In re Thomas H. Gentry Revocable Trust. , 138 Haw. 158 ( 2016 )

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Electronically Filed
Supreme Court
SCWC-13-0000428
28-JUN-2016
01:08 PM
IN THE SUPREME COURT OF THE STATE OF HAWAI#I
---o0o---
In the Matter of the
THOMAS H. GENTRY REVOCABLE TRUST
SCWC-13-0000428
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-13-0000428; TRUST NO. 02-1-0030)
JUNE 28, 2016
RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.
OPINION OF THE COURT BY RECKTENWALD, C.J.
The present appeal arises from a dispute over the
administration of two trusts established by the late Thomas H.
Gentry (THG): the THG Revocable Trust (Revocable Trust) and the
Marital Trust. Petitioner-Appellant Kiana E. Gentry (Kiana), a
beneficiary of both trusts and the wife of the late Mr. Gentry,
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sought appellate review of a judgment entered by the Circuit
Court of the First Circuit (probate court).1 However, the
Intermediate Court of Appeals (ICA) dismissed that appeal, and
Kiana now seeks review of that dismissal.
After THG’s death in 1998, the parties (the
Beneficiaries and the Co-Trustees) disputed how the trust assets
should be distributed. The largest remaining trust assets were
THG’s real estate companies (Gentry Companies). In December
2007, as a result of several disputes in Probate Court regarding
the Co-Trustees’ accounting and the proper distribution of trust
assets, all of the parties entered into a settlement agreement
(Settlement Agreement). One of the terms of the Settlement
Agreement required the Co-Trustees to sell the remaining trust
assets within thirty months of the date of the Settlement
Agreement, with a possible eighteen-month extension, and to
distribute the proceeds to the Beneficiaries. The Settlement
Agreement did not provide for a course of action if the Co-
Trustees were unable to sell all of the assets within that time-
frame.
The Co-Trustees sold most of the remaining trust
assets, but due to the economic recession of 2008, claimed they
were either unable to sell the remaining assets or unwilling
because the market conditions would result in a sale of the
1
The Honorable Derrick H. M. Chan presided.
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assets far below their true values. Instead of selling, the Co-
Trustees proposed distributing the remaining trust assets to the
Beneficiaries and terminating the trusts. Some of the
Beneficiaries supported this plan, but some opposed it.
Kiana, THG’s wife at the time of his death and a
beneficiary of both the Revocable Trust and the Marital Trust,
strongly opposed the Co-Trustees’ distribution plan. Kiana filed
a Petition to Enforce Settlement Agreement and Appoint Receiver
(Petition to Enforce) in probate court, which would have required
the Co-Trustees to liquidate the trust assets. The Co-Trustees
filed a Petition for Instructions Regarding Distribution of
Remaining Assets and Termination of Trust or in the Alternative
Resignation of Co-Trustees (Petition for Instructions), proposing
a pro rata distribution of the remaining assets and requesting
that the probate court order the proposed pro rata distribution,
or in the alternative, allow the Co-Trustees to resign. Kiana
opposed this petition on the grounds that the Co-Trustees’
proposed distribution violated the terms of the Settlement
Agreement.
The probate court entered judgments denying Kiana’s
Petition to Enforce (Enforcement Judgment) and granting in part
and denying in part2 the Co-Trustees’ Petition for Instructions
2
The Co-Trustees’ Petition for Instructions was denied only to the
extent that the Co-Trustees requested, as alternative relief, permission to
(continued...)
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(Distribution Judgment). In the Distribution Judgment, the
probate court ordered the pro rata distribution of the trust
assets on hand, and included a table showing specifically how
many shares of each of the remaining Gentry Companies each
Beneficiary was to receive.
Kiana appealed from the Enforcement Judgment but did
not appeal from the Distribution Judgment. Before the ICA, Kiana
argued that the probate court erred by refusing to grant her
Petition to Enforce, because it meant the probate court must have
either ignored the Settlement Agreement or found that it was
invalid and unenforceable. However, the ICA found that reversing
the probate court’s denial of the Enforcement Petition would
require overturning the Distribution Judgment. Because Kiana had
failed to directly appeal the Distribution Judgment, the ICA
determined that her appeal of the Enforcement Judgment
constituted a collateral attack on the Distribution Judgment.
Because the ICA concluded that it was unable to grant Kiana
effective relief, the ICA dismissed Kiana’s appeal as moot.
Kiana filed an Application for Writ of Certiorari. She
presents two questions for this court:
(1) Whether the ICA erred when it held that Kiana’s
appeal was a collateral attack upon the [Distribution
Judgment], when Kiana’s appeal merely addressed the
probate court’s improper decision regarding the
validity and enforceability of the Settlement
2
(...continued)
resign as Co-Trustees.
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Agreement; and
(2) Whether the ICA erred when it dismissed Kiana’s
appeal as moot based on its erroneous conclusion that
Kiana’s appeal constituted a collateral attack upon
the Distribution Judgment, thereby ignoring the merits
of the appeal and ignoring the Settlement Agreement.
For the reasons set forth below, we hold that the ICA
erred in concluding that Kiana’s appeal was an impermissible
collateral attack. We also hold that the ICA erred in concluding
that Kiana’s appeal was moot. We thus vacate the ICA’s
December 5, 2014 judgment on appeal, and remand to the ICA for
further proceedings consistent with this opinion.
I. Background
A. The Thomas H. Gentry Revocable Trust
In November 1994, THG, a prominent real estate
developer, was left in a coma after a boating accident. He
eventually passed away on January 15, 1998.
As a result of Mr. Gentry’s incapacity, Mark L. Vorsatz
(Vorsatz) and Hawaiian Trust Company (HTC) were named as
successor co-trustees of the Revocable Trust. The assets of the
Revocable Trust included various personal assets of THG, real
estate, and the Gentry Companies, including Gentry Pacific and
Gentry Properties. The beneficiaries of the Revocable Trust are
Norman H. Gentry, Tania V. Gentry, Mark T. Gentry, Corin S.N.
Gentry-Balding, and Candes S.N. Gentry (THG’s children from
previous marriages), Arielle N.H. Gentry and Race N.K. Gentry
(THG’s adult grandchildren), Kiana, Angel D. Vardas (Kiana’s
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daughter from a previous marriage), and all minor and unborn
issue of THG (collectively, Beneficiaries).
When Vorsatz and HTC began administering the Revocable
Trust, the financial condition of the Gentry Companies was
apparently extremely precarious, with high levels of debt,
ongoing litigation, and a lack of liquidity. However, between
1995 and 2005, Vorsatz and HTC worked with the management of the
Gentry Companies to stabilize the companies’ financial positions.
Over that period, the Co-Trustees claimed that over $300,000,000
of assets were sold, external debt was reduced from $275,000,000
to $46,000,000, internal loans were reduced from $102,000,000 to
$16,000,000, operating costs were greatly reduced, thirty-nine
separate companies were liquidated, and Gentry Homes was returned
to profitability.
Some time between 1995 and 1997, it became apparent
that HTC was conflicted, and as a result, HTC resigned as co-
trustee. Initially, the Beneficiaries agreed that there would be
no successor corporate trustee. However, Kiana later filed a
petition to appoint a corporate co-trustee. Subsequently, and
over Kiana’s objection, First Hawaiian Bank was appointed as co-
trustee in July 1997.
One of the terms of the Revocable Trust was that if
Kiana outlived THG, one-third of the Revocable Trust was to be
distributed to a separate trust, designated as the Marital Trust.
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The Marital Trust was created and approved by the probate court
on January 27, 1995. At the time of his death, THG was married
to Kiana, who is the sole income beneficiary of the Marital
Trust. Between April 2000 and December 2004, the improved
financial condition of the Gentry Companies allowed the Marital
Trust to make cash distributions of approximately $4,600,000 to
Kiana, in anticipation of dissolving the Revocable Trust.
B. Probate Court Proceedings and Settlement Agreement
In 2006, the Co-Trustees began planning how to
distribute the remaining assets of the Revocable Trust to various
subtrusts.3 On June 15, 2006, the Co-Trustees filed a Petition
for Instructions Regarding Initial Funding of Subtrusts, which
proposed to distribute $25 million in cash and allocate $35
million worth of assets to the subtrusts. According to the Co-
Trustees, Kiana opposed the proposed $25 million cash
disbursement to the subtrusts because she believed that the
Marital Trust should be funded with cash, while the interests in
the Gentry Companies should be left to the other beneficiaries.
From 1998 through 2006, the Co-Trustees also filed several
petitions for approval of trust accounting, many of which were
objected to by Kiana and other beneficiaries.
Due to the Beneficiaries’ objections, the Co-Trustees’
3
The subtrusts under the Revocable Trust are: the Marital Trust, a
Generation Skipping Trust (GST), and various subtrusts for children.
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Petitions for Approval of Income and Principal Accounts for the
Periods January 16, 1998 through December 31, 1999; January 2000
through December 31, 2003; January 1, 2004 through August 29,
2006; January 2006 through March 30, 2007; and the Co-Trustees’
Petition for Instructions Regarding Initial Funding of Subtrusts
were consolidated and set for trial in November 2007. Subsequent
to the setting of trial, in September 2007, the Co-Trustees also
filed a petition to approve their 2006 accounting and a Petition
for Instructions Regarding Final Funding of Subtrusts, seeking to
fully fund the subtrusts and terminate the administration of the
Trusts. This Petition was added to the issues to be resolved at
trial.
In August 2007, three months before the trial, Kiana
settled her claims against the Co-Trustees and withdrew her
objections to the Co-Trustees’ petitions. However, the trial
proceeded to resolve the issues of distributing the trust assets
to the Beneficiaries and subtrusts.
Two weeks into trial, the parties (all Beneficiaries
and Co-Trustees) entered mediation and agreed to the Settlement
Agreement. At a hearing before the probate court on December 7,
2007, the parties put the terms of the Settlement Agreement on
the record. The probate court informed the parties that the
Settlement Agreement was enforceable and that the court would
retain jurisdiction to enforce it. The probate court also went
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over the terms of the Settlement Agreement and ensured that each
party understood the terms.
On December 21, 2007, which was also the “effective
date of the Settlement Agreement,” the parties signed the written
Settlement Agreement. Under the terms of the Settlement
Agreement, the parties agreed to request that the probate court
approve all of the Co-Trustees’ prior accountings, up until 2007.
The Settlement Agreement also established a plan for the orderly
disposition of the trust assets. Pertinent to the present
appeal, the Settlement Agreement provided:
6. ORDERLY DISPOSITION OF ASSETS.
A. The parties agree to the orderly disposition of
certain assets of the Trusts. These assets are the
Trusts’ interests in TG California Company, Gentry-
Pacific, Ltd., Gentry Properties and Gentry Homes,
Ltd. The Co-Trustees will sell these entities or
their assets within a 30-month period from the
Effective Date, with one 18-month extension permitted
if supported by good cause as approved the Court. One
or more of Gentry’s Children and/or their issue are
not prohibited from purchasing any entity or asset
from the Trusts or from the entities for full
fair market value.
B. With respect to the Trusts’ ownership of
Gentry-Pacific, Ltd., this interest will not be sold
until Gentry Investment Properties or its assets have
been sold. When Gentry Properties’ assets are sold and
that entity is liquidated, and all expenses associated
with Gentry Properties are paid, Gentry Pacific will
make a dividend distribution of all of its cash to the
shareholders of Gentry Pacific. Thereafter, Gentry
Investment Properties will make a guaranteed payment
to Gentry-Pacific, Ltd., sufficient to cover
Gentry-Pacific, Ltd.’s reasonable operating expenses
for no longer than the aforesaid 30-month period.
. . .
7. GENTRY INVESTMENT PROPERTIES. Gentry Investment
Properties (“GIP”) will not be subject to the
disposition parameters of paragraph 6 above. As soon
as practicable, the Trust’s interests in GIP will be
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distributed to the marital subtrust, Gentry’s Children
(free of trust), and to the GST subtrust, Pro Rata.
Gentry-Pacific, Ltd., will remain as the general
partner of GIP for the aforesaid 30-month period. The
parties will use their best efforts to assure that
Gentry-Pacific, Ltd., and/or GIP will not use GIP’s
accumulated income or sales proceeds to start or
acquire any new businesses, or to acquire additional
real property, or to construct intract improvements.
The intent of the parties is that GIP will dispose of
its assets over time (unspecified) in a commercially
reasonable manner. In doing so, GIP is not precluded
from constructing infrastructure in order to
facilitate sales, provided, however, that such
improvements may be made only to obtain a final
subdivision map and/or to satisfy the requirements of
specific buyers under written contracts or as required
by law. Infrastructure includes, but is not limited
to, roads, walkways, drainage systems, utilities and
other construction consistent with the land use
entitlements of the particular property being
improved. Obtaining a final subdivision map includes
the ability to post or, if necessary, perform under a
bond for the required public improvements.
. . .
9. FURTHER DISTRIBUTIONS. The proceeds from the sale
of entities or assets under paragraph 6 and/or 7 along
with other income of the entities will be distributed
to the Trusts promptly (in the ordinary course of
business and subject to a reasonable reserve) and will
not need to be held for the entire 30-month
disposition period. The Trusts shall distribute
income and principal in accordance with the Trust
instruments and applicable law.
Subsequent to the Settlement Agreement, the Co-Trustees
began to execute a plan of liquidation of the trust assets
pursuant to paragraph 6 of the Settlement Agreement.
Specifically, the Co-Trustees claimed that they:
(i) distributed $60 million to the beneficiaries and
subtrusts; (ii) distributed Gentry Investment
Properties to the beneficiaries and subtrust; (iii)
sold 5 separate lots within Gentry Properties for a
gain of $11 million over book/tax basis; (iv) sold the
Trust’s interest in Lake Tahoe Blueridge land for a
gain of $662,000 over book/tax basis; (v) sold the
industrial court and 4 separate lots within GPP, LLC
(owned by Gentry Properties) for a gain of almost $22
million over book/tax basis.
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The Co-Trustees also stated in December 2010 that the
only remaining Gentry Companies held in the trust were Gentry
Pacific and Gentry Properties. The Co-Trustees claimed that the
above transactions were accomplished under “incredibly difficult
circumstances” due to the 2008 recession.
The Co-Trustees filed in the probate court--in June
2008, February 2009, February 2010, and April 2010--petitions for
approval of accounts for various periods from January 1, 2007
through December 31, 2009, and for the approval of attorney’s
fees accrued by the trusts. Several Beneficiaries, including
Kiana, objected to these petitions.
C. Prior Proceedings in the Present Appeal
On August 25, 2010, Kiana filed the Petition to Enforce
in probate court. In the Petition to Enforce, Kiana argued that
under the terms of the Settlement Agreement, specifically
paragraphs 6 and 7, the Co-trustees were required to take “a
series of actions . . . to complete the administration of the
Revocable and Marital Trusts within 30 months time of the
execution of the Settlement Agreement.” Kiana argued that the
Co-Trustees had failed to take these actions and requested that
the probate court “order that the necessary steps be taken to
effectuate a complete administration of the Revocable and Marital
Trusts pursuant to the terms of the Settlement Agreement.”
On November 9, 2010, the Co-Trustees filed an objection
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to Kiana’s Petition to Enforce. The Co-Trustees denied that they
had failed to implement the Settlement Agreement “to the extent
to which it is capable of being prudently implemented,” and
stated that they would file an additional petition seeking
instructions for distribution of the remaining trust assets pro-
rata.
On December 1, 2010, the Co-Trustees filed their
Petition for Instructions. The Co-Trustees argued that although
they had sold most of the trust assets at a profit pursuant to
paragraph 6 of the Settlement Agreement, they did not believe it
was in the best interests of the Beneficiaries to sell the
remaining assets given market conditions.4 The Co-Trustees
further argued that although their proposed distribution of the
remaining assets would “require the beneficiaries to maintain
mutual ownership of certain Gentry Companies for the foreseeable
future, the Trustees believe the beneficiaries may achieve a
better financial result if they liquidate when the economic
conditions improve.”
The Co-Trustees requested in the alternative that, if
the Beneficiaries decided to proceed with the sale or liquidation
of the remaining trust assets, the court approve the Co-Trustees’
resignation.
4
The Co-Trustees asked the probate court to take judicial notice of
the “Great Recession” that began in 2008.
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On December 2, 2010, Kiana filed her response to the
Co-Trustees’ Petition for Instructions. Kiana argued that the
Co-Trustees’ proposed pro rata in kind distribution of the assets
was “a direct violation of the Settlement Agreement that required
liquidation of the Gentry assets.” Kiana explained that:
[THG] did not want Kiana, or any other Gentry family
member, to remain in the home building business, and
wanted Kiana to have financial security. The Co-
Trustees’ proposal to distribute the Gentry assets pro
rata in kind, contravenes Tom’s wishes (as well as the
clear mandate of the Settlement Agreement), and
entrenches the Gentry family members, including Kiana,
in the home building business.
Kiana further argued that the Settlement Agreement was
valid and enforceable, and that the relevant controlling
provision was paragraph 6, which required the Co-Trustees to
“sell the Gentry assets within 30 months from the Effective Date
of the Settlement Agreement.” Kiana maintained that the Co-
Trustees were required to sell the Gentry assets by June 21, 2010
or apply for an eighteen-month extension, neither of which they
did. Thus, according to Kiana, “[t]he Co-Trustees have failed to
effectuate the terms of the Settlement Agreement, and their
proposed distribution would be a blatant breach of the terms of
the Settlement Agreement.”
On December 16, 2010, the parties appeared before the
probate court for a hearing on five petitions, including Kiana’s
Petition to Enforce and the Co-Trustees’ Petition for
Instructions.
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The probate court ordered the Co-Trustees to supplement
their Petition for Instructions with a plan for disposition of
the assets, and set another hearing for February 10, 2011.
On February 3, 2011, the Co-Trustees filed a supplement
to their Petition for Instructions (Supplemental Liquidation
Plan), detailing a proposed liquidation plan for the remaining
trust assets.
Kiana filed a response objecting to the Supplemental
Liquidation Plan. Kiana objected to the Supplemental Liquidation
Plan on the grounds that: (a) the plan is contrary to the
Settlement Agreement; (b) the Co-Trustees were attempting to
limit their liability to only “wilful misconduct”; (c) the plan
would give the Co-Trustees unfettered discretion in the sale of
the Gentry Companies; and (d) Kiana disagreed with the Co-
Trustees’ claims that they could not sell the Gentry Pacific and
Ashby entities. Kiana thus requested that the probate court deny
the Supplemental Liquidation Plan and order the Co-Trustees to
amend the plan to address all of the concerns raised by the
Beneficiaries.
On March 14, 2011, the Co-Trustees filed a reply to the
Beneficiaries’ responses. The Co-Trustees requested that the
probate court either grant their original Petition for
Instructions as filed, or grant their Supplemental Liquidation
Plan as filed.
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On August 11, 2011, the probate court held a hearing on
all matters, but the transcript of this hearing is not in the
Record on Appeal. On October 7, 2011, the probate court held
another hearing on all Petitions before the court.
On March 25, 2013, the probate court entered an order
denying Kiana’s Petition to Enforce. Also on March 25, 2013, the
probate court entered the Enforcement Judgment. The Enforcement
Judgment denied the Petition to Enforce as follows:
There being no just reason for delay, FINAL JUDGMENT
is hereby entered as follows:
1. The Prayer for Relief contained in paragraph A of
the Petition to Enforce, being a request for the Court
to enforce the Settlement Agreement, and order the Co-
Trustees to effectuate the terms of the Settlement
Agreement as it pertains to the administration of the
Revocable and Marital Trusts is DENIED; and
2. The Prayer for Relief contained in paragraph B of
the Petition to Enforce, being a request for the Court
to appoint a neutral receiver should the Co-Trustees
resign is DENIED.
3. Because this Judgment fully addresses all claims
raised in Petitioner Kiana E. Gentry’s Petition to
Enforce, it is final as to all persons with respect to
all issues that the Court considered or might have
considered incident to Petitioner Kiana E. Gentry’s
Petition to Enforce and judgment is entered pursuant
to Hawaii Probate Rule 34(a) and in the manner
provided by Rule 54(b) of the Hawaii Rules of Civil
Procedure.
(Emphasis in original).
On March 25, 2013, the probate court also entered an
order and final judgment granting in part and denying in part the
Co-Trustees’ Petition for Instructions (Distribution Judgment).
The Distribution Judgment provided:
There being no just reason for delay, FINAL JUDGMENT
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is hereby entered as follows:
1. The Petition is GRANTED in part in that the
Prayers for Relief contained in paragraphs B and D of
the December 1, 2010 Petition are granted such that
the remaining assets of the Trust shall be
distributed, subject to a reserve in an amount to be
determined by the Court after Petition by the Co-
Trustees, as follows:
2. The assets on hand shall be distributed, pro rata,
in the manner and to the beneficiaries as set forth on
Exhibit A attached.
3. Any remaining assets now or hereafter located
shall be distributed, pro rata, one-third to the
Thomas H. Gentry Marital Trust, and the remaining
balance equally to Thomas H. Gentry’s five children,
namely Norman Gentry, Tania Gentry, Mark Gentry, Corin
Gentry-Balding and Candes Gentry; and
4. The Petition is DENIED in part in that the Prayer
for Relief contained in paragraph C of the Petition,
being a request for Court approval of the resignations
of Mark L. Vorsatz and First Hawaiian Bank from their
position as successor co-trustees of the Trust, is
denied without prejudice.
5. Because this Judgment fully addresses all claims
raised in the Co-Trustees’ December 1, 2010 Petition,
it is final as to all persons with respect to all
issues that the Court considered or might have
considered incident to the Co-Trustees’ December 1,
2010 Petition and judgment is entered pursuant to
Hawai#i Probate Rule 34(a) and in the manner provided
by Rule 54(b) of the Hawaii Rules of Civil Procedure.
(Emphasis in original).
D. ICA Appeal
On April 24, 2013, Kiana filed a Notice of Appeal,
appealing the probate court’s Enforcement Judgment. Kiana did
not appeal the probate court’s Distribution Judgment.
Kiana filed her Opening Brief on January 2, 2014.
Kiana argued that by denying her petition, the probate court must
have either ignored the Settlement Agreement or deemed it
unenforceable. Kiana argued that the probate erred in denying
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her petition because the Settlement Agreement was valid and
enforceable and contained all of the essential terms. Kiana
further argued that the Co-Trustees and other Beneficiaries did
not raise any material facts that precluded enforcing the
Settlement Agreement. Kiana contended that the arguments of the
Co-Trustees and the Beneficiaries that the trust assets should
not be sold merely because they would not receive fair market
value was contrary to the requirements of the Settlement
Agreement. Finally, Kiana argued that the probate court should
have ordered an evidentiary hearing and/or a jury trial when it
denied her Petition to Enforce without articulating a reason why
it denied the petition.
On March 13, 2014, the Co-Trustees filed their
Answering Brief. The Co-Trustees first argued that Kiana’s
appeal was moot, and as such, the ICA was without jurisdiction to
pass upon its merits. According to the Co-Trustees, Kiana argued
on appeal that the probate court erred in finding that the
Settlement Agreement was unenforceable even though the probate
court had never made such a finding. In addition, the Co-
Trustees argued that because Kiana did not appeal the probate
court’s Distribution Judgment and the time for appeal had already
run, Kiana no longer had an available remedy. The Co-Trustees
contended that Kiana’s requested relief--to enforce the sale of
the remaining trust assets--was no longer available, because such
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relief would be inconsistent with the probate court’s
Distribution Judgment, which was not appealed. The Co-Trustees
thus argued that Kiana’s appeal was a collateral attack on the
Distribution Judgment.
The Co-Trustees next addressed the merits of Kiana’s
appeal. The Co-Trustees first argued that Kiana’s claim that the
probate court must have determined the Settlement Agreement to be
invalid or unenforceable was illogical because the probate court
never made this finding and because no party has ever disputed
that the Settlement Agreement is enforceable. Next, the Co-
Trustees argued that the probate court properly denied Kiana’s
Petition to Enforce, because the court’s granting of the Co-
Trustees’ Petition for Instructions superseded the Petition to
Enforce and rendered it moot. The Co-Trustees also argued that
the probate court did not err in denying Kiana’s Petition to
Enforce, because the question before the court was how to
distribute the trust assets after the thirty-month period in the
Settlement Agreement had elapsed. According to the Co-Trustees,
the Settlement Agreement is silent as to how to distribute the
assets if the Co-Trustees were unable to sell them after the
thirty months, so the probate court granted relief in equity by
approving the distribution of the remaining assets pro rata. The
Co-Trustees contended that such equitable relief is reviewed for
abuse of discretion, and in this case the probate court took
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“extraordinary measures” to try to effectuate the terms of the
Settlement Agreement, but ultimately, after ten months of
attempting to determine whether liquidation of the assets was
feasible, decided that it was not. Thus, according to Co-
Trustees, there is nothing to indicate that the probate court
abused its discretion in denying Kiana’s Petition to Enforce and
instead granting the Co-Trustees’ Petition for Instructions.
On April 7, 2013, Kiana filed her Reply Brief. Kiana
first argued that the only issue on appeal was whether the
Settlement Agreement is valid and enforceable. Kiana argued that
since the Co-Trustees admitted that the Settlement Agreement is
valid and enforceable, the probate court should have enforced it.
Kiana also argued that “nothing in the Settlement Agreement
excused the Co-Trustees from selling the Gentry Company assets in
the event of bad market conditions.” Kiana further maintained
that the probate court had impermissibly modified the Settlement
Agreement by approving the Trustees’ proposed pro rata
distribution, which was “directly contrary to the Settlement
Agreement’s requirements that the Gentry Company assets be
sold[.]” Thus, according to Kiana, the Co-Trustees’ arguments in
favor of the pro rata distribution of the trust assets are “void
ab initio.” (Emphasis in original).
Kiana also argued that her appeal was not moot. Kiana
contended that a valid remedy still existed because there were
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still remaining trust assets that were subject to the Settlement
Agreement and could be sold. Thus, according to Kiana, the
appropriate remedy would be to require the sale of the remaining
assets pursuant to the Settlement Agreement.
On October 22, 2014, the ICA entered its Memorandum
Opinion. The ICA first held that Kiana’s appeal was a collateral
attack on the Distribution Judgment. The ICA relied on Kim v.
Reilly, 105 Hawai#i 93, 94 P.3d 648 (2004), in which this court
held that a defendant’s appeal of the probate court’s order
granting the plaintiffs’ motion to enforce an arbitration award
was an improper collateral attack on the arbitration award
itself. The ICA held that, similar to the situation in Kim,
“Kiana is attempting to collaterally attack the [Distribution
Judgment] through her appeal of the [Enforcement Judgment].”
The ICA next held that because the Distribution
Judgment was not appealed, the ICA could not give Kiana effective
relief, and as such, her appeal was moot. The ICA relied on City
Bank v. Saje Ventures II, 7 Haw. App. 130, 748 P.2d 812 (1988),
in which a defendant appealed the circuit court’s order
confirming a public auction sale of the defendant’s property but
did not file a bond to stay enforcement of the confirmation
order, and the sale closed while the appeal was still pending.
The ICA reasoned that the present case was similar to City Bank
because it could not grant Kiana’s requested relief without
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overruling the Distribution Judgment, which was not before the
ICA due to Kiana’s failure to appeal it. Thus, the ICA held that
it had no jurisdiction to prevent the pro rata distribution of
the remaining trust assets and dismissed the appeal as moot.
On October 31, 2014, Kiana filed a motion for
reconsideration of the ICA’s opinion. Kiana first argued that
the ICA should not have considered the collateral attack doctrine
because the Co-Trustees had “failed to advance any cogent
argument on it.” Next, Kiana argued that the collateral attack
doctrine did not apply because her Petition to Enforce and the
Co-Trustees’ Petition for Instructions did not embrace the same
subject matter because the Settlement Agreement included a
“litany” of matters, whereas the Petition for Instructions only
addressed the distribution of the remaining assets. Kiana also
claimed that “Appellees are still able to distribute the assets
of the Revocable Trust pursuant to the Distribution Judgment,
even if Kiana wins on appeal and the Settlement Agreement is
enforced.” According to Kiana, such a result is possible because
if she won on appeal, certain assets would be sold pursuant to
the Settlement Agreement, but any cash proceeds would be subject
to distribution in accordance with the pro rata percentages in
the Distribution Judgment.
Kiana also argued that the collateral attack doctrine
is inapplicable here because the doctrine does not apply to
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appeals. According to Kiana, the ICA’s reliance on Kim was
misplaced because the collateral attack in Kim was applied in the
underlying proceedings, not on an appeal. Kiana further argues
that the Hawai#i appellate courts have only ever applied the
collateral attack doctrine to underlying proceedings, but never
to appeals.
Finally, Kiana argued that her appeal was not moot.
Kiana argued that the ICA’s reliance on City Bank was misplaced
because in this case, unlike City Bank, the Co-Trustees have not
sold or disposed of the assets yet. Kiana further argued that
enforcing the Settlement Agreement would not impeach the
Distribution Judgment, because the Co-Trustees could still sell
the assets and then distribute the proceeds pro rata.
On November 7, 2014, the ICA denied Kiana’s motion for
reconsideration. The ICA entered its Judgment on Appeal on
December 5, 2014. On January 2, 2015, Kiana timely filed her
application for writ of certiorari to this court. On January 20,
2015 the Co-Trustees filed their response. On January 27, 2015,
Kiana filed a reply. This court issued an Order for Supplemental
Briefing on February 26, 2015, asking the parties to specifically
address the issues of collateral attack and mootness. On March
23, 2015, the Co-Trustees filed their supplemental brief. Kiana
filed her supplemental brief on the same day.
We heard oral argument on May 14, 2015. On May 18,
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2015, Kiana filed a motion asking this court to take judicial
notice of the sale of Gentry Pacific Design Center and the
liquidation of Gentry Properties, GPP, LLC, and GPP Corporation
(collectively, the GPP Companies). Kiana argued that “the
documents (and the Co-Trustees’ in-court admission that the GPP
Companies have been sold) show that [sic] Distribution Judgment
and Settlement Agreement are not inconsistent” and stated that
the Co-Trustees’ claim that “disposition of certain Gentry assets
in the Distribution Judgment is contrary to the Settlement
Agreement” was “erroneous.” Four documents were attached to the
motion: a certified copy of the warranty deed transferring the
Gentry Pacific Design Center property from GPP to the Office of
Hawaiian Affairs, recorded at the Land Court on August 20, 2012;
a certified copy of the Statement of Termination of Limited
Partnership for Gentry Properties filed on November 19, 2012; a
certified copy of the Articles of Termination for GPP, LLC filed
on October 19, 2012; and a certified copy of the Articles of
Dissolution for GPP Corporation filed on October 19, 2012. The
Co-Trustees filed their response in opposition on May 26, 2015,
arguing that the documents are irrelevant to Kiana’s appeal and
to the issues before this court, specifically to whether Kiana’s
requested relief conflicts with the Distribution Judgment.
II. Standard of Review
A. Collateral Attack
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The applicability of the collateral attack doctrine,
which shares similarities with other preclusive doctrines such as
collateral estoppel and res judicata, is a question of law which
is reviewable de novo. Smallwood v. City & Cnty. of Honolulu,
118 Hawai#i 139, 146, 185 P.3d 887, 894 (App. 2008). See also
Eastern Savings Bank, FSB v. Esteban, 129 Hawai#i 154, 157, 296
P.3d 1062, 1065 (2013) (applying a de novo standard of review to
the question of the applicability of the res judicata doctrine).
B. Mootness
“It is axiomatic that mootness is an issue of subject
matter jurisdiction. Whether a court possesses subject matter
jurisdiction is a question of law reviewable de novo.” Cnty. of
Hawai#i v. Ala Loop Homeowners, 123 Hawai#i 391, 403-04, 235 P.3d
1103, 1115-16 (2010) (internal quotation marks and citation
omitted).
III. Discussion
A. The ICA erred in concluding that Kiana’s appeal was an
impermissible collateral attack on the Distribution Judgment
because her Petition to Enforce was filed before the
Distribution Judgment was entered
“A collateral attack ‘is an attempt to impeach a
judgment or decree in a proceeding not instituted for the express
purpose of annulling, correcting or modifying such judgment or
decree.’” Lingle v. Hawai#i Gov’t Emps. Ass’n, AFSCME, Local
152, AFL-CIO, 107 Hawai#i 178, 186, 111 P.3d 587, 595 (2005)
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(quoting First Hawaiian Bank v. Weeks, 70 Haw. 392, 398, 772 P.2d
1187, 1191 (1989)).
In Smallwood, the ICA summarized the collateral attack
doctrine and noted that it only applied when a prior5 action was
being attacked:
The party asserting that an action constitutes an
impermissible collateral attack on a judgment must
establish that: (1) a party in the present action
seeks to avoid, defeat, evade, or deny the force and
effect of the prior final judgment, order, or decree
in some manner other than a direct post-judgment
motion, writ, or appeal; (2) the present action has an
independent purpose and contemplates some other relief
or result than the prior adjudication; (3) there was a
final judgment on the merits in the prior
adjudication; and (4) the party against whom the
collateral attack doctrine is raised was a party or is
in privity with a party in the prior action.
118 Hawai#i at 150, 185 P.3d at 898 (emphases added).
This court addressed an issue similar to that in the
present case in Lingle, where we held that a petition seeking a
declaratory ruling filed during ongoing arbitration proceedings
at the Hawai#i Labor Relations Board (HLRB) could not be
characterized as a collateral attack:
However, [petitioner] filed its petition for
intervention in the HLRB proceedings while the
arbitration was still ongoing and, thus, well before
the arbitration award was rendered or confirmed. As
such, the [petitioner]’s petition for intervention and
subsequent appeal of the HLRB’s order cannot, as
5
Appellate courts in Hawai#i have typically only applied the
collateral attack doctrine in situations in which a second lawsuit has been
initiated challenging a judgment or order obtained from a prior, final
proceeding. See, e.g., Gamino v. Greenwell, 2 Haw. App. 59, 59, 625 P.2d
1055, 1056 (1981) (holding that a party in a family court case may not “pursue
a civil court action involving different parties and different issues when the
result sought would contradict a final and unappealed order issued in the
family court case”).
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[respondent] contends, be characterized as attempts to
“impeach a judgment” because there was no judgment or
award to impeach at the time [petitioner] brought its
petition.
107 Hawai#i at 186, 111 P.3d at 595 (emphasis in original).
Kiana filed her Petition to Enforce Settlement
Agreement and Appoint Receiver on August 25, 2010. The Co-
Trustees did not file their Petition for Instructions Regarding
Distribution of Remaining Assets until December 1, 2010, over
three months later.6 Under our holding in Lingle, Kiana’s filing
of her Petition to Enforce was not an attempt to impeach any
prior adjudication. Kiana filed her petition three months before
the trustees filed their petition for instructions, “well before”
any decision on the Co-Trustees’ petition “was rendered or
confirmed.” 107 Hawai#i at 186, 111 P.3d at 595 (emphasis in
original). Moreover, as discussed below, her appeal of the
probate court’s denial of her Petition to Enforce was not an
attempt to defeat or evade the Distribution Judgment, because the
Settlement Agreement deals with a number of issues that are not
contemplated by the Distribution Judgment. As such, the
collateral attack doctrine does not apply in this case, and the
ICA erred in holding that the doctrine barred Kiana’s appeal.
6
For our purposes, it does not matter that the probate court issued
final judgments on both petitions on the same day, March 25, 2013. As
discussed above, the date of filing, not the date of resolution, is
dispositive for our purposes.
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B. The ICA erred in concluding that Kiana’s appeal was moot
because she may still be able to receive meaningful relief
and because the Petition to Enforce and the Distribution
Judgment do not embrace the same subject matter
After concluding that Kiana’s appeal constituted a
collateral attack, the ICA held that it could not give Kiana any
effective relief because it had no jurisdiction to prevent
distribution of the trust assets pursuant to the Distribution
Judgment, and thus dismissed the appeal as moot. Gentry, mem.
op. at 6-8. In her Application, Kiana argues that ICA’s mootness
ruling was in error because “it was based on [the ICA’s]
erroneous determination that Kiana’s appeal was subject to the
collateral attack doctrine.” Kiana also argues that her appeal
is not moot because the assets that are subject to the Settlement
Agreement have not yet been sold and remain under the Co-
Trustees’ control. She asserts that this court can grant her
effective relief by enforcing the Settlement Agreement and
ordering the Gentry Assets to be sold and proceeds distributed in
accordance with the Distribution Judgment. Further, Kiana argues
that because the “Settlement Agreement was a contract resolving a
litany of matters [and] . . . the Distribution Judgment only
addressed the distribution of remaining assets in the Revocable
Trust,” her appeal of the Petition to Enforce does not “embrace
the same subject matter” as the Distribution Judgment.
Additionally, Kiana contends that the Probate Court’s authority
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under Hawai#i Probate Rules (HPR) Rule 36 would allow it to
vacate or amend the distribution judgment, and thus her appeal is
not moot and can be heard on the merits.7 We find her arguments
persuasive.
1. Kiana’s appeal is not moot because the Probate Court’s
authority would allow it to vacate or amend the
Distribution Judgment based on a decision on the merits
in this appeal, meaning she can still receive effective
relief
First, we address Kiana’s contention that the Probate
Court’s authority under HPR Rule 36 would allow it vacate or
amend the Distribution Judgment based on a decision on the merits
in this appeal.
7
HPR Rule 36 (Relief from Order) provides in pertinent part:
(b) Mistakes; Inadvertence; Excusable Neglect; Newly
Discovered Evidence; Fraud, Etc. Upon petition and
upon such terms as are just, the court may relieve an
interested person from an order or judgment for the
following reasons:
(1) mistake, inadvertence, surprise, or
excusable neglect;
(2) newly discovered evidence which by due
diligence could not have been discovered in time
before the order was issued;
(3) fraud (whether heretofore denominated
intrinsic or extrinsic), misrepresentation, or
other misconduct of an adverse party;
(4) the order is void;
(5) the order has been satisfied, released, or
discharged, or a prior order upon which it is
based has been reversed or otherwise vacated, or
it is no longer equitable that the order should
have prospective application; or
(6) any other reason justifying relief from the
operation of the order. The petition shall be
made within a reasonable time, and for reasons
(1), (2), and (3) not more than one year after
the order or proceeding was entered or taken. A
petition under this subdivision (b) does not
affect the finality of an order or suspend its
operation.
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HPR Rule 36(b) provides that the Probate Court may
relieve a party “from an order or judgment” when “the order has
been satisfied, released, or discharged, or a prior order upon
which it is based has been reversed or otherwise vacated, or it
is no longer equitable that the order should have prospective
application[,]” or for “any other reason justifying relief[.]”
This court has held that the Probate Court has the authority to
set aside judgments where there is “sufficient cause.” Kam Chin
Chun Ming v. Kam Hee Ho, 45 Haw. 521, 532, 371 P.2d 379, 388
(1962) (explaining that “[t]he proper course would have been for
the probate court to determine whether it would ‘open the
judgment’”).
Here, nothing indicates that Kiana would be prevented
from seeking post-judgment relief from the probate court.
Because the Probate Court retains the power to reopen and amend
the Distribution Judgment pursuant to HPR Rule 36(b), Kiana’s
appeal could be heard on the merits without being moot because
she retains an “effective remedy.” In re Doe Children, 105
Hawai#i 38, 56, 93 P.3d 1145, 1163 (2004) (“[T]he mootness
doctrine is properly invoked where events . . . have so affected
the relations between the parties that the two conditions for
justiciability relevant on appeal--adverse interest and effective
remedy--have been compromised.”) (internal quotation marks and
citation omitted, ellipses in original). It appears that the
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most appropriate provision in HPR Rule 36(b) for these purposes
would be HPR Rule 36(b)(5), which provides that a court may
relieve an interested person of a judgment or order if “the order
has been satisfied, released, or discharged, or a prior order
upon which it is based has been reversed or otherwise vacated, or
it is no longer equitable that the order should have prospective
application.” (Emphasis added).
2. Additionally, Kiana’s appeal is not moot because this
court can still grant her relief based on her appeal of
the Petition to Enforce the Settlement Agreement
“[A] case is moot if the reviewing court can no longer
grant effective relief.” Kaho#ohanohano v. State, 114 Hawai#i
302, 332, 162 P.3d 696, 726 (2007) (quoting City Bank, 7 Haw.
App. at 134, 748 P.2d at 815). “Stated another way, the central
question before us is whether changes in the circumstances that
prevailed at the beginning of litigation have forestalled any
occasion for meaningful relief.” Gator.com Corp. v. L.L. Bean,
Inc., 398 F.3d 1125, 1129 (9th Cir. 2005) (internal quotation
marks and citations omitted). “[An appellate court] may not
decide moot questions or abstract propositions of law.” Life of
the Land v. Burns, 59 Haw. 244, 250, 580 P.2d 405, 409 (1978)
(internal quotation marks and citation omitted).
It is well-settled that the mootness doctrine
encompasses the circumstances that destroy the
justiciability of a case previously suitable for
determination. A case is moot where the
question to be determined is abstract and does
not rest on existing facts or rights. Thus, the
mootness doctrine is properly invoked where
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“events . . . have so affected the relations
between the parties that the two conditions for
justiciability relevant on appeal--adverse
interest and effective remedy--have been
compromised.” Wong v. Board of Regents,
University of Hawaii, 62 Haw. 391, 394, 616 P.2d
201, 203-4 (1980).
In re Thomas, 73 Haw. 223, 225-26, 832 P.2d 253, 254 (1992)
(ellipsis in original).
In finding that Kiana’s appeal was moot, the ICA relied
upon City Bank, in which a mortgagee brought a foreclosure
action, and the circuit court granted summary judgment and
permitted a sale at public auction. 7 Haw. App. at 132, 748 P.2d
at 814. After the auction, the mortgagee filed a motion to
confirm the sale, which the circuit court granted. Id. Six days
later, the sale closed. Id. The defendants filed a motion for
reconsideration, which the circuit court denied, and the
defendants appealed. Id. at 132-33, 748 P.2d at 814. The ICA
dismissed the appeal as moot because the defendants had failed to
file a supersedeas bond to stay the sale, the sale had closed,
and as such, the ICA could no longer grant any effective relief.
Id. at 132, 748 P.2d at 814.
City Bank, however, is factually distinguishable on the
grounds that the trust assets in the present case have not yet
been distributed and still remain in the Co-Trustees’ control.
The Co-Trustees do not dispute that the assets which are subject
to the terms of the Settlement Agreement have not been sold or
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disposed of, and still remain in the Revocable Trust.8
Additionally, this court can grant relief to Kiana because the
Distribution Judgment and Settlement Agreement are not
inconsistent. The Distribution Judgment calls for shares9 of
Gentry Pacific and Gentry Properties to be distributed among
trustees–-shares that no longer exist because the GPP companies
have been liquidated. However, as Kiana contends in her motion
8
Kiana asks this court to take judicial notice of a certified copy
of the warranty deed transferring the Gentry Pacific Design Center property
from GPP to the Office of Hawaiian Affairs, recorded at the Land Court on
August 20, 2012. Although the Co-Trustees assert that the document is
irrelevant to the issue at hand, they do not dispute its veracity or accuracy.
This court has previously taken judicial notice of matters not raised by
the parties in their initial briefings or included in the record on appeal.
In Gao v. State, Dep’t of Attorney Gen., __ Hawai#i __, __ P.3d __ (2016), Gao
requested at oral argument that we take judicial notice of the State’s
Performance Appraisal System’s Supervisory Manual. Although the manual did
not specifically mention either party in that case, we took judicial notice
because the equity of the situation dictated that we do so. Id. at __, __
P.3d at __ (citing Eli v. State, 63 Haw. 474, 478, 630 P.2d 113, 116 (1981)
(“Where the equity of the situation dictates, we will use our discretion to
take judicial notice of matters of which courts may properly take judicial
notice but which are not part of the record on appeal.” (citation omitted));
Williams v. Aona, 121 Hawai#i 1, 11 n. 6, 210 P.3d 501, 511 n. 6 (2009)
(taking judicial notice of collective bargaining agreement because agreement
was “matter of public record and easily verifiable”)).
Pursuant to Hawai#i Rules of Evidence (HRE) Rule 201(b), courts may take
judicial notice of facts that are “either (1) generally known within the
territorial jurisdiction of the trial court, or (2) capable of accurate and
ready determination by resort to sources whose accuracy cannot reasonably be
questioned.” “Judicial notice may be taken at any stage of the proceeding.”
HRE Rule 201(f). Here, the document in question is a matter of public record
and easily verifiable, and is germane to the issues in this appeal. Thus, we
take judicial notice of the warranty deed pursuant to HRE Rule 201. See
Sierra Club v. D.R. Horton-Schuler Homes, LLC, 136 Hawai#i 505, 518 n.5, 364
P.3d 213, 226 n.5 (2015).
Although Kiana asks us to take judicial notice of several other
documents, in view of our resolution of the issues herein we need not consider
those documents and accordingly do not determine whether it would be
appropriate to take judicial notice of them.
9
According to the Distribution Judgment, of the 49,000 Gentry
Pacific Shares, 16,333.333 were to go to the Marital Subtrust, and each child
was to receive a share of 6,533.333. Of the 90% Membership in Gentry
Properties, 30% was to go to the Marital Subtrust, and each child was to
receive a share of 12%.
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for judicial notice, disposition of the assets pursuant to the
Settlement Agreement would not impeach the Distribution Judgment,
since the Co-Trustees can still distribute the proceeds from the
sale of the GPP companies in conformance with the distribution
percentages. Finally, all of the parties to this action,
including both the Trust beneficiaries and Appellee Co-Trustees,
are also parties to the Settlement Agreement. As such, an
appellate court could grant Kiana effective relief, and this
issue is not moot.
3. Kiana’s appeal is not moot because the Settlement
Agreement and the Distribution Judgment do not embrace
the same subject matter
Additionally, the ICA erred in holding that Kiana’s
appeal of the Enforcement Judgment was moot because the
Settlement Agreement is much broader and implicates many more
issues than the Distribution Judgment.
A case is moot when “neither party has a legally
cognizable interest in the final determination of the underlying
questions of fact and law.” Los Angeles Cty. v. Davis, 440 U.S.
625, 631 (1979). “[A]s long as the parties have a concrete
interest, however small, in the outcome of the litigation, the
case is not moot.” Knox v. Serv. Emps. Int’l Union, Local 1000,
132 S. Ct. 2277, 2287 (2012). The “heavy burden of establishing
mootness lies with the party asserting a case is moot.” Ouachita
Riverkeeper, Inc. v. Bostick, 938 F. Supp. 2d 32, 43 (D.D.C.
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2013). Mootness as to one issue does not preclude hearing other
issues in a case. See Grant v. District of Columbia, 908 A.2d
1173, 1178 (D.C. Cir. 2006) (noting that plaintiff’s voluntary
retirement mooted his request for employment reinstatement, but
not his requests for other relief); Kennedy v. District of
Columbia, 654 A.2d 847, 852 (D.C. Cir. 1994) (holding that a case
was not moot where “unresolved issues . . . constitute a
sufficient ‘concrete stake’ in the litigation”).
Kiana correctly argues that the “Settlement Agreement
was a contract resolving a litany of matters,” and does not
“embrace the same subject matter” as the Distribution Judgment.
The Distribution Judgment “only addressed the distribution of
remaining assets in the Revocable Trust in a pro rata manner in
accordance with an attached chart” and denied the “request for
Court approval of the resignations of Mark L. Vorsatz and First
Hawaiian Bank from their position as successor co-trustees of the
Trust[.]” To the contrary, the Settlement Agreement addressed a
number of issues other than distribution, including sale of the
Trusts’ interests in TG California Company, Gentry-Pacific, Ltd.,
Gentry Properties, and Gentry Homes, Ltd. within a 30-month
period from the effective date, Trustee Appointment for Various
Subtrusts, a Generation Skipping Trust, Attorneys’ Fees and
Costs, the Right of Withdrawal, Trustees’ Standard of Care and
Fees, and “Periodic Meetings,” among other items. Because the
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Petition to Enforce the Settlement Agreement covered a much
broader scope than the Distribution Judgment, the ICA could have
still granted Kiana some effective relief on appeal of the
Enforcement Judgment. Thus, the ICA erred when it determined
that the probate court’s ruling on the Distribution Judgment
mooted Kiana’s appeal of the Enforcement Judgment.
IV. Conclusion
For the foregoing reasons, we vacate the ICA’s
December 5, 2014 judgment on appeal dismissing Kiana’s appeal as
moot and remand to the ICA for further proceedings consistent
with this opinion.
Margery Bronster and /s/ Mark E. Recktenwald
Jae B. Park
for petitioner /s/ Paula A. Nakayama
Alan T. Yoshitake and /s/ Sabrina S. McKenna
Carroll S. Taylor
for respondents /s/ Richard W. Pollack
/s/ Michael D. Wilson
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