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Electronically Filed Supreme Court SCWC-13-0000129 30-JUN-2017 08:03 AM
SCWC-13-0000129
IN THE SUPREME COURT OF THE STATE OF HAWAI#I
LEIMOMI LESLIE FRESCH, Individually and as Next Friend for Howard K. Leslie, Jr., Respondent/Plaintiff-Appellee,
and
HOWARD K. LESLIE, SR., Petitioner/Plaintiff-Appellee,
HOWARD K. LESLIE, JR., Respondent/Plaintiff-Appellant,
vs.
JEFFREY K. KANUI, as Personal Representative of the Estate of Jamie K. Tavares, Deceased, Respondent/Defendant-Appellee.
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS (CAAP-13-0000129; CIV. NO. 97-0448)
MEMORANDUM OPINION (By: Recktenwald, C.J., Nakayama, Pollack, and Wilson, JJ., and Intermediate Court of Appeals Associate Judge Chan,1 in place of McKenna, J., recused)
1 The Honorable Derrick H.M. Chan was a Judge of the Circuit Court of the First Circuit when he was assigned as a substitute justice in this case. On April 13, 2017, Judge Chan was sworn in as an Associate Judge of the Intermediate Court of Appeals (ICA). *** NOT FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER ***
In December 1996, Howard K. Leslie, Jr. (Leslie Jr.)
was driving his employer’s vehicle when Jamie Tavares’s (Tavares)
vehicle struck Leslie Jr.’s head-on. Tavares was killed and
Leslie Jr. was hospitalized for several months. Howard K.
Leslie, Sr. (Leslie Sr.) sued the Tavares Estate, with Leimomi
Fresch (Fresch), Leslie Jr.’s mother, joining as a named
plaintiff both individually and as next friend for Leslie Jr.
Leslie Jr., Leslie Sr., and Fresch settled their claims against
the Tavares Estate in consideration for a total payment of
$320,000. The case was subsequently dismissed with prejudice in
July 1997.
In April 1998, Leslie Jr. filed a motion to vacate the
dismissal and rescind the settlement.2 That motion was denied,
and Leslie Jr. appealed. We vacated and remanded for proceedings
to assess the fairness of the apportionment. Leslie v. Estate of
Tavares, 91 Hawai#i 394, 405, 984 P.2d 1220, 1231 (1999).
At the fairness hearing, the circuit court found that
Leslie Jr., Leslie Sr., and Fresch, with the help of their
attorney, agreed to a reallocation of settlement proceeds where
Leslie Sr. and Fresch would each receive roughly $50,000 and
2 The Honorable Eden Elizabeth Hifo, then known as B. Eden Weil, presided over the 1998 motion to vacate the dismissal and rescind the settlement. Judge Hifo also presided over the 2001 fairness hearing. The case was reassigned to the Honorable Rhonda A. Nishimura on December 9, 2010, and Judge Nishimura presided over Leslie Jr.’s 2010 motion to enforce and 2012 renewed motion to enforce.
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“kick back” any proceeds in excess of $25,000 to Leslie Jr. to
help him avoid a lien against him belonging to the Hawai#i
Department of Human Services (DHS) for medical expenses incurred
in connection with the accident. Based on case law holding that
“a court may refuse to enforce contracts that violate [] public
policy[,]” the circuit court ruled that the original settlement
was fair and equitable, and that reallocating the settlement
funds to “effectively enforce the kickback scheme” was not
warranted.
Leslie Jr. entered into a workers’ compensation
settlement with the State and his former employer in August 2007.
He received a lump sum of $262,500 and the DHS lien was paid off.
In December 2010, Leslie Jr. filed a motion to enforce
the kickback arrangement or, in the alternative, for relief from
the fairness hearing order. Leslie Sr. did not oppose the motion
or attend the hearing, and on February 18, 2011, Leslie Jr.’s
request to enforce the kickback agreement was granted.
In February 2012, Leslie Sr. filed a motion to set
aside the order granting Leslie Jr.’s request to enforce the
original settlement. Leslie Sr. argued that his counsel
inadvertently failed to oppose the motion, and that the motion
was partially granted because it was unopposed by Leslie Sr. The
circuit court granted Leslie Sr.’s motion to set aside. Leslie
Jr. subsequently filed a renewed motion to enforce, which was
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denied, and Leslie Jr. appealed to the ICA.
In its August 6, 2015 Summary Disposition Order (SDO),
the ICA reversed the circuit court’s order granting Leslie Sr.’s
motion to set aside. Noting that “[t]he conduct of [Leslie
Sr.’s] counsel appears to be the result of mere carelessness,
which he did not seek to remedy until nearly a full year after
the subject order was entered[,]” the ICA held that “[Leslie
Sr.’s] failure to oppose the motion to enforce was inexcusable
neglect which did not warrant relief under [Hawai#i Rules of
Civil Procedure (HRCP)] Rule 60(b)(1).” Based on its HRCP Rule
60 holding, the ICA did not reach the underlying substance of the
dispute. The ICA entered judgment pursuant to its SDO on
November 3, 2015.
On certiorari, Leslie Sr. asks us to consider whether
his counsel’s failure to oppose the motion to enforce was
excusable neglect, and whether the ICA erred in affirming the
order granting Leslie Jr.’s motion to enforce a kickback scheme
that was previously ruled illegal and unenforceable.
As set forth below, Leslie Jr.’s appeal of the circuit
court’s July 27, 2012 order granting Leslie Sr.’s motion to set
aside (2012 Order Setting Aside) was untimely, and the ICA lacked
jurisdiction to act on Leslie Jr.’s appeal of this order. We
therefore vacate the ICA’s November 3, 2015 judgment on appeal as
it pertains to the circuit court’s 2012 Order Setting Aside, and
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reinstate the 2012 Order Setting Aside. In addition, we hold
that the circuit court did not abuse its discretion when it
denied Leslie Jr.’s renewed motion to enforce. We therefore
vacate the ICA’s judgment on appeal as it pertains to the circuit
court’s February 1, 2013 order and affirm the circuit court’s
February 1, 2013 order denying Leslie Jr.’s renewed motion to
enforce. We also vacate the portion of the ICA’s judgment on
appeal granting Leslie Jr.’s request for appellate costs, but
affirm the ICA’s denial of Leslie Jr.’s request for appellate
attorneys’ fees.
I. BACKGROUND
A. Motor Vehicle Accident, Settlement, and Prior Proceedings
This case has been ongoing for almost twenty years and
has involved two separate civil lawsuits, one worker’s
compensation agreement, three ICA decisions, and five
applications for writ of certiorari, four of which were granted,
including the one we are deciding today. The following facts and
procedural history are relevant to this appeal.
On December 22, 1996, Leslie Jr. was driving his
employer’s vehicle when Tavares’s vehicle allegedly crossed the
center line and struck Leslie Jr. Tavares was killed, and Leslie
Jr. suffered extensive life-threatening injuries and was
hospitalized for several months. Leslie Sr. sued the Tavares
Estate for negligence, with Fresch joining as a named plaintiff
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both individually and as next friend for Leslie Jr.
(collectively, Plaintiffs). Plaintiffs settled their claims
against the Tavares Estate in consideration for $250,000, and in
July 1997, the Plaintiffs’ complaint was dismissed with
prejudice. Plaintiffs also reached settlements in the amount of
$70,000 with the insurers of the vehicle driven by Leslie Jr.
Plaintiffs’ total gross settlement was $320,000.
In November 1997, DHS faxed to Leslie Jr.’s attorney a
listing of medical expenses that it had paid on Leslie Jr.’s
behalf, stating that the current amount of DHS’s lien against
Leslie Jr. was $47,178.50.
dismissal and rescind the settlement, which the circuit court
denied. Upon appeal to this court, we held in part that the
circuit court abused its discretion in failing to closely
scrutinize the apportionment of the settlement proceeds. Leslie
v. Estate of Tavares, 91 Hawai#i 394, 405, 984 P.2d 1220, 1231
(1999). We “remand[ed] for further proceedings . . . concerning
the fairness of the apportionment,” directing the circuit court
to exercise its “duty to insure that [the] settlement agreement
is fair to its ward.” Id.
The fairness hearing was held in February 2001. The
circuit court issued its Findings of Fact (FOF), Conclusions of
Law (COL), and Order on August 22, 2001. The following FOFs and
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COLs are relevant to this appeal: Leslie Jr. had “incurred
medical bills in excess of $1.75 million by March of 1997,” and
the “Department of Human Services (DHS) began paying medical
claims in May 1997;” both Mr. Wildman, Plaintiffs’ attorney, and
Plaintiffs “believed the DHS lien would exceed several hundreds
of thousands of dollars;” the State of Hawai#i Child Support
Enforcement Agency (CSEA) imposed a $60,000 lien against Leslie
Jr.’s assets; Mr. Wildman facilitated a kickback scheme between
Leslie Jr., Leslie Sr., and Fresch, where Leslie Sr.’s and
Fresch’s allocations above $25,000 would be informally returned
to Leslie Jr. after the DHS lien was satisfied; and
“overwhelming” evidence showed that the scheme was designed to
maximize Leslie Jr.’s financial recovery and to avoid Leslie Jr.
having to utilize settlement proceeds to satisfy the DHS and CSEA
liens. The circuit court also found that, by November 1997, Mr.
Wildman allocated the $320,000 settlement proceeds as follows:3 Wildman Fees plus costs: $111,529.67 Leimomi Leslie [Fresch] $ 61,465.75 Leslie Sr. $ 52,889.67 Leslie Jr. $ 46,936.41 DHS Lien $ 47,178.50
In its COL relevant to this appeal, the circuit court
concluded that “disturbing the allocation would effectively
enforce the kickback scheme[,] which this Court declines to
do[,]” citing Inlandboatmen’s Union v. Sause Brothers, Inc., 77
3 This allocation does not reflect the kickback amounts to be paid by Leslie Sr. and Fresch to Leslie Jr.
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Hawai#i 187, 194, 881 P.2d 1255, 1262 (App. 1994), for the
proposition that “a court may refuse to enforce contracts that
violate law or public policy.”
The circuit court thus affirmed the November 1997
allocation of settlement funds without the kickback amounts being
paid to Leslie Jr. The circuit court entered Judgment pursuant
to its August 22, 2001 FOF, COL, and Order on November 9, 2001,
which the ICA affirmed in an SDO. Fresch v. Estate of Tavares,
No. 28273 (App. Jan. 15, 2009) (SDO).
On August 15, 2007, Leslie Jr. entered into a separate
compromise, settlement, and release agreement with his employer
and the State of Hawai#i Special Compensation Fund (SCF),4 in
which SCF agreed to pay Leslie Jr. a lump sum of $262,500 and to
reimburse DHS for the lien amount of $47,178.50.
B. Leslie Jr.’s Motion to Enforce the Original Settlement
On December 9, 2010, Leslie Jr. filed a motion to
enforce the original settlement proceeds allocation agreement
between himself, Fresch, and Leslie Sr.--the kickback agreement.
Leslie Sr. does not dispute that the motion was properly served.
Nonetheless, Leslie Sr. did not file a memorandum in opposition
4 According to this workers’ compensation settlement, which is separate from the settlement at issue in Leslie Sr.’s application, Leslie Jr. filed a WC-5 Employee’s Claim for Workers’ Compensation Benefits on February 9, 1998. The Director of Labor and Industrial Relations denied Leslie Jr.’s claim on June 25, 1999, and Leslie Jr. appealed to the Labor and Industrial Relations Appeals Board (LIRAB) on June 29, 1999. The appeal to LIRAB was apparently still pending at the time of settlement.
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to Leslie Jr.’s motion to enforce. Following a hearing, on
February 18, 2011, the circuit court entered an order granting
Leslie Jr.’s motion to enforce, finding that enforcing the
agreement could no longer affect the State of Hawaii’s lien
rights. Neither Leslie Sr. nor his attorney attended the
hearing.
On May 18, 2011, the circuit court entered Final
Judgment against Leslie Sr. (2011 Final Judgment) in the amount
of $27,889.75 –- his settlement award of $52,889.67 minus
$24,999.92. On May 18, 2011, the circuit court entered a
separate final judgment against Fresch in the principal amount of
$36,465.75--her settlement award of $61,465.75 minus $25,000.
C. Leslie Sr.’s Motion to Set Aside
On February 13, 2012, more than eight months after the
2011 Final Judgment was entered against Leslie Sr., Leslie Sr.
filed a motion to set aside both the 2011 order granting Leslie
Jr.’s motion to enforce and the 2011 Final Judgment filed against
Leslie Sr. Leslie Sr. argued that he was not at fault for his
counsel’s inadvertent failure to oppose Leslie Jr.’s motion, for
which the circuit court could grant relief pursuant to HRCP Rule
60(b),5 and that Leslie Jr. would not be prejudiced by reopening. 5 HRCP Rule 60 (2006), “Relief from Judgment or Order,” provides in pertinent part:
(b) Mistakes; Inadvertence; Excusable Neglect; Newly Discovered Evidence; Fraud, etc. On motion and upon such terms as are just, the court may relieve a party (continued...)
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Leslie Jr. argued in response that the motion to set
aside was untimely and that it should be denied because Leslie
Sr.’s actions did not constitute excusable neglect. Leslie Jr.
also argued that he would be prejudiced if the motion was granted
because he had already instituted collection proceedings against
Leslie Sr. and Fresch based on the final judgments.
At a hearing on the motion to set aside, Leslie Sr.’s
counsel explained why he failed to appear at the January 14, 2011
hearing on the motion to enforce: What happened in this particular case is it came in right before I was going on vacation. I sent it off to the client, went on vacation, came back. My secretary had not calendered it. I had forgotten completely all about it. And a few days after the hearing, my client called up and said what happened? I completely spaced out that there was a hearing or there was a motion, and I didn’t even recognize the significance of it until afterwards.
Leslie Sr.’s counsel explained that he eventually
became aware of his failure, and that, at a subsequent hearing on 5 (...continued) or a party’s legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from th operation of the judgment. The motion shall be made within a reasonable time, and for reasons (1), (2), and (3) not more than one year after the judgment, order, or proceeding was entered or taken.
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a motion for fees and costs, he informed the court of his mistake
and said that a motion to set aside “would be coming.” Although
he did not explain why he did not raise these issues sooner,
Leslie Sr.’s counsel claimed that Leslie Sr. had a “meritorious
defense” based on the November 9, 2001 Judgment, which was
affirmed by the ICA. Leslie Sr.’s counsel contended that there
should be an argument on the merits so that the circuit court
could decide if “the circumstances have changed such that [the
kickback] has now become enforceable.”
On July 27, 2012, the circuit court entered an order
granting Leslie Sr.’s motion to set aside, finding that Leslie
Jr.’s post-collection efforts did not rise to the level of
prejudice and that Leslie Sr. had a potentially meritorious
defense.
D. Leslie Jr.’s Renewed Motion to Enforce
Leslie Jr. filed a renewed motion to enforce on
November 26, 2012, in which he largely reiterated his arguments
from his previous motion to enforce.
Leslie Sr. filed a memorandum in opposition to Leslie
Jr.’s renewed motion to enforce, contending that, after
“successfully defraud[ing]” the State of Hawai#i out of
settlement funds, Leslie Jr. could not now argue that the
kickback scheme could no longer be against public policy.
In his reply to Leslie Sr.’s opposition, Leslie Jr.
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argued in part that there was no legal or equitable basis for
allowing Leslie Sr. to retain the portion that was supposed to be
kicked back because the DHS lien had been satisfied.
The circuit court held a hearing on Leslie Jr.’s
renewed motion to enforce on January 11, 2013. At the hearing,
Leslie Jr. argued that the kickback agreement no longer had any
fraudulent effect because the lien had been satisfied, and that
the kickback agreement should therefore be revisited.
The circuit court filed its order denying Leslie Jr.’s
renewed motion to enforce on February 1, 2013.6 The court found
that nothing during the intervening period changed the court’s
August 22, 2001 finding that the agreement constituted an
informal kickback scheme. The court also decided that relief was
not warranted under either HRCP Rule 60(b)(5) or (6), which are
both “extraordinary” remedies.
E. Leslie Jr.’s Appeal to the ICA
On March 4, 2013, Leslie Jr. filed a notice of appeal,
appealing from (1) the 2012 Order Setting Aside and (2) the
6 The circuit court’s February 1, 2013 order also denied Leslie Jr.’s December 9, 2010 motion to enforce. However, the circuit court previously ruled on Leslie Jr.’s motion to enforce on February 18, 2011 and entered final judgments pursuant to this order on May 18, 2011. Although Leslie Sr. could have appealed the final judgment, as discussed supra, Leslie Sr. filed a motion to set aside pursuant to HRCP Rule 60. Therefore, the circuit court’s denial of Leslie Jr.’s motion to enforce in its February 1, 2013 order was superfluous. See Ditto v. McCurdy, 103 Hawai#i 153, 159-60, 80 P.3d 974, 980-81 (2003) (finding that the time for appealing matters conclusively decided by an order commenced upon entry of the order, not upon entry of the superfluous judgment on the order). Leslie Jr.’s November 26, 2012 Renewed motion to enforce did not resurrect his previous mtion to enforce, and thus Leslie Jr.’s December 9, 2010 motion to enforce was not before the circuit court when it entered its February 1, 2013 order.
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February 1, 2013 order denying Leslie Jr.’s motion to enforce and
renewed motion to enforce. Leslie Jr. argued that the circuit
court erred in entering the 2012 Order Setting Aside because
Leslie Sr. had not filed his motion within a reasonable time, and
Leslie Sr.’s failure to oppose the motion constituted inexcusable
neglect. Leslie Jr. further argued that the court erred in
denying the motion to enforce.
On August 6, 2015, the ICA issued its SDO reversing the
2012 Order Setting Aside. The ICA determined that “[t]he conduct
of [Leslie Sr.’s] counsel appears to be the result of mere
carelessness, which he did not seek to remedy until nearly a full
year after the subject order was entered.” It concluded that
Leslie Sr.’s failure to oppose the original motion to enforce was
“inexcusable neglect which did not warrant relief under HRCP Rule
60(b)(1),” and that the circuit court abused its discretion in
granting Leslie Sr.’s motion to set aside. Based on these
conclusions, the ICA held that Leslie Jr.’s renewed motion to
enforce was moot and vacated the circuit court’s February 1, 2013
order denying this motion. Thus, the 2011 order granting Leslie
Jr.’s motion to enforce the kickback allocation was reinstated.
In light of its conclusions, the ICA did not reach the question
of whether the circuit court erred in entering the order denying
Leslie Jr.’s renewed motion to enforce.
On August 31, 2015, Leslie Jr. filed a request with the
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ICA for appellate costs and attorneys’ fees. Leslie Jr. sought
to be reimbursed for costs in the amount of $300 and for
attorneys’ fees in the amount of $7,463.50. Leslie Sr. opposed
Leslie Jr.’s request for attorneys’ fees and costs. On
September 23, 2015, the ICA issued an order denying the request
for attorneys’ fees and granting the request for costs in the
amount of $300.
On November 3, 2015, the ICA entered judgment pursuant
to its SDO and its order denying the request for attorneys’ fees
and granting the request for costs.
F. Leslie Sr.’s Application for Certiorari
Leslie Sr. timely filed his application for writ of
certiorari on December 31, 2015. He presents two questions: 1. Whether the ICA erred when it determined in its August 6, 2015 Summary Disposition Order that the Circuit Court abused its discretion in ruling that Petitioner-Plaintiff-Appellee’s failure to oppose a Motion to Enforce an illegal kickback scheme was excusable neglect.
2. Whether the terms of a 1997 written settlement agreement entered into by all three Plaintiffs and Defendant can be reversed by one Plaintiff’s 2010 Motion to Enforce a contradictory alternate oral kickback scheme which was previously ruled illegal and unenforceable by the Circuit Court and the ICA.
II. STANDARD OF REVIEW
An order denying a motion for relief from a judgment
made pursuant to HRCP Rule 60(b) is reviewed on appeal under the
abuse of discretion standard. Hawai#i Hous. Auth. v. Uyehara, 77
Hawai#i 144, 147, 883 P.2d 65, 68 (1994). “[T]o constitute an
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abuse of discretion a court must have clearly exceeded the bounds
of reason or disregarded rules or principles of law or practice
to the substantial detriment of a party litigant.” Amfac, Inc.
v. Waikiki Beachcomber Inv. Co., 74 Haw. 85, 114, 839 P.2d 10, 26
(1992).
III. DISCUSSION
We conclude that Leslie Jr.’s appeal from the circuit
court’s order granting Leslie Sr.’s motion to set aside was
untimely, and that the ICA lacked jurisdiction to consider this
appeal. We also conclude that the circuit court did not abuse
its discretion when it denied Leslie Jr.’s renewed motion to
enforce.
A. Leslie Jr.’s Appeal of the Circuit Court’s July 27, 2012 Order Granting Leslie Sr.’s Motion to Set Aside Was Untimely, and the ICA Lacked Jurisdiction to Hear Leslie Jr.’s Appeal of This Order
We find that the ICA lacked jurisdiction to hear Leslie
Jr.’s appeal of the circuit court’s 2012 order granting Leslie
Sr.’s motion to set aside. We therefore vacate the portion of
the ICA’s November 3, 2015 judgment on appeal reversing the 2012
Order Setting Aside, and reinstate the 2012 Order Setting Aside.
“[C]ompliance with the requirement of the timely filing
of a notice of appeal is jurisdictional.” Ditto v. McCurdy, 103
Hawai#i 153, 157, 80 P.3d 974, 978 (2003). An appellate court is
obliged to ensure that it has jurisdiction to hear and determine
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each case before it, and to sua sponte dismiss an appeal when it
lacks jurisdiction. Id. A judgment rendered by a court without
subject matter jurisdiction is void, and questions about subject
matter jurisdiction may be raised at any stage of the case. Bush
v. Hawaiian Homes Comm’n, 76 Hawai#i 128, 133, 879 P.2d 1272,
1277 (1994).
The jurisdiction of appellate courts over civil appeals
is limited to review of “final judgments, orders, or decrees.”
Hawai#i Revised Statutes (HRS) § 641-1(a) (1993). Post-judgment
orders are appealable final orders under HRS § 641-1(a) “if the
order ends the proceedings, leaving nothing further to be
accomplished.” Ditto v. McCurdy, 103 Hawai#i at 157, 80 P.3d at
978 (citation omitted). “Correlatively, an order is not final if
the rights of a party involved remain undetermined or if the
matter is retained for further action.” Id. (citation omitted).
In Ditto v. McCurdy, the circuit court entered a
garnishee order against the Defendants in September 1998. Id. at
156, 80 P.3d at 977. In May 1999, this court reversed the
garnishee order, and on November 16, 1999, the Defendants moved
for return of garnished funds and for attorneys’ fees and costs.
Id. On March 24, 2000, the circuit court granted the motion as
to the garnished funds and costs, but denied the motion as to
attorneys’ fees. Id. On September 28, 2000, the circuit court
entered a “Final Judgment on Collateral Issue” based on its
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March 24, 2000 order. Id. On October 30, 2000, the Plaintiff
filed a notice of appeal from the March 24, 2000 order and
September 28, 2000 judgment. Id. at 157, 80 P.3d at 978. This
court held that the March 24, 2000 order was an appealable order
because it disposed of all issues raised in the November 16, 1999
motion and ended the post-judgment proceeding. Id. This court
further held that, because HRCP Rule 58’s separate document rule
applies only “to circuit court orders disposing of claims raised
in a circuit court complaint,” the September 28, 2000 judgment
was “superfluous,” and the time for appealing the issues
conclusively decided in the March 24, 2000 order commenced upon
entry of that order. Id. at 159-60, 80 P.3d at 980-81 (emphasis
in original). Therefore, this court held that the Plaintiff’s
October 30, 2000 notice of appeal was untimely, and sua sponte
dismissed the appeal of the March 24, 2000 order and
September 28, 2000 judgment for lack of jurisdiction. Id. at
160, 80 P.3d at 981.
Meanwhile, on October 9, 2000, the Plaintiff in Ditto
v. McCurdy filed a motion to set aside the September 28, 2000
judgment pursuant to HRCP Rule 60(b). Id. at 156-57, 80 P.3d at
977-78. The circuit court denied this motion on November 20,
2000. Id. at 157, 80 P.3d at 978. This court held that an
“order denying a motion for post-judgment relief under HRCP
[Rule] 60(b) is an appealable final order under HRS § 641-1(a).”
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Id. at 160, 80 P.3d at 981.7 This court found that the
Plaintiff’s December 20, 2000 notice of appeal from the
November 20, 2000 order was timely.8 Id. at 161, 980 P.3d at 982.
Here, the circuit court’s 2012 order granting Leslie
Sr.’s motion to set aside disposed of all issues raised in Leslie
Sr.’s February 13, 2012 motion to set aside, and ended the post-
judgment proceeding regarding the 2011 Final Judgment entered
against Leslie Sr. The circuit court’s 2012 Order Setting Aside
granted all relief requested in Leslie Sr.’s February 13, 2012
motion to set aside, leaving nothing further to be accomplished
with regard to that motion, and was therefore final.
Accordingly, the 2012 Order Setting Aside was appealable under
HRS § 641-1(a). See id. at 158, 80 P.3d at 979.
Hawai#i Rules of Appellate Procedure (HRAP) Rule 4(a)(1)
(2016) provides in relevant part: “TIME AND PLACE OF FILING.
When a civil appeal is permitted by law, the notice of appeal
shall be filed within 30 days after entry of the judgment or
appealable order.”
7 In Bailey v. Duvauchelle, this court held that an order denying an HRCP Rule 60(b) motion was not appealable because the underlying ruling the motion sought to vacate was not appealable. 135 Hawai#i 482, 488, 353 P.3d 1024, 1030 (2015). We note that the instant case differs from Bailey v. Duvauchelle in that Leslie Sr.’s motion to set aside sought relief from the 2011 order granting Leslie Jr.’s motion to enforce and 2011 Final Judgment, which were appealable orders under HRS § 641-1(a). 8 Although this court concluded that the time for appeal began on entry of the March 24, 2000 order, it found that because HRCP Rule 60(b) allowed the Plaintiff one year to bring a motion to set aside based on new evidence, the circuit court had authority to hear the Plaintiff’s October 9, 2000 motion to set aside. Id. at 981, 80 P.3d at 981.
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In this case, the circuit court issued an order
granting Leslie Sr.’s motion to set aside the order granting
Leslie Jr.’s motion to enforce on July 27, 2012. Leslie Jr. did
not file a notice of appeal regarding the 2012 Order Setting
Aside until March 4, 2013. Leslie Jr.’s notice of appeal was
therefore untimely. See HRAP Rule 4(a)(1).
In his appeal to the ICA, Leslie Jr.’s statement of
jurisdiction acknowledged that the 2012 Order Setting Aside had
the effect of setting aside the 2011 order granting Leslie Jr.’s
motion to enforce as it pertained to Leslie Sr. as well as the
2011 Final Judgment against Leslie Sr. Despite this, Leslie Jr.
argued: The Order Setting Aside did not dispose of Leslie Jr.’s original Motion to Enforce as it pertained to Leslie Sr., however. It simply set aside the Order Granting Motion to Enforce as that order pertained to Leslie Sr. and set aside the Final Judgment against Leslie Sr. It was therefore preliminary and led up to the Order Denying Motion to Enforce entered on February 1, 2013.
We reject Leslie Jr.’s argument. Leslie Sr.’s motion
to set aside requested that the circuit court enter an order
setting aside the 2011 order granting Leslie Jr.’s motion to
enforce as well as the 2011 Final Judgment entered against Leslie
Sr. The motion to set aside was filed solely by Leslie Sr.;
Fresch did not file a corresponding motion. The circuit court’s
2012 order granting Leslie Sr.’s motion to set aside expressly
set aside both the 2011 order granting Leslie Jr.’s motion to
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enforce and the 2011 Final Judgment as they pertained to Leslie
Sr. As in Ditto v. McCurdy, the circuit court’s 2012 Order
Setting Aside disposed of all issues raised in Leslie Sr.’s
motion to set aside, and was therefore an appealable order. See
Ditto v. McCurdy, 103 Hawai#i at 158, 80 P.3d at 979. As in Ditto
v. McCurdy, where the order denying an HRCP Rule 60(b) motion for
post-judgment relief was an appealable final order, here the 2012
order granting Leslie Sr.’s HRCP Rule 60(b) motion to set aside
was an appealable final order. See id. at 160, 80 P.3d at 981.
Thus, the ICA did not have jurisdiction to hear or act
on Leslie Jr.’s appeal of the July 27, 2012 Order Setting Aside,
and we vacate the portion of the ICA’s November 3, 2015 judgment
on appeal pertaining to the July 27, 2012 Order Setting Aside and
reinstate the July 27, 2012 Order Setting Aside.
B. Leslie Jr.’s Renewed Motion to Enforce Was Properly Denied by the Circuit Court Because Enforcement of the Kickback Scheme Would Have Violated Public Policy
Leslie Jr.’s March 4, 2013 notice of appeal also
appealed the circuit court’s February 1, 2013 order denying
Leslie Jr.’s renewed motion to enforce. The notice of appeal was
timely with respect to this post-judgment order, and this court
has jurisdiction to review issues “within the parameters” of this
order. See Indep. Mortg. Trust v. Dolphin, Inc., 57 Haw. 554,
556, 560 P.2d 488, 489–90 (1977) (finding that although the
notice of appeal was untimely with respect to one aspect of the
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appeal and the court lacked jurisdiction to review this aspect,
the notice of appeal was timely with respect to two post-judgment
orders, and the court had appellate jurisdiction to review issues
concerning the post-judgment orders).
The circuit court did not abuse its discretion when it
declined to enforce the kickback agreement because “no court will
lend its aid to one who founds a cause of action upon an immoral
or illegal act[.]” United Paperworkers Int’l Union, AFL-CIO v.
Misco, Inc., 484 U.S. 29, 42 (1987). As the ICA explained in
Inlandboatmen’s Union, we have “recognized the general common law
doctrine that a court may refuse to enforce contracts that
violate law or public policy.” 77 Hawai#i at 194, 881 P.2d at
1262; Aiea Lani Corp. v. Haw. Escrow & Title, Inc., 64 Haw. 638,
646, 647 P.2d 257, 263 (1982) (contract that provided for illegal
kickbacks was unenforceable); see also Wilson v. Kealakekua
Ranch, Ltd., 57 Haw. 124, 128, 551 P.2d 525, 528 (1976) (“Illegal
contracts are generally unenforc[ea]ble.” (citation and internal
quotation marks omitted)).
Other jurisdictions provide guidance on what
constitutes “public policy.” Public policy can be “expressed by
. . . statute[,] administrative regulation[,] judicial
decision[,] the common law[,] . . . long governmental practice[,
or] obvious ethical or moral standards[.]” 17A Am. Jur. 2d,
Contracts § 235 (2017) (citations and formatting omitted). “The
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underlying inquiry when determining whether a contract violates
public policy is whether the contract has a tendency to be
against the public good, or to be injurious to the public.” LK
Operating, LLC v. Collection Grp., LLC, 331 P.3d 1147, 1164
(Wash. 2014) (internal quotation marks omitted).
Here, the record strongly supports the circuit court’s
conclusion that “[t]he sole reason for this kickback scheme was
to reduce the amount of settlement proceeds ostensibly available
to [Leslie Jr.] to satisfy the State’s lien rights.”9 This
attempt to avoid the State’s lien implicates “obvious ethical or
moral standards[,]” and it would be inappropriate for the circuit
court to reward Leslie Jr. for his efforts. Thus, the circuit
court’s refusal to enforce a contract that it believed to be
against public policy is well supported by legal authority.
Moreover, HRS § 346-37,10 entitled “Recovery of payments
and costs of medical assistance,” provides the mechanism for DHS
9 Leslie Jr.’s former attorney “testified that the distribution was designed to maximize [Leslie Jr.’s] financial recovery.” Furthermore, the circuit court found that “[t]he evidence is overwhelming” that Leslie Sr. and Fresch “were trying to do [Leslie Jr.] a favor” by helping him avoid his DHS lien. 10 HRS § 346-37(c) (Supp. 2012) provides:
If the department has provided medical assistance or burial payment to a person who was injured, suffered a disease, or died under circumstances creating a tort or other liability or payment obligation against a third person, the department shall have a right to recover from the third person an amount not to exceed the full amount of the costs of medical assistance or burial payment furnished or to be furnished by the department.
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to recover its long-term medical assistance through liens.
Leslie Sr.’s argument that the kickback scheme “hasn’t become
proper” despite the fact that the State is no longer actively
seeking payment of its lien from Leslie Jr. is persuasive. The
State of Hawaii’s public policy does not tolerate a lienee
attempting to settle to avoid a government lien.11 If Leslie Jr.
had not entered into his workers’ compensation settlement, then
DHS would likely still be trying to recover funds owed to it by
Leslie Jr. The fact that DHS no longer has an interest in Leslie
Jr.’s settlement funds does not change the original purpose of
the kickback scheme. Thus, the circuit court did not abuse its
discretion when it declined to enforce the kickback scheme and
denied Leslie Jr.’s renewed motion to enforce the original
11 HRS § 346-37(f) provides in relevant part:
If liability is found to exist, or if the issue of third-party liability is settled or compromised without a finding of liability, regardless of who institutes legal proceedings or seeks other means of recovering, the department shall have a right to recover up to the full amount of the costs of medical assistance or burial payment made from a settlement, award, or judgment. To aid in the recovery of the costs, the department shall have a first lien for up to the full amount of the costs of medical assistance or burial payment made against the proceeds from damages recovered in a settlement, award, or judgment.
If the department has provided medical assistance or burial payment to a person who was injured, suffered a disease, or died under circumstances creating a tort or other liability or payment obligation against a third person, the department shall have a right to recover from the third person an amount not to exceed the full amount of the costs of medical assistance or burial payment furnished or to be furnished by the department.
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settlement.
IV. CONCLUSION For the foregoing reasons, we conclude that the ICA
lacked jurisdiction to hear Leslie Jr.’s appeal of the circuit
court’s July 27, 2012 order granting Leslie Sr.’s motion to set
aside, and that the circuit court did not abuse its discretion
when it denied Leslie Jr.’s renewed motion to enforce.
Accordingly, the ICA’s November 3, 2015 judgment on appeal is
vacated, and the circuit court’s July 27, 2012 Order Setting
Aside is reinstated. The circuit court’s February 1, 2013 order
denying Leslie Jr.’s renewed motion to enforce is affirmed. The
portion of the ICA’s judgment on appeal granting Leslie Jr.’s
request for appellate costs is vacated, and the ICA’s denial of
Leslie Jr.’s request for appellate attorneys’ fees is affirmed.
DATED: Honolulu, Hawai#i, June 30, 2017.
Paul R. Grable /s/ Mark E. Recktenwald for petitioner /s/ Paula A. Nakayama Frederick W. Rohlfing III for respondent /s/ Richard W. Pollack Howard K. Leslie, Jr. /s/ Michael D. Wilson
/s/ Derrick H.M. Chan