Lahaina Fashions, Inc. v. Bank of Hawai‘i.

319 P.3d 356, 131 Haw. 437, 2014 WL 50404, 2014 Haw. LEXIS 5
CourtHawaii Supreme Court
DecidedJanuary 7, 2014
DocketSCWC-30644
StatusPublished
Cited by9 cases

This text of 319 P.3d 356 (Lahaina Fashions, Inc. v. Bank of Hawai‘i.) 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
Lahaina Fashions, Inc. v. Bank of Hawai‘i., 319 P.3d 356, 131 Haw. 437, 2014 WL 50404, 2014 Haw. LEXIS 5 (haw 2014).

Opinion

Opinion of the Court by

ACOBA, J.

We hold, first, that depending on the circumstances, a court may recall a jury following a formal discharge if the jury is in the presence of, under the direction of, or subject to the control of the court. Inasmuch as the Intermediate Court of Appeals (ICA) held that a jury cannot be recalled under any circumstances following an order discharging the jury, respectfully, the ICA erred.

Second, a special verdict form cannot be amended simply because the jury “realized that its answers to the special verdict form have caused a result opposite from what it intended,” or misunderstood the legal effect of its answer to a special verdict question. Cabral v. McBryde Sugar Co., Ltd., 3 Haw.App. 223, 228, 647 P.2d 1232, 1235 (1982). Thus, we hold that the jurors’ statements that they “misunderstood” or “misinterpreted” the legal effect of the statute of limitations question on the special verdict form in this case does not provide a basis for overturning the jury’s verdict in favor of Respondents/Defendants-Appellees/Cross-Appel-lants Bank of Hawai'i (Bank); Hawaiian Trust Company, Ltd. (Hawaiian Trust); Ha-wai'i Real Estate Equity Fund; and Pacific Century Trust (collectively, Respondents) and against Petitioner/Plaintiff-Appellant/Cross-Appellee Lahaina Fashions, Inc. (Petitioner) on this ground.

Third, the question of whether the conversation of the Circuit Court of the Second Circuit (the court) 1 with the jurors after the court had initially discharged the jurors constituted an improper outside influence is moot, because the ICA correctly sustained the verdict under Cabral.

Finally, a contract to convey property does not create a trust relationship between the vendor and the purchaser of the property and therefore does not impose any fiduciary duties on the vendor. Restatement (Third) of Trusts (Third Restatement) § 5 cmt. I. Because the only alleged trust identified at trial by Petitioner was effectively a contract to convey property, no trust was created and therefore the ICA did not err in affirming the court’s order granting Respondents’ motion for Judgment as a Matter of Law (JMOL) on Petitioner’s breach of fiduciary duty claim.

For the reasons set forth herein, the April 12, 2013 judgment of the ICA filed pursuant to its February 2, 2013 published opinion is affirmed in part and vacated in part, and the July 8, 2010 final judgment of the court is affirmed.

I.

A.

Until 1994, Petitioner held title to property located at 744 Front Street, Lahaina, Maui. In 1994, however, Petitioner defaulted on a § 2.5 million mortgage loan held by International Savings and Loan. As a result, Petitioner attempted to sell the Property to repay the loan.

*440 On July 7, 1994, Petitioner agreed to sell the Property to Respondents for $6 million. As part of the Purchase and Sale Agreement, Respondents as “Landlord” agreed to lease the Property to Petitioner as “Tenant” for a period of fifty years. Under the terms of the lease, Petitioner retained the option to repurchase the Property (the Option) and sell it for a profit:

X. Option to Purchase Landlord’s Interest.
10.01 Tenant’s Option to Purchase. If at any time during the first ten (10) years of the Lease, Tenant desires to sell Tenant’s interest in this Lease, and Landlord’s interest in this Lease and the fee simple title to the Land (collectively called “leased fee interest”) for the sole purpose of selling to a third party Tenant’s leasehold interest and Landlord’s leased fee interest (so that such third party would own the Land in fee simple), then Tenant shall give Landlord prior written notice of the terms and conditions of the proposed sale and the name of the proposed buyer. Tenant shall have the right to purchase Landlord’s leased fee interest under the terms and conditions outlined below by giving Landlord written notice of Tenant’s election to purchase Landlord’s leased fee interest, in writing, within thirty (30) days after receipt of an offer from a prospective buyer. If Tenant exercises its right to purchase Landlord’s leased fee interest, then Tenant shall pay Landlord the amount specified below within the time proposed by the specified buyer, not to exceed six (6) months after Tenant’s election to purchase Landlord’s leased fee interest. If the prospective buyer is affiliated with or has had a business relationship with tenant, upon request of Landlord, Tenant shall furnish proof satisfactory to Landlord that the sale is not a sham sale for the purpose of subsequent resale, to avoid the payment of the percentage price to Landlord under Section 10.02. If Tenant fails to furnish satisfactory proof, Landlord may refuse to honor the exercise of such [Q]ption.... 10.02 Purchase Price for Landlord’s Leased Fee Interest. The purchase price for Landlord’s leased fee interest shall be SIX MILLION AND NQ/100 DOLLARS ($6,000,000.00) plus fifty percent (50%) of the “Net Proceeds of Sale” in excess of NINE MILLION AND NQ/100 DOLLARS ($9,000,000.00). As used herein, “Net Proceeds of Sale” means the Purchase Price paid by the prospective buyer less real estate brokers commissions and customary closing costs, provided that such commissions and closing costs shall not exceed four percent (4%) of such Purchase Price....

(Emphases added.) The lease agreement also stated the parties had negotiated the agreement at arm’s length and did not intend to form a partnership or joint venture:

9.12 No Party Deemed Drafter. All provisions of this Lease have been negotiated at anus length and with full representation of legal counsel and neither party shall be deemed the drafter of this Lease....
9.13 No Partnership Intended. Landlord and Tenant hereby agree that Landlord in no event and for no purpose is a partner of Tenant in the conduct of any of its businesses or other affairs or a joint venturer or member of a joint enterprise with Tenant.

(Emphases added.)

In 1999, Petitioner could not make its rent payments under the lease agreement and consequently defaulted. Subsequently, Pacific Century Trust, a division of the Bank and one of the owners of the Property, filed suit seeking a writ of possession and damages. However, prior to the conclusion of that action, Petitioner filed for bankruptcy in the United States Bankruptcy Court. The bankruptcy court approved the sale of Petitioner’s leasehold interest in the Property to Loko Maui, LLC on November 1, 2001, 2 in exchange for the payment of Petitioner’s ar-rearage and $250,000. As a result, Pacific Century Trust’s suit was dismissed.

*441 On June 25, 2007, Petitioner filed a Complaint, initiating the instant ease. The Complaint alleged that Respondents “had no intention of allowing [Petitioner] to exercise the Option,” and asserted claims against Respondents for fraud, conspiracy to defraud, breach of fiduciary duty, and tortious interference with prospective business advantage.

B.

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Cite This Page — Counsel Stack

Bluebook (online)
319 P.3d 356, 131 Haw. 437, 2014 WL 50404, 2014 Haw. LEXIS 5, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lahaina-fashions-inc-v-bank-of-hawaia-i-haw-2014.