Lahaina Fashions, Inc. v. Bank of Hawaii

297 P.3d 1106, 129 Haw. 250, 2013 Haw. App. LEXIS 115
CourtHawaii Intermediate Court of Appeals
DecidedFebruary 21, 2013
DocketNo. 30644
StatusPublished
Cited by4 cases

This text of 297 P.3d 1106 (Lahaina Fashions, Inc. v. Bank of Hawaii) is published on Counsel Stack Legal Research, covering Hawaii Intermediate Court of Appeals 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 Hawaii, 297 P.3d 1106, 129 Haw. 250, 2013 Haw. App. LEXIS 115 (hawapp 2013).

Opinion

Opinion of the Court by

REIFURTH, J.

Plaintiff-AppellanVCross-Appellee Lahai-na Fashions, Inc. (“Lahaina”) appeals from the July 8, 2010 Final Judgment, entered by the Circuit Court of the Second Circuit (“Circuit Court”)1 in favor of Defendants-Appel-lees/ Cross-Appellants Bank of Hawai'i (“Bank”); Hawaiian Trust Company, Ltd. (“Hawaiian Trust”); Hawai'i Real Estate Equity Fund (“REEF”); and Pacific Century Trust (collectively, “Defendants”) following a jury trial.

On appeal, Lahaina claims that the Circuit Court erred in (1) denying its motion to correct the verdict and enter a judgment (“Motion to Correct Verdict and Enter Judgment”) and its motion to deny the Defendants’ proposed findings of fact and conclusions of law and to resubmit to the jury (“Motion to Resubmit”); (2) granting the Defendants’ motion for judgment as a matter of law (“JMOL”) as to Lahaina’s breaeh-of-fidu-eiary-duty claim; (3) excluding from evidence Plaintiffs Exhibit 81 (“Exhibit 81”), which consists of (i) an email from the Bank’s attorney James K. Tam (“Attorney Tam”) to an officer at the Bank, and (ii) a letter from Lahaina’s attorney, David H. Nakamura (“Attorney Nakamura”), to Attorney Tam; and (4) refusing to disclose all of Defendants’ attorney-client communications concerning the property in question from 1994 through 2002.

Defendants filed a cross-appeal, asserting that the Circuit Court erred in denying three pre-judgment motions in which Defendants argued that Lahaina’s tortious-interference claim was barred by the statute of limitations.

We affirm.

I. BACKGROUND

A. History of the Property and the parties

Prior to 1994, Lahaina held fee simple title to a parcel of commercial property at 744 Front Street in Lahaina, Maui (the “Property”). Lahaina, however, had incurred debt of nearly $3.4 million and, by early 1994, had defaulted on a $2.5 million mortgage held by International Savings & Loan (“International Savings”). International Savings was seeking to foreclose on the Property; consequently, Lahaina sought to sell the Property in order to repay its debts.

[253]*253Defendants, through Hawaiian Trust, purchased the Property and leased the Property back to Lahaina for 50 years. The lease agreement between Hawaiian Trust and La-haina (“Lease”) gave Lahaina an option to purchase the Property from Hawaiian Trust for $6 million within the first ten years of the Lease should Lahaina wish to sell a fee simple intei-est to a third-party purchaser (the “Option”). Pursuant to the terms of the Option, Hawaiian Trust was entitled to 50% of any proceeds in excess of $9 million upon Lahaina’s sale of the Property to a third party.

In the fall of 1999, Lahaina’s largest anchor tenant, Planet Hollywood, surrendered its sublease on the Property. Consequently, Lahaina was unable to make its rental payments to Hawaiian Trust and defaulted under the Lease. On May 1, 2000, the then-owner of the Property, Pacific Century Trust, filed a lawsuit against Lahaina, seeking a judgment for possession, a writ of possession, and damages (“May 2000 Lawsuit”). On June 19, 2001, the trial court orally granted Pacific Century Trust’s motion for judgment of possession and a writ of possession.

On July 13, 2001, before the trial court entered its judgment in favor of Pacific Century Trust, Lahaina filed a voluntary Chapter 11 bankruptcy petition with the United States Bankruptcy Court for the District of Hawaii (“Bankruptcy Court”). Lahaina asked the Bankruptcy Court to approve its sale of its leasehold interest in the Property to LoKo Maui, LLC in exchange for the payment of Lahaina’s arrearage plus an additional $275,000.00 for Lahaina. The Bankruptcy Court approved the sale of Lahaina’s leasehold interest in the Property. The May 2000 Lawsuit was subsequently dismissed with prejudice by stipulation.

B. The Complaint

Lahaina initiated the lawsuit which is the basis of this appeal on June 25, 2007,2 asserting claims against Defendants for fraud, conspiracy to defraud, breach of fiduciary duty, and tortious interference with prospective business advantage. Lahaina claimed that the Defendants never intended to honor, and intentionally interfered with Lahaina’s subsequent attempts to exercise, the Option. La-haina alleged that the Defendants’ actions caused Lahaina to sell its rights under the Lease for a substantial loss.

C. Trial

1. Testimony of George Weir

George Weir (“Weir”), who Lahaina describes as “the Bank’s senior executive officer at the time it entered the agreement with Lahaina”, testified at trial on April 27, 2009, on the issue of whether Defendants owed Lahaina any contractual or fiduciary duties. The testimony relevant to the issues on appeal concerned Weir’s understanding of the legal effect of the Option:

Q. [by Joseph M. Alioto (“Attorney Al-ioto”) ] All right. So if the option is exercised, you’d have to give clear title, wouldn’t you?
A [by Weir] Of course.
Q. Of course. So you have to make sure that its—the land—if the option is—if the option is exercised, you have to make sure that the land is clear?
A Yes.
Q. You have to hold it in effect for Lahaina’s benefit, if they exercise the option?
A At the time—if they were to exercise their option and we were to accept it, at close of escrow, we’d have to deliver clean title.
Q. So you have an obligation to Lahai-na to make sure that at—that if the option is in fact exercised, you’re going to give him clear title?
A At close of escrow, yes, sir.
Q. So in effect then, Lahaina would be a beneficiary and you would have the obligation to make sure nothing happens to the land if the option is closed?
A At the time of the close of escrow we’d have to deliver it clear, as I say.
[254]*254Q. So you have a duty to Lahaina to make sure that nothing happens in the meantime?
A. Certainly nothing that can’t be fixed.
Q. So you have an obligation to make sure that either nothing happens or if something does, you’ve got to fix it?
A. True.
Q. And that’s an obligation to whom?
A. Would be to the lessee, to the tenant.
Q. To?
A. Lahaina.
Q. Lahaina. Okay. Now, would you say that that puts you in a fiduciary relationship with them?
A. It’s a stretch. I’ll take that.
Q. You’ll accept that?
A. A definition of a fiduciary is one who has a confidential relationship with another, which could extend to husband and wife. So sure.

Lahaina cites additional testimony from Weir of similar import and character.

2. Waiver of attorney-client privilege

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Rocky Dietz v. Hillary Bouldin
794 F.3d 1093 (Ninth Circuit, 2015)
Lahaina Fashions, Inc. v. Bank of Hawai‘i.
319 P.3d 356 (Hawaii Supreme Court, 2014)
Lahaina Fashions, Inc. v. Bank of Hawaii
298 P.3d 1058 (Hawaii Intermediate Court of Appeals, 2013)

Cite This Page — Counsel Stack

Bluebook (online)
297 P.3d 1106, 129 Haw. 250, 2013 Haw. App. LEXIS 115, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lahaina-fashions-inc-v-bank-of-hawaii-hawapp-2013.