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Electronically Filed Supreme Court SCWC-XX-XXXXXXX 20-MAR-2026 08:12 AM Dkt. 11 OP
IN THE SUPREME COURT OF THE STATE OF HAWAI‘I
---o0o---
NAHO YAMAGUCHI, Respondent/Plaintiff-Appellant,
vs.
TITLE GUARANTY ESCROW SERVICES, INC., a Hawaiʻi corporation, Petitioner/Defendant/Cross-Claimant/ Third-Party Plaintiff-Appellee,
and
MARTELL CAPITAL GROUP, LLC, doing business as IRONGATE; THE BLACKSTONE GROUP, L.P., a Delaware Limited Partnership, Respondents/Defendants/Cross-Claim Defendants-Appellees,
PACREP LLC, a Delaware limited liability company, Respondent/Third-Party Defendant.
SCWC-XX-XXXXXXX
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS (CAAP-XX-XXXXXXX; CASE NO. 1CC181000539)
MARCH 20, 2026
McKENNA, ACTING, C.J., EDDINS, GINOZA, AND DEVENS, JJ., AND CIRCUIT JUDGE JOHNSON, ASSIGNED BY REASON OF VACANCY
OPINION OF THE COURT BY DEVENS, J. *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
I. INTRODUCTION
This case involves a 2013 condominium sales contract (Sales
Contract) between purchaser Naho Yamaguchi (Yamaguchi) and
seller PACREP LLC (PACREP). That Sales Contract incorporated a
separate escrow agreement (Escrow Agreement) executed by PACREP
and Title Guaranty Escrow Services, Inc. (Title Guaranty), the
escrow company facilitating the condominium sale. Title
Guaranty was not a party to the Sales Contract, and Yamaguchi
was not a party to the Escrow Agreement. This appeal arises
from Yamaguchi’s claims against Title Guaranty for breach of
contract and breach of fiduciary duty relating to the Escrow
Agreement.
In February 2016, Yamaguchi defaulted on the Sales Contract
after failing to make the closing payment on the purchase of a
condominium unit in the Ritz-Carlton Residences, Waikiki Beach
condominium development (Ritz-Carlton Waikiki). The Escrow
Agreement between PACREP and Title Guaranty, which did not
incorporate the Sales Contract, provided, in pertinent part,
that in the event of a purchaser’s default,
[e]scrow shall thereafter treat all funds of the purchaser paid on account of such purchaser’s sales contract as funds of Seller and not as funds of the purchaser. Thereafter, such funds shall be free of the escrow established by this Agreement and shall be held by Escrow for the account of Seller. Upon written request by Seller, Escrow shall pay such funds to Seller, less any escrow cancellation fee.
(Emphases added.) Separately, Section D.38 of the Sales
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Contract provided that upon default, if Yamaguchi had already
paid more than fifteen percent of the purchase price into
escrow, PACREP was entitled to liquidated damages equaling
fifteen percent of the sales price or the amount of damages
PACREP incurred as a result of Yamaguchi’s breach, whichever was
greater. At the time of default, Yamaguchi’s escrow payments
exceeded fifty percent of the purchase price.
Upon Yamaguchi’s default, PACREP sent Yamaguchi notice of
her breach. PACREP then sent Yamaguchi two contract termination
letters after Yamaguchi failed to cure her default. The first
termination letter, copied to Title Guaranty, informed Yamaguchi
that PACREP had “elected to exercise its right, pursuant to
Section D.38 of the Sales Contract, to terminate the Sales
Contract and retain fifteen percent (15%) of the Total Purchase
Price as liquidated damages.” (Emphases added and omitted.)
The second termination letter, also copied to Title Guaranty,
notified Yamaguchi that PACREP had “elected to exercise its
right, pursuant to Section D.38 of the Sales Contract, to
terminate the Sales Contract and retain all deposits pursuant to
the Sales Contract.” (Emphases added and omitted.) Both
termination letters stated that PACREP was “hereby notifying
Title Guaranty Escrow Services, Inc. to cancel escrow and to
release said funds and accrued interest to Seller.” In April
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2016, Title Guaranty disbursed the balance of Yamaguchi’s
deposit to PACREP.
Pursuant to the remedy provisions of the Sales Contract,
Yamaguchi subsequently filed for arbitration against PACREP,
contesting the amount PACREP refunded her from the escrow
deposits. Yamaguchi was awarded damages on a conversion claim,
less PACREP’s entitlement to liquidated damages. PACREP
satisfied the judgment.
Separately, Yamaguchi filed a complaint in the present
action in the Circuit Court of the First Circuit (circuit court)
against Title Guaranty, asserting breach of contract and breach
of fiduciary duty claims. 1
Title Guaranty moved for summary judgment on Yamaguchi’s
claims and Yamaguchi cross-moved for partial summary judgment.
The circuit court granted Title Guaranty’s motion, denied
Yamaguchi’s cross-motion, and awarded attorney fees to Title
Guaranty.2 Yamaguchi appealed to the Intermediate Court of
Appeals (ICA), which affirmed the circuit court’s order denying
Yamaguchi’s motion for partial summary judgment. 3 However, the
1 Yamaguchi also alleged claims of conversion and unfair or deceptive acts or practices (UDAP) in violation of Hawaiʻi Revised Statutes (HRS) Chapter 480.
2 The Honorable James H. Ashford presided.
3 The ICA also affirmed summary judgment in favor of Title Guaranty on Yamaguchi’s conversion and UDAP claims.
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ICA vacated summary judgment as to Yamaguchi’s breach of
contract and breach of fiduciary duty claims, after concluding
there was a genuine issue of material fact as to whether Title
Guaranty breached the Escrow Agreement and its fiduciary duty to
Yamaguchi when it disbursed the entirety of her escrow deposit
to PACREP. Citing Hawaiʻi Revised Statutes (HRS) § 449-16
(2013), the ICA concluded that “Title Guaranty had ‘the
responsibility of a trustee for all moneys’ it received from
Yamaguchi.” (Emphasis added.)
We hold that Yamaguchi failed to raise a genuine issue of
material fact as to whether Title Guaranty breached the Escrow
Agreement. Accordingly, we also hold that Yamaguchi failed to
raise a genuine issue as to whether Title Guaranty breached its
fiduciary duty under HRS § 449-16.
With respect to Yamaguchi’s breach of contract claim, Title
Guaranty had a legal obligation to follow the terms of the
Escrow Agreement, to which Yamaguchi assented in the Sales
Contract, and which Title Guaranty fulfilled. Upon a
purchaser’s default, Title Guaranty was required, pursuant to
the Escrow Agreement, to “treat all funds of the purchaser paid
on account of such purchaser’s sales contract as funds of
Seller,” and to “pay such funds to Seller” upon the seller’s
“written request.” (Emphases added.)
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Yamaguchi defaulted. PACREP sent the required written
notices to Yamaguchi. With the terms of the Escrow Agreement
met, Title Guaranty released the entire escrow deposit to
PACREP. Thus, there is no genuine issue of material fact as
Title Guaranty complied with the plain and unambiguous language
of the Escrow Agreement. Therefore, as to Yamaguchi’s breach of
contract claim, we vacate the ICA’s decision and judgment and
affirm the circuit court’s order granting summary judgment for
Title Guaranty.
As to Yamaguchi’s claim that Title Guaranty breached its
fiduciary duty, we also vacate the ICA’s decision and judgment
and affirm the circuit court’s order granting summary judgment
for Title Guaranty. As an escrow depository, Title Guaranty
owed a fiduciary duty to Yamaguchi for the deposits made.
However, Title Guaranty’s fiduciary duty was to “‘comply
strictly with the provisions’ of the parties’ escrow agreement
or instructions.” Hancock v. Kulana Partners, LLC, 145 Hawai‘i
374, 383, 452 P.3d 371, 380 (2019) (quoting DeMello v. Home
Escrow, Inc., 4 Haw. App. 41, 47, 659 P.2d 759, 763 (App.
1983)). See also HRS § 449-1 (2013) (stating that acts by an
escrow depository are to be performed “in accordance with the
terms of the agreement between the parties to the transaction”);
and HRS § 449-16 (explaining that an escrow depository “shall
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have the responsibility of a trustee for all moneys, other
consideration, or instruments received by it”).
Title Guaranty strictly complied with the terms of the
Escrow Agreement and, therefore, Title Guaranty did not breach
its fiduciary duty to Yamaguchi. In reference to PACREP’s first
letter to Yamaguchi indicating its election to retain fifteen
percent of Yamaguchi’s deposit as damages, and PACREP’s second
letter indicating its election to retain all of Yamaguchi’s
deposit, the ICA concluded that Title Guaranty breached its
fiduciary duty after receiving “conflicting instructions from
[PACREP] before it disbursed Yamaguchi’s funds.” Even if the
two letters were interpreted to be in conflict, read in the
light most favorable to Yamaguchi, the Escrow Agreement clearly
and unambiguously stated that in the event of a purchaser’s
default, Title Guaranty was required to treat “all funds” in
escrow as property of the seller, and that “such funds shall be
free of the escrow established by this Agreement.” Thus,
PACREP’s two termination letters did not conflict with the
relevant, controlling provision of the Escrow Agreement with
which Title Guaranty complied.
Yamaguchi also appealed the circuit court’s award of
attorney fees and costs to Title Guaranty, which the ICA did not
reach after concluding that Title Guaranty was no longer the
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prevailing party. Title Guaranty does not raise attorney fees
on certiorari. Because the issue of attorney fees is not
properly before this court, we remand the case to the ICA to
determine whether the circuit court abused its discretion in
awarding attorney fees and costs to Title Guaranty.
II. BACKGROUND
A. Escrow Agreement
The Escrow Agreement was executed by PACREP and Title
Guaranty in February 2013.
Section C of the Escrow Agreement’s “Recitals” provided:
Seller intends to enter into sales contracts for the sale of units in the Project under the Public Report, the terms of which sales contracts will provide for payment of the purchase price and closing costs to be made to Escrow, to be held and disbursed by Escrow pursuant to the terms and provisions of this Agreement.
Pursuant to the Escrow Agreement, Title Guaranty was to
“receive, deposit and hold in escrow and disburse . . . all
payments received by Escrow under sales contracts made by
Seller[.]”
In the event of a purchaser’s default, Section 12 of the
Escrow Agreement stated in relevant part:
If Seller subsequently certifies in writing to Escrow that Seller has terminated the sales contract in accordance with the terms thereof and provides to Escrow copies of all such notices of termination and proof of receipt sent to the purchaser, Escrow shall thereafter treat all funds of the purchaser paid on account of such purchaser’s sales contract as funds of Seller and not as funds of the purchaser. Thereafter, such funds shall be free of the escrow established by this Agreement and shall be held by Escrow for the account of Seller. Upon written request by
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Seller, Escrow shall pay such funds to Seller, less any escrow cancellation fee. Escrow shall thereupon be released from any further duties or liability hereunder with respect to such funds and such purchaser.
(Emphases added.)
The Escrow Agreement further provided:
14. Protection of Escrow. In consideration of Escrow acting as escrow holder hereunder, it is agreed that Escrow is relieved from all liability for acting in accordance with the terms hereof, notwithstanding a notice to the contrary by Seller or any purchaser or third person[.]
. . . .
15. Binding Effect. This Agreement shall be binding upon, shall apply to and shall inure to the benefit of the parties hereto and their respective heirs, devisees, personal representatives, successors in trust, and assigns, and shall upon its acceptance by a given purchaser (which shall automatically occur upon Seller’s execution of a sales contract), also be binding upon and inure to the benefit of such purchaser, his or her heirs, personal representatives, devisees, successors and permitted assigns.
B. Sales Contract to Purchase Ritz-Carlton Waikiki Condominium Unit
In September 2013, Yamaguchi entered into the Sales
Contract with PACREP to purchase Unit 1215 (Unit) in the Ritz-
Carlton Waikiki for a sale price of $1,182,800.00, to be paid in
installments.
Section 13 of the Sales Contract provided that the Escrow
Agreement between Title Guaranty and PACREP would be
incorporated into the Sales Contract, stating, in relevant part,
Seller has entered into the Escrow Agreement with Escrow, which by this reference is incorporated herein and made a part hereof, covering the deposit with Escrow of all funds paid by Purchaser under this Sales Contract and the
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disbursement of such funds by Escrow. All payments to be made hereunder, other than the Initial Deposit made through the Project Broker, shall be paid by Purchaser to Escrow pursuant to the Escrow Agreement. Purchaser hereby acknowledges that Purchaser has examined and approves the terms of the Escrow Agreement, and hereby assumes the benefits and obligations set forth therein. . . .
. . . SELLER AND PURCHASER HEREBY IRREVOCABLY INSTRUCT ESCROW TO MAKE DISBURSEMENTS FROM PURCHASER’S DEPOSITS AS MAY BE PERMITTED BY THE ESCROW AGREEMENT. SELLER AND PURCHASER HEREBY AGREE THAT ESCROW IS RELIEVED FROM ALL LIABILITY FOR ACTING IN ACCORDANCE WITH THE TERMS OF THIS SECTION, NOTWITHSTANDING A NOTICE TO THE CONTRARY BY SELLER, PURCHASER, OR ANY OTHER PARTY OR THIRD PERSON; PROVIDED, HOWEVER, THAT ESCROW SHALL NOT BE RELIEVED FROM ANY LIABILTY ARISING OUT OF OR IN CONNECTION WITH ITS OWN INTENTIONAL, GROSS NEGLIGENCE, OR RECKLESS ACTS OR OMISSIONS.
(Emphases added and omitted.)
Section D.38 of the Sales Contract provided that in the
event of a purchaser’s default, the seller’s remedies were, in
relevant part, as follows:
In the event purchaser . . . shall fail to comply with or perform any of the covenants, agreements or other obligations to be performed by purchaser under the terms and provisions of this sales contract, . . . seller shall provide purchaser with written notice of such default or breach and the opportunity for purchaser to remedy such default or breach within twenty (20) days after the date of receipt of such notice. If purchaser has not remedied such default or breach within such twenty (20)-day period, seller shall be entitled to any remedy available in law or in equity including . . . termination of this sales contract upon written notice to purchaser . . . . [I]f purchaser loses its rights and interest in the unit as a result of purchaser’s breach or default under this sales contract after fifteen percent (15%) of the purchase price has been paid by purchaser, (exclusive of any interest accrued thereon), seller shall refund to purchaser any amount that remains after subtracting (A) fifteen percent (15%) of the purchase price of the unit (exclusive of any interest earned thereon), or the amount of damages incurred by seller as a result of such breach, whichever is greater, from (B) the amount paid by purchaser with respect to the
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purchase price of the unit, excluding any interest earned thereon.
(Capitalization altered.)
C. Yamaguchi’s Default
In 2016, Yamaguchi defaulted under the Sales Contract.
Prior to defaulting, Yamaguchi had deposited approximately
$592,400.00 into escrow, which was substantially greater than
fifteen percent of the purchase price of the Unit.
On February 2, 2016, PACREP sent Yamaguchi a letter, with
Title Guaranty copied, notifying Yamaguchi of her default and
warning that
[p]ursuant to Section D.38 of the Sales Contract, you have twenty (20) days from the receipt of this notice of default to remedy the default. If you fail to close by said date, Seller may exercise any of its available remedies as set forth in Section D.38 of the Sales Contract.
(Emphases omitted.)
In a letter dated March 7, 2016 (March 7 Letter), PACREP
sent a “Notice of Termination” to Yamaguchi, copied to Title
Guaranty, stating in part:
Because you failed to timely remedy the default, you are hereby notified that Seller has elected to exercise its right, pursuant to Section D.38 of the Sales Contract, to terminate the Sales Contract and retain fifteen percent (15%) of the Total Purchase Price as liquidated damages.
By copy of this letter, we are hereby notifying Title Guaranty Escrow Services, Inc. to cancel escrow and to release said funds and accrued interest to Seller.
Included with PACREP’s March 7 Letter was an unsigned
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“Termination Agreement and Mutual Release” noted as being by and
between PACREP and Yamaguchi, communicating in part:
Buyer and Seller agree that as soon as reasonably possible after the Termination Date, Escrow shall release to Buyer the amount that remains after subtracting (A) ONE HUNDRED SEVENTY SEVEN FOUR THOUSAND FOUR HUNDRED TWENTY AND NO/100 DOLLARS ($177,420.00) (“Seller’s Payment”) from (B) the Deposits, which totals FOUR HUNDRED FOURTEEN THOUSAND NINE HUNDRED EIGHTY AND NO/100 DOLLARS ($414,980.00) (“Buyer’s Payment”).
In a letter dated March 25, 2016 (March 25 Letter), PACREP
sent a second “Notice of Termination” to Yamaguchi, again
copying Title Guaranty, declaring in part:
Because you failed to timely remedy the default, you are hereby notified that Seller has elected to exercise its right, pursuant to Section D.38 of the Sales Contract, to terminate the Sales Contract and retain all deposits pursuant to the Sales Contract.
By copy of this letter, we are hereby notifying Title Guaranty Escrow Services, Inc. to cancel escrow and to release said funds and accrued interest to Seller.
Twelve days after the March 25 Letter, Title Guaranty
disbursed $250,014.39 to PACREP on April 6, 2016. This
disbursement represented the balance of Yamaguchi’s escrow
deposit, with the difference of approximately $592,400.00 of her
total deposit having been previously disbursed to PACREP for
permitted construction costs.
On March 31, 2016, Title Guaranty issued a letter to
Yamaguchi, informing her that “[f]unds have been released to
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seller as liquidated damages.” Shortly thereafter, Yamaguchi’s
counsel informed PACREP that she objected to the release of the
funds. Yamaguchi’s counsel also sent a subsequent communication
to Title Guaranty, inquiring as to the status of Yamaguchi’s
deposit.
D. Yamaguchi and PACREP’s Arbitration Proceedings
Pursuant to the arbitration provision in the Sales
Contract, Yamaguchi submitted her dispute with PACREP to
arbitration claiming: (1) recission of the Sales Contract under
HRS Chapter 514B; (2) breach of contract; (3) conversion; (4)
liquidated damages; and (5) unfair and deceptive acts or
practices (UDAP) under HRS Chapter 480. Yamaguchi prevailed on
her conversion and UDAP claims. The arbitrator awarded
Yamaguchi: $412,750.90 in conversion damages; $1,000.00 in
statutory damages and $5,000.00 in attorney fees related to her
UDAP claim. The arbitrator also awarded PACREP liquidated
damages in the sum of $177,420.00, which was reflected in the
net amount awarded to Yamaguchi. The circuit court entered a
final judgment confirming the arbitration award on September 25,
2018, and PACREP fully satisfied the judgment on October 12,
2018.4
4 The Honorable James H. Ashford presided.
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E. Circuit Court Proceedings
1. Yamaguchi’s Complaint
While Yamaguchi’s arbitration claims against PACREP were
pending, Yamaguchi filed a lawsuit in the circuit court against
Title Guaranty.5 Relevantly, Yamaguchi alleged conversion (Count
I); breach of fiduciary duty (Count II); breach of contract
(Count III); and a UDAP claim (Count IV).
2. Title Guaranty’s Motion for Summary Judgment
On December 18, 2020, Title Guaranty filed a motion for
summary judgment asserting that its sole duty was to comply with
the Escrow Agreement, which it fulfilled by disbursing
Yamaguchi’s full escrow deposit to PACREP after PACREP provided
Title Guaranty with the notice of termination of the Sales
Contract following Yamaguchi’s default.
Yamaguchi countered that the Escrow Agreement was
unenforceable because she never signed it which violated the
statute of frauds. Further, Yamaguchi asserted there was a
genuine issue of material fact as to whether she received the
Escrow Agreement. Yamaguchi also argued that Section 13 of the
Sales Contract (incorporation section) was unintelligible, and
5 Yamaguchi amended her circuit court complaint twice. Yamaguchi’s initial complaint also named Irongate, LLC (Irongate) and The Blackstone Group, L.P. (Blackstone Group). Title Guaranty answered and filed a cross- claim against Irongate and Blackstone Group and a third-party complaint against PACREP. These claims were later dismissed by stipulation.
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Section 12 of the Escrow Agreement (escrow funds release
section) was unconscionable and void as a matter of law.
3. Yamaguchi’s Motion for Partial Summary Judgment
Yamaguchi cross-moved for partial summary judgment on her
conversion, breach of contract, breach of fiduciary duty, and
UDAP claims.
4. Circuit Court’s Decision
Following a hearing, the circuit court granted Title
Guaranty’s motion for summary judgment on all counts and denied
Yamaguchi’s motion for partial summary judgment.
The circuit court reasoned:
[N]umber one, plaintiff’s sales contract with [PACREP] incorporates by reference and includes the terms of the escrow agreement between Title Guaranty and [PACREP].
Number two, plaintiff defaulted on her obligations under that sales contract.
Number three, despite plaintiff receiving notice of her default, plaintiff did not cure the default.
Number four, pursuant to section D.38 of the sales contract, [PACREP] elected to terminate the sales contract and retain all of the money plaintiff had deposited with escrow.
Number five, pursuant to paragraph 12 of the escrow agreement, [PACREP] instructed Title Guaranty to release all of plaintiff’s deposited funds to [PACREP].
And, number six, because all of the contractual preconditions to doing so were fulfilled, Title Guaranty had know [sic] choice but to follow the escrow instructions that plaintiff herself had agreed to and were incorporated and made a part of her sales contract.
The circuit court also found that Yamaguchi’s claim that
she never received the Escrow Agreement did not “nullify or
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diminish her agreement to incorporate and make the escrow
agreement a part of her sales contract[,]” and her assertion
that it was not attached to the Sales Contract was “immaterial.”
The court concluded that the Escrow Agreement was
“incorporated into and made a part of the sales contract between
[PACREP] and [Yamaguchi,]” finding that Yamaguchi “unambiguously
incorporated the escrow agreement into her sales contract. She
[did] not need to sign the escrow agreement to make it a part of
her own contract.”
The court further found Section 12 of the Escrow Agreement,
which provided instructions regarding a purchaser’s default, to
be “applicable to the facts of this transaction in this case.”
The circuit court concluded that “Title Guaranty did not
breach any duty whether in contract or in tort to plaintiff[,]”
noting:
Title Guaranty has presented evidence negating the elements of breach of duty, both in tort and in contract, and has demonstrated that plaintiff will not be able to carry her burden of proof at trial. In response, plaintiff has done nothing to show any genuine issue of material fact with respect to either of Counts 2 or 3.
The court also granted Title Guaranty’s motion for summary
judgment as to Yamaguchi’s conversion and UDAP claims, finding
that Yamaguchi did not satisfy her burden.
The circuit court entered judgment for Title Guaranty and
granted Title Guaranty’s motion for attorney fees and costs
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pursuant to HRS § 607-14 (2016). 6
F. ICA Proceedings
1. Opening Brief
Yamaguchi appealed the circuit court’s grant of summary
judgment for Title Guaranty and its denial of her motion for
partial summary judgment. Yamaguchi raised eleven points of
error. Relevant here, Yamaguchi argued that the circuit court
erred in granting Title Guaranty’s motion for summary judgment
on her breach of contract and breach of fiduciary duty claims.
First, Yamaguchi asserted that the circuit court erred
because Title Guaranty’s fiduciary duty extended to her, even if
she was not a signatory to the Escrow Agreement. She argued
that Title Guaranty’s duty “extended beyond the alleged escrow
agreement that binds Yamaguchi” and required Title Guaranty to
avoid self-dealing, conflicts of interest, and gross negligence
or reckless acts or omissions.
Second, Yamaguchi asserted that she was “not a party to
this Escrow Agreement” and “did not negotiate this Escrow
Agreement”; and thus, the Escrow Agreement was illegal,
unconscionable, unfair and deceptive, and, therefore,
unenforceable.
6 The ICA temporarily remanded the case for entry of an appealable judgment, and the circuit court entered an amended final judgment. Yamaguchi subsequently filed a First Amended Statement of Jurisdiction.
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Yamaguchi also contended that the circuit court abused its
discretion in awarding Title Guaranty attorney fees and costs.
2. Answering Brief
Title Guaranty contended that the circuit court did not err
because, as an escrow, its only duty was to “comply strictly
with the provisions of the [Escrow Agreement] or instructions.”
DeMello, 4 Haw. App. at 47, 659 P.2d at 763. Title Guaranty
argued that Yamaguchi agreed to the Escrow Agreement’s terms
when she executed the Sales Contract, which expressly
incorporated the Escrow Agreement.
Title Guaranty also maintained that the Escrow Agreement
was neither illegal nor unenforceable. Pursuant to Section 12
of that agreement, it argued, “once [Title Guaranty] received
[PACREP]’s certification in writing that the Sales Contract was
terminated due to Yamaguchi’s default, Yamaguchi’s deposited
funds automatically by irrevocable agreement became [PACREP]’s
free of the escrow[.]” Accordingly, when Title Guaranty
received the letter from PACREP, it continued, which “instructed
[Title Guaranty] to release the deposited funds to [PACREP],
[Title Guaranty] was required to do so under Section 12 of the
Escrow Agreement.” Title Guaranty contended there was no breach
of its fiduciary or contractual duty because it complied with
PACREP’s instructions; further, the Escrow Agreement released
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Title Guaranty from liability with respect to the escrow funds
and “such purchaser.”
Title Guaranty also argued that Yamaguchi’s claims for
conversion, UDAP, and punitive damages must fail and that the
circuit court properly awarded Title Guaranty attorney fees.
3. Reply Brief
Yamaguchi replied that Title Guaranty breached its
fiduciary duty because it was “fully aware of the conflict
between the Sales Agreement and the Escrow Agreement.”
Yamaguchi contended that Title Guaranty was acting as a
fiduciary for all the parties to the transaction. Therefore,
Title Guaranty breached this duty when it released the funds to
PACREP; failed to disclose to Yamaguchi material information
related to the disbursement of the funds; and failed to maintain
neutrality as the escrow agent.
Yamaguchi also reasserted her breach of contract claim,
arguing that Title Guaranty breached the Escrow Agreement
because the agreement favored the seller over the purchaser.
4. ICA Summary Disposition Order
The ICA affirmed the circuit court’s order denying
Yamaguchi’s motion for partial summary judgment and the order
granting summary judgment for Title Guaranty as to Yamaguchi’s
conversion and UDAP claims. However, the ICA vacated summary
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judgment for Title Guaranty with respect to Yamaguchi’s breach
of contract and breach of fiduciary duty claims.
The ICA concluded there was a genuine issue of material
fact as to whether Title Guaranty breached its fiduciary duty
under HRS § 449-16 when it disbursed the entirety of the escrow
funds to PACREP after PACREP sent “conflicting instructions” to
Title Guaranty in the March 7 Letter and the March 25 Letter.
The first letter, the ICA noted, instructed Title Guaranty to
disburse fifteen percent of the purchase price, pursuant to
Yamaguchi’s default, while the subsequent letter instructed
Title Guaranty to disburse all the escrow funds. Under Section
D.38 of the Sales Contract, the ICA continued, if the purchaser
deposited more than fifteen percent of the Unit’s purchase
price, upon the purchaser’s default, PACREP was entitled to keep
fifteen percent of the price. The ICA pointed out that after
PACREP notified the parties of Yamaguchi’s default, Title
Guaranty disbursed all of Yamaguchi’s funds even though she
deposited more than fifty percent of the purchase price into
escrow. “Under these circumstances,” the ICA concluded, “there
was a genuine issue of material fact about whether Title
Guaranty breached its duty as a trustee of Yamaguchi’s funds
when it released all of her deposits to [PACREP].”
As to Yamaguchi’s breach of contract claim, the ICA
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determined that Yamaguchi was an intended third-party
beneficiary of the Escrow Agreement, consistent with Section 15
of the agreement stating that the agreement shall be “binding
upon and inure to the benefit of such purchaser” of a Ritz-
Carlton Waikiki unit. Thus, the ICA concluded: “[t]here is a
genuine issue of material fact about whether Title Guaranty
breached its contractual duty to Yamaguchi by paying all of her
deposits to [PACREP].”
The ICA rejected Yamaguchi’s remaining claims. The ICA
determined that: (1) “Yamaguchi wasn’t a party to the Escrow
Agreement[,]” meaning her argument regarding the “enforceability
of section 12 has no bearing on the merits of her claims against
Title Guaranty”; and (2) “Title Guaranty was not a party to the
Sales Contract or otherwise in privity with [PACREP,]” rendering
res judicata inapplicable.
The ICA vacated the circuit court’s award of attorney fees
and costs to Title Guaranty, concluding that Title Guaranty was
“no longer the prevailing party.”
The ICA denied Title Guaranty’s motion for reconsideration.
G. Supreme Court Proceedings
On certiorari, Title Guaranty raises two questions: (1)
“[d]id the ICA err in holding that [Yamaguchi] was not a party
to the [] Escrow Agreement”; and (2) “[d]id the ICA err in
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holding that there were questions of fact as to whether Title
Guaranty breached its contractual and fiduciary duties to
Yamaguchi[.]”
As to the first question, Title Guaranty contends that
Yamaguchi never argued that she was not a party to the Escrow
Agreement. Title Guaranty also asserts that the ICA erred in
sua sponte raising an issue not first considered by the circuit
court. Moreover, Title Guaranty argues that because the Sales
Contract incorporated the Escrow Agreement, Yamaguchi “assumed
its benefits and obligations” and was therefore a party to the
With respect to the second question, Title Guaranty asserts
two positions: (1) that Title Guaranty’s only fiduciary duty was
to “remain neutral” and “comply strictly” with the provisions of
the Escrow Agreement and PACREP’s instructions; and (2) Title
Guaranty correctly complied with PACREP’s second instruction
(March 25 Letter) to disburse the entire deposit, which
“superseded” PACREP’s first instruction to disburse only fifteen
percent of the purchase price.
Title Guaranty further posits that Yamaguchi’s contention
that she did not receive or understand the Escrow Agreement does
not allow her to “escape [its] binding effect,” and the circuit
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court correctly found that she was bound by the agreement.
Title Guaranty also argues that escrow companies are not
required to interpret contracts or advocate for escrow parties;
they must remain “neutral” and comply strictly with the
provisions of an agreement. Title Guaranty thus maintains that
the ICA erred in concluding that the escrow company breached its
duty to Yamaguchi after receiving “conflicting instructions”
from PACREP regarding disbursal of the escrow funds. Because
Section 12 of the Escrow Agreement provided that, in the event
of default, escrow funds were to “be treated as the Seller’s
free of the escrow,” and because it complied with PACREP’s
instructions, Title Guaranty asserts that it did not breach the
Escrow Agreement or violate its fiduciary duty to Yamaguchi.
Based on the facts and circumstances of this case, we agree
with Title Guaranty.
III. STANDARDS OF REVIEW
A. Summary Judgment
We review the circuit court’s grant or denial of summary
judgment de novo. Jou v. Dai-Tokyo Royal State Ins. Co., 116
Hawai‘i 159, 164, 172 P.3d 471, 476 (2007).
The standard for granting a motion for summary judgment is
well-settled:
Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there
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is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. A fact is material if proof of that fact would have the effect of establishing or refuting one of the essential elements of a cause of action or defense asserted by the parties. The evidence must be viewed in the light most favorable to the non-moving party. In other words, we must view all of the evidence and the inferences drawn therefrom in the light most favorable to the party opposing the motion.
Id. (cleaned up). In reviewing the evidence, “[t]he court is
permitted to draw only those inferences of which the evidence is
reasonably susceptible[.]” Ka‘upulehu Land LLC v. Heirs and
Assigns of Pahukula, 136 Hawai‘i 123, 132, 358 P.3d 692, 701
(2015) (citing Winfrey v. GGP Ala Moana LLC, 130 Hawai‘i 262,
270–71, 308 P.3d 891, 899–900 (2013)).
“This court may affirm a grant of summary judgment on any
ground appearing in the record, even if the circuit court did
not rely on it.” Reyes v. Kuboyama, 76 Hawai‘i 137, 140, 870
P.2d 1281, 1284 (1994) (citations omitted).
B. Contract Interpretation
“‘As a general rule, the construction and legal effect to
be given a contract is a question of law freely reviewable by an
appellate court.’” Frederick A. Nitta, M.D., Inc. v. Hawaii
Med. Serv. Ass’n, 156 Hawaiʻi 457, 470, 575 P.3d 547, 560 (2025)
(citing Casumpang v. ILWU Local 142, 108 Hawaiʻi 411, 420, 121
P.3d 391, 400 (2005)).
This court has determined that it is fundamental that terms of contract should be interpreted according to their plain, ordinary and accepted use in common speech, unless the
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contract indicates a different meaning. Further, in construing a contract, a court’s principal objective is to ascertain and effectuate the intention of the parties as manifested by the contract in its entirety. If there is any doubt, the interpretation which most reasonably reflects the intent of the parties must be chosen.
Harrison v. Casa De Emdeko, Inc., 142 Hawaiʻi 218, 225, 418 P.3d
559, 566 (2018) (citation omitted).
IV. DISCUSSION
A. Breach of Contract
1. Yamaguchi was a third-party beneficiary of the Escrow Agreement.
Yamaguchi was not a signatory to the Escrow Agreement, but
she was clearly a third-party beneficiary of that agreement.
The ICA correctly concluded that Yamaguchi was entitled to
pursue her breach of contract claim as a third-party beneficiary
of the Escrow Agreement because the agreement was made expressly
for her benefit as a purchaser of a Ritz-Carlton Waikiki unit.
A third party beneficiary is one for whose benefit a promise is made in a contract but who is not a party to the contract. The rights of the third party beneficiary must be limited to the terms of the promise, and this promise may be express or it may be implied from the circumstances.
Ass’n of Apartment Owners of Newtown Meadows ex rel. its Bd. of
Directors v. Venture 15, Inc., 115 Hawaiʻi 232, 269, 167 P.3d
225, 262 (2007) (cleaned up).
“Ordinarily, third-party beneficiary status is a question
of fact as to whether the terms of the contract reflect an
intent to benefit the party.” Jou, 116 Hawai‘i at 168, 172 P.3d
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at 480 (cleaned up).
In resolving the foregoing factual inquiry, this jurisdiction follows the framework set forth by the RESTATEMENT (SECOND) of CONTRACTS § 302 (A.L.I. 1981), as follows:
(1) Unless otherwise agreed between promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either
(a) the performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary; or
(b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.
(2) An incidental beneficiary is a beneficiary who is not an intended beneficiary.
Id. at 168–69, 172 P.3d at 480–81 (quoting R ESTATEMENT (SECOND) OF
CONTRACTS § 302 (A.L.I. 1981)) (cleaned up and emphases added).
As this court noted in Title Guaranty Escrow Servs., Inc.
v. Wailea Resort Co., Ltd., 146 Hawai‘i 34, 46, 456 P.3d 107, 119
(2019), “‘contract terms should be interpreted according to
their plain, ordinary, and accepted sense in common speech.’”
146 Hawai‘i at 46, 456 P.3d at 119 (citation omitted). In this
case, pursuant to the Escrow Agreement, Title Guaranty was to
Seller[.]” Section 15 of the agreement clearly provided that
its terms would be “binding upon and inure to the benefit of
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such purchaser” of the condominium units.
Based on a plain reading of the Escrow Agreement’s
unambiguous language, the agreement was clearly intended to
benefit the purchasers of PACREP’s Ritz-Carlton Waikiki units.
Yamaguchi was an intended beneficiary of the Escrow Agreement,
as were all purchasers of the Ritz-Carlton Waikiki units. This
is further evidenced by Title Guaranty’s role as an “escrow
depository,” as established by HRS § 449-1, which defines an
“escrow depository” as “the corporation which, in an escrow, and
for compensation, receives, holds, and delivers the money, other
consideration, or instrument affecting title to real property.”
HRS § 449-1.
Given the terms and provisions of the Escrow Agreement,
which expressly benefited purchasers of the units, the ICA did
not err in concluding that Yamaguchi was an intended third-party
beneficiary.
2. The ICA erred in concluding that there was a genuine issue of material fact as to whether Title Guaranty breached the Escrow Agreement.
As an intended third-party beneficiary of the Escrow
Agreement, Yamaguchi had a right to pursue a breach of contract
claim against Title Guaranty. “Generally, third parties do not
have enforceable contract rights. The exception to the general
rule involves intended third-party beneficiaries.” Ass’n of
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Apartment Owners of Newtown Meadows, 115 Hawai‘i at 269, 167 P.3d
at 262 (cleaned up). However, “the rights of the third party
beneficiary must be limited to the terms of the promise, and
this promise may be express or it may be implied from the
circumstances.” Id. (cleaned up). Thus, Yamaguchi’s right was
limited to the terms of the Escrow Agreement, with which Title
Guaranty complied.
The interpretation of a contract is reviewed de novo and
“absent an ambiguity, the contract terms should be interpreted
according to their plain, ordinary, and accepted sense in common
speech.” Wailea Resort Co., Ltd., 146 Hawai‘i at 45, 456 P.3d at
118 (cleaned up). “As a general rule, the court will look no
further than the four corners of the contract to determine
whether an ambiguity exists.” Hawaiian Ass’n of Seventh-Day
Adventists v. Wong, 130 Hawai‘i 36, 45, 305 P.3d 452, 461 (2013)
(citation omitted).
We note that although the Sales Contract incorporated the
Escrow Agreement, the converse is not true; in other words,
Section D.38 of the Sales Contract is not part of the Escrow
Agreement. Then, as further noted, Section 12 of the Escrow
Agreement provides in pertinent part that in the event of a
purchaser’s default,
[i]f Seller subsequently certifies in writing to Escrow that Seller has terminated the sales contract in accordance with the terms thereof and provides to Escrow copies of all
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such notices of termination and proof of receipt sent to the purchaser, Escrow shall thereafter treat all funds of the purchaser paid on account of such purchaser’s sales contract as funds of Seller and not as funds of the purchaser. Thereafter, such funds shall be free of the escrow established by this Agreement and shall be held by Escrow for the account of Seller. Upon written request by Seller, Escrow shall pay such funds to Seller, less any escrow cancellation fee. Escrow shall thereupon be released from any further duties or liability hereunder with respect to such funds and such purchaser.
Based on the plain and unambiguous language of Section 12, the
agreement authorizes Title Guaranty to disburse a purchaser’s
escrow deposit to PACREP, provided: (1) the purchaser defaults
on the Sales Contract; (2) PACREP certifies in writing to Title
Guaranty that it terminated the Sales Contract as a result of
the default; and (3) PACREP provides Title Guaranty with copies
of its termination notices and proof that the purchaser received
the same.
There is no issue of material fact as to whether PACREP
complied with Section 12 of the Escrow Agreement. Yamaguchi
defaulted, and PACREP subsequently sent her a notice of default
and two termination notices, all copied to Title Guaranty.
Yamaguchi confirmed receiving PACREP’s default and termination
notices.
After Title Guaranty received the notices of termination
from PACREP, Yamaguchi’s escrow deposit was “free of the escrow
established by [the Escrow Agreement]” and “held by Escrow for
the account of Seller[,]” pursuant to Section 12 of the
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agreement. Further, “[u]pon written request by Seller, Escrow
[was obligated to] pay such funds to Seller, less any escrow
cancellation fee.” Title Guaranty received PACREP’s written
requests to return the funds by the March 7 Letter (requesting
the return of fifteen percent of the deposit) and later the
March 25 Letter (requesting the return of the entire deposit).
Thus, after Yamaguchi defaulted, the governing and controlling
provisions of the Escrow Agreement set the entirety of the
deposit “free of the escrow,” and dictated that the funds should
be treated by Title Guaranty as PACREP’s property. Acting in
compliance with the clear and definite language of the Escrow
Agreement, Title Guaranty disbursed Yamaguchi’s deposit to
PACREP. Yamaguchi had the option of enforcing the terms of the
Sales Contract with respect to any portion of the proceeds she
believed PACREP owed her from the escrow deposits. This is
precisely what Yamaguchi did when she initiated arbitration
proceedings against PACREP for those claimed amounts.
We hold that Yamaguchi did not meet her burden of
establishing a genuine issue of material fact as to Title
Guaranty’s compliance with Section 12 of the Escrow Agreement.
Title Guaranty complied with the Escrow Agreement by disbursing
Yamaguchi’s funds. Accordingly, the circuit court did not err
in granting summary judgment in favor of Title Guaranty on
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Yamaguchi’s breach of contract claim.
3. The ICA’s conclusion that “Yamaguchi wasn’t a party to the Escrow Agreement” is of no consequence to the ICA’s analysis of Yamaguchi’s breach of contract claim.
Title Guaranty asserts that the ICA erred in determining
Yamaguchi was not a party to the Escrow Agreement. However,
with regard to the ICA’s analysis of Yamaguchi’s breach of
contract claim now under review, Yamaguchi’s status as a non-
signatory to the Escrow Agreement is immaterial.
As stated, the ICA correctly concluded that Yamaguchi
brought her contract claim as an intended third-party
beneficiary of the Escrow Agreement. See supra Section IV.A.2.
As a third-party beneficiary, Yamaguchi’s breach of contract
claim was “‘limited to the terms of the promise[.]’” Ass’n of
Apartment Owners of Newtown Meadows, 115 Hawai‘i at 269, 167 P.3d
at 262. As discussed above, Title Guaranty complied with the
Escrow Agreement. Therefore, Title Guaranty’s contention that
the ICA erred in concluding Yamaguchi was not a party to the
Escrow Agreement is of no consequence to our review of
Yamaguchi’s breach of contract appeal before us.
B. Breach of Fiduciary Duty
The ICA concluded that there was a genuine issue of
material fact regarding Yamaguchi’s breach of fiduciary duty
claim based on PACREP’s March 7 Letter and March 25 Letter that
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issued purported “conflicting instructions” to Title Guaranty.
We respectfully disagree.
Proving a breach of fiduciary duty requires plaintiff to
show that: (1) a fiduciary relationship existed; (2) defendant
breached their fiduciary duty to plaintiff; and (3) the breach
was the proximate cause of plaintiff’s injury. See Awakuni v.
Awana, 115 Hawaiʻi 126, 142 n.20, 165 P.3d 1027, 1043 n.20
(2007); Domingo v. James B. Nutter & Co., 153 Hawaiʻi 584, 615,
543 P.3d 1, 32 (App. 2023); 37 C.J.S. Fraud § 15 (2023).
Here, Title Guaranty had a fiduciary duty to both PACREP
and Yamaguchi, who were parties to the Sales Contract. Title
Guaranty is an escrow depository as defined in HRS Chapter 449.
See HRS § 449-1. “Escrow” refers to
any transaction affecting the title to real property, including leaseholds, proprietary leaseholds, and condominiums, in which a person not a party to the transaction and neither having nor acquiring any interest in the title receives from one party to the transaction, holds until the happening of an event or performance of a condition and then delivers to another party to the transaction, any money or other consideration or any instrument affecting the title to that real property, all
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in accordance with the terms of the agreement between the parties to the transaction.
Id. (emphasis added). “Escrow depository” refers to “the
corporation which, in an escrow, and for compensation, receives,
holds, and delivers the money, other consideration, or
instrument affecting title to real property.” Id.
HRS § 449-16(a) provides that an escrow depository “shall
consideration, or instruments received by it.” HRS § 449-16(a)
(2013) (emphasis added).
In DeMello, the ICA concluded that a fiduciary duty is
clearly imposed by statute under HRS § 449-16, and “such duty is
owed only to the parties to the escrow transaction.” 4 Haw.
App. at 47, 659 P.2d at 763. There, the ICA noted, “[t]he
statutory definition of ‘escrow’ specifically limits the
depository’s function to acts performed ‘in accordance with the
terms of the agreement between the parties to the transaction.’”
Id. (quoting HRS § 449-1). This court cited approvingly to
DeMello in Hancock, stating that “[t]he general rule is that an
escrow depository occupies a fiduciary relationship with the
parties to the escrow agreement or instructions[,]” and that the
escrow company must “‘comply strictly with the provisions’ of
the parties’ escrow agreement or instructions.” Hancock, 145
Hawai‘i at 383, 452 P.3d at 380 (citing DeMello, 4 Haw. App. at
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47, 659 P.2d at 763).
In the case at bar, PACREP and Yamaguchi were the parties
involved in the escrow transaction, and Yamaguchi was a third-
party beneficiary of the Escrow Agreement. Title Guaranty
therefore owed a fiduciary duty to Yamaguchi. DeMello, 4 Haw.
App. at 47, 659 P.2d at 763. Title Guaranty’s fiduciary duty
was to “‘comply strictly with the provisions’ of the parties’
escrow agreement or instructions.” Hancock, 145 Hawai‘i at 383,
452 P.3d at 380.
Once PACREP satisfied the requirements of Section 12 of the
Escrow Agreement, the terms of the agreement further provided
that the deposit “shall be free of the escrow established” by
the Escrow Agreement. Title Guaranty’s only duty thereafter was
to adhere to the terms of the Escrow Agreement and “treat all
funds of the purchaser paid on account of such purchaser’s sales
contract as funds of Seller” and “pay such funds to Seller” upon
“written request by Seller[.]”
There is no genuine question of material fact as to whether
Title Guaranty complied with Section 12 of the Escrow Agreement.
As discussed, the March 7 Letter notified Yamaguchi and Title
Guaranty that PACREP had “elected to exercise its right,
pursuant to Section D.38 of the Sales Contract, to terminate the
Sales Contract and retain fifteen percent (15%) of the Total
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Purchase Price as liquidated damages.” (Emphasis omitted.)
Eighteen days later, PACREP sent the March 25 Letter informing
Yamaguchi and Title Guaranty that PACREP had elected to “retain
all deposits pursuant to the Sales Contract.” (Emphasis added.)
Both letters also stated that PACREP was “hereby notifying Title
Guaranty Escrow Services, Inc. to cancel escrow and to release
said funds and accrued interest to Seller.” Title Guaranty
complied and disbursed the balance of Yamaguchi’s deposit to
PACREP on April 6, 2016.
The ICA concluded that the instructions in PACREP’s two
letters were in conflict. The ICA explained that under one
interpretation of Section D.38 of the Sales Contract, if
Yamaguchi had paid more than fifteen percent of the purchase
price into escrow--which she had--PACREP was only entitled to
fifteen percent of the Unit’s sale price as a result of
Yamaguchi’s default, with the balance to be refunded to the
buyer. The ICA determined that under these circumstances,
“there was a genuine issue of material fact about whether Title
when it released all of her deposits to PACREP.”
While the ICA correctly noted that “[u]nder one
interpretation” of Section D.38, PACREP’s entitlement to the
deposit could be limited to only fifteen percent of the escrow
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deposit, this interpretation of the Sales Contract has no
bearing on Title Guaranty’s fiduciary duty to Yamaguchi under
the Escrow Agreement. But, as earlier noted, although the Sales
Contract incorporated the Escrow Agreement, the Escrow Agreement
did not incorporate the Sales Contract. Therefore, Section D.38
of the Sales Contract is not part of the Escrow Agreement.
Hence, even if PACREP’s two letters to Title Guaranty could be
construed as containing “conflicting instructions,” as opposed
to superseding instructions, Title Guaranty’s fiduciary duty was
to “‘comply strictly with the provisions’ of the parties’ escrow
agreement or instructions.” Hancock, 145 Hawai‘i at 383, 452
P.3d at 380.
As noted, under Section 12 of the Escrow Agreement, Title
Guaranty was obligated to “treat all funds of the purchaser paid
on account of such purchaser’s sales contract as funds of Seller
and not as funds of the purchaser. . . . Upon written request by
Seller, Escrow shall pay such funds to Seller[.]” (Emphases
added.) Based on its plain and obvious meaning, “such funds”
refers to “all funds of the purchaser paid on account of such
purchaser[].” As there is no genuine issue of material fact as
to Title Guaranty’s compliance with Section 12 of the Escrow
Agreement, we affirm the circuit court’s order granting Title
Guaranty summary judgment.
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V. CONCLUSION
For these reasons, we vacate the ICA’s December 19, 2024
judgment on appeal and remand the case to the ICA to address the
award of attorney fees and costs. The circuit court’s
January 25, 2022 Amended Final Judgment, January 13, 2021 order
granting Title Guaranty summary judgment on all claims, and
January 13, 2021 order denying Yamaguchi’s partial summary
judgment on all claims are affirmed.
Charles A. Price /s/ Sabrina S. McKenna for petitioner /s/ Todd W. Eddins Junsuke Aaron Otsuka /s/ Lisa M. Ginoza for respondent /s/ Vladimir P. Devens
/s/ Ronald G. Johnson