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Electronically Filed Supreme Court SCWC-XX-XXXXXXX 25-JUN-2020 08:02 AM
IN THE SUPREME COURT OF THE STATE OF HAWAII
---o0o---
CAROL L. McKENNA, Petitioner/Plaintiff-Appellant,
vs.
ASSOCIATION OF APARTMENT OWNERS OF ELIMA LANI, a Hawaii nonprofit corporation; CERTIFIED MANAGEMENT, INC., dba Certified Hawaii; WELLS FARGO BANK, N.A.; and ROSS ANDALORO, Respondents/Defendants/Cross-Claim Defendants/ Cross-Claimants-Appellees,
and
GEOFFREY S. KIM and HAWAIIAN ISLES ADJUSTING CO., LLC, a Hawaii limited liability company; Respondents/Defendants/Cross-Claimants/Cross-Claim Defendants.
SCWC-XX-XXXXXXX
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS (CAAP-XX-XXXXXXX; CIV. NO. 11-1-627K)
JUNE 25, 2020
RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.
OPINION OF THE COURT BY NAKAYAMA, J.
This case arose from settlement negotiations between *** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
Petitioner/Plaintiff-Appellant Carol L. McKenna (McKenna) and
Respondents/Defendants-Appellants Association of Apartment
Owners of Elima Lani, Certified Management, Inc., Wells Fargo
Bank, and Ross Andaloro (collectively, Defendants) relating to
a dispute between the parties about water and mold damage to
McKenna’s condominium. At the close of an October 21, 2014
settlement conference, at which McKenna was represented by
counsel, the circuit court and the parties acknowledged that
the parties had reached a settlement and went on the record to
identify the “essential terms” of the agreement. Thereafter,
McKenna refused to sign the settlement documents. McKenna has
since represented herself pro se.
On November 5, 2014, Respondents filed a motion to
enforce the settlement agreement (Motion to Enforce) in the
Circuit Court of the Third Circuit (circuit court) and
attached a proposed written settlement agreement and
stipulation. McKenna opposed the Motion to Enforce.
After a November 24, 2014 hearing on the Motion to
Enforce, McKenna filed a Motion for an Evidentiary Hearing.
The circuit court denied McKenna’s Motion for an Evidentiary
Hearing and issued an order granting Defendants’ Motion to
Enforce.
In its order, the circuit court found that the
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parties had entered into a binding settlement agreement at the
settlement conference but that the proposed written settlement
agreement contained terms beyond those that had been agreed to
at the settlement conference. The circuit court therefore
struck those terms and created a revised settlement agreement.
The circuit court entered a final judgment on March 10, 2016,
dismissing all of McKenna’s claims with prejudice.
The Intermediate Court of Appeals (ICA) affirmed the
circuit court’s final judgment. McKenna filed an application
for writ of certiorari.
Genuine issues of material fact exist as to whether
the parties reached a valid settlement agreement and as to
which terms the parties agreed to at the settlement
conference. As such, pursuant to the ICA’s holding in Miller
v. Manuel, 9 Haw. App. 56, 64, 828 P.2d 286, 292 (App. 1991),
the circuit court should have granted McKenna’s motion for an
evidentiary hearing to resolve these issues. Instead, the
circuit court revised the proposed settlement agreement itself
before issuing an order enforcing the revised settlement
agreement.
We therefore vacate the ICA’s September 17, 2018
Judgment on Appeal. We remand the case to the circuit court
with instructions that the circuit court hold an evidentiary
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hearing and for further proceedings consistent with this
opinion.
I. BACKGROUND
At the outset of this dispute, McKenna was the owner
and occupier of a condominium unit at Elima Lani in South
Kohala, Hawaiʻi. Association of Apartment Owners of Elima
Lani Condominiums, a Hawaii Nonprofit Corporation (AOAO) was
the governing body of the condominium complex that includes
McKenna’s condominium. Certified Management, Inc. dba
Certified Hawaii (Certified Management), was the managing
agent of the Elima Lani condominiums. Ross Andaloro owned the
condominium above McKenna’s. Wells Fargo Bank, N.A. was the
previous owner of Ross Andaloro’s condominium.1
In June 2010, McKenna returned home to discover
extensive water damage in her condominium, which appeared to
have been caused by a leak in the unit above hers (Ross
Andaloro’s unit). McKenna alleged that she contacted AOAO to
address the leak, but that AOAO did not endeavor to fix the
leak or enable McKenna to do so. Several months later,
McKenna identified mold in her condominium and she began to
1 McKenna claims that “[d]uring the period of time that the leak in [the] Andaloro unit was causing water to accumulate in the ceiling cavities of [McKenna’s] unit . . . the Andaloro unit was owned by or in the possession of Wells Fargo” and that during that time, Wells Fargo was attempting to sell the unit to Andaloro, who at some point did purchase the unit.
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suffer symptoms associated with exposure to contaminants.
McKenna claimed that she was forced to vacate her condominium
due to the mold contamination. On December 20, 2011, McKenna
filed a Complaint in the circuit court against Defendants
alleging, inter alia, negligence and misrepresentation.
Over the following two years, the parties engaged in
two mediation sessions and arbitration.
A. Circuit Court Proceedings2
1. Settlement Conference Terms
On October 21, 2014, McKenna attended a settlement
conference with Defendants. At the close of the conference,
the parties went on the record, acknowledged that they had
reached a settlement, and described the “essential terms” of
the agreement. McKenna agreed to the terms in the following
exchange:
THE COURT: Okay. And my understanding is that the parties have reached a settlement agreement in this case. That the terms of the settlement include – the essential terms of the settlement agreement are that the defendants shall pay plaintiff $60,000 in cash. The Association of Apartment Owners of Elima Lani will also release any lien and outstanding amounts owed by Ms. McKenna to the association. That there be – it’s a general-damages-only release, and that the parties will execute a settlement agreement with mutual releases and standard settlement terms and a dismissal of the case. Have I accurately stated the settlement agreement from the perspective of the plaintiff, [McKenna’s counsel]?
2 The Honorable Melvin H. Fujino presided over entry of the Final Judgment. The Honorable Elizabeth A. Strance presided over all other proceedings.
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[MCKENNA’S COUNSEL]: Yes, your Honor.
THE COURT: And Ms. McKenna, do you agree to the terms of the settlement?
MS. MCKENNA: Yes.
THE COURT: Okay. And [Wells Fargo’s counsel], have I accurately stated the settlement agreement from the perspective of your client, Wells Fargo?
[WELLS FARGO’S COUNSEL]: Yes, your Honor.
THE COURT: And do you have authority on behalf of your client to enter into the settlement agreement?
[WELLS FARGO’S COUNSEL]: I do, your Honor.
THE COURT: Okay. And [AOAO’s counsel], have I accurately stated the settlement agreement from the perspective of the association and of Certified Management?
[AOAO’S COUNSEL]: One clarification, your Honor. It’s a dismissal with prejudice.
THE COURT: Yes.
The parties agreed that Wells Fargo’s counsel would draft a
written settlement agreement reflecting the terms described
and circulate it within fourteen days. All parties stipulated
that the circuit court could retain jurisdiction to enforce
the settlement agreement.
2. The Proposed Settlement Agreement
Wells Fargo’s counsel thereafter circulated a
proposed settlement agreement to the parties, including
McKenna’s attorney. McKenna instructed her attorney not to
sign anything on her behalf, as she did not agree to the
settlement terms. McKenna did not sign the settlement
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documents.
McKenna’s attorney filed a motion to withdraw as
counsel on October 27, 2014, citing McKenna’s refusal to sign
settlement documents. The circuit court granted the motion.
McKenna has proceeded pro se since her counsel’s withdrawal.
Defendants filed their Motion to Enforce on November
5, 2014. Defendants requested that the motion be granted
and that an Order enter herein enforcing the terms and conditions of the settlement reached by Plaintiff and the Defendants at the Settlement held on October 21, 2014 and requiring Plaintiff to execute the Settlement Agreement and Stipulation and or otherwise permitting the Clerk of Court, pursuant to Rule 10(e) of the Rules of the Circuit Courts of the State of Hawaii, to sign the Stipulation . . . .
On November 14, 2014, McKenna filed an opposition to
Defendants’ Motion to Enforce. McKenna attached a declaration
to her opposition in which she claimed that, essentially, her
verbal assent to the settlement conference terms was invalid.
McKenna asserted,
I was told during the settlement conference multiple times by [the circuit court] “It is not about the merits of the case, you cannot afford $100,000 to go to trial.” During the same conversation I replied to [the circuit court] directly this case is well documented and I feel confident presenting emails and professional reports to professional witnesses pro-se. [The circuit court] replied to me I could not afford the professional witnesses.
McKenna also stated that “[t]owards the end of the settlement
conference when we were between $30-$60K, I was feeling sick
[and] asked to leave and was told no, I could not by [the
circuit court].”
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The circuit court held a hearing on Defendants’
Motion to Enforce on November 24, 2014. At the hearing,
McKenna argued that there had been no meeting of the minds at
the settlement conference, that the settlement agreement
lacked essential terms about repairing her condominium, that
the proposed settlement agreement contained terms she had not
agreed to, and that the settlement was invalid because the
parties did not attend the settlement conference but sent
attorneys in their stead. After confirming that each
Defendant had given full settlement authority to their
attorney, the circuit court granted the Motion to Enforce,
finding that there was a meeting of the minds as to the
essential terms of the settlement. However, the circuit court
found that the settlement agreement contained terms beyond
what had been agreed to at the settlement conference. The
circuit court stated:
So the court will grant the motion to enforce settlement. With respect to the specific settlement agreement, the court will take the matter under advisement as to what, uh, it will, uh, allow a clerk to enter. Um, the court will not be going outside the terms of the settlement. Uh, there were no agreements regarding non- disparagement and things of that ilk. So the court will look carefully at the, uh, settlement agreement and/or, uh, issue something separate from, uh, what is submitted to the court. But with respect to the essential terms, the court finds that they were agreed upon and will, uh, grant the motion to enforce settlement.
Defendants submitted a proposed order granting their
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Motion to Enforce. McKenna filed a motion objecting to the
proposed order. Therein, McKenna claimed that the terms of
the proposed settlement agreement were different from those
she agreed to at the settlement conference.
In her motion, McKenna reiterated that, for several
reasons, her assent to the settlement conference terms was
invalid. For example, McKenna argued that the circuit court
compelled McKenna to settle when the circuit court “improperly
introduced [the] confidential Mediation amount as a starting
point for settlement negotiations . . . said [McKenna] could
not leave when [she] asked to go [and] repeatedly insisted
[McKenna] could not afford to go to trial or afford [] expert
witnesses.” McKenna also contended that she had not been
present at the drafting of the proposed settlement agreement,
that she was “coerced, and under duress” at the settlement
conference, and that she “never agreed at the October 21, 2014
Settlement Conference to all the Material and Essential Terms
and Conditions as described and enumerated in the [proposed
settlement agreement][.]” Defendants opposed the motion.
McKenna filed a Motion for an Evidentiary Hearing on
December 2, 2014. Therein, McKenna argued that genuine issues
of material fact were present and that as the circuit court
should view motions to enforce settlement agreements by the
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same standard as motions for summary judgment, she was
entitled to an evidentiary hearing.
On February 6, 2015, the circuit court held a
hearing on McKenna’s Motion for an Evidentiary Hearing. At
the hearing, the circuit court found that the motion was
essentially a motion to reconsider the court’s oral grant of
Defendants’ motion to enforce, for which an order had not yet
been issued. Accordingly, the circuit court denied McKenna’s
Motion for an Evidentiary Hearing:
The Court will deny the motion to order evidentiary hearing, finding that the motion is essentially a motion to reconsider the motion to enforce settlement for which an order has not been issued. To the extent that the parties are requesting further ruling of the Court, the Court finds that the settlement conference that was held on October 21st, 2014, was an arm’s length settlement conference. All parties were represented by counsel. The Court satisfied itself that all counsel had authority of their clients, if their client was not here, that they had the appropriate authority to act. The Court was satisfied that the defense counsel had authority. To that end then, the Court conducted extensive settlement conferences in which Ms. McKenna was a full and active participant [] with her attorney. As the result of that lengthy settlement conference, a settlement agreement was reached, the material terms of which were placed on the record. Based upon the record before it, the Court can find no misconduct on the part of any defense counsel based upon their conduct and representations that were made during the course of the settlement conference and in terms of their conduct since. To the extent that no settlement agreement has been executed, that [sic] Court finds that that lays squarely in the lap of Ms. McKenna. Ms. McKenna indicated, shortly after the settlement conference, her intention not to execute a settlement agreement. As a result of that, her attorney filed a motion to withdraw as counsel. That motion was granted. Prior to the withdrawal of counsel, it would have been inappropriate, and that would have been attorney misconduct had either, any counsel attempted to contact
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and negotiate directly with Ms. McKenna regarding any matter relating to settlement. In large part, the motion to order evidentiary hearing is attempts [sic] to either reargue the underlying merits of the case, which Ms. McKenna gave up in reaching a settlement in this case, or were previously covered during the motion to enforce settlement. For all of those reasons, the motion to order evidentiary hearing is denied.
The circuit court entered a written order denying McKenna’s
Motion for an Evidentiary Hearing on March 4, 2015 (Order
Denying Motion for Evidentiary Hearing).
3. Revised Settlement Agreement Terms
On February 6, 2015, the circuit court entered an
order granting Defendants’ Motion to Enforce (Order Granting
Motion to Enforce). The circuit court found that “[t]he
parties herein entered into a binding settlement agreement
during a settlement conference held on October 21, 2014.” The
circuit court also found that “[t]he [proposed settlement
agreement] submitted to [McKenna] contains terms beyond the
material terms of the Settlement Agreement.” The circuit
court accordingly struck the following provisions of the
Settlement and Release Agreement:
a. Paragraph 4 Attorneys’ Fees: All language after “The Settling Parties shall bear their respective attorneys’ fees and costs incurred in the Lawsuit. b. Paragraph 5, Non-Disparagement shall be stricken in its entirety. c. Paragraph 6, Release by Plaintiff, [] all language after the word “Lawsuit”. d. Paragraph 8, Release of Unknown Claims shall be stricken in its entirety. e. Paragraph 11, Indemnification [] all language after SAC is stricken. f. Paragraph 12(c) Acknowldgment [sic]. Inasmuch as
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Plaintiff has refused to participate in the drafting of the Settlement Agreement, she cannot be deemed drafter. g. Paragraph 13. Tax Consequences shall be stricken in its entirety. h. Paragraph 18, Further Assurances shall be stricken in its entirety.
The circuit court ordered that Defendants revise the proposed
settlement agreement in conformity with the stricken
provisions (revised settlement agreement) and submit it to the
circuit court for execution by the Clerk of Court. The
circuit court also ordered that Defendants submit the
stipulation for dismissal with prejudice to the circuit court
for execution by the Clerk of Court. Defendants submitted the
revised settlement agreement and the stipulation for
dismissal. The case was dismissed on March 16, 2015.3 The
circuit court entered a Final Judgment in favor of Defendants
on March 10, 2016.
B. ICA Proceedings
McKenna filed a notice of appeal on March 31, 2016.
McKenna appealed: (1) the February 6, 2015 Order Granting
Motion to Enforce; (2) the March 4, 2015 Order Denying Motion
for an Evidentiary Hearing; and (3) the circuit court’s March
10, 2016 Final Judgment. McKenna argued, inter alia, that the
3 McKenna filed various unsuccessful motions attempting to appeal the stipulation for dismissal and restore the proceedings. McKenna also filed an appeal to the ICA, which was dismissed for lack of appellate jurisdiction. Meanwhile, McKenna’s former counsel moved for distribution of settlement proceeds, which the circuit court granted.
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settlement agreement was not executed voluntarily, that the
circuit court rewrote the settlement agreement such that it
was materially different than the settlement agreement
originally drafted by Defendants, and that there was no mutual
assent or meeting of the minds at the settlement conference.
In the Defendants’ answering brief, they argued that
there was a meeting of the minds as to the terms of the
settlement agreement and that McKenna suffered no prejudice by
her failure to personally participate in drafting a written
settlement agreement. Defendants also argued that the circuit
court used its “inherent power to modify the written
agreement” and “revised the written settlement agreement to
delete provisions not expressly agreed upon at the settlement
conference.”
On June 29, 2018, the ICA entered a Summary
Disposition Order (SDO) affirming the circuit court. McKenna
v. Ass’n of Apartment Owners of Elima Lani, NO. CAAP-16-284,
2018 WL 3199233 (App. June 29, 2018). The ICA reasoned that
as McKenna “does not dispute that the October 21, 2014
Settlement Offer was orally accepted by [her] at that
proceeding,” there was “no indication that McKenna did not
intend to be bound to the resulting judgment or dismissal with
prejudice. Therefore, the agreement was entered into
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voluntarily and there was a meeting of the minds, and a
binding settlement agreement was formed.” The ICA further
held that the revised settlement agreement “did not materially
change the essential terms agreed to at the Settlement
Conference, and in fact, included several edits to assure that
the agreement was not outside the scope of what was
discussed.”
The ICA entered its Judgment on Appeal on September
17, 2018. McKenna filed an application for writ of
certiorari.
II. STANDARD OF REVIEW
A motion to enforce a settlement agreement is
reviewed by the same standard as a motion for summary
judgment. Miller, 9 Haw. App. at 64, 828 P.2d at 292. We
review the grant or denial of a motion for summary judgment
“de novo under the same standard applied by the circuit
court.” Dairy Rd. Partners v. Island Ins. Co., 92 Hawaii 398,
411, 992 P.2d 93, 106 (2000). Summary judgment is appropriate
if “there is no genuine issue as to any material fact and []
the moving party is entitled to judgment as a matter of law.”
Hawaii Rules of Civil Procedure (HRCP) Rule 56(c).
Accordingly, granting a motion to enforce a settlement
agreement is appropriate if “there [is] no genuine issue of
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material fact and [] as a matter of law the parties [] entered
into a valid compromise agreement.” Miller, 9 Haw. App. at
64, 828 P.2d at 292.
III. DISCUSSION
McKenna raises the following questions on
application for writ of certiorari:
1. Whether the ICA gravely erred in holding that McKenna had a meeting of the minds as to the October 21, 2014 original agreement?
2. Whether the trial court’s revisions of the original draft agreement and enforcement of the new and revised court ordered agreement was proper over McKenna’s objection and lack of consent.
We interpret McKenna’s application as arguing that
the circuit court erred in enforcing the revised settlement
agreement without granting McKenna’s motion for an evidentiary
hearing, in light of the genuine issues of material fact
expressed in McKenna’s questions on certiorari.4 We agree
that McKenna raises genuine issues of material fact as to the
validity of her assent to the settlement agreement and as to
the terms agreed to at the October 21, 2014 settlement.
4 While McKenna does not explicitly contend that the circuit court improperly denied her motion for an evidentiary hearing, McKenna references the circuit court’s erroneous failure to conduct an evidentiary hearing multiple times in her application. Moreover, McKenna challenged the order denying her motion for an evidentiary hearing in her August 7, 2016 Opening Brief to the ICA. Because McKenna is a pro se litigant, we construe her arguments liberally. See Waltrip v. TS Enters., Inc., 140 Hawaii 226, 231, 398 P.3d 815, 820 (2016). Accordingly, we construe McKenna’s argument to be that the circuit court erroneously denied her motion for an evidentiary hearing. We consider the issue preserved.
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Because the standard for granting a motion to enforce a
settlement agreement is the same standard that governs the
grant or denial of a motion for summary judgment, the circuit
court erred in granting Defendants’ Motion to Enforce when
genuine issues of material fact exist. The evidentiary
hearing requested by McKenna will allow a full record to be
developed to answer the questions raised in McKenna’s
application.
In Miller, the ICA held that an order granting a
motion to enforce a settlement agreement is reviewed by the
same standard as that of a motion for summary judgment. 9
Haw. App. at 64, 828 P.2d at 292. As such, “the question is
whether the evidence presented to the trial court indicated
that there was no genuine issue of material fact and that as a
matter of law the parties had entered into a valid compromise
agreement.” Id. The ICA further held that the circuit court
must hold an evidentiary hearing if genuine issues of material
fact exist regarding the validity of a settlement agreement.
Id. at 64-65, 828 P.2d at 292. If, at the hearing, the
circuit court determines that there was no valid settlement
agreement, the circuit court should set the case for trial on
the merits. Id. at 71, 828 P.2d 295.
Miller involved a contested settlement agreement
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concerning a dispute to quiet title to interests in real
property on the island of Hawaii. Id. at 59, 828 P.2d at 289.
There, an agreement was reached at a settlement conference,
and a hand-written memorandum was executed by all parties.
Id. at 59-60, 828 P.2d at 289. Subsequently, certain parties
filed a motion to enforce settlement and attached a copy of
the hand-written agreement and a stipulation, the terms of
which differed from those of the agreement. Id. at 60, 828
P.2d at 290. The motion requested that the court enter an
order approving the stipulation, or in the alternative, enter
a judgment enforcing the agreement’s terms. Id. The circuit
court granted the motion and entered an order enforcing
certain terms of the stipulation and the agreement. Id. at
61, 828 P.2d 290. The parties contesting the stipulation
filed a motion asking the court to reconsider the order and to
hold an evidentiary hearing, which the circuit court later
denied. Id.
In vacating the circuit court’s decision, the ICA
concluded that the enforcement of a settlement agreement must
be treated like a motion for summary judgment. Id. at 64, 828
P.2d at 292. The ICA stated,
[S]ince very important rights are at stake in most cases, appellate courts must strive to ensure that the purported compromise agreement sought to be enforced is truly an agreement of the parties. A motion to enforce a settlement contract is neither ordinary nor
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routine . . . . Its relative simplicity is a concession to the policy favoring settlements, but only to the extent that full and fair opportunities to prove one’s points are substantially preserved.
Id. at 63, 828 P.2d at 291 (internal quotations omitted).
Evaluating the settlement agreement by a summary judgment
standard, the ICA held that genuine issues of material fact
remained and that the circuit court should have set the case
for trial on the merits or ordered an evidentiary hearing on
the validity of the settlement agreement. Id. at 64-65, 828
P.2d at 292. Noting that discrepancies existed between the
hand-written agreement terms and the stipulation terms, the
ICA held that those discrepancies per se created a genuine
issue as to whether there was a meeting of the minds regarding
the terms of either document. Id. at 67, 828 P.2d at 293.
We adopt the ICA’s analysis in Miller because it is
consistent with Hawaii law and that of other jurisdictions,
and because public policy favors this approach. “[S]ummary
judgment is proper where the moving party demonstrates that
there is no genuine issue of material fact and it is entitled
to judgment as a matter of law.” Kaneohe Bay Cruises, Inc. v.
Hirata, 75 Haw. 250, 258, 861 P.2d 1, 6 (1993). In the
context of summary judgment, if a trial court finds that
genuine issues of material fact exist, summary judgment is
denied and the parties proceed to trial on the merits. HRCP
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Rule 56(d). Because enforcing a disputed settlement similarly
involves summarily adjudicating a case, it is consistent with
our courts’ summary judgment practices that the trial court
deny a motion to enforce a settlement where genuine issues of
material fact exist surrounding the settlement. In this
matter, because McKenna requested an evidentiary hearing and
not an immediate trial, the circuit court should have, at a
minimum, held an evidentiary hearing on whether a valid
settlement agreement existed. If the circuit court found that
no valid settlement agreement existed, it then could have
proceeded to a trial on the merits of the underlying lawsuit.
Other jurisdictions also treat motions to enforce
settlement as motions for summary judgment and have held that
courts are required to hold an evidentiary hearing to resolve
genuine issues of material fact before granting a motion for
summary judgment. For example, the Nevada Supreme Court held
in Resnick v. Valente, 637 P.2d 1205, 1206 (Nev. 1981), that
an alleged settlement agreement could not be summarily reduced
to judgment upon the motion of one party without an
evidentiary hearing. The federal courts have also adopted
this practice. The United States Court of Appeals for the
Ninth Circuit stated that “[w]here material facts concerning
the existence or terms of an agreement to settle are in
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dispute, the parties must be allowed an evidentiary hearing.”
Callie v. Near, 829 F.2d 888, 890 (9th Cir. 1987) (emphasis in
original).
We adopt the process of allowing an evidentiary
hearing instead of immediately scheduling the matter for trial
on the underlying claims based on the public policy supporting
the enforcement of settlement agreements. See State Farm Fire
and Cas. Co. v. Pac. Rent-All, Inc., 90 Hawaii 315, 323, 978
P.2d 753, 761 (1999). This public policy position underpins
the procedural distinction between the denial of a motion to
enforce a settlement and the denial of a motion for summary
judgment. Whereas, when genuine issues of material fact
preclude the grant of summary judgment, the circuit court must
set the case for trial on the merits, see HRCP Rule 56(d),
when genuine issues of material fact as to the terms or
validity of a settlement agreement preclude the enforcement of
that agreement, the circuit court may hold an evidentiary
hearing to address those genuine issues in lieu of proceeding
directly to trial on the merits. See Miller, 9 Haw. App. at
63, 828 P.2d at 291. Because the policy supporting settlement
should not be invoked at the expense of depriving litigants of
the full and fair opportunity to have a trial on the merits,
however, the circuit court should set a matter for trial on
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the merits if it concludes at an evidentiary hearing that the
parties did not enter into a valid settlement agreement.
In light of the foregoing, we hold that a trial
court errs in granting a motion to enforce a settlement
agreement when genuine issues of material fact exist regarding
the existence and terms of the settlement agreement. See id.
at 64, 828 P.2d at 292. We further hold that the circuit
court must, at minimum, hold an evidentiary hearing as to
those genuine issues of fact.
As settlement agreements are contracts, Dowsett v.
Cashman, 2 Haw. App. 77, 83, 625 P.2d 1064, 1068 (App. 1981),
however, the traditional requirements for contract formation
must be met for an enforceable settlement to exist. Carson v.
Saito, 53 Haw. 178, 182, 489 P.2d 636, 638 (1971) (“We have
held that 'the parties not having reached agreement upon all
of the essential and material terms, conditions or covenants
of the agreement, there was failure of mutual assent or a
meeting of the minds and therefore no binding contract.”) At
the evidentiary hearing requested by McKenna, the circuit
court must therefore determine whether there was a meeting of
the minds as to essential and material terms.5
5 Pursuant to Section 204 of the Restatement (Second) of Contracts (1981), however:
(continued. . .)
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Here, McKenna adequately refuted Defendants’
allegation that there was no genuine issue of material fact.
“The moving party in a summary judgment proceeding has the
obligation to show . . . that there is no genuine issue of
material fact.” Miller, 9 Haw. App. at 65, 828 P.2d at 292.
Once the moving party has satisfied its burden, “the opposing
party must come forward, through affidavit or other evidence,
with specific facts showing that there is a genuine issue of
material fact.” Id. However, “the alleged facts and the
inferences logically drawn therefrom must be viewed in the
light most favorable to the non-moving party.” Id.
Defendants’ Motion to Enforce simply alleged that
the parties entered into a binding settlement agreement at the
settlement conference and attached the proposed settlement
agreement and stipulation for dismissal. McKenna attached a
declaration to her opposition to Defendants’ Motion to Enforce
asserting that (1) the proposed settlement terms were
different than the settlement conference terms, and that, (2)
due to certain factors, her verbal assent to the settlement
When the parties to a bargain sufficiently defined to be a contract have not agreed with respect to a term which is essential to a determination of their rights and duties, a term which is reasonable in the circumstances is supplied by the court.
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conference terms was invalid.
McKenna argues, and we agree, that viewed in the
light most favorable to McKenna, there exist genuine issues of
material fact regarding the existence and terms of the
settlement agreement. First, McKenna raises a genuine issue
of material fact as to the validity of her assent to the
settlement conference terms. “Whether or not the parties
entered into an agreement is essentially a question of fact.”
Island Directory Co. v. Iva’s Kinimaka Enters., Inc., 10 Haw.
App. 15, 23, 859 P.2d 935, 940 (App. 1993). In McKenna’s
declaration attached to her opposition to Defendants’ Motion
to Enforce, McKenna claimed that, essentially, her verbal
assent to the settlement conference terms was invalid because
she was ill at the settlement conference and was not allowed
to leave. She also stated that the circuit court coerced her
into settling by repeatedly insisting that she could not
afford to go to trial. These claims call into question, and
thus demonstrate a genuine issue as to, the validity of
McKenna’s assent at the settlement conference.
Second, like the discrepancy between the stipulation
and agreement alleged in Miller, here the terms of the
proposed settlement agreement differed from the settlement
conference terms. The proposed settlement agreement contained
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twelve provisions not placed on the record at the settlement
conference: (1) attorneys’ fees, (2) warranties and
representations, (3) indemnification, (4) acknowledgments, (5)
compromise of disputed claims, (6) severability, (7) binding
effect, (8) governing law, (9) counterparts, (10) integration
clause, (11) time is of the essence, and (12) headings and
captions. Defendants argued that these terms are “standard
provisions commonly found in settlement agreements.”
However, the circuit court struck several of the additional
provisions, finding that they were beyond what was agreed to
at the settlement conference. The difference between the
proposed settlement agreement terms and the settlement
conference terms evinces a genuine issue as to which terms
were explicitly and implicitly agreed to at the settlement
conference.
The circuit court acknowledged in its Order Granting
Motion to Enforce that the proposed settlement agreement
contained terms beyond what the parties agreed to at the
settlement conference. Pursuant to the ICA’s analysis in
Miller, this discrepancy alone creates a genuine issue of
material fact. See 9 Haw. App. at 67, 828 P.2d at 293. The
circuit court therefore erred in granting Defendants’ Motion
to Enforce in light of the genuine issue of which terms the
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parties agreed to at the settlement conference.
As courts are “more indulgent towards the materials
submitted by the non-moving party,” Miller, 9 Haw. App. at 66,
828 P.2d at 292, McKenna adequately refuted Defendants’
showing and demonstrated that genuine issues of material fact
exist as to McKenna’s assent to the settlement agreement and
as to the terms to which the parties agreed at the October 21,
2014 settlement conference. Pursuant to the standard that we
now adopt, we hold that the circuit court erred in granting
Defendants’ Motion to Enforce because genuine issues of
material fact exist as to the existence and terms of the
original settlement agreement. Rather than granting
Defendants’ Motion to Enforce, the circuit court should have
granted McKenna’s motion for an evidentiary hearing.
On remand, the circuit court should hold an
evidentiary hearing to address the conflicting facts to
determine whether the parties entered into a valid settlement
IV. CONCLUSION
We hold that, as with a motion for summary judgment,
the circuit court may not grant a motion to enforce a
settlement agreement when genuine issues of material fact
remain. Here, McKenna raised genuine issues of material fact
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regarding her assent to the settlement agreement and the
discrepancy between the terms of the revised settlement
agreement and the original settlement agreement. The circuit
court erroneously denied McKenna’s request for an evidentiary
hearing, striking certain terms from the proposed settlement
agreement and granting Defendants’ motion to enforce the
settlement agreement.
We vacate the ICA’s September 17, 2018 Judgment on
Appeal. We remand with instruction that the circuit court hold
an evidentiary hearing to address the issues of fact as to the
terms and existence of the settlement agreement in further
proceedings consistent with this opinion.
Carol L. McKenna, /s/ Mark E. Recktenwald petitioner/plaintiff- appellant pro se /s/ Paula A. Nakayama
Michael C. Bird, /s/ Sabrina S. McKenna Jonathan W.Y. Lai, and Lisa M. Yang and Paul D. /s/ Richard W. Pollack Alston and J. Blaine Rogers for respondent/defendant- /s/ Michael D. Wilson appellee Wells Fargo Bank, N.A.