Maui Harbor Shops, LP v. Octagon Corporation ( 2021 )

NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS OR THE PACIFIC REPORTER
Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
28-OCT-2021
07:53 AM
Dkt. 113 SO
NOS. CAAP-XX-XXXXXXX, CAAP-XX-XXXXXXX, CAAP-XX-XXXXXXX
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI#I
MAUI HARBOR SHOPS, LP, Plaintiff-Appellee,
v.
OCTAGON COPORATION, dba TREASURE ISLAND
ENTERTAINMENT CENTER, Defendant-Appellant
APPEAL FROM THE DISTRICT COURT OF THE SECOND CIRCUIT
WAILUKU DIVISION
(CIVIL NO. 17-1-001704)
SUMMARY DISPOSITION ORDER
(By: Hiraoka, Presiding Judge, Wadsworth and McCullen, JJ.)
These consolidated appeals arise out of a commercial
lease dispute between Defendant-Appellant Octagon Corporation
d/b/a Treasure Island Entertainment Center (Octagon) and
Plaintiff-Appellee Maui Harbor Shops, LP (MHS).1/
In CAAP-XX-XXXXXXX, Octagon appeals from the
January 30, 2018 order granting MHS's Ex Parte Motion for Default
Judgment in the amount of $120,309.51 (Default Judgment), entered
in the District Court of the Second Circuit, Wailuku Division
(District Court).2/
1/
On July 13, 2018, this court entered an order consolidating
appellate court case nos. CAAP-XX-XXXXXXX, CAAP-XX-XXXXXXX and CAAP-XX-XXXXXXX
under appellate court case no. CAAP-XX-XXXXXXX.
2/
The Honorable Blaine J. Kobayashi entered the Default Judgment.
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In CAAP-XX-XXXXXXX, Octagon appeals from the District
Court's:
(1) March 29, 2018 "Order Denying [Octagon's] Motion
for Reconsideration and Relief from Judgment Filed
on January 29, 2018";
(2) December 18, 2017 Judgment for Possession;
(3) March 29, 2018 "Order Denying [Octagon's] Motion
for Reconsideration and Relief from Default
Judgment Filed on February 9, 2018"; and
(4) Default Judgment.3/
In CAAP-XX-XXXXXXX, Octagon appeals from the District
Court's:
(1)May 1, 2018 "Order Granting [MHS's] Ex Parte
Motion for Writ of Execution"; and
(2) May 1, 2018 Writ of Execution.4/
On appeal, Octagon contends that the District Court
erred: (1) in entering judgment by default against Octagon when
the court allegedly lacked personal jurisdiction over Octagon
because it was not adequately served; (2) in entering judgment by
default against Octagon when the court allegedly lacked subject
matter jurisdiction over the action because the parties had
contractually limited the forum for any dispute to the "Second
Circuit Court"; (3) in entering judgment against Octagon when
there was no evidentiary basis for breach of the parties' lease
due to a force majeure clause in the lease; (4) in entering the
Default Judgment against Octagon ex parte, without a proof
hearing to determine the actual amount of any damages; and (5) in
entering the Default Judgment against Octagon when it exceeded
the amount requested in MHS's pleading. Octagon further contends
that each of the above alleged errors violated Octagon's federal
and state due process rights.
After reviewing the record on appeal and the relevant
legal authorities, and giving due consideration to the issues
3/
Judge Kobayashi also entered the identified orders and judgments
in CAAP-XX-XXXXXXX.
4/
The Honorable Kelsey T. Kawano entered the identified order and
writ in CAAP-XX-XXXXXXX.
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raised and the arguments advanced by the parties, we resolve
Octagon's contentions as follows:
(1) Octagon contends that the District Court lacked
personal jurisdiction over Octagon because Octagon "was not
served adequately by posting in the absence of the exercise of
due diligence" or, alternatively, that the District Court
erroneously denied an evidentiary hearing on the issue of MHS's
due diligence. MHS argues that the service by posting complied
with the court's order authorizing the manner of service, which
was issued pursuant to applicable state law.
On December 11, 2017, Octagon failed to appear before
the District Court to answer the October 20, 2017 "Complaint
(Assumpsit-Summary Possession/Landlord - Tenant, Damages)"
(Complaint). The District Court entered default against Octagon,
granted a judgment for possession and writ of possession, and
directed MHS to file an ex parte motion for damages. The
Judgment for Possession and Writ of Possession were entered on
December 18, 2017. On or about January 24, 2018, MHS submitted
its Ex Parte Motion for Default Judgment (Motion for Default
Judgment) to the District Court. The Default Judgment was signed
by the court on January 26, 2018, and entered on January 30,
2018.
Octagon first raised the personal jurisdiction issue in
its January 29, 2018 motion for reconsideration and relief from
judgment (First Motion for Reconsideration), which sought to set
aside the Judgment for Possession and Writ of Possession pursuant
to District Court Rules of Civil Procedure (DCRCP) Rules 4(d),
59(e) and 60(b)(4).5/ Octagon raised the personal jurisdiction
issue again in its February 9, 2018 motion for reconsideration
and relief from default judgment (Second Motion for
Reconsideration), which sought to set aside the Default Judgment
pursuant to the same DCRCP rules.
DCRCP Rule 59(e) motions for reconsideration are
reviewed under the abuse of discretion standard. Yoshimura v.
5/
We note that the First Motion for Reconsideration was not made
within ten days of the Judgment for Possession and Writ of Possession,
pursuant to DCRCP Rule 59(e). We thus construe the First Motion for
Reconsideration as a DCRCP Rule 60(b)(4) motion.
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Kaneshiro, 149 Hawai#i 21, 33, 481 P.3d 28, 40 (2021) (construing
Hawai#i Rules of Civil Procedure (HRCP) Rule 59(e); see Chen v.
Mah, 146 Hawai#i 157, 172, 457 P.3d 796, 811 (2020) ("The trial
court's ruling on a motion for reconsideration is reviewed under
the abuse of discretion standard." (quoting Kamaka v. Goodsill
Anderson Quinn & Stifel, 117 Hawai#i 92, 104, 176 P.3d 91, 103
(2008))). A trial court's denial of a motion under DCRCP Rule
60(b) is likewise reviewed under the abuse of discretion
standard. Citicorp Mortg., Inc. v. Bartolome, 94 Hawai#i 422,
428, 16 P.3d 827, 833 (App. 2000) (construing HRCP Rule 60(b)).
However, with respect to motions under DCRCP Rule 60(b)(4),
alleging that a judgment is void, this court has noted:
[T]he determination of whether a judgment is void is not a
discretionary issue. It has been noted that a judgment is
void only if the court that rendered it lacked jurisdiction
of either the subject matter or the parties or otherwise
acted in a manner inconsistent with due process of law.
Wright & Miller, Federal Practice and Procedure: Civil
§ 2862 (1973). . . .
Id. (quoting In re Hana Ranch Co., 3 Haw. App. 141, 146, 642 P.2d
938, 941-42 (1982)). Furthermore, when a party seeks to set
aside a default judgment due to improper service of process, it
raises a question of the trial court's jurisdiction, which is
reviewed de novo. See Wagner v. World Botanical Gardens, Inc.,
126 Hawai#i 190, 197, 268 P.3d 443, 450 (App. 2011) (citing
Citicorp Mortg., Inc., 94 Hawai#i at 430, 16 P.3d at 835).
The record reflects the following regarding service of
process in this case: MHS and Octagon, as landlord and tenant,
respectively, entered into the Lease for Maui Harbor Shops
(Lease), dated October 17, 2016, under which Octagon leased the
premises at 300 Ma#alaea Road, #1C/CS & 1E, Wailuku, Hawai#i (300
Ma#alaea Road Address). At all relevant times, Octagon was a
Nevada corporation and Dr. Jon Van Cleave (Van Cleave) was the
owner and President of Octagon. Van Cleave was also Octagon's
registered agent for service of process, with an address of 83
Kainehe Place, Kihei, HI 96753 (83 Kainehe Place Address).
On or about November 14, 2017, MHS submitted to the
District Court an Ex Parte Motion for Service of Process by
Posting and by Certified Mail (Motion re Service). The Motion re
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Service listed three "Attempted Service Dates" — October 30,
November 3, and November 8, 2017 — for service of process on
Octagon, via its "registered agent . . . Van Cleave," at the 83
Kainehe Place Address. The Motion re Service cited Hawaii
Revised Statutes (HRS) § 666-8 (quoted infra) and was supported
by a process server's declaration, dated November 9, 2017. The
process server's declaration stated in relevant part:
I attempted service on the Attempted Service Dates at the
. . . Other Address(es) listed on page 1 [ i.e., the 83
Kainehe Place Address], that are the only known address(es)
for Defendant(s). I have checked the telephone directory of
this circuit and I have not been able to find any other
address for Defendant(s). Despite my efforts, I have not
been able to locate and serve said Defendant(s). I am
informed and believe that Defendant(s) continues to reside
and/or do business in the State of Hawai#i but is avoiding
service of process.
On November 20, 2017, the District Court filed its
order granting the Motion re Service (Order re Service), which
stated in relevant part:
NOW, THEREFORE, YOU ARE COMMANDED to leave certified
copies of this Motion and the Complaint for Summary
Possession with some agent or employee of Defendant(s),
provided an agent or employee can be found upon the premises
or elsewhere within the circuit, and also to affix in a
conspicuous place upon the certain premises located at
Premises Address listed on page 1, certified copies of this
Motion and the Complaint for Summary Possession, such
posting to be not less than ten (l0) days before the return
date, and make due return of this Order with what you have
done endorsed thereon.
IT IS FURTHER ORDERED that Plaintiff send to
Defendant(s), by certified mail, return-receipt requested,
certified copies of this Motion and the Complaint for
Summary Possession and file in these proceedings a
declaration of the certified mail in the appropriate form.
(Emphasis omitted.)
On November 30, 2017, MHS filed two returns of service
both indicating that Octagon had been "[s]erved by [p]osting per
Court Order." The first return of service stated that the
Complaint, Motion re Service, and other documents were posted at
the 300 Ma#alaea Road Address on November 22, 2017, and included
photographs that appeared to show the posting on the door of the
premises. The second return of service stated that the
Complaint, Motion re Service, and other documents were posted at
the 83 Kainehe Place Address on November 22, 2017, and included
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photographs that appeared to show the posting on the door of a
residential property. Additionally, a later declaration and
supporting exhibits filed by counsel for MHS showed that counsel
had sent, via certified mail on November 20, 2017, a copy of the
"Summons and Complaint" to Van Cleave at the 83 Kainehe Place
Address, which mail apparently went unclaimed for some weeks
before being returned to sender on January 4, 2018.
Under Hawai#i law,
it is service of process, not actual knowledge of the
commencement of the action which confers jurisdiction.
Otherwise a defendant could never object to the sufficiency
of service of process, since he must have knowledge of the
suit in order to make such objection. . . . The crux of the
matter is not whether [a] defendant has knowledge of the
action but whether it has been put to the defendant, in the
proper way, that he must appear and defend or be in default.
Tropic Builders, Ltd. v. Naval Ammunition Depot Lualualei
Quarters, Inc., 48 Haw. 306, 319, 402 P.2d 440, 448-49 (1965)
(emphasis added; footnote omitted). Notice of an action "must be
of such nature as reasonable to convey the required information.
If with due regard for the practicalities and peculiarities of
the case these conditions are reasonably met, the constitutional
requirements [of due process] are satisfied." Applications of
Herrick, 82 Hawai#i 329, 343, 922 P.2d 942, 956 (1996) (quoting
Klinger v. Kepano, 64 Haw. 4, 10, 635 P.2d 938, 942 (1981)).
DCRCP Rule 4(d)(3)6/ provides that a summons and
6/
DCRCP Rule 4 states, in relevant part:
(d) [Summons]: Personal service. The summons and
complaint shall be served together. The plaintiff shall
furnish the person making service with such copies as are
necessary. Service shall be made as follows:
. . . .
(3) Upon a domestic or foreign corporation or upon a
partnership or other unincorporated association which is
subject to suit under a common name, by delivering a copy of
the summons and of the complaint to an officer, a managing
or general agent, or to any other agent authorized by
appointment or by law to receive service of process and, if
the agent is one authorized by statute to receive service
and the statute so requires, by also mailing a copy to the
defendant.
. . . .
continued . . .
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complaint shall be served together upon a corporation "by
delivering a copy of the summons and of the complaint to an
officer, a managing or general agent, or to any other agent
authorized by appointment or by law to receive service of process
and, if the agent is one authorized by statute to receive service
and the statute so requires, by also mailing a copy to the
defendant." Under DCRCP Rule (4)(d)(8), when a defendant is a
corporation, "it is also sufficient if the summons and complaint
are served in the manner prescribed by any statute." (Emphasis
added.)
One such manner of service is prescribed in HRS § 666-8
(2016), which addresses service of process in summary possession
proceedings. Section 666-8 states, in relevant part:
Service. The summons shall be served as provided by
the rules of court.
. . . .
If any defendant cannot be served with process within
the State, and the facts shall appear by affidavit or
otherwise to the satisfaction of the court, service as to
such defendant may be made according to the special order of
the court, but such order shall in any case include a
direction to the officer to leave a certified copy of the
complaint and summons with some agent or employee of mature
years of the defendant, provided the agent or employee can
be found upon the premises or elsewhere within the circuit,
and also to affix in a conspicuous place upon the premises
(as upon the wall of any store, shop, dwelling, or other
building thereon, and if there is no such building, then
upon some other permanent object thereon, as a tree or
fence) a certified copy of the complaint and summons. The
order shall further require that a certified copy of the
complaint and summons be sent to the defendant by certified
or registered mail, postage prepaid, unless it is shown by
affidavit or otherwise to the satisfaction of the court that
the address of the defendant is unknown and cannot be
ascertained.
Here, Octagon argues that "no attempt at adequate
service was even made." The record shows, however, MHS's
repeated efforts to serve Octagon through its registered agent
for service of process, Van Cleave, pursuant to DCRCP Rule
. . . continued
(8) Upon a defendant of any class referred to in
paragraph (1) or (3) of this subdivision of this rule, it is
also sufficient if the summons and complaint are served in
the manner prescribed by any statute.
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4(d)(3).7/ After those efforts proved unsuccessful, MHS filed the
Motion re Service pursuant to HRS § 666-8. The District Court
granted the motion and ordered MHS to serve process on Octagon by
posting and certified mail, as authorized by DCRCP Rule 4(d)(8)
and HRS § 666-8. MHS complied with the Order re Service. On
this record, we conclude that service on Octagon was sufficient
under DCRCP Rule 4(d)(8) and HRS § 666-8.
Octagon contends that service by posting violated its
rights under paragraph 29.5 of the Lease.8/ However, by its
terms, Paragraph 29.5 of the Lease did not address service of
process. Moreover, the manner of service of process was governed
by Hawai#i law, not the Lease. Here, as discussed above, MHS
complied with the Order re Service, which was issued pursuant to
applicable Hawai#i law.9/
7/
MHS's efforts to serve Octagon through Van Cleave were also made
in accordance with the requirements of HRS § 414-64, which governs service of
process upon a corporation. See HRS § 414-64(a) ("Service of any notice or
process authorized by law issued against any corporation, whether domestic or
foreign, by any court . . . may be made in the manner provided by law upon any
registered agent, officer, or director of the corporation who is found within
the jurisdiction of the court . . . .").
8/
Paragraph 29.5 of the Lease states:
Notice. Any notice, consent or approval required to
be given under this Agreement shall be in writing and shall
be deemed to have been given (i) upon hand delivery, (ii)
one (1) Business Day after being deposited with Federal
Express or another reliable overnight courier service for
next day delivery, (iii) upon facsimile transmission with
confirmation (except that if the date of such transmission
is not a Business Day or if such transmission is made after
5:00 p.m. (Hawaii Standard Time) on a Business Day, then
such notice shall be deemed to be given on the first (1st)
Business Day following such transmission), or (iv) three (3)
Business Days after being deposited in the United States
mail, registered or certified mail, postage prepaid, return
receipt required, addressed to Landlord [MHS] or Tenant
[Octagon] at the addresses set forth in the Specific
Provisions. "Business Days" means Mondays to Fridays, other
than federal and State of Hawaii holidays. Either party
hereto may change its address by giving notice of such
change in the above manner to the other party.
The "Specific Provisions" of the Lease list Octagon's address as 1215 South
Kihei Road, Suite O-233, Kihei, HI 96753.
9/
We note that Octagon's opening brief at page 14 cites an
unpublished memorandum opinion issued by the Hawai #i Supreme Court in 2005.
The citation to this 2005 decision violates Hawai #i Rules of Appellate
Procedure (HRAP) Rule 35(c)(1) (2008) because: the cited case was decided
continued . . .
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Octagon argues in the alternative that the District
Court erroneously denied an evidentiary hearing as to whether MHS
exercised due diligence in serving Octagon. However, Octagon did
not establish the need for such a hearing in these circumstances,
where MHS complied with the Order re Service, as well as Hawai#i
law regarding the manner of service.
On this record, we conclude that the District Court had
personal jurisdiction over Octagon in the underlying action.
Accordingly, the District Court did not err in denying Octagon's
First Motion for Reconsideration to the extent Octagon contended
that the court lacked personal jurisdiction to enter the Judgment
for Possession and the Writ of Possession. Similarly, the
District Court did not err in denying Octagon's Second Motion for
Reconsideration to the extent Octagon contended that the court
lacked personal jurisdiction to enter the Default Judgment.
(2) Octagon contends that the District Court lacked
subject matter jurisdiction over this action because MHS had
waived its right to a District Court adjudication of any Lease
dispute and instead agreed to the jurisdiction of the Circuit
Court of the Second Circuit. MHS argues that the District Court
had subject matter jurisdiction under both the Lease and state
statute.
"The existence of jurisdiction is a question of law
that we review de novo under the right/wrong standard. Questions
regarding subject matter jurisdiction may be raised at any stage
of a cause of action. . . . A judgment rendered by a circuit
court without subject matter jurisdiction is void." Ocean Resort
Villas Vacation Owners Ass'n v. County of Maui, 147 Hawai#i 544,
552, 465 P.3d 991, 999 (2020) (quoting Amantiad v. Odum, 90
Hawai#i 152, 159, 977 P.2d 160, 167 (1999)).
"It is well-settled that subject-matter jurisdiction
cannot be conferred upon a court by agreement, stipulation, or
. . . continued
prior to July 1, 2008; it does not establish the law of this case; it does not
have res judicata or collateral estoppel effect in this case; and this case is
not a criminal action or proceeding involving "the same respondent." HRAP
Rule 35(c)(1). The unpublished decision should not have been cited, and
Octagon's counsel is therefore cautioned to comply with HRAP Rule 35(c).
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consent of the parties." Cvitanovich-Dubie v. Dubie, 125 Hawai#i
128, 141, 254 P.3d 439, 452 (2011) (brackets omitted) (quoting
Gilmartin v. Abastillas, 10 Haw. App. 283, 292, 869 P.2d 1346,
1351 (1994)). Rather, HRS § 666-6 (2016) provides that "[i]n the
case of summary possession proceedings, the person entitled to
the possession of the premises shall bring and prosecute the
person's action in the district court of the circuit wherein the
lands and premises in question are situated." The Hawai#i
Supreme Court has also made clear that so long as no issue as to
title is properly raised, jurisdiction over summary possession
actions lies in the district courts. See, e.g., Kimball v.
Lincoln, 72 Haw. 117, 125, 809 P.2d 1130, 1134 (1991)
("Jurisdiction over summary possession actions lies in the
district court, not the circuit court. HRS § 666–6."); Deutsche
Bank Nat. Trust Co. v. Peelua, 126 Hawai#i 32, 34 n.8, 265 P.3d
1128, 1130 n.8 (2011).
Here, the Complaint initiated a summary possession
proceeding. The Complaint alleged, among other things: "[MHS]
is the landlord or the agent for the landlord of the property";
"[t]he premises is located in this division of this Court"; "[a]
copy of the written rental agreement for the premises . . . is
attached"; and "[Octagon] has broken the rental agreement" due to
unpaid rent and other fees. The Complaint sought in part "[a]
Judgment giving [MHS] possession of the premises."
On this record, we conclude that the District Court had
subject matter jurisdiction over this summary possession action.
Accordingly, the District Court did not err in denying Octagon's
First Motion for Reconsideration to the extent Octagon contended
that the court lacked subject matter jurisdiction to enter the
Judgment for Possession and the Writ of Possession. Similarly,
the District Court did not err in denying Octagon's Second Motion
for Reconsideration to the extent Octagon contended that the
court lacked subject matter jurisdiction to enter the Default
Judgment.
(3) Octagon contends that the District Court lacked an
evidentiary basis for entering judgment, because a force majeure
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clause in the Lease10/ constituted a defense to its enforcement
for any payment default by Octagon on or after October 1, 2017.
Alternatively, Octagon contends that the District Court
erroneously denied an evidentiary hearing regarding this alleged
defense. MHS argues that the force majeure clause did not apply
under the circumstances, where Octagon "made its own choice to
use the gambling equipment . . . [that] led to scrutiny from the
local authorities and ultimate shutdown of the business."
Octagon first raised its purported force majeure
defense in the First Motion for Reconsideration and raised the
same issue again in the Second Motion for Reconsideration. The
entirety of Octagon's argument in the First Motion for
Reconsideration was as follows:
3. There Was No Default.
The Lease Agreement of the parties specifically
provides that in "Force Majeure" circumstances beyond the
control of the lessee as happened here, Declaration of Van
Cleave, Paragraphs 4, 5, and 6, Exhibit 1, Paragraph 29.4,
the obligation to pay rent is abated during the period of
delay.
The Second Motion for Reconsideration repeated the same argument
verbatim, under the heading: "3. There Was No Default by
Defendant Octagon." Both motions relied on a declaration signed
by Van Cleave, which stated in relevant part that "the local
police, without notice, raided my shop and seized all of my
arcade and entertainment equipment, . . claiming that I was
running a gambling house, even though that was not the case
10/
Paragraph 29.4 of the Lease stated:
Force Majeure. If either party shall be delayed or
hindered or prevented from the performance of any act
required under this Lease by reason of strikes, lockouts,
labor troubles, inability to procure materials, severe
weather, fire, restrictive laws or regulations, riots,
insurrections, war or other reason of a like nature not at
the fault of such party, then performance of such act shall
be excused for the period of the delay and the period for
the performance of such act shall be so extended; provided
however, that this provision shall not operate to excuse
[Octagon] from the payment of rent or any other payments
required hereunder after 60 day grace period after the
period of delay. If there is no agreement after this grace
period on payments due than [sic] [MHS] has the option to
terminate the lease.
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. . . ." Van Cleave further stated that he and his attorney had
notified MHS "that due to the above described events beyond my
corporation's control, Defendant Octagon was invoking the Force
Majeure . . . condition subsequent in the Lease Agreement
. . . ."
We conclude that Octagon's First and Second Motions for
Reconsideration did not meet the applicable requirements for
setting aside a default judgment. Octagon was required to meet
the three-prong test applicable to motions to set aside default
judgments under HRCP Rule 60(b), which requires a showing that
"(1) the nondefaulting party will not be prejudiced by the
reopening, (2) that the defaulting party has a meritorious
defense, and (3) that the default was not the result of
inexcusable neglect or a wilful act." Chen, 146 Hawai#i at 173,
457 P.3d at 812 (quoting BDM, Inc. v. Sageco, Inc., 57 Haw. 73,
76, 549 P.2d 1147, 1150 (1976));11/ see M Pocket Corp. v. Shanghai
Shanghai, LLC, CAAP-XX-XXXXXXX, 2018 WL 6629650, *5 (Haw. App.
Dec. 19, 2018) (SDO) (applying the same three-prong test to a
DCRCP Rule 60(b) motion to set aside a judgment for possession).
In addition, the burden was on Octagon to establish that each
prong had been satisfied. See Chen, 146 Hawai#i at 174, 457 P.3d
at 813 (citing In re RGB, 123 Hawai#i 1, 17, 229 P.3d 1066, 1082
(2010)). If Octagon failed to meet any one prong of the test,
the District Court did not abuse its discretion in refusing to
set aside the judgments at issue. See Citicorp Mortg., Inc., 94
Hawai#i at 439, 16 P.3d at 844.
Here, Octagon made no argument below, and makes none on
appeal, regarding the first and third prongs of the applicable
test, i.e., that MHS would not have been prejudiced had the
Judgment for Possession and the Default Judgment been set aside,
11/
In Chen, the Hawai#i Supreme Court held, prospectively, that
motions to set aside entry of default are governed only by the "good cause"
standard explicitly stated in HRCP Rule 55(c), and need not satisfy the
three-prong test enunciated in BDM, 57 Haw. at 76, 549 P.2d at 1150. See
Chen, 146 Hawai#i at 160, 457 P.3d at 799. Here, Octagon did not invoke Rule
55(c) in its First and Second Motions for Reconsideration. Even if it had,
the holding in Chen "applies only to decisions on motions to set aside entry
of default under HRCP Rule 55(c) after the date of this opinion[,]" which was
issued on January 30, 2020. Id. at 177, 457 P.3d at 816. The orders and
judgments at issue in this case were entered well before that date.
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and Octagon's default was not the result of inexcusable neglect
or a wilful act.12/ Without such findings, Octagon was not
entitled to set aside the Judgment of Possession and the Default
Judgment. See M Pocket Corp., 2018 WL 6629650, at *5 (citing
Citicorp Mortg., 94 Hawai#i at 439, 16 P.3d at 844); see also
HRAP Rule 28(b)(7) (points not argued may be deemed waived).
Even with respect to the second prong, Octagon
presented no argument to the District court as to why the police
"raid" described in Van Cleave's declaration qualified as a force
majeure under Paragraph 29.4 of the Lease so as to excuse
Octagon's payment obligations under the Lease. In short, Octagon
did not provide a sufficient legal basis for the District Court
to conclude that Octagon had a meritorious defense to the
Complaint, and it did not establish the need for an evidentiary
hearing in these circumstances.
Accordingly, we conclude that the District Court did
not abuse its discretion in denying the First and Second Motions
for Reconsideration and in refusing to set aside the Judgment for
Possession and the Default Judgment based on Octagon's alleged
force majeure defense.
(4) Octagon contends that the District Court "lacked
the ability to enter a six-figure default judgment ex parte,
without a proof hearing to determine the actual amount of
damages[,] if any." Octagon also cites several cases for the
proposition that due process requires notice and an opportunity
to be heard, and concludes that notice and hearing were not
provided here, where "Octagon was not properly served with the
summons and complaint to begin with." MHS contends that the
District Court properly entered the Default Judgment even without
a proof hearing because Octagon had failed to appear to defend
and raise any defenses, and was already in default.
DCRCP Rule 55 provides, in relevant parts:
12/
For example, there is no apparent dispute that Van Cleave was
Octagon's registered agent for service of process at the 83 Kainehe Place
Address. However, Octagon failed to provide any explanation for why repeated
attempts to serve Van Cleave at that address were unsuccessful, or why posting
at that address was not an effective means of service.
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DEFAULT.
(a) Entry. When a party against whom a judgment for
affirmative relief is sought has failed to plead or
otherwise defend as provided by these rules, and the fact is
made to appear by affidavit or otherwise, the clerk shall
enter that party's default.
(b) Judgment. Judgment by default may be entered as
follows:
. . . .
(2) BY THE COURT. In all other cases the party
entitled to a judgment by default shall apply to the court
therefor. If, in order to enable the court to enter
judgment or to carry it into effect, it is necessary to take
an account or to determine the amount of damages or to
establish the truth of any averment by evidence or to make
an investigation of any other matter, the court may conduct
such hearings as it deems necessary and proper.
(Emphases added.)
DCRCP Rule 5 provides, in relevant part:
SERVICE AND FILINGS OF PLEADINGS AND OTHER PAPERS.
(a) Service: When required. Except as otherwise
provided in these rules, every order required by its terms
to be served, every pleading subsequent to the original
complaint unless the court otherwise orders because of
numerous defendants, every written motion other than one
which may be heard ex parte, and every written notice,
appearance, demand, brief or memorandum of law, offer of
judgment, bill of costs, designation of record on appeal,
and similar paper shall be served upon each of the parties,
but no service need be made on parties in default for
failure to appear, except that pleadings asserting new or
additional claims for relief against them shall be served
upon them in the manner provided for service of summons in
Rule 4.
(Emphases added.) DCRCP Rule 5(a) thus provides two exceptions
to the general rule requiring service upon each of the parties:
for a motion that may be heard ex parte, and upon a party in
default for failure to appear.
Here, as previously discussed, Octagon was served per
the Order re Service and failed to appear and answer on
December 11, 2017. The District Court entered default against
Octagon and directed MHS to file an ex parte motion for damages.
Under DCRCP Rule 55(a), the entry of default was proper when
Octagon failed to appear, plead, or otherwise defend. For the
reasons set forth in Section (1), we reject Octagon's argument
that it was not properly served.
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On or about January 24, 2018, MHS submitted its Motion
for Default Judgment to the District Court. The motion detailed
MHS's requested judgment in the amount of $120,309.51,
comprising: a principal amount (due under the Lease), attorney's
fees, filing fee, service fee, and other costs. The motion was
supported by a continuation sheet that: (1) provided the factual
background of the case, including Octagon's alleged breach of the
Lease and the addendum to the Lease; and (2) itemized the amounts
that went into determining the principal amount, including, inter
alia, rent, shared marketing expenses, taxes, utilities, and late
fees, which were offset in-part by a credit to Octagon for
payment already made by Octagon. As supporting exhibits, the
Motion for Default Judgment included a copy of the Lease and the
addendum to the Lease, an accounting ledger, and a declaration
regarding attorneys' fees and costs. The Motion for Default
Judgment did not assert any new or additional claims for relief
against Octagon. Thus, under DCRCP Rule 5(a), the Motion for
Default Judgment did not require service, because it was a motion
that could be heard ex parte,13/ and was brought against a party
that was in default for failure to appear, and did not assert any
new or additional claims for relief against the defaulted party.
Given the record and the circumstances of this case, we
conclude there was no due process violation. The District Court
did not abuse its discretion in denying the Second Motion for
Reconsideration to the extent Octagon contended that the Default
Judgment was improperly entered without a proof hearing.
(5) Octagon contends that the District Court "lacked
the ability to enter a six-figure default judgment [that]
13/
Under DCRCP Rule 55(b)(2), the District Court had authority to
direct the filing of an ex parte motion to determine damages. Compare DCRCP
Rule 55(b)(2) ("If, in order to enable the court to enter judgment or to carry
it into effect, it is necessary to take an account or to determine the amount
of damages . . ., the court may conduct such hearings as it deems necessary
and proper.") with HRCP Rule 55(b)(2) ("If a party against whom judgment by
default is sought has appeared in the action, the party . . . shall be served
with written notice of the application for judgment at least 3 days prior to
the hearing on such application. If, in order to enable the court to enter
judgment or to carry it into effect, it is necessary to take an account or to
determine the amount of damages . . ., the court may conduct such hearings as
it deems necessary and proper and shall accord a right of trial by jury to the
parties when and as required by any statute.").
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exceeded the amount requested in [the Complaint]." Octagon
contrasts the final Default Judgment amount of $120,309.51 with
the amount of "$58,171.35" specified as "[u]npaid rent" in the
Complaint.
DCRCP Rule 54(c) provides, in pertinent part:
JUDGMENTS; COSTS.
. . . .
(c) Demand for judgment. A judgment by default shall
not be different in kind from or exceed in amount that
prayed for in the demand for judgment.
See In re Genesys Data Techs., Inc., 95 Hawai#i 33, 38, 18 P.3d
895, 900 (2001) (construing analogous HRCP Rule 54(c)).
Here, the Complaint specified "[u]npaid rent
$58,171.35" and specifically prayed for that amount in the demand
for judgment. However, the Complaint also identified "[o]ther
[l]egal fees, cost of collection, [and] late fees" in connection
with the alleged breach of the Lease. The Complaint's demand for
judgment sought, among other things:
C. Judgment against [Octagon] for $58,171.35.
In addition, the Court may award additional rent and
other charges owed under the rental agreement,
damages, court costs, interest, and reasonable
attorney's fees.
Thus, the Complaint's demand for judgment was not limited to
$58,171.35.
Consistent with this demand, MHS's later Motion for
Default Judgment requested judgment in the amount of $120,309.51,
supported by the detail and documentation discussed above in
Section (4). All of the itemized amounts specified by MHS
related, variously, to the "[l]egal fees, cost of collection,
late fees" or "additional rent and other charges owed under the
rental agreement, damages, court costs, interest, and reasonable
attorney's fees," all prayed for in the Complaint. Thus, the
final Default Judgment amount of $120,309.51 did not exceed the
amount prayed for in the Complaint. See Henry v. Sneiders, 490
F.2d 315, 317 n.2 (9th Cir. 1974) (per curiam) (construing
Federal Rules of Civil Procedure Rule 54(c) and holding that a
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default judgment for $235,338.39 did not exceed the amount prayed
for where the complaint requested "judgment . . . in the sum of
$71,243.68 . . . and for [p]laintiff's other damages as are
proved at the time of trial, together with interest and costs");
see also Genesys Data, 95 Hawai#i at 42, 18 P.3d at 904(regarding HRCP Rule 9(g), "there is no requirement that any
specific amount be alleged, and the purposes of both HRCP Rules
9(g) and 54(c) are met where the 'plaintiff states the nature of
the injury . . . and sets forth the specific elements of damages
for which he seeks judgment' such that the defendant can make a
reasonably informed judgment as to whether to actively defend the
action" (emphasis omitted) (quoting Melehes v. Wilson, 774 P.2d
573, 579–80 (Wyo. 1989))).
On this record, we conclude that the $120,309.51
judgment amount was not "different in kind from" and did not
"exceed in amount that prayed for in the demand for judgment."
DCRCP Rule 54(c). Accordingly, the District Court did not abuse
its discretion in denying the Second Motion for Reconsideration
to the extent Octagon contended that the Default Judgment
exceeded the amount requested in the Complaint.
(6) Octagon further contends that "all five errors
above by the State District Court . . . created a series of
compounding due process violations, denying Octagon its freedom
of contact, its written contractual rights, and its procedural
due process rights to notice and a hearing before suffering
financial forfeitures."
Initially, we note that this omnibus argument was not
raised below and is thus waived on appeal. See State v.
Gonzalez, 128 Hawai#i 314, 317, 288 P.3d 788, 791 (2012); State
v. Moses, 102 Hawai#i 449, 456, 77 P.3d 940, 947 (2003).
Regardless, for the reasons previously discussed, the argument is
without merit.
For the reasons discussed above, we affirm the
following orders and judgments, entered in the District Court of
the Second Circuit, Wailuku Division: (1) the December 18, 2017
Judgment for Possession; (2) the December 18, 2017 Writ of
Possession; (3) the January 30, 2018 order granting the Ex Parte
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Motion for Default Judgment; (4) the March 29, 2018 "Order
Denying [Octagon's] Motion for Reconsideration and Relief from
Judgment Filed on January 29, 2018"; (5) the March 29, 2018
"Order Denying [Octagon's] Motion for Reconsideration and Relief
from Default Judgment Filed on February 9, 2018"; (6) the May 1,
2018 Order Granting [MHS's] Ex Parte Motion for Writ of
Execution; and (7) the May 1, 2018 Writ of Execution.
DATED: Honolulu, Hawai#i, October 28, 2021.
On the briefs:
/s/ Keith K. Hiraoka
Gary Victor Dubin and Presiding Judge
Frederick J. Arensmeyer
(Dubin Law Offices)
for Defendant-Appellant. /s/ Clyde J. Wadsworth
Associate Judge
Loren K. Tilley and
Magdalena Bajon
(Merchant Horovitz & Tilley) /s/ Sonja M.P. McCullen
for Plaintiff-Appellee. Associate Judge
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