reasons stated herein, we affirm in part and
vacate in part the court’s April 19, 2011 Amended Final Judgment.
We affirm the Amended Final Judgment with respect to the court’s
March 29, 2010 and June 30, 2010 orders granting summary
judgment, but for the reasons stated herein, and we vacate the
court’s Amended Final Judgment with respect to its August 23,
2010 Order Granting Plaintiff’s Motion for Review of Costs (Order
Granting Costs) and remand for review of Respondents’ taxation of
costs. Therefore, we affirm the August 10, 2012 judgment of the
ICA filed pursuant to its July 12, 2012 Summary Disposition
Order, but based on the reasons stated herein.3 Additionally, we
affirm the ICA’s December 6, 2011 order denying Petitioner’s
Motion for Recusal.
3
The SDO was filed by Presiding Judge Daniel R. Foley and Associate
Judges Alexa D.M. Fujise and Katherine G. Leonard.
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I.
A.
Respondents initiated an action on July 19, 2004 (2004
action), against Petitioner and others, based on an investigation
conducted by the Office of Consumer Protection (OCP). The
complaint alleged, inter alia, that Petitioner had participated
in a scheme to sell long term deferred annuities to elderly
consumers through unfair or deceptive acts or practices in
violation of HRS §§ 480-2 (1993 & Supp. 2002)4, 481A-3 (1993)5,
4
HRS § 480-2 provides:
Unfair competition, practices, declared unlawful.
(a) Unfair methods of competition and unfair or
deceptive acts or practices in the conduct of any
trade or commerce are unlawful.
(b) In construing this section, the courts and
the office of consumer protection shall give due
consideration to the rules, regulations, and decisions
of the Federal Trade Commission and the federal courts
interpreting section 5(a)(1) of the Federal Trade
Commission Act (15 U.S.C. 45(a)(1)), as from time to
time amended.
(c) No showing that the proceeding or suit would
be in the public interest (as these terms are
interpreted under section 5(b) of the Federal Trade
Commission Act) is necessary in any action brought
under this section.
(d) No person other than a consumer, the
attorney general or the director of the office of
consumer protection may bring an action based upon
unfair or deceptive acts or practices declared
unlawful by this section.
(e) Any person may bring an action based on
unfair methods of competition declared unlawful by
this section.
5
HRS § 481A-3 provides, in pertinent part:
Deceptive trade practices.
(a) A person engages in a deceptive trade
practice when, in the course of the person's business,
vocation, or occupation, the person:
. . . .
(continued...)
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and other statutory provisions. Respondents identified several
individuals, including Limuel and Hazel Cherry (the Cherrys) and
other consumers as the target of Petitioner’s alleged scheme. As
alleged by Respondents in the complaint, the scheme involved
Petitioner, insurance agent Dan Fox, attorney Rodwin Wong and
others using Rodwin Wong’s name and law practice on mailings
offering information about elder law to solicit consumers.
Individuals who responded to the mailings were then contacted at
their homes where Petitioner and others falsely identified
themselves as “paralegals” working for Rodwin Wong in order to
5
(...continued)
(2) Causes likelihood of confusion
or of misunderstanding as to the source,
sponsorship, approval, or certification of
goods or services;
(3) Causes likelihood of confusion
or of misunderstanding as to affiliation,
connection, or association with, or
certification by, another;
. . . .
(5) Represents that goods or
services have sponsorship, approval,
characteristics, ingredients, uses,
benefits, or quantities that they do not
have or that a person has a sponsorship,
approval, status, affiliation, or
connection that the person does not have;
. . . .
(11) Makes false or misleading
statements of fact concerning the reasons
for, existence of, or amounts of price
reductions; or
(12) Engages in any other conduct
which similarly creates a likelihood of
confusion or of misunderstanding.
(b) In order to prevail in an action under this
chapter, a complainant need not prove competition
between the parties or actual confusion or
misunderstanding.
(c) This section does not affect unfair trade
practices otherwise actionable at common law or under
other statutes of this State.
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obtain personal and confidential financial information from them.
Based on this information, Petitioner and others allegedly sold
or attempted to sell long term annuities to these consumers while
failing to provide them with information necessary to make
decisions in their best interest and “engag[ing] in conduct which
created a likelihood of confusion or of misunderstanding.”
On December 21, 2005, the court6 filed an order
granting Petitioner’s motion for partial summary judgment on the
claims pertaining to the Cherrys.7 On December 22, 2005, the
court granted in part and denied in part, Petitioner’s motion for
summary judgment on the claims pertaining to the other consumers.
On May 16, 2006, the court denied Moriyama’s motion to continue
trial, and ordered a severance of the trial as to Petitioner.
Petitioner and Respondents stipulated to dismiss the remaining
claims against Petitioner pursuant to Hawai#i Rules of Civil
Procedure (HRCP) Rule 41(a)(1)(B)8 and the court filed a
6
The Honorable Victoria S. Marks presided over the 2004 action
underlying Petitioner’s claim.
7
This order was granted on the basis of res judicata.
8
Rule 41 provides, in relevant part:
(a) Voluntary dismissal: Effect thereof.
(1) By plaintiff; by stipulation. An action may
be dismissed by the plaintiff without order of court
(A) by filing a notice of dismissal at any time before
the return date as provided in Rule 12(a) or service
by the adverse party of an answer or of a motion for
summary judgment, or (B) by filing a stipulation of
dismissal signed by all parties who have appeared in
the action, in the manner and form prescribed by Rule
(continued...)
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Stipulation for Dismissal Without Prejudice on June 26, 2006.
B.
Petitioner then filed the present action against
Respondents on January 17, 2008. His allegations were based on
the facts as recited above, and in his complaint, he alleged that
Respondents were liable for malicious prosecution, negligent
investigation, negligent failure to train and/or supervise, and
punitive damages arising from the initiation and maintenance of
the 2004 action. Petitioner sued Moriyama in his individual and
official capacities for negligent investigation and malicious
prosecution. In addition, Petitioner sued Levins in his
individual and official capacities, as well as the State, for
negligent failure to train and/or supervise Moriyama.
Respondents answered the complaint on May 29, 2008, and discovery
commenced in the case, including requests for production of
documents, interrogatories, and depositions.
On December 24, 2009, Respondents filed their first
motion for summary judgment on Petitioner’s claims pertaining to
the initiation of the prosecution in the 2004 action, and on
8
(...continued)
41.1 of these rules. Unless otherwise stated in the
notice of dismissal or stipulation, the dismissal is
without prejudice, except that a notice of dismissal
operates as an adjudication upon the merits when filed
by a plaintiff who has once dismissed in any court of
the United States, or of any state, territory or
insular possession of the United States an action
based on or including the same claim.
(Emphasis added.)
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February 22, 2010, Petitioner filed a memorandum in opposition.
The court issued an order granting in part Respondents’ first
motion for summary judgment with respect to the negligent
supervision and training claims against the State and Levins,9 as
to the negligent investigation claim against Moriyama, and as to
the initiation of a malicious prosecution claim against Moriyama.
The court denied in part Respondents’ first motion for summary
judgment.10 The court noted that it had not ruled on
Petitioner’s claim that Moriyama was liable for maintaining a
malicious prosecution.
On April 12, 2010, Respondents filed a second motion
for summary judgment on Petitioner’s claims pertaining to the
maintenance of the prosecution in the underlying action.
Petitioner filed his opposition to the motion on June 4, 2010,
and Respondents filed a reply on June 10, 2010. On July 30,
2010, the court issued an order granting Respondents’ second
motion for summary judgment as to Petitioner’s claims pertaining
to the maintenance of the prosecution in the 2004 action.
On July 2, 2010, Respondents filed a Notice of Taxation
of Costs pursuant to HRCP Rule 54(d) and HRS § 607-9 (1993).
Respondents asked the court to require Petitioner to pay for the
9
Petitioner did not appeal the court’s ruling as to the negligent
supervision claims against Levins and the State.
10
The court denied Respondents’ first motion for summary judgment as
to “Doe defendants” who were not identified at the time the complaint was
filed. The “Doe defendants” are not at issue in this case.
8
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costs of mediation, of depositions of certain persons, and of the
transcript of the first motion for summary judgment hearing. On
July 13, 2010, Petitioner filed his Motion for Review of Costs.
Respondents filed a Memorandum in Opposition to Petitioner’s
Motion for Review of Costs. On August 23, 2010, the court
granted in part and denied in part Petitioner’s Motion. The
court entered final judgment in favor of Respondents on September
2, 2010 as to Moriyama in his official and individual capacities,
Levins in his official and individual capacities, and the State.
C.
Petitioner filed a Notice of Appeal to the ICA on May
18, 2011. On November 29, 2011, Petitioner filed his Motion for
Recusal, requesting that Judge Leonard be recused from the ICA
panel. The ICA entered an order denying Petitioner’s Motion for
Recusal on December 6, 2011.
II.
On appeal to the ICA, Petitioner argued that the court
erred (1) in concluding that Respondents established probable
cause to initiate the 2004 prosecution of Petitioner, (2) in
deciding that HRS § 487-1 does not create an actionable duty of
care to support a claim for negligence, and (3) in holding that
Hawai#i does not recognize a tort action for maintaining a
prosecution when probable cause to continue no longer exists.
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Respondents filed a Cross-Appeal to the ICA (Cross-Appeal),
seeking a reversal of the court’s Order Granting Costs in part.
With respect to Petitioner’s first argument, the ICA
upheld the court’s grant of summary judgment, concluding that
Respondents had probable cause to initiate a prosecution.
Arquette v. State, No. CAAP-11-0000416, 2012 WL 2864352, at *1
(App. July 12, 2012) (SDO). According to the ICA, Respondents
presented sufficient evidence to indicate they had an honest and
reasonable belief that there was probable cause to initiate the
2004 action, based on a declaration by Moriyama and evidence that
Petitioner’s business cards and letterhead identified Petitioner
as a paralegal for attorney Rodwin Wong, but listed the address
and phone number of Dan Fox’s insurance sales company which was,
at the time, under investigation by the OCP. Id. at *2.
In addressing Petitioner’s second argument, the ICA
affirmed the court’s determination that HRS § 487-1 did not
create a private right of action. Id. at *3. The determinative
factor, the ICA noted, was that there was no legislative history
establishing a private right of action in HRS § 487-1. Id.
The ICA also rejected Petitioner’s third argument,
holding that Hawai#i does not recognize the tort of maintaining a
malicious prosecution. Id. The ICA explained that Young v.
Allstate Ins. Co., 119 Hawai#i 403, 198 P.3d 666 (2008), “clearly
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indicates that malicious prosecution is limited to the initiation
of an action against a defendant.” Id.
Lastly, the ICA noted that although “‘[t]he award of
taxable cost is within the discretion of the circuit court and
will not be disturbed absent a clear abuse of discretion[,]’” id.
at *4 (quoting Pulawa v. GTE Hawaiian Tel, 112 Hawai#i 3, 10–11,
143 P.3d 1205, 1212–13 (2006)), the court “abused its discretion
when it reduced the amount of taxable costs without adequate
explanation or a readily discernable rationale in the record.”
Id. (citing Wong v. Takeuchi, 88 Hawai#i 46, 52, 961 P.2d 611,
617 (1998)).
III.
Petitioner presents the following questions in his
Application, “[1] [d]id the ICA gravely err in holding that a
prosecution continued without probable cause would not support a
cause of action for malicious prosecution? [;] [2] [d]id the ICA
gravely err in finding that, taking all the facts and reasonable
inferences in the light most favorable to [Petitioner], there was
probable cause to initiate the prosecutions? [;] [3] [d]id the
ICA gravely err in misconstruing [Petitioner’s] argument that HRS
§ 487-1 stated a standard of care? [;] [4] [d]id the ICA gravely
err in overturning the [court’s] discretionary decision to deny
[Respondent’s] costs that were not statutorily authorized or
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reasonably necessary?[; and] [5] [d]id the ICA gravely err in
denying [Petitioner’s] Motion For Recusal of Substitute Judge?”
On October 22, 2012, Respondents filed a Response to
Petitioner’s Application (Response).
IV.
A.
We hold that continuing to prosecute an action without
probable cause is included in the tort of malicious prosecution.
The ICA held that Young “clearly indicates that [the tort of]
malicious prosecution is limited to the initiation of an action
against a defendant.” Arquette, 2012 WL 2864352, at *3.
However, in Young, this court addressed the tort of malicious
defense, not malicious prosecution. Although some dicta in the
case may suggest that the tort of malicious prosecution is
limited, Young does not decide the issue raised in the instant
case. Instead, whether the tort of malicious prosecution
includes maintaining a prosecution in the absence of probable
cause is a matter of first impression.
In Young, inter alia, this court declined to recognize
the tort of malicious defense. 119 Hawai#i at 416, 198 P.3d at
679. The Young court analogized the malicious defense tort to
the tort of malicious prosecution, stating that “it is not
appropriate to derive the tort of malicious defense from the tort
of malicious prosecution where the tort of malicious prosecution
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remedies harms resulting from the initiation of a lawsuit.” Id.
(emphasis in original). Although this language appears to
suggest that malicious prosecution is restricted to actions
stemming from the initiation of the lawsuit, that interpretation
is inapposite given the context of the case.
When Young emphasizes the importance of initiating a
lawsuit for purposes of the malicious prosecution tort, this
court is emphasizing the difference between a situation in which
the defendant has wrongfully initiated a lawsuit and a situation
where the defendant has wrongfully defended him or herself in an
existing lawsuit. See id. at 418, 198 P.3d at 681 (“The tort of
malicious prosecution acknowledges the special, particular harms
that a defendant suffers when a lawsuit is maliciously initiated
against it.”). Thus, the focus of this court was on the status
of the parties, and it was simply contrasting the plaintiff, who
initiates a suit, with the defendant, who responds to a suit.
The decision further states that “[b]ecause a malicious
prosecution claim is triggered when the unsuccessful party
initiated the lawsuit, ‘the defendant is not liable for
proceedings unless he has initiated them.’” Id. at 417, 198 P.3d
at 680 (quoting Prosser and Keeton on Torts § 120, at 893 (5th
ed., W. Page Keeton, et al. eds., 1984)) (brackets omitted).
Here, again, this court was distinguishing between the two
parties and not explicitly limiting the “trigger[ing]” of a
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malicious prosecution to when a lawsuit is initiated. Id. The
question of when a defendant may bring a claim for malicious
prosecution was not at issue in Young. Thus, the cases cited in
Young setting forth the elements of a malicious prosecution,
including that a plaintiff must show that the prior proceedings
were “initiated by the defendant without probable cause, and []
initiated by the defendant with malice[,]” id. at 430, 198 P.3d
at 693 (citing Wong v. Cayetano, 111 Hawai#i 462, 478, 143 P.3d
1, 17 (2006)) (emphasis added), are not controlling as to whether
this court may consider a continuation of the tort beyond
initiation of a prosecution. In sum, Young has no preclusive
effect on whether this court should now recognize a tort for
maintaining a malicious prosecution.
B.
It is well-established that this court may recognize a
new cause of action in tort. Fergerstrom v. Hawaiian Ocean View
Estates, 50 Haw. 374, 375, 441 P.2d 141, 142 (1968) (holding that
this court could adopt a cause of action for invasion of privacy,
despite the fact that neither the ancient common law nor prior
Hawai#i case law recognized the right). The purpose underlying
the tort of malicious prosecution is to protect “the interest in
freedom from unjustifiable litigation.” Young, 119 Hawai#i at
418, 198 P.3d at 681 (quoting Prosser and Keeton on Torts § 119,
at 870) (brackets omitted). Although litigation may be warranted
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in the eyes of the plaintiff at its commencement, if that
plaintiff becomes aware that the litigation is no longer
justified, then the plaintiff should terminate the litigation.
Indeed, “litigation ‘has a profound effect upon the quality of
one’s life that goes beyond the mere entitlement to counsel
fees.’” Id. at 421, 198 P.3d at 684 (quoting Aranson v.
Schroeder, 671 A.2d 1023, 1028 (N.H. 1995)).
If a plaintiff fails to terminate litigation when he or
she knows it would be appropriate to do so, then the same harms
are inflicted on the defendant’s quality of life that would have
been inflicted if the plaintiff knew that the litigation was
unjustified in the first instance. In order to properly guard
against the harms associated with protracted litigation, the tort
of maintaining malicious prosecution should be recognized.
Moreover, many of the reasons that this court
enumerated in Young for rejecting the tort of malicious defense
are inapplicable to the tort of maintaining a malicious
prosecution. In Young, the court noted that “the malicious
defense tort is ‘unfamiliar, if known at all[,]’” id. at 417, 198
P.3d at 680 (quoting Jonathan K. Van Patten & Robert E. Willard,
The Limits of Advocacy: A Proposal for the Tort of Malicious
Defense in Civil Litigation, 35 Hastings L.J. 891, 893 (1984)),
and that only one jurisdiction, New Hampshire, had recognized it.
Id. at 418, 198 P.3d at 682. While not dispositive, this factor
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was relevant in this court’s decision not to extend Hawai#i tort
law. Unlike the malicious defense tort that has limited
acceptance, a cause of action for continuing a malicious
prosecution has been recognized in the Restatement (Second) of
Torts,11 and by a substantial number of states.12 Although not
controlling, the recognition in other jurisdictions is
11
Section 674 of the Restatement provides:
One who takes an active part in the initiation,
continuation or procurement of civil proceedings
against another is subject to liability to the other
for wrongful civil proceedings if
(a) he acts without probable cause, and
primarily for a purpose other than that of
securing the proper adjudication of the claim
in which the proceedings are based, and
(b) except when they are ex parte, the
proceedings have terminated in favor of the person
against whom they are brought.
Restatement (Second) of Torts § 674 (emphasis added).
12
As the California Supreme Court noted in Zamos v. Stroud, 87 P.3d
802, 808 (Cal. 2004):
The Restatement's position on this question has been
adopted or was anticipated by the courts of a
substantial number of states: Alabama (Laney v.
Glidden Co., Inc.[,] []194 So. 849, 851–852 [(Ala.
1940)]); Arizona (Smith v. Lucia[,] []842 P.2d 1303,
1308 [(Ariz. Ct. App. 1992)]); Arkansas (McLaughlin v.
Cox[,] []922 S.W.2d 327, 331–332 [(Ark. 1996)]);
Colorado (Slee v. Simpson[,] []15 P.2d 1084, 1085
[(Colo. 1932)]); Idaho (Badell v. Beeks[,] []P.2d 126,
128 [(Idaho 1988)]); Iowa (Wilson v. Hayes[,] 464
N.W.2d 250, 264 [(Iowa 1990)]); Kansas (Nelson v.
Miller[,] []607 P.2d 438, 447–448 [(Kan. 1980)]);
Mississippi (Benjamin v. Hooper Electronic Supply Co.,
Inc.[,] []568 So. 2d 1182, 1189, fn. 6 [(Miss.
1990)]); New York (Broughton v. State of New York[,]
[]335 N.E.2d 310 [(N.Y. 1975)]); Ohio (Siegel v. O.M.
Scott & Sons Co.[,] []56 N.E.2d 345, 347 [(Ohio Ct.
App. 1943)]); Oregon (Wroten v. Lenske[,] []835 P.2d
931, 933–934 [(Or. 1992)]); Pennsylvania (Wenger v.
Philips[,] []45 A. 927 [(Pa. 1900)]); and Washington
(Banks v. Nordstrom, Inc.[,] []787 P.2d 953, 956–957
[(Wash. 1990)]).
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instructive as to whether a new cause of action should be adopted
in Hawai#i. As this court stated in Fergerstrom, “[w]e are
disinclined to decide an important issue merely on the basis of
the number of states adopting a given approach. But some weight
must be accorded to the overwhelming recognition of a common law
right of privacy by all but a few states.” 50 Haw. at 375, 441
P.2d at 143.
Respondents counter that allowing a cause of action for
continuing a malicious prosecution would promote lawsuits ad
infinitum. (Citing Brodie v. Hawai#i Auto. Retail Gasoline
Dealers Ass’n, 2 Haw. App. 316, 321, 631 P.2d 600, 604 (1981),
rev’d on other grounds, 65 Haw. 598, 655 P.2d 863 (1982).)
However, it would no more promote lawsuits than this court’s
current conception of the tort of malicious prosecution. In its
reasoning for rejecting the tort of malicious defense, Young
states that “[p]ermitting a plaintiff to bring a second lawsuit
against the same party as the underlying case where other
workable remedies exist may allow such plaintiff to recover twice
against the defendant and needlessly burden the already
overworked judicial system.” Young, 119 Hawai#i at 424, 198 P.3d
at 687.
In contrast, recognizing the tort of maintaining a
malicious prosecution would not allow any additional recovery,
but would provide a remedy to those litigants who may have been
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brought into court on the basis of good faith, but who were
maliciously kept there. Further, as in bringing a claim for
initiating malicious prosecution, a complainant would have to
premise his or her claim for maintaining a malicious prosecution
on narrowly construed elements. As with the tort of initiating
malicious prosecution, the tort of maintaining malicious
prosecution would not chill zealous advocacy, because liability
would only attach when the plaintiff maliciously maintains an
unreasonable claim. See id., at 431, 198 P.3d at 694 (Levinson,
J., dissenting) (citing Cayetano, 111 Hawai#i at 483, 143 P.3d at
22 (reiterating that malice is an essential element that the
complainant must demonstrate in order to maintain an action for
malicious prosecution)).
Additionally, the existing rules and statutes do not
fully remedy the harms inflicted by protracted litigation. As
the Court of Appeal in California pointed out when addressing
this issue, “‘[h]olding attorneys liable for the damages a party
incurs as a result of the attorneys prosecuting civil claims
after they learn the claims have no merit will [] encourage
voluntary dismissals of meritless claims at the earliest stage
possible[,] . . . [and] the attorney will serve the client’s
best interests in that the client will avoid the cost of
fruitless litigation[.]’” Zamos, 87 P.3d at 809-10 (quoting
Zamos v. Stroud, 1 Cal. Rptr. 3d 484, 494 (Cal. Ct. App. 2003)).
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Although the conduct associated with continuing a malicious
prosecution is subject to sanctions under HRCP Rule 11
(permitting recovery of attorneys fees),13 attorneys fees may not
always provide a complete remedy to a litigant whose reputation
may have been damaged. See Young, 119 Hawai#i at 418, 198 P.3d
at 681 (citing Stanley v. Superior Court, 181 Cal. Rptr. 878, 882
(Cal. Ct. App. 1982)). Furthermore, “[s]omewhere along the line,
the rights of the defendant to be free from costly and harassing
litigation must be considered. So too must the time and energies
13
See, e.g., HRCP Rule 11 which states, in pertinent part:
(b) Representations to court. By presenting to
the court (whether by signing, filing, submitting, or
later advocating) a pleading, written motion, or other
paper, an attorney or unrepresented party is
certifying that to the best of the person's knowledge,
information, and belief, formed after an inquiry
reasonable under the circumstances:
(1) it is not being presented for any improper
purpose, such as to harass or to cause unnecessary
delay or needless increase in the cost of litigation;
(2) the claims, defenses, and other legal
contentions therein are warranted by existing law or
by a nonfrivolous argument for the extension,
modification, or reversal of existing law or the
establishment of new law;
(3) the allegations and other factual
contentions have evidentiary support or, if
specifically so identified, are likely to have
evidentiary support after a reasonable opportunity for
further investigation or discovery; and
(4) the denials of factual contentions are
warranted on the evidence or, if specifically so
identified, are reasonably based on a lack of
information or belief.
(c)Sanctions. If, after notice and a reasonable
opportunity to respond, the court determines that
subdivision (b) has been violated, the court may,
subject to the conditions stated below, impose an
appropriate sanction upon the attorneys, law firms, or
parties that have violated subdivision (b) or are
responsible for the violation.
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of our courts and the rights of would be litigants awaiting their
turns to have other matters resolved.” Ellis v. Harland
Bartholomew & Assocs., 1 Haw. App. 420, 428, 620 P.2d 744, 750
(1980) (citation omitted).
C.
A workable standard for continuation of malicious
prosecution is easily garnered from the elements that must be
shown to prove the initiation of a malicious prosecution. Thus,
the standard for continuing a malicious prosecution would be (1)
that the prior proceedings were terminated in the plaintiff’s
favor, (2) that the prior proceedings were maintained without
probable cause, and (3) that the prior proceedings were
maintained with malice. See Zamos, 87 P.3d at 810 (with a
similar test for initiating malicious prosecution as Hawai#i,
applying the same standard to the continuation as to the
initiation of a suit). Hence, a claim for continuation of
malicious prosecution could be brought under circumstances in
which an attorney has taken affirmative action toward continuance
of a prosecution, despite the fact that the attorney knows he or
she lacks probable cause to do so, and that the attorney is
motivated by malice.
Although the tort of malicious prosecution is “‘not
generally favored in our legal system, and thus its requirements
are construed strictly against the party bringing the action,’”
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Young, 119 Hawai#i at 419, 192 P.3d at 682 (quoting Wong v.
Tabor, 422 N.E.2d 1279, 1283 (Ind. Ct. App. 1981)), the tort of
the continuation of a malicious prosecution is not an unwarranted
enlargement of the current doctrine but, rather, logically stems
from the policies underlying the tort.
V.
With respect to Petitioner’s second question, “‘[t]here
are three essential elements in a claim for [initiating]
malicious prosecution: (1) that the prior proceedings were
terminated in the plaintiff’s favor, (2) that the prior
proceedings were initiated without probable cause, and (3) that
the prior proceedings were initiated with malice.’” Myers v.
Cohen, 67 Haw. 389, 391, 688 P.2d 1145, 1148 (1984) (quoting
Brodie, 2 Haw. App. at 318, 631 P.2d at 602) (other citation
omitted) (emphasis added). Accordingly, in a valid claim for
initiating a malicious prosecution, all three elements must be
satisfied. In his Application to this court, Petitioner
challenged the ICA’s holding that the court properly granted
Respondents’ motion for summary judgment on the issue of whether
there was probable cause to initiate the prosecution.14
14
“‘Unlike other appellate matters, in reviewing summary judgment
decisions an appellate court steps into the shoes of the trial court and
applies the same legal standard as the trial court applies.’” Blaisdell v.
Dep’t of Pub. Safety, 119 Hawai#i 275, 284, 196 P.3d 277, 282 (2008) (quoting
Beamer v. Nishiki, 66 Haw. 572, 577, 670 P.2d 1264, 1270 (1983)). “This court
reviews a circuit court’s grant or denial of summary judgment de novo.” Id.
(citations omitted).
(continued...)
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A.
The issue of probable cause for initiation of the
prosecution was addressed most extensively in the proceedings and
is considered first. Probable cause in a malicious prosecution
action depends “not on the actual state of the facts but upon the
honest and reasonable belief of the party commencing the action.”
Brodie, 2 Haw. App. at 318, 631 P.2d at 602 (citations omitted).
[P]robable cause for the filing of a lawsuit exists
where a person:
reasonably believes in the existence of the
facts
upon which the claim is based, and either
(a) correctly or reasonably believes that
under those facts the claim may be valid
under the applicable law, or
(b) believes to this effect in reliance
upon the advice of counsel, sought in good
faith and given after full disclosure of
all relevant facts within his knowledge or
information.
Id. at 319, 631 P.2d at 602 (quoting Restatement (Second) of
Torts § 675 (1977)). The determination as to whether a
particular party had probable cause is both a subjective and
14
(...continued)
[S]ummary judgment is 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
judgment as a matter of law. 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.
Id. (emphasis in original) (quoting Omerod v. Heirs of Kaheananui, 116 Hawai#i
239, 254-55, 172 P.3d 983, 998-99 (2007)) (citations omitted)).
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objective question. See, e.g., Bertero v. Nat’l. Gen. Corp., 118
Cal. Rptr. 184, 193 (1974); Williams v. City of New York, 508
F.2d 356, 359 (1974). The first question is whether the party
had the subjective belief that he or she possessed probable cause
in the underlying action. The second question is whether that
belief was reasonable.
B.
Respondents argued in their Memorandum in Support of
their first motion for summary judgment that “[a]ll the
evidence[] . . . establishes that, based on the information known
to Moriyama at the time he filed suit in July 2004, he had a
reasonable basis for initiating [the 2004 action] against
[Petitioner].”15 In support of this allegation, Respondents
attached Moriyama’s declaration stating that at the time the
action was filed, Petitioner and other defendants had been the
subject of an ongoing investigation for several years, and which
had shown Petitioner was involved with a group of insurance
salespeople who referred to themselves as “paralegals.”
According to Moriyama, he had information in 2004 based
on interviews with consumers that these salespeople were selling
15
The complaint against Petitioner in the 2004 action alleged, inter
alia, that he committed deceptive acts in falsely representing himself as a
paralegal, operating under the guise of estate planning, failing to provide
required information to consumers regarding replacement insurance or annuity
contracts, misrepresenting the suitability or appropriateness of selling
securities and purchasing deferred annuities, engaging in unlicensed
securities transactions, acting as an unlicensed investment adviser, employing
high pressure sales tactics, and targeting the elderly, in violation of HRS §§
480-2, 481A-3, and other statutory provisions.
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deferred annuities to elderly citizens in Hawai#i, and that OCP
had “initially identified thirty-three [] consumers who: 1)
Within the previous four [] years at the time had purchased or
signed applications to purchase annuities through Dan Fox or
others working with Dan Fox, and 2) Were in their seventies [] or
eighties [] at the time.” Respondents provided a list of these
thirty-three alleged consumers. Moriyama stated that at the time
the lawsuit was filed, “OCP knew four [] individuals or couples
who dealt with [Petitioner] and would be identified as witnesses
([the] Arrudas, James Gamache, [the] Paakaulas, and [the]
Pachecos).” Moriyama further averred that after filing the
lawsuit, four additional consumers who reported that they dealt
with [Petitioner] either complained to OCP or were referred to
OCP (James Ah Nee, the Cherrys16, and Blanche Schwarz).
As an example of the pattern which Petitioner and other
defendants allegedly engaged in, Moriyama stated that James
Gamache related that Petitioner “explained the ‘system’ and took
the check payable to Rodwin Wong” from James Gamache.
Respondents provided a copy of a receipt given to James Gamache
signed by Petitioner on a line marked “Paralegal Signature” and
16
Petitioner included a declaration attached to his Memorandum in
Opposition to Respondents’ first motion for summary judgment, which relates to
his alleged violation of a temporary restraining order obtained on behalf of
Mrs. Cherry. Petitioner’s interactions with the Cherrys were apparently the
subject of actions by other state agencies. This declaration by Petitioner
does not appear relevant to whether Moriyama acted with probable cause or
malice.
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that contained a “Law Offices of Rodwin L. Wong” letterhead, but
listed the address of what was allegedly Dan Fox’s insurance
business at 6650 Hawaii Kai Drive, Suite 201. Respondents also
included a copy of a business card given to the Pachecos that
identified Petitioner as a “paralegal” but listed the office
address of Dan Fox. According to Moriyama’s declaration, the
annuity contracts that were eventually sold to the Pachecos had
thirty year deferral periods, and Mrs. Pacheco was sixty-five
years old at the time she purchased the annuity. A redacted copy
of the specifications of the Pacheco annuity was also provided by
Respondents, which state the “Maturity Date” as September 13,
2029.
Additionally, Respondents provided the declaration of
Levins, Moriyama’s supervisor, stating that he discussed the
facts that supported the filing of the complaint, and it was his
“understanding that there was sufficient information to believe
that [Petitioner], along with others, were engaging in deceptive
and unfair sales practices in the marketing of high dollar amount
deferred annuities to a substantial number of elderly persons in
the State of Hawai#i.”
In his affidavit attached to both his Memoranda in
Opposition to Respondents’ first and second motions for summary
judgment, Petitioner alleges that “[a]ll work I performed for the
Law Offices of Rodwin Wong was at the direction of and under the
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supervision and responsibility of [Rodwin Wong][,] [Rodwin Wong]
described my job as being a paralegal[,]” “I did not sell,
attempt to sell and never even discussed the sale of [insurance
products or securities] with the Arrudas, [James Gamache, the
Paakaulas, and the Pachecos][,]” and “I was never privy to the
relationship between the Law Offices of Rodwin Wong, [Rodwin
Wong], [or] [Dan Fox].”
C.
1.
Under the probable cause standard, as noted before, the
first question is whether Moriyama subjectively believed that he
had probable cause to initiate the prosecution when he filed the
2004 complaint. This is unequivocally established through
Moriyama’s declaration, which states that “[t]he only reason
[Petitioner] and the other defendants were named in the [2004
action] was because the facts obtained through years of
investigation supported the allegations contained in the
complaint that Petitioner engaged in unfair and deceptive acts.”
The second question, then, is whether Moriyama’s belief
that he had probable cause was reasonable. Moriyama must have
both reasonably “believ[ed] in the existence of facts upon which
[his] claim [was] based” and “correctly or reasonably believed
that under those facts the claim may [have been] valid under the
applicable law.” Brodie, 2 Haw. App. at 318, 631 P.2d at 602.
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In this case, the declarations and other evidence
indicate that Moriyama, as well as other investigators and
attorneys at OCP, had engaged in an ongoing investigation for
several years. Thus there was a reasonable basis for Moriyama to
believe in the existence of facts upon which the complaint was
based.
Next, Respondents brought numerous claims against
Petitioner in the complaint, including, for example, that he had
engaged in unfair and deceptive trade practices, in violation of
HRS § 481A-3. As noted, HRS § 481A-3, the applicable law, states
in part that “[a] person engages in deceptive trade practice
when, in the course of the person’s business, vocation, or
occupation, the person: . . . . (3) [c]auses likelihood of
confusion or misunderstanding as to affiliation, connection, or
association with, or certification by, another . . . . or (12)
[e]ngages in any other conduct which similarly creates a
likelihood of confusion or of misunderstanding.” It is
undisputed that the business cards and letterhead Petitioner used
contained the name “Rodwin Wong,” and the address and telephone
number of Dan Fox’s insurance company. Based on the information
known to Moriyama when he filed the complaint, it was reasonable
for him to believe that, under the facts, the claim against
Petitioner of deceptive trade practices, inter alia, may have
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been valid under the applicable law. See Brodie, 2 Haw. App. at
318, 631 P.2d at 302.
2.
Petitioner argued, in his Memorandum in Opposition,
that there was no reasonable basis for Respondents’ 2004
complaint. He contends that Moriyama’s declaration constitutes
“inadmissible hearsay,” and that, without that declaration,
Respondents had not provided enough evidence to show that
Moriyama had a reasonable basis for initiating the lawsuit.
However, in deciding a motion for summary judgment, a court can
consider, among other things, declarations provided by the
parties to determine whether a genuine issue of material fact
exists. Blaisdell, 119 Hawai#i at 284, 196 P.3d at 282. Since
the reasonable belief had to exist in the mind of Moriyama, his
declaration was relevant to determining whether summary judgment
was appropriate on this issue.
Petitioner’s additional objections fail to create an
issue of material fact as to Moriyama’s reasonable belief.
Petitioner points to the fact that Moriyama did not identify
specific consumers in the complaint. But this was not necessary
to show that Moriyama had a “reasonable belief in the facts
underlying the complaint.” Petitioner asserted that Moriyama’s
motion to modify a protective order entered by the court, and
subsequent motion to continue trial indicated that he did not
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have probable cause at the time he filed the complaint. However,
Moriyama stated in his declaration that those efforts were tied
to obtaining more admissible evidence against Petitioner. The
mere fact that discovery was ongoing in the case does not
indicate that Moriyama lacked probable cause to file the
complaint in the first instance, because probable cause does not
require that a plaintiff have all the facts that he or she may
later obtain through discovery. Thus, Petitioner provides no
evidence to support his allegation that Moriyama did not believe
the facts underlying the complaint, or that Moriyama’s belief was
unreasonable.
Consequently, Moriyama demonstrated that he
subjectively believed in the facts upon which the complaint was
based. Further, his belief in the existence of these facts was
reasonable inasmuch as the facts were the result of a multi-year
OCP investigation. Finally, for the reasons stated before, the
facts reasonably supported Moriyama’s belief that it was
appropriate to bring a claim against Petitioner for, among other
things, engaging in deceptive trade practices. In opposition to
Respondents’ first motion for summary judgment, Petitioner failed
to provide any documentation that created a genuine issue of
material fact as to whether Moriyama had probable cause to file a
complaint. Therefore, the court did not err when it ruled in
favor of Respondents on the issue of whether Moriyama had
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probable cause to bring the original complaint against Petitioner
in the 2004 action.
D.
At the hearing on Respondents’ first motion for summary
judgment, the court also apparently ruled that there was no issue
of material fact that the prior proceedings were not initiated
with malice. During the hearing, it stated, “[t]he court does
not believe that there is a genuine issue of material fact as to
number 2 and number 3, initiated with probable cause and not
initiated with malice.” (Emphasis added.) Petitioner had argued
the element of malice in his Memorandum in Opposition to
Respondents’ first motion for summary judgment, and included an
affidavit from Keith A. Matsuoka (Matsuoka), Petitioner’s
attorney in the 2004 action, as an attachment to his Memorandum
in Opposition.
However, Petitioner alleged in a footnote in his brief
to the ICA that “[a]s the court offered no factual basis for its
determination that the underlying action was not initiated with
malice, for the purposes of the instant appeal, it is presumed
that its determination was based on its finding that the action
was initiated with probable cause.” Under Petitioner’s approach,
as alleged in this footnote, the court’s finding of a lack of
malice followed from its finding of probable cause. See, e.g.,
Gallucci v. Milavic, 100 So. 2d 375, 378 (Fla. 1958) (“Although
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malice may be inferred from want of probable cause, the converse
is not true.”) Accordingly, on appeal, Petitioner did not
challenge the court’s conclusion on summary judgment that
Petitioner did not make out the malice element as a matter of
law.
In any event, “‘unless plaintiff can produce some
affirmative evidence that malice existed,’” summary judgment in
favor of Moriyama was appropriate on that issue. Brodie, 2 Haw.
App. at 320, 631 P.2d at 603 (quoting 10 Wright & Miller, Federal
Practice and Procedure § 2730 (1973)). Malice is defined as
“[t]he intent, without justification or excuse, to commit a
wrongful act.” Black’s Law Dictionary 1042 (9th ed. 2009).
Thus, “[i]n order to establish the element of malice for a
malicious prosecution claim, a plaintiff must show inter alia
that the defendant initiated the prior proceeding with ‘the
intent, without justification or excuse, to commit a wrongful
act’ and the emphasis is on the misuse of criminal or civil
actions ‘as a means for causing harm.’” Isobe v. Sakatani, 127
Hawai#i 368, 388, 279 P.3d 33, 53 (App. 2012) (quoting Young, 119
Hawai#i at 419, 198 P.3d at 682) (brackets omitted)).
This court has acknowledged that “‘it is true that
malice is seldom the subject of a confession by the wrongdoer.
It usually must be proved by inferences from other evidence.’”
Cayetano, 111 Hawai#i at 483, 142 P.3d at 22 (quoting Myers v.
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Cohen, 67 Haw. 389, 397, 688 P.2d 1145, 1151 (1984)); see also
Brodie, 2 Haw. App. at 322, 631 P.2d at 605 (holding that an
inference of malice may be supported by direct or circumstantial
evidence). However, “‘[b]are allegations or factually
unsupported conclusions are insufficient to raise a genuine issue
of material fact, and therefore, insufficient to reverse a grant
of summary judgment.’” Id. (quoting Reed v. City & County of
Honolulu, 76 Hawai#i 219, 230, 873 P.2d 98, 109 (1994)). Rather,
a plaintiff must set forth some “independent evidence of conduct
other than a voluntary dismissal, from which [] improper motive
can be inferred.” Brodie, 2 Haw. App. at 320, 631 P.2d at 603.
Here, Respondents had probable cause to initiate the
suit. In support of their first motion for summary judgment,
Respondents point to a lack of evidence provided by Petitioner to
show malice on Moriyama’s part, stating that, for example, “[t]he
[Petitioner] does not dispute, . . . that [] Moriyama extended
professional courtesies to [Petitioner], pro se, after the OCP
action was initiated.” In response, Petitioner alleged that when
the action was initiated, Moriyama had “absolutely no information
showing that [Petitioner] was involved in or connected with any
of the annuities or securities which formed the bases for any of
the charges alleged against him,” and thus, a jury could infer
that Moriyama acted with malice. But, this allegation relates to
probable cause, and as established supra, Petitioner failed to
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provide any evidence to create a factual question as to whether
Moriyama acted with probable cause.
As noted, in opposition to Respondents’ first summary
judgment motion, Petitioner had included Matsuoka’s affidavit,17
in further support of his contention that Moriyama acted with
malice. The affidavit stated, inter alia, that
(26) Throughout the course of proceedings, []
Moriyama appeared to display a very personal animus
against [Petitioner].
(27) I believe this led [] Moriyama to disregard
or knowingly fail to assess and analyze the applicable
law in order to persecute [Petitioner] in violation of
his legal rights.
(28) This animus presented itself in various
ways, including his constant proclamations that
[Petitioner]’s actions were the most egregious.
17
The Matsuoka affidavit further states that, among other things,
(29) [] Moriyama also appeared to exercise an
unhealthy degree of influence and be over-involved in
the investigations and proceedings conducted by other
departments and agencies, including State v. Arquette,
Civil No. 04-1-1985; In re Hazel Cherry, FC-G No. 04-
1-0279; and In re Hazel Cherry, FC-AA No. 04-1-0008.
(30) Based on my interaction with these
departments and agencies, I concluded that [] Moriyama
was a major “source” of misinformation which formed
the basis for their claims.
(31) [] Moriyama also appeared to exert an
unhealthy degree of influence over the actions of the
Office of the Public Guardian and Maximum Legal
Service Corp., fiduciaries in various matters, which
led to procedural difficulties with little beneficial
effect except to block [Petitioner’s] access to
information necessary to defend himself.
(32) [] Moriyama’s conduct, which I would term
“unreasonable,” needlessly increased the cost of
litigation and ultimately required the trust estate of
Hazel Cherry to indemnify [Petitioner] for more than
$180,000 in fees and costs pursuant to an order
entered in In re Hazel Cherry, TR. No. 06-1-0013.
However, these allegations set forth with regard to Moriyama’s conduct in
other proceedings are irrelevant inasmuch as they do not allege any specific
facts upon which Matsuoka’s conclusions are based.
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However, this affidavit does not establish
“independent evidence” of malice sufficient to create a genuine
issue of material fact. In Cayetano, the plaintiff alleged that
the State of Hawai#i had maliciously prosecuted her on charges of
hindering prosecution and conspiracy. 111 Hawai#i at 482, 143
P.3d at 21. There was no dispute that the underlying proceedings
were terminated in the plaintiff’s favor, and “neither side
point[ed] to any evidence in the record as to whether the State
had probable cause to charge [the plaintiff].” Id. Thus, this
court addressed only whether the defendants’ motion for summary
judgment should be granted on the issue of malice. Id. at 482-
83, 143 P.3d at 21-22. Cayetano held that the defendants had met
their burden inasmuch as they pointed to records of cases arising
from the same underlying facts, in which the circuit court had
found that “there was no evidence to show that the indictment was
improperly motivated.” Id.
This court took judicial notice of that finding, and
noted that, “the burden shifted to [the plaintiff] to demonstrate
evidence of ‘specific facts’ to dispute or contradict [the
d]efendants’ evidence that there was no improper motive behind
the prosecution.” Id. The Cayetano court held that because the
plaintiff failed to adduce evidence of “specific facts” from
which malice could be inferred, but instead “relied on the
conclusory allegations of the complaint[,]” she failed to raise a
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genuine issue of material fact as to whether the prosecution was
initiated with malice. Id. Similarly, here, Petitioner has
relied primarily on conclusory allegations in contending that
Moriyama acted with malice.
Paragraph 26 of Matsuoka’s affidavit states that
“[t]hroughout the course of proceedings, [] Moriyama appeared to
display a very personal animus against [Petitioner].” Such a
claim must be supported by “specific facts,” because unsupported
conclusions are insufficient to raise a genuine issue of material
fact. With respect to Paragraph 26, Matsuoka provided his
opinion that Moriyama “appeared to display a very personal
animus” as a conclusion, without any discussion of supporting
facts. For example, Matsuoka did not allege when this personal
animus was displayed, under what circumstances, how the animus
was relayed, or any other facts regarding how he knew that
Moriyama had a personal animus toward Petitioner. Matsuoka’s
statement of opinion, at Paragraph 26, which does not include any
“specific facts,” therefore cannot serve as circumstantial
evidence from which to infer malice. See Cayetano, 111 Hawai#i
at 482, 143 P.3d at 21.
Matsuoka’s affidavit then states at Paragraph 27 that
“I believe this [animus] led [] Moriyama to disregard or
knowingly fail to assess and analyze the applicable law in order
to persecute [Petitioner] in violation of his legal rights.”
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Paragraph 27 cannot provide a basis for a finding of malice
inasmuch as it has been established that Petitioner did
reasonably “assess and analyze the applicable law,” because he
had probable cause to bring a claim against Petitioner under the
applicable law.18 Further, Matsuoka’s opinion again failed to
allege any “specific facts” that could form the basis of an
inference of malice. He did not state how Moriyama failed to
assess the applicable law, or refer to the law that Moriyama
misapplied. Therefore, Petitioner did not raise a genuine issue
of material fact that Moriyama was acting with “the intent,
without justification or excuse, to commit a wrongful act,”
Black’s Law Dictionary 1042, through “the misuse of a criminal or
civil action ‘as a means for causing harm.’” Isobe, 127 Hawai#i
at 388, 279 P.3d at 53. In the instant case, Matsuoka’s
“unsupported conclusion” does not create a genuine issue of
material fact. See Cayetano, 111 Hawai#i at 482, 143 P.3d at 21.
Paragraph 29 of Matsuoka’s affidavit states that
“[t]his animus presented itself in various ways, including his
constant proclamations that [Petitioner]’s actions were the most
18
As noted, under the standard for probable cause, one of the
elements is whether the plaintiff “correctly or reasonably believes that under
[the] facts, [his or her] claim may be valid under the applicable law[.]”
Brodie, 2 Haw. App. at 318, 631 P.2d at 602 (citation omitted). Since this
element of probable cause has been established in this case, as discussed
supra, Matsuoka’s allegation at Paragraph 27 that Moriyama disregarded or
knowingly failed to assess and analyze the applicable law cannot serve as a
basis for an inference of malice.
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egregious.” This statement does not provide specific facts in
support of Petitioner’s allegation of malice. The word
“egregious” is defined as “extremely or remarkably bad;
flagrant.” Black’s Law Dictionary 593. However, Matsuoka does
not refer to the circumstances under which these “proclamations”
were made, including the number of times they were made, or when
during the proceedings they were made, other than to say that
they were made “constantly,” and that Moriyama stated that
Petitioner’s actions “were the most egregious.” (Emphasis
added.) This indicates that Moriyama declared that the behavior
of all the defendants was to some extent “egregious.” That
declaration, by itself, even if made “constantly,” as alleged by
Matsuoka, does not demonstrate an intent on Moriyama’s part to
“caus[e] harm” to Petitioner “without justification or excuse,”
Black’s Law Dictionary 1042, through the initiation of the
lawsuit. Isobe, 127 Hawai#i at 388, 279 P.3d at 53. Without
specific facts regarding how these proclamations evinced a
particular desire to “cause harm” on Moriyama’s part, Paragraph
29 does not create a genuine issue of material fact with respect
to the issue of malice.
Thus, no specific facts were alleged to create a
genuine issue of material fact as to whether malice can be
inferred from Moriyama’s actions. Because Petitioner failed to
demonstrate “independent evidence” of malice in this case, the
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court properly granted summary judgment to Respondents on this
element of Petitioner’s malicious prosecution claim.
E.
Petitioner must establish all three elements of a
malicious prosecution claim in order to sustain his action. See
Myers, 67 Haw. at 391, 688 P.2d at 1148. There was no genuine
issue of material fact with respect to probable cause or malice.
Inasmuch as there was a reasonable basis for the OCP’s complaint
under the facts and no independent evidence of bias, see Brodie,
2 Haw. App. at 322, 631 P.2d at 605, the court correctly granted
summary judgment to Respondents as to probable cause and malice,
two of the three elements of a malicious prosecution suit. The
third prong of the test relating to termination of the 2004
action in favor of Petitioner thus need not be reached. The
court having been correct in granting summary judgment to
Respondents on the initiation of the suit, the ICA’s decision on
this question must be affirmed.
VI.
As set forth, supra, a cause of action for maintaining
a malicious prosecution should be recognized. However,
Petitioner in this case cannot make out a claim that Respondents
maintained a malicious prosecution against him when they
prosecuted the 2004 action. As noted before, the three elements
in a claim for maintaining a malicious prosecution are: (1) that
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the prior proceedings were terminated in the plaintiff’s favor,
(2) that the prior proceedings were maintained without probable
cause, and (3) that the prior proceedings were maintained with
malice. See, e.g., Zamos, 12 Cal. Rptr. 3d at 54.
At the time Respondents filed their first motion for
summary judgment, the court held that the tort of malicious
prosecution extended only to the initiation of a claim. However,
with respect to Respondents’ second motion for summary judgment,
both parties provided arguments as to why Moriyama did or did not
maintain the prosecution with probable cause and without
malice.19
A.
In applying the elements discussed above, Respondents
had to establish that there was no genuine issue of material fact
as to whether Moriyama had probable cause to maintain the
prosecution after filing suit. In other words, when Moriyama
filed his last motion in the case, his Motion to Continue Trial
on April 11, 2006, he still had to have had probable cause
for the claims against Petitioner.
19
Respondents included a section in their second motion for summary
judgment titled “Probable Cause Existed For the Continuation of the Prior
Proceeding. At No Time During the Pendency Of The Prior Proceeding Did
[Respondent] Moriyama Act With Malice.” In his Memorandum in Opposition to
Respondents’ second motion for summary judgment, Petitioner argued that
“[t]here is substantial evidence showing that there is a genuine issue as to
whether there was probable cause for continuing the prosecution of
[Petitioner].” In their Reply Memorandum in connection with the second motion
for summary judgment, Respondents further asserted that “[t]he fact that some
elderly persons did not want to participate in the OCP proceeding does not
create a lack of probable cause that a violation of the law had occurred.”
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In support of their second motion for summary judgment,
Respondents stated that,
[T]hroughout the pendency of the OCP litigation, []
facts concerning who was in control of the
‘paralegals’ did not change. Moriyama and the OCP
investigators who continued to work on [the] OCP
investigation of [the] scheme only confirmed [Rodwin]
Wong’s pre-lawsuit admissions as to who was in control
of [the] scheme during the pendency of that OCP
lawsuit.
Respondents further pointed to Moriyama’s declaration in which he
recounted his interview with Rodwin Wong, who admitted that
“paralegals” who worked for him actually operated under the
direction of Dan Fox.
Petitioner contends in his Memorandum in Opposition to
Respondents’ second motion for summary judgment that OCP records
both failed to reveal any complaints about him by some of the
individual consumers Respondent identified, and confirmed that
Petitioner never discussed insurance products or the sale of
securities with them. Thus, Petitioner asserts, although
Respondents knew in February 2002 that Petitioner had “never
discussed or sold insurance products or securities to [James
Gamache or the Paakaulas], and without any complaints from or
about Petitioner by [the Arrudas or Pachecos],”20 Moriyama
20
In support of his Memorandum in Opposition to Respondents’ second
motion for summary judgment, Petitioner provided the same affidavit, dated
September 13, 2005, in which he states that he “did not sell, attempt to sell
and never even discussed the sale of securities [or insurance products] with
the Arrudas, [James Gamache, the Paakulas, or the Pachecos].” It also states
that, “[a]ll work I performed for the Law Offices of Rodwin Wong was at the
direction of and under the supervision and responsibility of [Rodwin Wong][,]
[Rodwin Wong] described my job as being a paralegal[,]” and “I was never privy
(continued...)
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continued to prosecute Petitioner.
Respondents’ probable cause, however, was not based
exclusively on complaints from specific consumers but, rather,
rested on the underlying investigation conducted by OCP, which
had found that Petitioner was part of an overall “scheme” to sell
long term annuities, and that as part of this scheme, Petitioner
had misrepresented himself to consumers through use of misleading
business cards and letterhead. As set forth supra, Respondents
had charged Petitioner with, inter alia, unfair and deceptive
trade practices pursuant to HRS § 481A-3, which includes “(3)
[c]aus[ing] likelihood of confusion or of misunderstanding as to
affilitation, connection, or association with, or certification
by another[,]” and “(12) [e]ngag[ing] in any conduct which
similarly creates a likelihood of confusion or of
misunderstanding.”
Under the standard for determining whether probable
cause existed, the first question is whether the plaintiff
subjectively believed in the facts underlying the claim.
Restatement (Second) of Torts § 675. Respondents attached
another declaration from Moriyama to their Memorandum in Support
of their second motion for summary judgment. He stated, in part,
[a]fter filing the lawsuit, information acquired by
OCP continued to confirm what the various
20
(...continued)
to the relationship between the Law Offices of Rodwin Wong, [Rodwin Wong],
[or] [Dan Fox].”
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investigations had earlier revealed concerning
[Petitioner’s] and other defendants’ conduct and
association with one another. As the litigation
progressed through discovery and continued
investigations, the information that I and other
persons at OCP obtained continued to substantiate the
allegations of OCP’s complaint.
(Emphases added.) This declaration indicates that throughout the
pendency of the proceedings, Moriyama continued to believe in the
facts underlying the suit.
Then, it must be determined whether Moriyama’s belief
in the facts underlying his continuation of the suit was
reasonable. On this point, Petitioner alleges in his September
19, 2005 affidavit that “[Respondents] knew that there was no
probable cause to prosecute Petitioner based on annuities sold to
and/or securities sold for the [Arrudas, James Gamache, the
Paakaulas, or the Pachecos], on October 10, 2005, and yet . . .
[] Moriyama continued his prosecution of [Petitioner]. . . .”
Id. However, Moriyama’s belief in the facts underlying the
initial complaint still was reasonable based on the information
he had regarding Petitioner’s involvement in the overall scheme,
including Petitioner’s employment by Rodwin Wong. Moriyama’s
second declaration also stated that after the lawsuit was filed,
additional consumers who dealt with Petitioner “complained to, or
were referred to, OCP[,]” including the Cherrys,21 James Ah Nee,
and Blanche Schwarz. Thus, Moriyama’s belief in the existence of
21
Although, as noted, summary judgment was later granted to
Petitioner with respect to claims arising from his interactions with the
Cherrys, it was granted on the basis of res judicata.
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facts indicating that Petitioner was part of the scheme to sell
long term annuities to elderly consumers, was objectively
reasonable.22
Finally, in order to have probable cause, Moriyama must
have continued during the pendency of the suit to “correctly or
reasonably” believe that under the facts at the time, the claim
against Petitioner might be “valid under the applicable law.”
Restatement (Second) of Torts § 675. As discussed, Respondents
had alleged that Petitioner violated, inter alia, HRS § 481A-3,
by engaging in deceptive trade practices. HRS § 481A-3 states
that “[a] person engages in deceptive trade practices when, in
the course of the person’s business, vocation, or occupation, the
person: . . . . (3) [c]auses likelihood of confusion or
22
Based on the similarity of their elements, as discussed supra, the
standard for determining whether a plaintiff had probable cause for
maintaining a lawsuit should be coterminous with that of initiating a lawsuit.
As set forth by the Restatement (Second) of Torts § 675:
One who takes an active part in the initiation,
continuation or procurement of civil proceedings
against another has probable cause for doing so if he
reasonably believes in the existence of the facts upon
which the claim is based, and either
(a) correctly or reasonably believes that
under those facts the claim may be valid
under the applicable law, or
(b) believes to this effect in reliance
upon the advice of counsel, sought in good
faith and given after full disclosure of
all relevant facts within his knowledge
and information.
(Emphases added.) See also Brodie, 2 Haw. App. at 319, 631 P.2d at 602
(discussing the standard above as applied to the initiation of a lawsuit).
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misunderstanding as to affiliation, connection, or association
with, or certification by, another . . . . or (12) [e]ngages in
any other conduct which similarly creates a likelihood of
confusion or of misunderstanding.” Moriyama’s belief that
Petitioner had misrepresented himself to consumers, through his
alleged use of false contact information on his business cards
and letterhead, could reasonably have led Moriyama to believe
that a claim against Petitioner for violations of subsections (3)
and (12) of HRS § 481A-3, among other things, might be valid
under the applicable law. See Restatement (Second) of Torts §
675. Thus, Moriyama’s continuing prosecution of Petitioner
satisfies the element of probable cause as discussed in Brodie
and the Restatement (Second) of Torts § 675. Summary judgment in
favor of Respondents on this issue then was appropriate.
B.
As discussed supra with regard to Petitioner’s claim
that Moriyama maliciously initiated the prosecution against
Petitioner, Petitioner must produce “independent evidence” of
malice. Young, 119 Hawai#i at 419, 198 P.3d at 682. Petitioner
states that it is “well established” that “‘[m]alice . . . may be
inferred . . . from want of probable cause.’” (Quoting Stewart
v. Sonneborn, 98 U.S. 187, 194 (1878).) However, under Hawai#i
case law, the evidence suggesting lack of probable cause must
itself support an inference of malice, and if it does not support
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that inference, then Petitioner must have “independent evidence”
of that malice. Brodie, 2 Haw. App. at 322, 631 P.2d at 605. In
Brodie, for example, the ICA held that “where the only evidence
of a want of probable cause is the inference that may be drawn
from the voluntary dismissal of the original action,” a finding
that there is no probable cause “will not support the second
inference, that the defendant acted with improper motives. There
must be some other direct or circumstantial evidence to support
the inference of malice.” Id. Here, where Moriyama had probable
cause to initiate the prosecution, malice cannot be inferred.
In any event, Petitioner does not allege any
“independent evidence” to support an inference that Moriyama
acted with malice in maintaining the prosecution. Petitioner’s
only argument is that Moriyama continued the prosecution despite
knowing that there was no probable cause for any of the charges
as alleged. On the other hand, Respondents point to Moriyama’s
declaration as evincing his lack of malice during the pendency of
the 2004 proceeding. Specifically, as noted before, they allege
that Moriyama granted several extensions to Petitioner personally
to allow him more time to respond to the original OCP complaint.
Petitioner provided the same evidence and affidavits with regard
to malice as was attached to his Memorandum in Opposition to
Respondents’ first motion for summary judgment, including the
Matsuoka affidavit. As discussed, the allegations set forth in
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Matsuoka’s affidavit do not create a genuine issue of material
fact as to whether malice can be inferred on the part of Moriyama
in filing the complaint. Similarly, the allegations do not
create a genuine issue of material fact as to whether Moriyama
acted with malice in continuing the prosecution.
Therefore, Petitioner cannot support his allegation
that Moriyama acted with malice with any independent evidence in
the form of specific facts from which malice can be inferred.
See Cayetano, 11 Hawai#i at 483, 143 P.3d at 22. Thus summary
judgment must be granted in favor of Respondents on the issue of
malice. Inasmuch as all three elements must be satisfied to
sustain an action for maintaining a malicious prosecution, the
third element of successful termination of the prior proceeding
in Petitioner’s favor need not be reached.
VII.
Petitioner’s third question, whether HRS § 487-1 is
relevant in determining the standard of care for his negligence
action,23 is preserved on appeal. The ICA interpreted his
argument as asserting that HRS § 487-1 created a private right of
action and resolved that issue in the negative. Although
Respondents contend that Petitioner changed his argument on
appeal, and argued for the first time that HRS § 487-1 is
23
As noted, in his complaint in the instant case, Petitioner alleged
that Moriyama’s “failure to sufficiently investigate” the claims against
Petitioner was negligent.
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relevant to the standard of care in a negligence action,24 the
record supports Petitioner’s contention that he argued both
issues before the court below. Petitioner contended both that
HRS § 487-1 set forth a private right of action25 and, in the
alternative, that HRS § 487-1 was informative as to Respondents’
duty of care for Petitioner’s negligence claim.26 Petitioner
argues (1) that under Lee v. Corregedore, 83 Hawai#i 154, 173,
925 P.2d 324, 343 (1996), a court may “adopt the requirements of
a statute as the standard of conduct necessary to avoid liability
for negligence,” and (2) that pursuant to Tseu ex rel. Hobbs v.
Jeyte, 88 Hawai#i 85, 962 P.2d 349 (1998), “HRS § 487-1 is
indicative of a duty of care.” However, neither case
demonstrates that HRS § 487-1 creates or is “indicative of” a
duty of care.
24
“As a general rule, if a party does not raise an argument at
trial, that argument will be deemed to have been waived on appeal; this rule
applies in both criminal and civil cases.” State v. Moses, 102 Hawai#i 449,
456, 77 P.3d 940, 947 (2003); see e.g., State v. Ildefonso, 72 Haw. 573, 584,
827 P.2d 648, 655 (1992) (“Our review of the record reveals that [the
defendant] did not raise this argument at trial, and thus it is deemed to have
been waived.”).
25
Since Petitioner did not present this issue in his Application, we
do not address whether or not HRS § 487-1 sets forth a private cause of
action. See Arquette, 2012 WL 2864352 at *3.
26
In his Memorandum in Opposition to Respondents’ first motion for
summary judgment, Petitioner stated that “[HRS § 487-1] imposes a duty of care
on [Respondents] to exercise their statutory duties with due regard to
[Petitioner’s] legitimate business activities. See Corregedore, 83 Hawai#i at
172, 925 P.2d at 342 (Duty in a negligence action may be defined by common law
or by statute[.]).” Petitioner further asserted that, “‘[i]f a statute
[]contains no express provision that its violation shall result in tort
liability, and no implication to that effect, the court may, and in certain
types of cases customarily will, adopt the requirements of the enactment as
the standard of conduct necessary to avoid liability for negligence.’”
(Quoting Restatement (Second) of Torts § 285 comment c (1965).)
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A.
Pursuant to Corregedore, a duty of care may be
established by statute if a “legislative enactment [] lays down
requirements of conduct, and provides expressly or by implication
that a violation shall entail civil liability in tort.” 83
Hawai#i at 172, 925 P.2d at 342. However, HRS § 487-1 cannot be
construed to “lay[] down requirements of conduct[.]” Id. The
statute creates “a permanent office of consumer protection” for
the purpose of coordinating “the services offered to the
consumer,” and “aiding the development” of various programs. HRS
§ 487-1. The statute does not obligate government officials to
act in a certain manner or in accordance with any particular
standard or proscribe any conduct. In sum, the statute does not
“lay[] down requirements of conduct.” Corregedore, 83 Hawai#i at
172, 925 P.2d at 342.
Further, Petitioner conceded in its Answering Brief
before the ICA that the statute “contains no express provision
that its violation shall result in tort liability, and no
implication to that effect.” Because Corregedore requires that
the statute “provide[] expressly or by implication that a
violation shall entail civil liability in tort,” id., Corregedore
does not apply to HRS § 487-1.
B.
Also, Jeyte does not indicate that HRS § 487-1 is
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“indicative of a standard of care.” In Jeyte, this court held
that the plaintiff could pursue “a common law tort action for
negligence” when the Hawai#i Civil Rights Commission (HCRC)
negligently investigated a complaint against the plaintiff. 88
Hawai#i at 91, 962 P.2d at 350. Jetye reasoned that “the HCRC is
subject to a duty to follow its own administrative rules,” and
noted that the HCRC had failed to follow a rule which required it
to recognize an affirmative defense to what would otherwise be a
discriminatory practice. Id. Jeyte then held that “there exists
a duty of reasonable care in the exercise of a statutorily
granted authority.” Id. at 92, 962 P.2d at 351.
On reconsideration, however, this court clarified
Jeyte’s scope. According to this court, the HCRC misapprehended
the opinion, because “as stated on multiple occasions in the
opinion,” the “cause of action which may exist against the HCRC
is based on a duty to follow its own administrative regulations.”
Id. at 93, 962 P.2d at 352 (emphasis added). Here, Petitioner
makes no argument that Respondents ignored or violated applicable
regulations. Moreover, HRS § 487-1 states the purpose behind the
creation of an office of consumer protection, but does not
provide any standard governing conduct or any provision which
prescribes a duty. Consequently, under these facts, Jeyte is not
“indicative of a standard of care.”
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VIII.
With respect to Petitioner’s fourth question,
Respondents asked that Petitioner pay for the costs of mediation
by Dispute Prevention Resolution,27 for the deposition
transcripts and records of Dr. Claudine Kimura, Petitioner,
Moriyama, and Dr. L. Martin Johnson, and for the transcript of
the first summary judgment hearing. On July 13, 2010, Petitioner
objected to the taxation of these costs, arguing that mediation
was not a cost explicitly set forth by statute and that the
depositions were not necessary for Respondents’ case.
Respondents replied that the costs were “reasonable on their face
and were necessarily incurred . . . .” The court allowed
Respondents the costs of obtaining the deposition transcript of
Moriyama and the transcript of the first summary judgment
proceedings, but held that Petitioner was not required to pay for
the costs of mediation, or of the other deposition transcripts.
A.
Pursuant to HRS § 607-9,28 “[n]o other costs of court
27
According to the declaration of Lawrence I. Kawasaki, mediation
was conducted on February 2, 2009, with Keith Hunter of Dispute Prevention and
Resolution, Inc.
28
HRS § 607-9 provides:
No other costs of court shall be charged in any
court in addition to those prescribed in this chapter
in any suit, action, or other proceeding, except as
otherwise provided by law.
All actual disbursements, including but not
(continued...)
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shall be charged in any court in addition to those prescribed in
this chapter.” However,
[a]ll actual disbursements, including but not limited
to, intrastate travel expenses for witnesses and
counsel, expenses for deposition transcript originals
and copies, and other incidental expenses, including
copying costs, intrastate long distance telephone
charges, and postage, sworn to by an attorney or a
party, and deemed reasonable by the court, may be
allowed in taxation of costs. In determining whether
and what costs should be taxed, the court may consider
the equities of the situation.
HRS § 607-9. Both parties agree that under HRS § 607-9, “the
court may not deny costs to the prevailing party without
justification, unless the circumstances justifying the denial of
costs are plain from the record.” Takeuchi, 88 Hawai#i at 52,
961 P.2d at 617; see also HRCP Rule 54(d) (“[C]osts shall be
allowed as a matter of course to the prevailing party unless the
court otherwise directs.”). Further, both parties agree that the
court did not expressly justify its denial of costs in the
present case.
B.
Petitioner contends that the reasons supporting the
court’s denial of costs “are evident from the record as
28
(...continued)
limited to, intrastate travel expenses for witnesses
and counsel, expenses for deposition transcript
originals and copies, and other incidental expenses,
including copying costs, intrastate long distance
telephone charges, and postage, sworn to by an
attorney or a party, and deemed reasonable by the
court, may be allowed in taxation of costs. In
determining whether and what costs should be taxed,
the court may consider the equities of the situation.
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[Respondents’] malicious prosecution of [Petitioner] compelled
him to defend himself in a substantive amount of litigation which
spanned two years.” Sheets v. Yamaha Motors Corp., U.S.A., 891
F.2d 533 (5th Cir. 1990), is instructive in this regard.29
Sheets held that the trial court’s reason for the denial of costs
was “apparent from the record,” because the court was “forced to
endure defendants’ repeated and abusive hardball tactics” such as
violating discovery orders, misleading the plaintiff, and
utilizing “obfuscatory defense strategies.” Id. at 539. Under
these “egregious circumstances,” Sheets held that the failure to
set forth reasons was not an abuse of discretion. Id. at 540.
Here, the record does not evince circumstances that would make
the reasons for the court’s denial of costs “plain from the
record,” such as in the manner exemplified in Sheets.
C.
Respondents argue that the costs of mediation and the
depositions should have been awarded to Respondents as a matter
of law. They cite Pulawa, 112 Hawai#i at 19-22, 143 P.3d at
1221-24, for the proposition that “in the absence of evidence of
misconduct or some fault on the part of the prevailing party
29
“This court has previously noted that Federal Rules of Civil
Procedure Rule 54(d) is functionally identical to HRCP Rule 54(d). Where a
Hawai#i rule of civil procedure is identical to the federal rule, the
interpretation of this rule by federal courts is highly persuasive.” Pulawa,
112 Hawai#i at 19 n.15, 143 P.3d at 1221 n.15 (citing federal authority to
determine whether various costs should be assessed to the losing parties).
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. . . the trial court does not have any discretion to reduce or
deny an award of costs.”
In Pulawa, the losing parties argued that, because they
demonstrated that they were indigent, the circuit court abused
its discretion in requiring them to pay costs. Id. at 19, 143
P.3d at 1221. A majority of this court said there is “a strong
presumption that the prevailing party will recover costs,” which
can only be overcome by “some showing [by the losing party] that
an award would be inequitable under the circumstances.” Id.
Pulawa held that the losing parties had not provided enough
evidence to demonstrate that the denial of costs was an abuse of
discretion.30 Id. at 20-22, 143 P.3d at 1222-24. Pulawa thus
does not stand for the broad proposition that evidence is always
necessary to justify a denial of costs.31
30
The dissent in Pulawa argued that the losing parties’ failure to
list their assets was not dispositive, and that in any event the case should
be remanded to allow the losing parties to present the necessary evidence. 112
Hawai#i at 28, 143 P.3d at 1230 (Acoba, J., concurring and dissenting).
31
Numerous Hawai#i cases acknowledge that a losing party may justify
a denial of costs without submitting evidence. See, e.g., Takeuchi, 88
Hawai#i at 54, 961 P.2d at 619 (noting that office supplies are not generally
taxable costs, and therefore the prevailing party was required to demonstrate
a “compelling rationale” in order for the court to grant this expense) (citing
Tradewinds Hotel Inc. v. Cochran, 8 Haw. App. 256, 271, 799 P.2d 60, 68,
reconsideration denied, 8 Haw. App. 662, 868 P.2d 466 (1990); Harkins v.
Ikeda, 57 Haw. 378, 386, 557 P.2d 788, 794 (1976) (denying costs without an
evidentiary showing because out of state traveling expenses were not
explicitly mentioned by statute); Geldert v. State, 3 Haw. App. 259, 268, 649
P.2d 1165, 1172 (1982) (holding that deposition costs are not awarded unless
the deposition was reasonably necessary for trial); but see Abreu v. Raymond,
56 Haw. 613, 614, 546 P.2d 1013, 1014 (1976) (“[T]he denial of costs to the
prevailing party or the assessment of partial costs against him is in the
nature of a penalty for some defection on his part in the course of the
litigation.”).
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Instead, this court has held that “the losing party
bears the burden of showing that the denial of costs is
justified.” Takeuchi, 88 Hawai#i at 53, 961 P.2d at 618.
Justification, however, does not necessarily require an
evidentiary showing. A party may set forth reasons that a
certain expense item should be denied without making an
evidentiary showing on that issue. See 10 Moore’s Federal
Practice §54.101(b) (3d ed. 1998) (listing reasons for declining
to tax costs that do not require an evidentiary showing, such as
costs incurred unreasonably).
D.
The costs associated with mediation are not explicitly
listed in HRS § 607-9 as taxable. It has been held that a court
has discretion to assess the costs of mediation to the losing
party if the mediation was court-ordered. See, e.g., Gibson v.
Bobroff, 57 Cal. Rptr. 2d 235, 240 (Cal. Ct. App. 1996)
(“Accordingly, we reject defendants’ view that only those costs
directly related to the preparation or the trial of a case are
recoverable as being reasonably necessary to the conduct of the
litigation. This is especially true here since the mediation was
court-ordered.”); Spears v. Huber, No. 07-11-0193-CV, 2012 WL
933780, at *4 (Tex. App. March 20, 2012) (“As for the mediator's
fee, when a mediator is appointed by the court, it may set a
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reasonable fee for the services of the mediator and tax the fee
as costs of suit.”); Albuquerque Commons P’ship v. City Council
of Albuquerque, 212 P.3d 1122, 1141 (N.M. App. 2009), reversed on
other grounds, 248 P.3d 856 (N.M. 2011) (holding that it was
within the trial court’s discretion to tax the costs of mediation
because the mediation was court ordered and the losing party did
not participate in good faith); Elder v. Islam, 869 So. 2d. 600,
603 (Fla. App. 2004) (“[T]he costs of mediation can be awarded if
the parties are required to mediate under a statute or court
rule.”).
Costs generated in the pursuit of litigation are
distinguished from those “severable from and unrelated to the
litigation.” See Takeuchi, 88 Hawai#i at 54-55, 961 P.2d at 619-
20 (holding that “[m]eals are not taxable costs” because “the
necessity of eating lunch is severable from and unrelated to the
litigation”). When a court orders the parties to enter
mediation, they have no choice but to obey. In such
circumstances, the costs of entering court-ordered mediation are
related to and cannot be “sever[ed] from” the underlying
litigation. Takeuchi, 88 Hawai#i at 55, 961 P.2d at 620; see
Gibson, 49 Cal. App. 4th at 1209 (noting that court-ordered
mediation “is a necessary part of litigation”); see also Elder,
869 So. 2d. at 603 (awarding the costs of court-ordered mediation
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because the parties “had to expend that”). Hence, it would be
within the court’s discretion to decide that the cost of court-
ordered mediation is a “reasonable” cost that may be taxed. HRS
§ 607-9.
On the other hand, when the parties voluntarily enter
into mediation, it has been concluded that the losing party
cannot be assessed the costs of mediation absent a compelling
demonstration by the prevailing party. Smith v. Village of
Ruidoso, 994 P.2d 50, 60 (N.M. App. 1999) (“We do not think that,
with respect to mediations conducted pursuant to an agreement of
the parties, the expense of the mediator’s fee should be a
recoverable cost.”); see also Orlando Reg’l Med. Ctr., Inc., v.
Chmielewski, 573 So. 2d. 876, 883 (Fla. App. 1990), abrogated on
other grounds by Boulis v. Florida Dep’t of Transp., 733 So. 2d
959 (Fla. 1999) (“Although reasonable costs and expenses for a
statutorily required mediation procedure are available,
appellants failed to establish that they were required to submit
to mediation in this case under any statute or court rule.”); cf.
Gibson, 49 Cal. App. 4th at 1209 n.7 (“We expressly do not decide
whether a party prevailing after a trial which is preceded by
unsuccessful voluntary mediation would be entitled to such
costs.”) (emphasis in original); but see Liker v. Found. for
Preservation of Mt. Helix Nature Theater, No. Do41091, 2004 WL
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1405937, at *6, *8 (Cal. App. June 24, 2004) (“The trial court
had discretion to award the Likers their costs of voluntary
mediation.”).32
Mediation “facilitate[s] the effective, timely and
voluntary resolution of disputes.” Cf. HRS § 613-2 (Supp. 2000)
(establishing a center for alternative dispute resolution). In
other words, the goal of mediation is to avoid trial, and its
attendant costs, altogether. A cost incurred by the parties’
joint decision to attempt to avoid trial would appear to be a
cost separate from the underlying litigation, as it represents a
shared attempt to avoid the costs of trial. Moreover, because
litigants may voluntarily enter into mediation for their mutual
benefit, assessing the losing party the entire cost of mediation
would appear inequitable. Consequently, unlike court-ordered
mediation, a voluntary decision to enter mediation is “severable
from and unrelated to the litigation,” see Takeuchi, 88 Hawai#i
at 54-55, 961 P.2d at 619-20, inasmuch as under such
circumstances voluntary mediation is not a necessity of
litigation.
32
Liker reasoned that awarding the costs of voluntary mediation may
encourage parties to enter mediation, because they may believe that the other
side will be compelled to bear their costs. 2004 WL 1405937, at *8 . Liker’s
assumption is unrealistic –- it is more likely that parties will voluntarily
enter mediation when, based on the circumstances of a specific case, they
believe that there is a reasonable chance of successfully avoiding the
expenses associated with trial. In any event, the relevant inquiry under
Hawai#i law is whether an expense is “severable from and unrelated to the
underlying litigation.” Takeuchi, 88 Hawai#i at 54-55, 961 P.2d at 619-20.
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Based on the foregoing, generally, the costs of
voluntary mediation should not be taxable. In that light, the
prevailing party must provide a compelling reason for the court
to assess the cost of voluntary mediation to the losing party.
Cf. id. at 54, 961 P.2d at 619 (“As a general rule, routine
expenses related to operating a law firm are not taxable.
Therefore, [the prevailing party] would have to demonstrate a
compelling rationale for the court to grant this expense.”).
As discussed supra, it was error for the court to
decline to assess the costs of mediation without providing
reasons. Id. at 52, 961 P.2d at 617 (“[T]he court may not deny
costs to the prevailing party without justification, unless the
circumstances justifying the denial of costs are plain from the
record.”). Hence, the court’s decision not to assess Petitioner
the costs of mediation must be remanded so that the court may set
forth the reasons for its decision.
E.
It is well-settled that “deposition costs are only
recoverable if the depositions were necessarily obtained for use
in the trial.” Tradewinds Hotel, 8 Haw. App. at 271, 799 P.2d at
69; see also Nani Koolau Co. v. K & M Constr., Inc., 5 Haw. App.
137, 143, 681 P.2d 580, 586 (1984) (same); Geldert, 3 Haw. App.
at 268, 649 P.2d at 1172 (same); 10 Moore’s Federal Practice §
54.101(b) (court may decline to tax costs if costs incurred
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unreasonably). The court in this case may decline to assess the
costs of the depositions against Petitioner if it found that the
depositions were not necessarily obtained for use at trial, or
that to do so would be inequitable.
Although refusing to tax such costs was within the
court’s discretion, again, as discussed supra, it was error for
the court to do so without providing reasons. Takeuchi, 88
Hawai#i at 52, 961 P.2d at 617. Consequently, this issue also
must be remanded to allow the court to set forth the reasons for
not assessing Petitioner the deposition costs of Dr. Claudine
Kimura, Petitioner, and Dr. L. Martin Johnson.
IX.
Finally, with respect to Petitioner’s fifth question,
the ICA properly denied Petitioner’s Motion for Recusal.
Disqualification or recusal cases involve a two-part analysis.
State v. Ross, 89 Hawai#i 371, 377, 974 P.2d 11, 17 (1998)
(citing State v. Brown, 70 Haw. 459, 467, 776 P.2d 1182, 1187
(1989)). First, “HRS § 601-7[33] [(Supp. 2004)] is applied to
33
To reiterate, HRS § 601-7 provides, in relevant part:
§ 601-7. Disqualification of judge; relationship,
pecuniary interest, previous judgment, bias or
prejudice.
(b) Whenever a party to any suit, action, or
proceeding, civil or criminal, makes and files an
affidavit that the judge before whom the action or
proceeding is to be tried or heard has a personal bias
or prejudice either against the party or in favor of
any opposite party to the suit, the judge shall be
disqualified from proceeding therein. Every such
(continued...)
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determine whether the alleged bias is covered by any of the
specific instances prohibited therein.” Id. Then, “[i]f the
alleged bias falls outside of the provisions of HRS § 601-7, the
court may [] turn, if appropriate, to the notions of due process
described in Brown in conducting the broader inquiry of whether
‘circumstances . . . fairly give rise to an appearance of
impropriety and . . . reasonably cast suspicion on the judge’s
impartiality.’” Id. (quoting Brown, 70 Haw. at 467 n.3, 776 P.2d
at 1188 n.3) (ellipses in original) (brackets omitted). The
decision by the ICA to deny Petitioner’s Motion for Recusal thus
is reviewed for abuse of discretion. As this court noted in
Ross, “[d]ecisions on recusal or disqualification present perhaps
the ultimate test of judicial discretion and should thus lie
undisturbed absent a showing of abuse of discretion.” Id. at
375, 974 P.2d at 15.
33
(...continued)
affidavit shall state the facts and the reasons for
the belief that bias or prejudice exists and shall be
filed before the trial or hearing of the action or
proceeding, or good cause shall be shown for the
failure to file it within such time. No party shall
be entitled in any case to file more than one
affidavit; and no affidavit shall be filed unless
accompanied by a certificate of counsel of record that
the affidavit is made in good faith. Any judge may
disqualify oneself by filing with the clerk of the
court of which the judge is a judge a certificate that
the judge deems oneself unable for any reason to
preside with absolute impartiality in the pending suit
or action.
(Emphases added.)
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A.
HRS § 601-7(b) sets forth the procedure for seeking
disqualification based on personal bias. The statute requires
the movant to timely file an affidavit “stat[ing] the facts and
reasons for the belief that bias or prejudice exists.” Id.
Furthermore, in considering whether the facts allege
disqualification pursuant to HRS § 601-7,
a judge whose disqualification is sought must take the
facts alleged as true, but can pass upon whether they
are legally sufficient.” State v. Mata, 71 Haw. 319,
325, 789 P.2d 1122, 1126 (1990). When the affidavit
to disqualify refers to matters of record, however, we
may consider the entire record in making our
determination. Schutter v. Soong, 76 Hawai#i 187,
205, 873 P.2d 66, 84 (1994) (citing Peters v.
Jamieson, 48 Haw. 247, 257, 397 P.2d 575, 582 (1964)).
“The reasons and facts for the belief the [affiant]
entertains . . . must give fair support to the charge
of a bent of mind that may prevent or impede
impartiality of judgment.” Whittemore v. Farrington,
41 Haw. 52, 57 ([Terr.] 1955) (citation omitted). The
test assumes the viewpoint of a reasonable onlooker,
rather than the subjective belief of the judge. See
Yorita v. Okumoto, 3 Haw. App. 148, 153, 643 P.2d 820,
825 (1982).
Ross, 89 Hawai#i at 377, 974 P.2d at 18.
Bias cannot be premised on adverse rulings alone. Id.
at 378, 974 P.2d at 18 (citing Peters, 48 Haw. at 257, 397 P.2d
at 583). In Schutter, this court ruled that “[w]here the record
reflects ‘marked personal feelings . . . on both sides’
inflicting lingering ‘personal stings’ on the judge (i.e., where
the case conveys an apparent ‘flavor of animosity on the part of
the judge against counsel,’ . . . such that the citing judge
manifestly loses his or her capacity to ‘perform judicial duties
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without bias or prejudice,’)[,] the judge should not preside.”
76 Hawai#i at 205, 873 P.2d at 84 (ellipses in original) (quoting
Evans v. Takao, 74 Haw. 267, 291-92, 842 P.2d 255, 266 (1992)).
In the instant case, the record reflects no animosity
by Judge Leonard against Petitioner, and instead, the motion to
disqualify is based solely on a declaration by Petitioner's
attorney.34 As discussed, the test is whether a reasonable
onlooker would find that the facts, here, as alleged in the
declaration, are legally sufficient to disqualify the judge.
Yorita, 3 Haw. App. at 153, 643 P.2d at 825.
In Jou v. Schmidt, 117 Hawai#i 477, 184 P.3d 792 (App.
2008), the ICA considered whether Hawai#i Supreme Court Associate
Justice Sabrina S. McKenna, then a judge on the Circuit Court of
the First Circuit, was required to recuse herself from a
proceeding in which one of the parties had a seat on the judicial
selection committee. The ICA, affirming the denial of the motion
for recusal, held that movant’s declaration “failed to include
34
In support of his Motion for Recusal filed pursuant to Hawai#i
Rules of Appellate Procedure Rule 27, Petitioner included the following
declaration from his attorney:
2. I publicly opposed the nomination of Associate Judge
Katherine Leonard of the [ICA] to serve as Chief Justice
of the Hawai#i Supreme Court.
3. Judge Leonard has recently been assigned to
the above-captioned case as a substitute judge.
4. I am concerned about the appearance and
potential for partiality raised by having Judge Leonard
participate in a case in which I am lead counsel so soon
after the controversy involving her nomination.
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any specific facts regarding Judge McKenna’s retention or
petition for retention. Therefore, the sweeping inference that
Judge McKenna is, ipso facto, biased or prejudiced . . . is
speculative at best.” Id. at 484, 184 P.3d at 799. In this
case, Petitioner also does not set forth specific facts in the
declaration, beyond speculation that there is the “potential for
partiality,” as to how Judge Leonard would be biased or
prejudiced against Petitioner. Thus, even taking the facts
alleged as true, there is no legal showing that Judge Leonard
would have a personal bias in this case, under HRS § 601-7.
B.
In reviewing disqualification actions, a court next
considers “whether ‘circumstances . . . fairly give rise to an
appearance of impropriety and . . . reasonably cast suspicion on
[the judge’s] impartiality.’” Chen v. Hoeflinger, 127 Hawai#i
346, 362, 279 P.3d 11, 27 (App. 2012) (quoting Ross, 89 Hawai#i
at 377, 974 P.2d at 17) (brackets and ellipses in original)
(other citation omitted). When the ICA considered this issue in
Jou, it held that, although the record was silent on whether any
commissioner removed herself or himself from Judge McKenna's
retention petition, the movant “failed to overcome the
presumption that [the commission] acted in accordance with its
rules and otherwise failed to establish disqualifying facts in
this case.” Jou, 117 Hawai#i at 484, 184 P.3d at 799.
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Similarly, under the circumstances of this case, Petitioner did
not establish any disqualifying facts that would reasonably cast
suspicion on Judge Leonard’s impartiality.
In Chen, the ICA reviewed a family court decision in
which one of the attorneys had been appointed a per diem family
court judge after the trial concluded, but before the court
issued a decision. 127 Hawai#i at 362, 279 P.3d at 27. The ICA
held that the presiding judge did not abuse his discretion in
denying the motion for his disqualification. Id. The ICA noted
that the speculative “personal relationship” between the
presiding family court judge and an attorney who had been
recently appointed as a family court judge “did not give rise to
the probability of unfairness or the temptation for the judge to
forget the applicable burden of proof.” Id. (citing Ross, 89
Hawai#i at 379, 974 P.2d at 19). Similarly, in the instant case,
the involvement of Petitioner’s attorney in Judge Leonard’s
nomination process, giving rise to the “appearance and potential
for partiality” on the part of Judge Leonard was speculative. No
specific facts were alleged that would “give rise to the
probability of unfairness or the temptation for the judge to
forget the applicable burden of proof.” Id. Thus, the ICA did
not abuse its discretion in holding that the facts as alleged
were not sufficient to warrant Judge Leonard’s recusal.
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X.
We affirm the ICA’s August 10, 2012 judgment and the
ICA’s December 6, 2011 order denying Petitioner’s Motion for
Recusal, but for the reasons stated herein. Further, for the
reasons stated herein, we affirm the court’s April 19, 2011
Amended Final Judgment with respect to its March 29, 2010 and
June 30, 2010 orders granting summary judgment, and vacate the
court’s April 19, 2011 Amended Final Judgment with respect to its
August 23, 2010 Order Granting Plaintiff’s Motion for Review of
Costs and remand the Order.
Eric A. Seitz, /s/ Paula A. Nakayama
Della Au Bellati,
Ronald N.W. Kim, /s/ Simeon R. Acoba, Jr.
for petitioner
/s/ Sabrina S. McKenna
Dennis K. Ferm,
Caron M. Inagaki, /s/ Richard W. Pollack
for respondent
/s/ Virginia L. Crandall
65