Chang v. Buffington

256 P.3d 694, 125 Haw. 186, 2011 Haw. LEXIS 152
CourtHawaii Supreme Court
DecidedJuly 13, 2011
Docket30259
StatusPublished
Cited by4 cases

This text of 256 P.3d 694 (Chang v. Buffington) is published on Counsel Stack Legal Research, covering Hawaii Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Chang v. Buffington, 256 P.3d 694, 125 Haw. 186, 2011 Haw. LEXIS 152 (haw 2011).

Opinions

Opinion of the Court by

RECKTENWALD, C.J.

In this appeal, we consider whether the Intermediate Court of Appeals had jurisdiction to review a good faith settlement determination, which was made by a federal bankruptcy court prior to the ease being remanded to state court.

Eadean Michie Buffington seeks review of the Intermediate Court of Appeals’ June 4, 2010 order dismissing Buffington and Integrity Escrow and Title Company, Inc.’s1 appeal for lack of appellate jurisdiction. Buff-ington and Integrity appealed pursuant to Hawai'i Revised Statutes § 663-15.5(e) (Supp. 2009), quoted infra, from an order entered by the federal bankruptcy court determining that a settlement of tort claims was made in good faith. They filed their notices of appeal in the circuit court, after the case had been remanded to that court. The Intermediate Court of Appeals dismissed the appeal for lack of appellate jurisdiction for three reasons: (1) one of the defendants in the tort action was in bankruptcy; (2) the bankruptcy court’s good faith settlement order was not in the record on appeal; and (3) Hawai'i Revised Statutes §§ 602-57 and 663-15.5(e) do not authorize an appeal to a Hawai'i appellate court from a good faith settlement determination made by a federal court.

For the reasons set forth below, we hold that the Intermediate Court of Appeals had jurisdiction. Accordingly, we vacate the Intermediate Court of Appeals’ dismissal order and remand to the Intermediate Court of Appeals for further proceedings consistent with this opinion.

I. Background

A. Factual and procedural background

The following facts are taken from the record on appeal (ROA), which includes all documents filed in the Circuit Court of the [188]*188First Circuit (circuit court) before the ease was l’emoved to the United States Bankruptcy Court for the District of Hawaii (bankruptcy court), including the third amended complaint, and documents filed in circuit court after the case was remanded, discussed further infra.2

On September 23, 2005, the Walter Y.C. Chang Trust, Walter Y.C. Chang, and Sylvia S.W. Chang (collectively the Changs) filed a Complaint for Foreclosure and Other Relief in Civil No. 05-1-1708 (the foreclosure action) in circuit court. The Changs filed their first, second, and third amended complaints in the circuit court. According to the third amended complaint, the subject of the foreclosure action was a Middle Street apartment building that the Changs sold in 2003 to Steve Crouch and Naomi Crouch (the Crouches). The sale was by way of a purchase money mortgage executed by Ho-kulani Square, Inc., a corporation of which the Crouches were the only directors, officers, and shareholders. Hokulani Square subsequently mortgaged the Middle Street building to secure a $1.9 million loan from Investors Funding Corporation (Investors Funding) and purchased commercial property on School Street. Investors Funding’s mortgage on the Middle Street property was elevated over the Changs’ purchase money mortgage on the property via a subordination agreement that the Crouches allegedly secured from the Changs.

The Changs’ third amended complaint alleged, inter alia, that the Crouches and Ho-kulani Square were in default of the purchase money mortgage. The third amended complaint further alleged that the sale of the Middle Street building and the execution of the subordination agreement were the result of undue influence and/or fraud, and a breach of fiduciary duty by the Changs’ attorney, Eadean Buffington (Buffington). The complaint sought, inter alia, prioritizing of the Changs’ claims to the Middle Street and School Street properties, an equitable lien on the Middle and School Street properties, and damages against the Crouches, Hokulani Square, and Buffington.

On May 10, 2007, Hokulani Square filed a petition for bankruptcy in bankruptcy court. On October 11, 2007, Hokulani Square l’e-moved the Changs’ circuit court action to the bankruptcy court as an adversary proceeding.3 In the adversary proceeding, Integrity was added as a third party defendant.

B. The good faith settlement determination

On July 21, 2009, in the adversary proceeding, the Changs filed a notice of settlement with Investors Funding, among other parties, and petitioned the bankruptcy court for a determination, pursuant to Hawaii Revised Statutes (HRS) § 663-15.5(b),4 that the set [189]*189tlement was made in good faith. The bankruptcy court issued an order on December 2, 2009 granting the Changs’ petition pursuant to HRS § 663-15.5.5 The order stated in relevant part:

This order does not decide whether the Uniform Contribution among Tortfeasors Act [HRS] § 663-ll-663.17[sie]) applies to any of the claims in this ease. This order does decide, however, that the settlement was made in good faith within the meaning of [HRS] § 663-15.5.

C. Appeal and remand to circuit court

On December 10, 2009, pursuant to HRS § 663-15.5(e),6 Buffington and Integrity appealed the bankruptcy court’s December 2, 2009 good faith settlement determination in the adversary proceeding. Buffington and Integrity also filed statements electing to have their appeals heard by the United States District Court for the District of Hawai'i (district court).7

On December 16, 2009, while the appeal to the disti’ict court was pending, the bankruptcy court filed its Order Remanding Adversary Proceeding to State Court. The bankruptcy court’s order remanding the adversary proceeding provided:

On October 11, 2007, Debtor Hokulani Square, Inc., removed this action, Civil No. 05-1-1708-09, from the Circuit Court of the First Circuit, State of Hawaii, pursuant to 28 U.S.C. § 1452(a).8 On April 13, 2009, the court entered an Order Regarding Remand of This Adversary Proceeding, setting a deadline of May 15, 2009, for a party to file a motion to withdraw reference of this matter to the district court in order to conduct a jury trial. The order further provided for remand of the action to the state court absent the filing of such a motion. The original deadline was most recently extended to December 15, 2009. No timely motion to withdraw reference has been filed.
NOW, THEREFORE, IT IS HEREBY ORDERED that this adversary proceeding is remanded to the Circuit Court of the First Circuit, State of Hawaii, pursuant to 28 U.S.C. § 1452(b).9 The clerk shall forthwith transmit a certified copy of this order together with a copy of the docket sheet of this adversary proceeding to the clerk of the Circuit Court of the First [190]*190Circuit. The parties shall be responsible for providing copies of any process and pleadings to the state court.

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Bluebook (online)
256 P.3d 694, 125 Haw. 186, 2011 Haw. LEXIS 152, Counsel Stack Legal Research, https://law.counselstack.com/opinion/chang-v-buffington-haw-2011.