Kelepolo v. Fernandez . Application for Writ of Certiorari or in the alternative Petition for Writ of Mandamus, filed 09/05/2018. ( 2020 )

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Electronically Filed
Supreme Court
SCWC-XX-XXXXXXX
30-JUN-2020
10:15 AM
IN THE SUPREME COURT OF THE STATE OF HAWAIʻI
---o0o---
ANNETTE M. KELEPOLO, Respondent/Plaintiff-Appellee,
vs.
GRACIANO KEHOPU FERNANDEZ, NANCY FERNANDEZ,
GRACE LYN W. FERNANDEZ-CHISHOLM, DAMIEN K. KAINA, JR.,
FRANK I. KAINA, JOSEPH T. KAINA, PATRICK KAINA,
TAMARA SMITH-KAUKINI, Petitioners/Defendants-Appellants.
SCWC-XX-XXXXXXX
ORIGINAL PROCEEDING
(CAAP-XX-XXXXXXX; CIV. NO. 16-1-0453(1))
JUNE 30, 2020
RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.
OPINION OF THE COURT BY POLLACK, J.
This case, brought as a petition for writ of mandamus,
asks us to review whether the Intermediate Court of Appeals
(ICA) manifestly abused its discretion in setting the amount of
a supersedeas bond as a condition of staying the enforcement of
a judgment and writ of possession pending appeal. Upon review
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of relevant court rules and precedent, we conclude that
petitioners have demonstrated a manifest abuse of discretion by
the ICA as it did not apply relevant factors in setting the bond
amount. Accordingly, we grant the petition and direct the ICA
to re-determine the supersedeas bond amount in a manner
consistent with this opinion.
I. BACKGROUND AND PROCEDURAL HISTORY
A. Background
This case arises from a dispute over real property
located in Hana on the island of Maui (the property) where
petitioners Graciano Kehopu Fernandez, Nancy Fernandez, Grace L.
W. Fernandez-Chisholm, Damien K. Kaina Jr., Frank I. Kaina,
Joseph T. Kaina, Patrick Kaina, and Tamara Smith-Kaukini
(collectively, “Petitioners”) reside with their families.
Petitioners maintain that they inherited the property from their
uncle. Respondent Annette M. Kelepolo, who is related to
Petitioners through the first marriage of their grandmother,
claims title to the property based on a quitclaim deed that was
executed by power of attorney for Petitioners’ uncle on the day
that he died in 2007. The deed was recorded in the Bureau of
Conveyances of the State of Hawaii on February 16, 2007.
On August 18, 2016, Kelepolo filed a complaint for
ejectment against Petitioners in the Circuit Court of the Second
2
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Circuit (circuit court).1 Kelepolo alleged that she charged
Petitioners $120.00 in monthly rent to be paid on the 15th of
each month--$100.00 would go towards real property taxes and
$20.00 would go towards the water bill. Kelepolo contended that
Petitioners failed to pay rent for one year and had thereby
breached their oral contract.2
Petitioners filed an answer to Kelepolo’s complaint
along with a counterclaim. Petitioners’ counterclaim contested
1
According to the complaint, Kelepolo initially filed a complaint
for summary possession against Petitioners in the district court but
voluntarily dismissed that complaint to pursue ejectment upon Petitioners’
assertion that they owned the property. We have described an ejectment
action in the following manner:
Ejectment is a common law action once used to recover
possession of land and for damages for the unlawful
detention of its possession. The lessor or real party in
interest had to establish title in order to warrant
recovery. The common law action for ejectment has been
modified by statute in many states and may come under the
title of action for summary process, action for eviction,
or forcible entry and detainer actions.
Queen Emma Found. v. Tingco, 74 Haw. 294, 300 n.5, 845 P.2d 1186, 1189 n.5
(1992) (citing Black’s Law Dictionary 516 (6th ed. 1990)); see also Un Wong
v. Kan Chu, 5 Haw. 225, 226 (Haw. Kingdom 1884); Hale v. Maikai, 12 Haw. 178,
182 (Haw. Terr. 1899).
Pursuant to the Hawaii Revised Statutes (HRS) § 604-5 (Supp.
2015), “The district courts shall not have cognizance of real actions, nor
actions in which the title to real estate comes in question . . . .” HRS
§ 604-5(d); see also HRS § 604-6 (1993) (“Nothing in section 604-5 shall
preclude a district court from taking jurisdiction in ejectment proceedings
where the title to real estate does not come in question at the trial of the
action.”).
2
Kelepolo’s complaint sought the following relief: entry of
judgment giving Kelepolo possession of the property; a writ of possession
directing law enforcement remove the tenants and their property; damages in
an amount to be proven at trial based on trespass and unjust enrichment; a
determination that title to the property is in Kelepolo; a determination that
Kelepolo owned the property by adverse possession; and other relief deemed
just and proper.
3
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Kelepolo’s claim to the property, alleging that the quitclaim
deed was procured by fraud and must be rescinded and cancelled.
Petitioners contended that, when they agreed to pay for the real
property taxes and water bill at a May 2015 meeting, Kelepolo
appeared to acknowledge Petitioners’ rights to the property.
Petitioners maintained that after making several contributions
to the “fund,” they learned that Kelepolo was overstating the
real property tax amount and collecting the funds into her own
bank account instead of an account that was to be set up to
collect the contributions for the property.
Kelepolo thereafter filed a motion for summary
judgment as to all claims, arguing that Petitioners’ claims to
the property were based on, inter alia, “mere speculation.”
Following a hearing on the motion,3 the circuit court granted
summary judgment in favor of Kelepolo, concluding that
Petitioners failed to establish a cognizable claim to the
subject property through adverse possession and did not present
any admissible evidence to support their assertion that the
quitclaim deed was procured by fraud. The court’s summary
judgment order determined title to the property to be in
Kelepolo and, alternatively, that Kelepolo was entitled to
ownership through adverse possession; the court granted Kelepolo
3
The Honorable Rhonda I. L. Loo presided.
4
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a judgment of possession and a writ of possession.4 Kelepolo
waived any right to seek money damages and none were awarded.
Judgment was entered in favor of Kelepolo, and Petitioners
appealed to the ICA.
B. Petitioners’ Motions for Stay Pending Appeal
While the appeal was pending, Petitioners moved in the
circuit court for a stay of proceedings to enforce the judgment
pursuant to Hawaii Rules of Civil Procedure (HRCP) Rule 62 and
Hawaii Rules of Appellate Procedure (HRAP) Rule 8. Petitioners
contended that Kelepolo was taking steps to enforce the judgment
and eject them from the property. Kelepolo opposed Petitioners’
motion for a stay and argued that the motion should be denied on
the merits and, alternatively, that any proposed stay should
require a supersedeas bond in the amount of $578,000, which
consisted of the purported assessed value of the property
($558,000) and Kelepolo’s estimated costs of maintenance, water,
electricity, and property taxes ($20,000).
The motion was heard on May 24, 2018. The circuit
court ruled that the balance of irreparable harm and the public
interest supported Petitioners’ request for a stay, and the
court required Petitioners to post a supersedeas bond in the
amount of $578,000. The bond amount was required to be posted
within 30 days of the court’s order.
The Court does find that balancing public interests
and irreparable harm, the Court is going to grant
4
The court’s summary judgment order dismissed all remaining claims
and counterclaims with prejudice.
5
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Defendants’ motion to stay. The Court will also, however,
order that Defendants post a supersedeas bond.
Though Defendants assert that Plaintiff is not
entitled to a supersedeas bond as this case does not
involve a monetary judgment, the determination of the
amount of the supersedeas bond, however, is committed to
the sound discretion of the Court. And the inherent
discretion of the Court also allows for flexibility in
determining the nature and extent of the bond.
The Court finds that the lack of a monetary judgment
is due to Plaintiff’s flexibility in waiving her claim of
monetary damages for unpaid rent and water consumption for
many years. Despite this waiver, the Court finds that
Plaintiff still has the rights to the property that warrant
the Court’s protection.
Therefore, in its discretion, the Court will order
Defendants to post a supersedeas bond in the amount of
$578,000. This amount is based on the assessed value of
the property and the estimated costs of maintenance, water,
electricity, and taxes for two years.
Accordingly, the Court’s going to grant
Defendants’ motion, will order Defendants post the
supersedeas bond in that amount. Within 30 days of filing
the order, that’s the due date for the bond to be posted.
(Emphasis added.)
Petitioners subsequently filed a motion for a stay in
the ICA, arguing that the circuit court abused its discretion in
imposing a supersedeas bond, as a stay should have been granted
without bond because no monetary damages were awarded, and that
the amount was exorbitant and not related to the potential loss
that Kelepolo could claim as a result of the stay.5 The ICA
granted a stay on the condition that it would be effective upon
the ICA’s approval of a supersedeas bond in the amount of
$250,000 (stay order). The ICA stated that the amount was based
5
Petitioners subsequently filed a motion to stay enforcement of
the judgment for possession and writ of possession pending review of the
motion for stay filed in the ICA.
6
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on the property’s tax assessed value and “other factors and
circumstances in the case”6:
Upon consideration of . . . the papers in support and
in opposition, and the record, including evidence of the
subject property’s tax-assessed value and other factors and
circumstances in the case, it appears that a supersedeas
bond in the amount of $250,000 would adequately secure
. . . Kelepolo’s interest pending appeal.
Therefore, IT IS HEREBY ORDERED that the motions for
stay are granted in part. A stay of further enforcement of
the Second Circuit Court’s Judgment for Possession and Writ
of Possession is granted on the condition that Appellants
submit to this court for its approval a supersedeas bond in
the amount of Two-Hundred-Fifty Thousand and no/100 Dollars
($250,000). The stay will take effect upon the approval of
the supersedeas bond by this court.
(Bold font omitted and emphasis added.) The ICA’s stay order
did not provide a date by which the supersedeas bond was
required to be posted and did not limit Kelepolo’s ability to
execute the judgment prior to Petitioners posting the bond.
Petitioners filed a motion for reconsideration or modification
of the ICA’s stay order, requesting, inter alia, a reduction in
the bond amount and a reasonable time to post the bond; the ICA
denied the motion.7
C. Petitioners’ Application for Writ of Certiorari or, in the
Alternative, Petition for Writ of Mandamus
Petitioners subsequently filed an “Application for
Writ of Certiorari or in the Alternative Petition for Writ of
6
The ICA did not explain what the “other factors and
circumstances” were that it considered.
7
Petitioners filed a third motion for a stay in the ICA, seeking
to stay enforcement pending review of their request for reconsideration. The
ICA denied this motion as moot.
7
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Mandamus” (Petition) from the ICA’s stay order and the
subsequent order denying the motion for reconsideration.
Relevant to the mandamus relief requested, Petitioners argue
that the ICA manifestly abused its discretion in setting the
$250,000 bond amount because it did not bear any rational
relation to any damages that Kelepolo may incur as a result of a
delay in enforcing the judgment while the appeal is pending.
Petitioners suggest that the amount of the supersedeas bond
should not exceed $8,000 (the monthly rent amount ($120) for
each of the five Petitioners who reside at the property for 12
months), which they contend is an amount correlating to the
anticipated duration of the appeal.
They also argue that the ICA abused its discretion
because it did not allow Petitioners a reasonable amount of time
to post the supersedeas bond. Petitioners assert that
“[s]etting the amount of the bond without a temporary stay to
secure the bond defeated the purpose of the bond.” Finally,
Petitioners contend that mandamus relief is appropriate because
the ICA has already denied their motion for reconsideration,
they have been unable to post a bond in the amount required by
the ICA, and they are faced with immediate eviction if a stay is
not granted.
Accordingly, Petitioners ask that this court grant
their Petition and direct the ICA to modify its stay order to
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conform the amount of the supersedeas bond, if any, to our
decision in Midkiff v. de Bisschop, 58 Haw. 546, 574 P.2d 128
(1978), and related caselaw and to set forth a reasonable time
period to post the bond. Petitioners argue the supersedeas bond
amount should be based on the likelihood of prevailing on
appeal, the balancing of irreparable harms, the public interest,
and the potential damages, if any, that Kelepolo may incur as a
result of a delay during the appeal based on the evidence in the
record.
As to the request for certiorari review, this court
dismissed the application for writ of certiorari pursuant to
Hawaii Rules of Appellate Procedure (HRAP) Rule 40.1(a) (2017)
and Hawaii Revised Statutes (HRS) §§ 602-5(a)(1) (2016) and 602-
59(a) (2016). However, Kelepolo was directed to file an answer
to Petitioners’ request for mandamus relief. We granted a
temporary stay of enforcement of the circuit court’s judgment
for possession and writ of possession pending review of the
petition seeking mandamus relief.
In her answer to the Petition, Kelepolo argues that
Petitioners fail to demonstrate a clear and indisputable right
to relief and a lack of alternative means of redress. Kelepolo
maintains that although the stay order does not include a time
period within which the bond must be posted, Petitioners had
9
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more than a reasonable time to post the bond or alternative
security but failed to do so. Because the ICA’s order provides
that “[t]he stay will take effect upon the approval of the
supersedeas bond,” Kelepolo contends that the ICA did not err by
refusing to include a “reasonable time” to post a bond in the
stay order. Additionally, the ICA did not abuse its discretion,
Kelepolo argues, as the appellate rules do not contain any
language that restricts what considerations may be taken into
account by a court determining in its discretion the appropriate
amount of a supersedeas bond. Finally, Kelepolo maintains that
Petitioners failed to meet their burden to request or provide
alternative security in lieu of posting a supersedeas bond.
In reply, Petitioners reiterate their arguments that
the ICA failed to address their contention that the stay should
have been granted without a bond, the ICA abused its discretion
in setting a bond amount that appeared arbitrary, and the ICA’s
stay order failed to afford them any time to try to secure a
bond. They note that, in light of this court’s stay of the
judgment pending disposition of this proceeding, the issue of
the ICA’s failure to set forth a reasonable time period to
comply or otherwise respond to the ICA’s stay order is moot, but
Petitioners continue to raise the issue so that it is not
repeated in the future.
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II. STANDARDS OF REVIEW
A. Writ of mandamus
A writ of mandamus is an extraordinary remedy that
will not issue unless the petitioner demonstrates a clear and
indisputable right to the relief requested and a lack of other
means to redress adequately the alleged wrong or to obtain the
requested action. Kema v. Gaddis, 91 Hawaiʻi 200, 204, 982 P.2d
334, 338 (1999).
B. Amount of Bond or Security
The amount of a bond or alternative security
sufficient to protect the rights of an appellee is committed to
the court’s sound discretion. See Shanghai Inv. Co. v. Alteka
Co., 92 Hawaii 482, 503-04, 993 P.2d 516, 537-38 (2000),
overruled on other grounds by Blair v. Ing, 96 Hawaii 327, 331
n.6, 335-36, 31 P.3d 184, 188 n.6, 192-93 (2001).
III. DISCUSSION
A. Stay of Enforcement of Judgment by the Circuit Court and
Appellate Court Pending Appeal
It is well recognized that “[t]he purpose of posting a
supersedeas bond is to preserve the status quo” and protect the
appellee’s rights during the appeal. Shanghai Inv. Co., 92
Hawaii at 503-04, 993 P.2d at 537-38 (quoting Poplar Grove
Planting & Refining Co. v. Bache Halsey Stuart, Inc., 600 F.2d
1189, 1190-91 (5th Cir. 1979)). Hence, a supersedeas bond
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serves as security to protect the appellee from the risk of loss
occasioned by the stay of execution should the appellee prevail
on appeal. Rachel v. Banana Republic, Inc., 831 F.2d 1503, 1505
n.1 (9th Cir. 1987); NLRB v. Westphal, 859 F.2d 818, 819 (9th
Cir. 1988) (per curiam). A court, accordingly, should generally
attempt to protect nonappealing parties from any loss that may
be incurred as a result of the stay of a judgment when setting a
supersedeas bond. 5 Am. Jur. 2d Appellate Review § 374 (May
2020 Update) (“[T]he amount of a supersedeas bond should be
sufficient to protect the appellee in [their] judgment[.]”
(footnotes omitted)); see Poplar Grove, 600 F.2d at 1190-91
(supersedeas bond in the amount of $10,000 for a $270,985.65
judgment was insufficient).
In our circuit courts, a stay of proceedings to
enforce a judgment is governed by HRCP Rule 62 (1980). HRCP
Rule 62(d) provides as follows:
When an appeal is taken the appellant by giving a
supersedeas bond may obtain a stay subject to the
exceptions contained in subdivision (a) of this rule.[8] The
bond may be given at or after the time of filing the notice
of appeal or of procuring the order allowing the appeal, as
8
HRCP Rule 62(a) provides in relevant part as follows:
Unless otherwise ordered by the court, an interlocutory or
final judgment in an action for an injunction or in a
receivership action, or a judgment or order directing an
accounting shall not be stayed during the period after its
entry and until an appeal is taken or during the pendency
of an appeal. The provisions of subdivision[] (c) of this
rule govern the suspending, modifying, restoring, or
granting of an injunction during the pendency of an appeal.
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the case may be. The stay is effective when the
supersedeas bond is approved by the court.
Thus, subject to the specified exceptions, an appellant may
obtain a stay of the execution of a judgment at or after the
time the notice of appeal is filed, or when an order is obtained
allowing the appeal, by posting a supersedeas bond. HRCP Rule
62(d). The stay is effective when the bond is approved by the
court. Id.
Under our caselaw, a trial court has inherent
authority to determine the nature and extent of the security to
be furnished in the exercise of a party’s right to obtain a stay
pending an appeal. Shanghai Inv. Co., 92 Hawaii at 503-04, 993
P.2d at 537-38. In Shanghai Investment Co., we discussed the
trial court’s “inherent discretion” to determine appropriate
security in light of HRCP Rule 62(d):
Other jurisdictions have indicated that “the rule and the
inherent discretion and power of the trial court allow for
flexibility in the determination of the nature and extent
of the security required to stay the execution of the
judgment pending appeal.” Bruce Church, Inc. v. Superior
Court, 160 Ariz. 514, 774 P.2d 818, 821 (App.1989) . . . .
The burden to provide a secure alternative rests on the
judgment debtor. Poplar Grove, 600 F.2d at 1191.
Id. (other citations omitted). We adopted Poplar Grove’s
reasoning that the sound financial circumstances of a judgment
debtor may be considered by the trial court in determining
suitable security. Id. This permits the court to exercise its
discretion to substitute some form of guaranty of judgment in
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lieu of a supersedeas bond. On the other hand, if a full bond
would unduly burden the debtor, the court may allow arrangement
of substitute security that would equally protect the judgment
creditor.
[I]f a judgment debtor objectively demonstrates a present
financial ability to facilely respond to a money judgment
and presents to the court a financially secure plan for
maintaining that same degree of solvency during the period
of an appeal, the court may then exercise a discretion to
substitute some form of guaranty of judgment responsibility
for the usual supersedeas bond. Contrariwise, if the
judgment debtor’s present financial condition is such that
the posting of a full bond would impose an undue financial
burden, the court similarly is free to exercise [its]
discretion to fashion some other arrangement for substitute
security through an appropriate restraint on the judgment
debtor’s financial dealings, which would furnish equal
protection to the judgment creditor.
Shanghai Inv. Co., 92 Hawaii at 503-04, 993 P.2d at 537-38
(quoting Poplar Grove, 600 F.2d at 1191) (“We believe the
approach taken by the Bruce Church and Poplar Grove courts to be
the appropriate one.”). Thus, while HRCP Rule 62(d) does not
expressly authorize a trial court to allow a party to provide
alternative security in lieu of a supersedeas bond, our
precedent clearly recognizes a court’s inherent discretion to
approve such a request.9 Id.
HRCP Rule 62(d)’s counterpart, former Federal Rules of
Civil Procedure (FRCP) Rule 62(d) (reorganized 2018),10 has been
9
It is noted that the circuit court is required to grant a stay
without bond when the State or county is the appellant requesting a stay of
enforcement of the judgment. HRCP Rule 62(e).
10
Former FRCP Rule 62(d) provided as follows:
(continued . . .)
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similarly interpreted by several federal courts as allowing
judges to have discretion to determine the appropriate security
to effectuate a stay. See, e.g., Olympia Equip. Leasing Co. v.
W. Union Tel. Co., 786 F.2d at 794, 797 (7th Cir. 1986)
(concluding that “[FRCP] Rule 62(d) does not impose an ironclad
requirement of a supersedeas bond”); Miami Int’l Realty Co. v.
Paynter, 807 F.2d 871, 873-74 (10th Cir. 1986) (holding that the
court did not err in granting a stay without a supersedeas bond
in the full amount of the judgment); Fed. Prescription Serv.,
Inc. v. Am. Pharm. Ass’n, 636 F.2d 755, 759-61 (D.C. Cir. 1980)
(FRCP Rule 62(d) “in no way necessarily implies that filing a
bond is the only way to obtain a stay”); Poplar Grove, 600 F.2d
at 1191. Indeed, in 2018, FRCP Rule 62 was amended to
specifically provide authority to the court to accept
alternative security in lieu of a bond. FRCP Rule 62 advisory
committee’s note to 2018 amendments; see FRCP Rule 62(b) (Stay
(. . . continued)
When an appeal is taken the appellant by giving a
supersedeas bond may obtain a stay subject to the
exceptions contained in subdivision (a) of this rule. The
bond may be given at or after the time of filing the notice
of appeal or of procuring the order allowing the appeal, as
the case may be. The stay is effective when the
supersedeas bond is approved by the court.
Becker v. United States, 451 U.S. 1306, 1307 (1981) (quoting former FRCP Rule
62(d)). These provisions were amended and reorganized into current FRCP Rule
62(b) in 2018. See FRCP Rule 62 advisory committee’s notes to 2018
amendments.
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by Bond or Other Security).11 This amendment, in effect,
formalized procedures that many federal courts had already
followed. See 16A Charles Alan Wright et al., Federal Practice
and Procedure § 3954.1, at 696 (Supp. 2019) (recognizing that
appellate courts asked to issue a stay pursuant to FRCP Rule
62(b) have applied caselaw developed under prior FRCP Rule
62(d)). Thus, Hawaii courts, like federal courts, have
authority to determine the appropriate bond or other security to
effectuate a stay.
In the Hawaiʻi appellate courts, a motion for stay of
judgment is governed by HRAP Rule 8 (2010).12 This rule provides
11
Current FRCP Rule 62(b) (2018) provides as follows:
Stay by Bond or Other Security. At any time after judgment
is entered, a party may obtain a stay by providing a bond
or other security. The stay takes effect when the court
approves the bond or other security and remains in effect
for the time specified in the bond or other security.
The Permanent Committee on Rules of Civil Procedure and Circuit Court Civil
Rules may wish to consider the appropriateness of an amendment to HRCP Rule
62.
12
HRAP Rule 8(a) provides in part as follows:
A motion for stay of the judgment or order in a civil
appeal, or for approval of a supersedeas bond, or for an
order suspending, modifying, restoring, or granting an
injunction during the pendency of an appeal shall
ordinarily be made in the first instance to the court or
agency appealed from.
A motion for such relief on an appeal may be made to
the appellate court before which the appeal is pending or
to a judge thereof, but, if the appeal is from a court, the
motion shall show that application to the court appealed
from for the relief sought is not practicable, or that the
court appealed from has denied an application, or has
failed to afford the relief the applicant requested, with
(continued . . .)
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that a motion for stay on appeal should ordinarily be made in
the court or agency appealed from in the first instance. HRAP
Rule 8(a). However, an appellant may move for a stay in the
appellate court in which the appeal is pending when application
to the court appealed from is not practicable, the relief sought
has been denied, or the relief requested has not been afforded.13
Id.
Upon proper motion, an appellate court has discretion
to grant a stay under HRAP Rule 8(b), which provides, “Relief
available in the appellate courts under this rule may be
conditioned upon the filing of a bond or other appropriate
security in the court or agency appealed from.”14 The
(. . . continued)
the reasons given by the court appealed from for its
action. The motion shall also show the reasons for the
relief requested and the facts relied upon, and, if the
facts are subject to dispute, the motion shall be supported
by affidavits, declarations, or other sworn statements or
copies thereof. . . .
13
The circuit court rules do not in any way restrict the appellate
courts from staying the proceedings during the pendency of an appeal. HRCP
Rule 62(g) provides as follows:
The provisions in this rule do not limit any power of the
supreme court or of the intermediate court of appeals or of
a justice or judge thereof to stay proceedings during the
pendency of an appeal or to suspend, modify, restore, or
grant an injunction during the pendency of an appeal or to
make any order appropriate to preserve the status quo or
the effectiveness of the judgment subsequently to be
entered.
14
HRAP Rule 8 provides the appellate court with authority to not
require the posting of a bond or security to obtain a stay, as it states that
relief in the appellate courts “may be conditioned upon the filing of a bond
or other appropriate security in the court or agency appealed from.”
(continued . . .)
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“considerations that should guide appellate courts and judges
are the same as those applicable to the trial courts.” 11
Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal
Practice and Procedure § 2908, at 730 (2012).
While HRCP Rule 62(d) and (g) and HRAP Rule 8 are
silent as to the factors to be considered in determining the
appropriate amount of a supersedeas bond, our decision in
Midkiff v. de Bisschop, 58 Haw. 546, 574 P.2d 128 (1978), is
instructive, particularly in the absence of a money judgment.
In Midkiff, this court addressed the amount of a supersedeas
bond to stay enforcement of a writ of possession under prior
HRCP Rule 73(d) (repealed 1984).15 58 Haw. at 549-50, 574 P.2d
at 131. We stated that, when an appeal is from a judgment
(. . . continued)
(Emphasis added.) Federal Rules of Appellate Procedure Rule 8(a)(2)(E)
(2018), which similarly provides that the “court may condition relief on a
party’s filing a bond or other security in the district court,” has been held
to authorize the federal appellate courts to “stay a judgment pending appeal,
with or without bond.” Lightfoot v. Walker, 797 F.2d 505, 507 (7th Cir.
1986). We do not address the circuit court’s authority in this regard. See
generally 11 Wright, Miller, and Kane, supra, § 2905, at 720.
15
Former HRCP Rule 73(d) at that time provided as follows:
“When the judgment determines the disposition of the
property in controversy as in real actions, replevin, and
actions to foreclose mortgages or when such property is in
the custody of a duly authorized officer or when the
proceeds of such property or a bond for its value is in the
custody or control of the court, the amount of the
supersedeas bond shall be fixed at such sum only as will
secure the amount recovered for the use and detention of
the property, the costs of the action, costs on appeal,
interest, and damages for delay.”
Midkiff, 58 Haw. at 549-50, 574 P.2d at 131 (quoting former HRCP Rule 73(d)).
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awarding possession of land, this rule limits the bond amount to
the amount recoverable by the successful appellee for the
temporary deprivation of the use of the property.
Significantly, Rule 73(d) limits the amount of the bond to
the amount recoverable by Appellees in the event they are
successful in the appeal. The supersedeas bond stands as
security for the payment of this amount and cannot
otherwise be the foundation of a claim by appellees. When
the appeal is from a judgment awarding possession of land,
the cause of action of the successful appellee is to
recover for temporarily being deprived of the use of the
premises. Jenkins v. Morgan, 123 Utah 480, 260 P.2d 532
(1953); Annot., Measure and Amount of Damages Recoverable
Under Supersedeas Bond in Action Involving Recovery or
Possession of Real Estate, 9 A.L.R. 3d 330 (1966).
Id. at 550, 574 P.2d at 131. When setting a supersedeas bond
amount, Midkiff further explains, the court must determine what
damages for delay the appellee might reasonably be expected to
incur, which must be shown with adequate certainty in the event
the appeal is resolved in the appellee’s favor.
The assessment of such damages in an action upon a
supersedeas bond is necessarily subject to the general
rules that the extent of the appellee’s loss must be shown
with reasonable certainty and conclusions may not be
founded on speculation. Uyemura v. Wick, 57 Haw. 102, 551
P.2d 171 (1976).
Id. Additionally, the Midkiff court emphasized that in the
context of a judgment awarding possession of land, the bond
amount must not be used to discourage appeals. And, a bond
amount that unduly burdens the appellant and is unrelated to the
damages recoverable by the appellee if the appellee is
successful on appeal may be constitutionally defective.
The determination of the amount of a supersedeas bond which
will be sufficient to protect the rights of an appellee is
committed to the sound discretion of the circuit court, but
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this discretion is not unlimited. Moreover, the bond
requirement may not be used to discourage appeals. A
requirement, in a tenant’s appeal, of a supersedeas bond in
an amount unrelated to actual rent accrued and specific
damage sustained by the landlord has been held to be
constitutionally defective where the result was to burden
appealing tenants more greatly than other appellants.
Lindsey v. Normet, 405 U.S. 56, 92 S. Ct. 862, 31 L. Ed. 2d 36
(1972).
Id. (emphasis added). Thus, while determination of the bond
amount sufficient to protect the rights of the appellee is
within the court’s discretion, such discretion is constrained by
relevant considerations. Id.
We note that since Midkiff was decided, HRCP Rule
73(d) and its federal counterpart, Federal Rule of Civil
Procedure (FRCP) Rule 73(d) (repealed 1968), have been rescinded
in light of the adoption of the Hawaii Rules of Appellate
Procedure and the Federal Rules of Appellate Procedure (FRAP),
respectively.16 But even following its repeal, FRCP Rule 73(d)
has provided guidance to federal courts in the setting of the
amount of a supersedeas bond under FRCP Rule 62(d). See, e.g.,
Poplar Grove, 600 F.2d at 1191 (“Although the present [FRCP Rule
62(d)] does not by its terms precisely define the amount and
conditions of a supersedeas bond, it has been read consistently
with the earlier [FRCP Rule 73(d)].”); Tully v. Kerguen, 304 F.
16
See Friends of Makakilo v. D.R. Horton-Shuler Homes, LLC, 134
Hawaii 135, 140, 338 P.3d 516, 521 (2014) (stating that HRCP Rules 73 through
76 were deleted from the HRCP when the HRAP were first promulgated in 1984);
11 Wright, Miller & Kane, supra, § 2905, at 715 (noting that FRCP Rule 73(d)
was rescinded in 1968 when the FRAP were adopted).
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Supp. 1225, 1227 (D.V.I. 1969) (“Rule 8(b) of the Federal Rules
of Appellate Procedure, has superseded, but not annulled that
[former] Rule, and the law thereunder. Hence the law as above
stated has lost none of its validity or vitality.”); 11 Wright,
Miller & Kane, supra, § 2905, at 715 (“[F]ormer Rule 73(d)
described what always has been good practice on a supersedeas
bond, and . . . it is still a useful guide on these matters.”
(footnote omitted)); see also Asarco LLC v. Americas Mining
Corp., 419 B.R. 737, 741-42 (Bankr. S.D. Tex. 2009) (citing
Poplar Grove for its holding that prior FRCP Rule 73(d) provides
the general rule that applies to FRCP Rule 62(d)).
As with repealed FRCP Rule 73, former HRCP Rule 73 and
cases interpreting it have continued vitality and serve as
guidance to our courts when setting a supersedeas bond amount.
Specifically, Midkiff’s reasoning and the factors set forth in
former HRCP Rule 73(d) remain consonant with the purpose of
posting a supersedeas bond during appeals and determining its
amount in cases involving judgments that resolve the disposition
of property. In this regard, former HRCP Rule 73(d) expressly
provided several factors that continue to be appropriate for the
court’s consideration when setting a bond amount:
“When the judgment determines the disposition of the
property in controversy as in real actions, replevin, and
actions to foreclose mortgages . . . the amount of the
supersedeas bond shall be fixed at such sum only as will
secure the amount recovered for the use and detention of
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the property, the costs of the action, costs on appeal,
interest, and damages for delay.”
Midkiff, 58 Haw. at 549-50, 574 P.2d at 131 (quoting former HRCP
Rule 73(d)). As the purpose of setting a supersedeas bond is to
maintain the status quo and secure the appellee’s interest
during the appeal, when the judgment determines the disposition
of property--as in real actions or actions to foreclose
mortgages--a court should consider the amount recoverable for
the use and detention of the property, the costs of the action,
costs on appeal, interest, and damages for delay when setting a
supersedeas bond amount. Id. In considering such factors, a
trial court properly exercises its discretion to determine a sum
that is limited to the amount that will appropriately protect
the appellee during the appeal.
Further, as Midkiff recognizes, a trial court’s
discretion in setting a bond amount is not unlimited and the
bond requirement may not be used to discourage appeals. Id. at
550, 574 P.2d at 131. A court may thus be required to consider
additional factors bearing on the appropriateness of the bond
amount under the circumstances of a given case. Such factors
include, for example, any appealing party’s financial ability to
post the bond, the hardship to the parties,17 and the public
17
A supersedeas bond serves a “dual protection role” for both the
appellant and the appellee. Poplar Grove, 600 F.2d at 1191. Thus, in
(continued . . .)
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interest.18 See Azizian v. Federated Dep’t Stores, Inc., 499
F.3d 950, 961 (9th Cir. 2007) (noting that requiring security
for attorney’s fees under FRAP Rule 7 may be improper when
factors such as financial hardship indicate that a monetary bond
would unduly burden the party’s right to appeal); Olympia Equip.
Leasing Co., 786 F.2d at 798-99 (considering effect on
defendant’s other creditors if plaintiff were allowed to execute
judgment instead of accepting defendant’s alternative security
in lieu of full bond); Miami Int’l, 807 F.2d at 874 (concluding
that the district court did not err in granting a stay without a
full supersedeas bond when appellant did not have sufficient
assets to post full bond and execution on the judgment would
place appellant in insolvency).
Finally, a court has discretion to consider a reduced
bond or other forms of security aside from a full bond when
determining whether and in what amount a supersedeas bond is
necessary to maintain the status quo. See HRAP Rule 8(b)
(stating that a stay may be conditioned on other appropriate
(. . . continued)
determining a motion for stay pending appeal, the hardship to both parties is
to be considered by the court.
18
We note that a court’s discretion may also be limited by statute
or rule. HRAP Rule 8(b) (“If security is given in the form of a bond or
stipulation or other undertaking . . . the bond, stipulation, or undertaking
shall comply with applicable statutes[.]”); HRS § 607-26 (2016) (limit on
supersedeas bond).
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security); see also Poplar Gove, 600 F.2d at 1191 (a court has
discretion to approve substitute security that would equally
protect the judgment creditor if posting a full bond would
impose an undue financial burden on the judgment debtor); 11
Wright, Miller & Kane, supra, § 2905, at 716-17 (courts have
inherent power to provide for a bond in a lesser amount or to
permit security other than the bond). The burden to provide a
secure alternative to a bond rests with the appellant. See
Shanghai Inv. Co., 92 Hawaii at 503, 993 P.2d at 537.19
B. The Supersedeas Bond Amount in This Case
In this case, the circuit court set the amount of the
bond at $578,000 based on the tax assessed value of the property
($558,500) and the estimated costs of water, electricity, and ad
valorem taxes for two or more years ($20,000). The circuit
court also set forth a 30-day time frame in which Petitioners
were required to post the bond. The ICA reduced the bond amount
to $250,000 based on “evidence of the subject property’s tax-
assessed value and other factors and circumstances in the case”
and its conclusion that the bond “would adequately secure . . .
Kelepolo’s interest pending appeal.” The ICA did not elaborate
19
The family and district courts should also consider the foregoing
relevant factors, as appropriate, when ruling on a motion to stay the
enforcement of a judgment pursuant to Hawaii Family Court Rules Rule 62 or
District Court Rules of Civil Procedure Rule 62.
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as to the “other factors” it considered or provide any time
period for Petitioners to post the reduced bond amount.
The $250,000 bond amount set by the ICA is not based
on the amount that Kelepolo would reasonably be expected to
recover for being temporarily deprived of the use of the
property during the pendency of the appeal and any recoverable
appellate costs and damages related to the delay. Midkiff, 58
Haw. at 550, 574 P.2d at 131. Instead, the reasons provided by
the ICA to substantiate the bond amount are “evidence of the
subject property’s tax-assessed value” and “other factors and
circumstances in the case.” These reasons do not provide an
adequate basis for determining an amount that would be
appropriate to protect Kelepolo’s interest during the appeal.
Without additional information or evidence as to what comprised
the “other factors and circumstances in the case” that the ICA
considered when setting the bond amount, the bond amount of
$250,000 is arbitrary and cannot be sustained as an appropriate
amount based on consideration of the recoverable amount, “shown
with reasonable certainty,” that Kelepolo could expect to obtain
upon prevailing on appeal. Midkiff, 58 Haw. at 550, 574 P.2d at
131.
Specifically, there is no indication that the ICA
based the amount of the bond on any costs or damages that
Kelepolo would incur from being temporarily deprived of the use
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of the premises during the pendency of the appeal. Indeed, both
the ICA and the circuit court appear to have substantially
relied on the assessed value of the property in setting the
amount of the bond, which does not appear to bear any relation
to the amount that the appellee could expect to recover as a
result of a delay in enforcing the judgment upon a successful
appeal. The ICA and the circuit court should have considered
the property’s rental value, costs of the appeal, and damages
for delay that Kelepolo may have reasonably expected to sustain,
if any, during the appeal that could be established with
adequate certainty. Midkiff, 58 Haw. at 550, 574 P.2d at 131-
32. And while Kelepolo’s memorandum in opposition listed the
estimated costs of “maintenance, water, electricity, [and] ad
valorem taxes for two (or more) years” at $20,000, this number
alone clearly does not justify the ICA’s bond amount of
$250,000. The record is also silent regarding whether Kelepolo
intended to put the property on the market for sale and, if so,
whether there was any buyer at an offered sale price, or whether
Petitioners’ presence on the property was disrupting Kelepolo’s
ability to enjoy her property in other ways, other than loss
rent. There is also no indication that the ICA considered the
public interest, Petitioners’ ability to pay the bond amount, or
whether the amount would pose a hardship on Petitioners when
setting the amount.
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The Petition also indicates that Petitioners have been
unable to post a bond in the amount required by the ICA, and the
arbitrary amount of the bond could discourage Petitioners from
moving forward with the appeal if it imposes an undue burden
upon them. And the ICA’s stay order, which did not prevent
Kelepolo from immediately pursuing execution of the judgment,
could have also had the effect of frustrating Petitioners’
appeal. As we stated in Midkiff, the bond amount may not be
used to discourage appeals, and an amount that is unrelated to
the damages recoverable by the appellee if successful on appeal
and that burdens the appellant “more greatly” than other
appellants may be constitutionally flawed. 58 Haw. at 550, 574
P.2d at 131.
Additionally, the ICA’s failure to include a
reasonable time period in which Petitioners could post the bond
and thereby effectuate the stay also hindered the purpose of the
supersedeas bond. As stated in the ICA’s stay order, “The stay
will take effect upon the approval of the supersedeas bond by
this court.” The result of the ICA’s order is that no stay
would be in effect until the ICA accepted Petitioners’ bond.
See Shanghai Inv. Co., 92 Hawaii at 503, 993 P.2d at 537 (“[T]he
necessary implication is that without giving a supersedeas bond
or unless otherwise ordered by the Court, the order is not
stayed, even though an appeal is pending.” (quoting MDG Supply,
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Inc. v. Diversified Invs., Inc., 51 Haw. 375, 381, 463 P.2d 525,
529 (1969)). Kelepolo was therefore free to enforce the
judgment until such time as the court approved Petitioners’
bond. The ICA’s omission in not providing a reasonable time
period in which Petitioners could post the bond could have
undermined the purpose of the supersedeas bond. See Hackin v.
Superior Court, 425 P.2d 420, 421 (Ariz. 1967) (“Therefore, the
lower court, upon notice of appeal, should determine as quickly
as possible the amount of the supersedeas bond, stay execution
for a reasonable time to permit the party appealing to post the
bond, and thereby stay and preserve the status quo. Otherwise
the effect might be to render nugatory the purpose of the
supersedeas bond.”). The ICA therefore should have granted a
temporary stay to allow Petitioners a reasonable time period in
which to post a bond and effectuate the stay.
Accordingly, the ICA’s stay order is flawed in two
significant respects: (1) the amount of the supersedeas bond
appears to be arbitrary in not reflecting a rational basis for
an amount that would be in accordance with preserving the status
quo and adequately protecting Kelepolo’s interest during the
pendency of the appeal, and (2) the stay order lacked a
reasonable timeframe in which Petitioners would be required to
post the bond. Accordingly, it is clear that the ICA manifestly
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abused its discretion by not applying relevant factors under our
law in setting the supersedeas bond amount.
IV. CONCLUSION
Based on the foregoing, the petition for writ of
mandamus is granted. The ICA is directed to re-determine the
amount of the supersedeas bond of its August 15, 2018 stay order
in No. CAAP-XX-XXXXXXX and order a bond amount, as appropriate,
consistent with this opinion.
F. Steven Pang /s/ Mark E. Recktenwald
John Winnicki
for petitioners /s/ Paula A. Nakayama
Matson Kelley /s/ Sabrina S. McKenna
Alex Wilkins
for respondent /s/ Richard W. Pollack
/s/ Michael D. Wilson
29