Justia Contracts Opinion Summaries

Hawaiian Airlines entered into a contract with Boeing, agreeing to indemnify Boeing for any taxes incurred on maintenance supply parts sold to Hawaiian. Boeing did not remit general excise taxes (GET) on these sales, claiming an exemption under Hawai'i Revised Statutes (HRS) § 237-24.9. The Hawai'i Department of Taxation audited Boeing for tax years 2013-2018 and proposed disallowing the exemption. Boeing received a Notice of Proposed Assessment (NOPA) in May 2021, and Hawaiian paid $1,624,482.75 under protest, then filed a lawsuit seeking a declaration that GET was not owed and a refund of its payment.The Tax Appeal Court dismissed the lawsuit, ruling it lacked jurisdiction because there was no "final agency decision" or "actual dispute" at the time of Hawaiian's payment. The court found that the inter-office memorandum, email, and closing letter from the Department did not constitute formal administrative decisions. The Intermediate Court of Appeals (ICA) affirmed the dismissal, citing the need for a formal administrative decision to create an actual dispute under HRS § 40-35.The Supreme Court of Hawai'i reviewed the case and held that a NOPA qualifies as a "formal administrative decision" sufficient to create an actual dispute for HRS § 40-35 jurisdiction purposes. The court found that the NOPA contained a demand and determination of tax liability, thus meeting the requirements set forth in Grace Business Development Corp. v. Kamikawa. The court vacated the tax court's dismissal and the ICA's judgment, remanding the case for further proceedings consistent with its opinion. View "Tax Appeal of Hawaiian Airlines, Inc. v. Department of Taxation" on Justia Law

Thomas Schmidt filed a lawsuit against his former attorney, Gary Dubin, and Dubin Law Offices, alleging that Dubin breached contractual and other duties in representing Schmidt in a separate lawsuit and improperly retained a $100,000 retainer. The Circuit Court of the First Circuit granted partial summary judgment in favor of Dubin, ruling that Schmidt's claims were time-barred and awarded Dubin attorneys' fees and costs as the prevailing party. Schmidt appealed the decision.The Intermediate Court of Appeals (ICA) reviewed the case and found that the Circuit Court erred in granting summary judgment on Schmidt's breach of contract claims, as there were genuine issues of material fact regarding when the cause of action accrued. The ICA vacated the Circuit Court's judgment on these claims but affirmed the judgment in all other respects, including the award of attorneys' fees and costs to Dubin. Schmidt filed a motion for reconsideration, arguing that the ICA should also vacate the award of attorneys' fees and costs, which the ICA denied.The Supreme Court of the State of Hawai‘i reviewed the case and held that the ICA erred in affirming the Circuit Court's judgment for attorneys' fees and costs after vacating the summary judgment on Schmidt's breach of contract claims. The Supreme Court vacated the ICA's judgment to the extent it affirmed the award of attorneys' fees and costs and remanded the case to the Circuit Court for further proceedings consistent with its opinion. The Supreme Court emphasized that when a judgment upon which attorneys' fees and costs were based is vacated, the related fees and costs should also be vacated. View "Schmidt v. Dubin" on Justia Law

In a procurement dispute, the Honolulu Board of Water Supply (BWS) solicited bids for a well-drilling project and disqualified Alpha, Inc. for not having the required contractor’s license. Alpha challenged the decision administratively and judicially, arguing that its bid was responsive and that the winning bidder, Beylik/Energetic A JV, was nonresponsive. BWS maintained that the administrative hearings officer and courts lacked jurisdiction to hear the protest because Alpha did not meet the statutory requirement that the protest concern a matter worth at least ten percent of the contract’s value.The Office of Administrative Hearings (OAH) concluded that the ten percent requirement was not jurisdictional and had jurisdiction to hear Alpha’s appeal. On the merits, OAH found that Alpha’s bid was nonresponsive due to the lack of a required subcontractor listing. The Circuit Court of the First Circuit affirmed OAH’s decision, agreeing that BWS could require a C-27 license for tree removal and that Alpha’s bid was nonresponsive. The Intermediate Court of Appeals (ICA) also affirmed, holding that the ten percent requirement related to standing, not jurisdiction, and that Alpha had standing to appeal.The Supreme Court of the State of Hawai‘i reversed the ICA’s decision, holding that the ten percent requirement is jurisdictional. The court concluded that Alpha did not meet this requirement, and therefore, OAH and the courts lacked jurisdiction to review BWS’s decision. The court also provided guidance on the merits, affirming BWS’s disqualification of Alpha’s bid for not listing a required subcontractor and not having the proper license for tree removal. View "Alpha Inc. v. Board of Water Supply" on Justia Law

In this case concerning the enforceability of a non-compete agreement the Supreme Court vacated the intermediate court of appeals' judgment on appeal and the circuit court's final order in favor of Lorna Gagnon with respect to her alleged breach of a non-solicitation clause as to one real estate agent but otherwise affirmed, holding that a genuine issue of material fact precluded summary judgment as to this issue.A non-compete agreement restricted Gagnon, a former employee of Prudential Locations, LLC, from establishing her own brokerage firm in Hawaii within one year after terminating her employment with Locations and from soliciting persons employed or affiliated with Locations. The Supreme Court held (1) the ICA erroneously failed to address whether the non-compete and non-solicitation clauses were ancillary to a legitimate purpose not violative of Haw. Rev. Stat. Chapter 480; (2) restricting competition is not a legitimate ancillary purpose; (3) to establish a violation of a non-solicitation clause, there must be evidence that the person subjective to the clause actively initiated contact; and (4) as to the non-compete clause, summary judgment was proper, but as to the non-solicitation clause, a genuine issue of material fact existed regarding whether Gagnon actively initiated contact. View "Prudential Locations, LLC v. Gagnon " on Justia Law

In this case concerning two restrictive clauses within a non-compete agreement the Supreme Court affirmed in part and reversed in part the entry of summary judgment in favor of Lorna Gagnon, a former employee of Prudential Locations, LLC (Locations), holding that summary judgment was improper as to one agent as to a non-solicitation clause.The non-compete agreement in this case restricted Gagnon from establishing her own brokerage firm in the state within one year after terminating her employment with Locations and from soliciting persons "employed by" or "affiliated with" Locations. The two restrictive clauses at issue were a non-compete clause and a non-solicitation clause. The Supreme Court vacated the judgments of the lower courts, holding (1) summary judgment was properly granted in favor of Gagnon as to the non-compete clause because the clause was not ancillary to a legitimate purpose; and (2) a genuine issue of material fact existed as to one agent with respect to the non-solicitation clause. View "Prudential Locations, LLC v. Gagnon" on Justia Law

The Supreme Court affirmed the judgment on appeal entered by the intermediate court of appeals affirming the circuit court's final judgment in this compensation dispute based on an oral agreement, holding that the circuit court did not abuse its discretion in denying Defendants' motion filed under Haw. R. Civ. P. (HRCP) 55(c) to set aside entry of default.In this dispute between an independent contractor dentist, Dr. Grace Chen, and the dentist who retained Chen's services, Dr. Jonathan Mah and his corporation (collectively, Defendants), default and subsequent default judgment as to certain claims were entered against Defendants, and a bench trial was held regarding damages on some claims. Defendants appealed the denial of their motion to set aside entry of default and their motion for reconsideration and/or for new trial. The ICA affirmed. The Supreme Court affirmed, holding (1) the circuit court correctly denied Defendants' HRCP Rule 55(c) on the grounds that they failed to satisfy the second and third prongs of the test governing HRCP Rule 60(b) motions to set aside default judgments; and (2) the circuit court did not err in its remaining rulings. View "Chen v. Mah" on Justia Law

In this case arising from settlement negotiations between Plaintiff and Defendants relating to a dispute about water and mold damage to Plaintiff's condominium the Supreme Court remanded this case with instruction that the circuit court hold an evidentiary hearing to address issues of fact as to the terms and existence of a purported settlement agreement between the parties.At the close of a settlement conference, the circuit court and the parties acknowledged that the parties had reached a settlement. Plaintiff, however, refused to sign the settlement documents and proceeded to represent herself pro se. Defendants filed a motion to enforce the settlement agreement. The circuit court granted the motion, concluding that the parties had entered into a binding settlement agreement but that the proposed written settlement agreement contained terms beyond those agreed to at the settlement conference. Therefore, the court struck those terms and created a revised settlement agreement. The Supreme Court remanded the case, holding that because genuine issues of material fact existed as to whether the parties reached a valid settlement agreement and as to which terms the parties agreed to at the settlement conference, the circuit court should have granted Plaintiff's motion for an evidentiary hearing to resolve those issues. View "McKenna v. Association of Apartment Owners of Elima Lani" on Justia Law

In this commercial landlord-tenant dispute the Supreme Court affirmed in part and vacated in part the judgment of the intermediate court of appeals (ICA) vacating the circuit court's judgment finding that Tenant was not entitled to damages and that Tenant's claims for equitable relief were moot, holding that the ICA erred in two of its holdings.Landlords performed a self-help eviction after Tenant allegedly breached the lease. Tenant filed this complaint alleging violations of Haw. Rev. Stat. 654-1, 480-2, 480-13, and 480-13.5, and intentional infliction of emotional distress and requesting injunctive relief and damages. The circuit court concluded that Tenant was not entitled to damages because two of the breaches were material and that Tenant's equitable relief claims, including a claim for replevin seeking access to his personal property, were moot. The ICA vacated the circuit court's judgment. The Supreme Court vacated the ICA's judgment in part, holding that the ICA (1) correctly found that the breaches were not material; (2) should not have analyzed the merits of the replevin claim because Tenant had already retrieved his personal property at the time of trial; and (3) misapplied the law of equitable relief because all the equitable claims were moot. View "Kahawaiolaa v. Hawaiian Sun Investments, Inc." on Justia Law

The Supreme Court reversed the judgment of the intermediate court of appeals (ICA) affirming the judgment of the circuit court granting Defendants' motion to compel arbitration of Plaintiff's complaint against a partnership and a partner after concluding that Plaintiff's claims arose out of the agreement founding the partnership, signed by Plaintiff, that contained an arbitration clause, holding that the claims in Plaintiff's complaint were not subject to the arbitration clause in the partnership agreement.Plaintiff, a founding partner of the partnership, brought claims alleging conversion, fraudulent conversion, and punitive damages. The lower courts concluded that Plaintiff's claims arose out of the partnership agreement, and therefore the arbitration clause applied. The Supreme Court reversed, holding that because Defendants failed to initiate arbitration pursuant to Haw. Rev. Stat. 658A-9 before filing a motion to compel arbitration and because the arbitration clause did not encompass Plaintiff's claims for conversion, the ICA erred in affirming the circuit court's order granting Defendants' motion to compel arbitration. View "Yamamoto v. Chee" on Justia Law

In this compensation dispute based on an oral agreement between Plaintiff and Defendants the Supreme Court affirmed the intermediate court of appeals' (ICA) judgment on appeal affirming the circuit court's final judgment, holding that the circuit court did not abuse its discretion in denying Defendants' Haw. R. Civ. P. 55(c) motion to set aside entry of default and did not err in its other rulings.The circuit court entered default and subsequent default judgment as to certain claims against defendants. After a bench trial regarding damages on the remaining claims the circuit court entered judgment in favor of Plaintiff and against Defendants. The ICA affirmed. The Supreme Court affirmed, holding (1) the circuit court did not abuse its discretion in denying Defendants' motion to set aside entry of default; and (2) prospectively, a Rule 55(c) motion to set aside entry of default is to be evaluated based only on whether there has been a showing of "good cause." View "Chen v. Mah" on Justia Law