IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAII
--oOo--
STANDARD MANAGEMENT, INC., and PAZ F. ABASTILLAS, Plaintiffs-Appellants, v. BENJAMIN PAUL KEKONA; TAMAE M. KEKONA; KEVIN K. K. KEKONA; PAULETTE KAWAKAMI; NORTH SHORE SHUTTLE, INC.; WILLIAM J. EGGERS III; FRED PAUL BENCO; and KEVIN S. C. CHANG, Defendants-Appellees
NO. 22611
MOTION FOR REASSIGNMENT OR FOR VOLUNTARY RECUSAL
(CIV. NO. 89-3517)
MARCH 14, 2000
BURNS, C.J., ACOBA AND LIM, JJ.
On January 27, 2000, Plaintiffs-Appellants-Movants (Movants) Standard Management, Inc. (SMI) and Paz F. Abastillas (Paz or Abastillas) filed a "Motion of Plaintiffs-Appellants Standard Management, Inc. and Paz F. Abastillas to the Intermediate Court of Appeals for a Certificate of Reassignment or, in the Alternative, for Voluntary Recusal" (Motion for Reassignment or Recusal).
The Motion for Reassignment or Recusal pertains to this appeal, No. 22611, which is an appeal of an "independent action in equity" (IAIE), seeking relief from the September 2, 1994
judgment entered in Civ. No. 89-3517, which was affirmed in a prior appeal, No. 18388 (Hanauma Bay case). Movants report that in the Hanauma Bay case in the circuit court,
SMI lost, and the Kekonas [defendants-appellees Benjamin Paul Kekona and Tamae M. Kekona] won, recovering a total judgment of $703,750; $152,500 against SMI, $281,250 against Abastillas (including $25,000 in punitive damages), and $270,000 against counsel [Robert A. Smith].
SMI, Abastillas, and counsel appealed, contending inter alia that "'there was not a scintilla of evidence, let alone substantial evidence,'" to support the jury's award of . . . [damages.] On appeal, this Honorable Court affirmed against SMI on its ouster claim; refused to review the fraud judgment against Abastillas on its merits but reversed on damages, remanding for retrial; and reversed the judgment against counsel on both liability and damages, remanding for retrial.
(Record citations omitted.)
In a memorandum opinion entered by the Intermediate Court of Appeals (ICA or this court) on November 25, 1997, in appeal No. 18388, this court reviewed the circuit court's September 2, 1994 Revised Final Judgment as to All Claims and All Parties entered in Civ. No. 89-3517 and decided as follows:
In conclusion, we vacate that portion of the September 2, 1994 Revised Judgment awarding general damages and attorney's fees against Paz; remand the case for a new trial on the issue of general damages against Paz for fraud; remand for a new trial on the negligence claim against Smith; vacate that part of the Revised Judgment which awards attorneys' fees in favor of the Kekonas on their negligence claim against Smith; and affirm the Revised Judgment in all other respects.
On December 12, 1997, this court denied the motion for reconsideration of the memorandum opinion filed by SMI, Abastillas, and Robert A. Smith and the motion for reconsideration and clarification filed by the Kekonas.
On January 23, 1998, the Hawaii Supreme Court denied Movants' application for writ of certiorari.
In their Motion for Reassignment or Recusal in the instant appeal, Movants report that
[o]n remand, counsel made a Rule 68 offer of $6,000, which the Kekonas accepted. On the day of trial of their damages against Abastillas, the Kekonas settled with Abastillas for $3,000. The Kekonas now have a judgment for $6,000 against counsel and $25,000 (punitive damages) against Abastillas. Including the $3,000 which Abastillas paid to settle, this adds up to $34,000, which is only 6% of the $551,250 judgment which they previously had against counsel and Abastillas. The Kekonas thus lost $264,000 (97%) of their $270,000 malpractice judgment against counsel and $252,250 (nearly 90&) of their $281,250 fraud judgment against Abastillas.
(Record citations omitted.)
Movants commenced their IAIE on January 27, 1999. They filed their First Amended Complaint on March 29, 1999, seeking relief from the circuit court's judgment in Civ. No. 89-3517 and from the ICA's memorandum opinion in appeal no. 18388. In their words, "A HUGE JUDGMENT WAS OBTAINED THROUGH JUDICIAL ERROR, PERJURED TESTIMONY, AND FRAUD ON THE COURT," and "[t]he Independent Action in Equity alleges that the Hanauma Bay
judgment was obtained through judicial mistakes of this Honorable Court, rampant perjury by the Kekonas, and fabrication of trial evidence amounting to fraud on the Court."
On September 27, 1999, a Stipulated Dismissal of Appeal from the Final Judgment as to All Claims and All Parties Filed June 4, 1999 as to Defendant-Appellee Kevin S. C. Chang and Order was entered. The Order stated, "To the extent that the Honorable Virginia L. Crandall, Judge of the First Circuit Court, State of Hawaii, may be construed as a Defendant-Appellee herein, the parties further stipulate to the dismissal of the instant appeal as to Judge Crandall."
In the Motion for Reassignment or Recusal, Movants contend that
[a]s the Independent Action in Equity alleges, this Honorable Court failed to recognize a clear partnership ouster, made an elemental error in refusing to apply the parol evidence rule, and wrongly affirmed the Kekonas' $152,500 judgment against SMI for breach of the partnership agreement because there were zero damages. For just as there was no evidence supporting the $270,000 malpractice award against counsel or the $281,250 fraud award against Abastillas, so also, as alleged in the Independent Action in Equity, was there no evidence supporting the $152,500 breach of contract award against SMI. Thus one of the judicial errors asserted was this Honorable Court's failure to follow its own and Hawaii [Hawaii] Supreme Court precedent requiring that damages be supported by evidence of "pecuniary injury" which must mathematically "compute".
(Record citations omitted.)
On June 4, 1999, the circuit court entered an order granting Defendants-Appellees' motion to dismiss the IAIE. The order decided:
1. Plaintiffs and their counsel are determined to be vexatious litigants within the meaning of HRS Chapter 634J.
2. Plaintiffs and their attorney, Robert A. Smith, are hereby barred and enjoined from filing any new litigation . . . in the courts of the State of Hawaii [Hawaii] against the Kekona defendants and defendant Eggers and their privies, without first obtaining prior leave of the Administrative Judge of the First Circuit Court as provided by Section 634-J-7, H.R.S. . . .
3. All claims made by plaintiffs in the complaint and first amended Complaint are frivolous and are not reasonably supported by the facts and the law, in that they are barred by the doctrines of res judicata and collateral estoppel, they are not based on any new evidence, and plaintiffs can prove no set of facts entitling them to relief.
[4.] Attorney's fees and costs are therefore awarded under HRS § 607-14.5 against plaintiffs and their attorney, Robert A. Smith, jointly and severally, in the amount of $9,441.50 as to the Kekona defendants and in the amount of $4,897.36 as [to] the defendant Eggers.
[5.] The complaint and first amended complaint filed are dismissed with prejudice.
Also on June 4, 1999, the circuit court entered a Final Judgment as to All Claims and All Parties.
Movants appealed in No. 22611. It appears that Movants' counsel, Robert A. Smith, did not appeal.
In their opening brief, Movants assert two points on appeal. First, they argue that the IAIE states a claim for relief upon the following grounds: (1) mistake of law by the court; (2) perjury; (3) fraud upon the court. They assert that the IAIE does not require "new evidence." They further assert that
Hawaii [Hawaii] courts thus have not reached the question whether mistake of law by the court constitutes grounds for relief under 60(b)(1).
However, the federal courts have numerous decisions on the issue; and most federal circuits hold that mistake of law by the court is grounds for 60(b)(1) relief.
Second, they argue that Movants and their counsel, Robert A. Smith, are not vexatious litigants.
On January 4, 2000, the Hawaii Supreme Court assigned this appeal, No. 22611, to the ICA.
On January 11, 2000, the Hawaii Supreme Court denied Movants' petition for immediate reassignment of appeal No. 22611 to the Hawaii Supreme Court.
On January 27, 2000, Movants filed this Motion for Reassignment or Recusal asking the ICA for a certificate of reassignment or, in the alternative, for voluntary recusal in lieu of disqualification. Noting that Hawaii Rules of Appellate Procedure Rule 31(b)(2)(b) authorizes the ICA to seek reassignment of the appeal to the Hawaii Supreme Court, Movants opine that the ICA's request for reassignment "might be persuasive to the Hawaii Supreme Court."
Alternatively, Movants note that the IAIE challenges the circuit court's and the ICA's decisions in the Hanauma Bay case and argue as follows:
This Honorable Court may not ethically decide one of the key issues on this appeal, which is whether the Independent Action in Equity does or does not state a claim for relief. For that issue turns on whether grounds for an Independent Action in Equity include judicial errors--the errors allegedly made by this Honorable Court in its Hanauma Bay appellate decision. This Court is already on record denying the motion for reconsideration of its Hanauma Bay decision. This Honorable Court would have insurmountable difficulty applying the proper standard of review. That standard, by which Rule 12 motions are determined, requires [the] trial judge and appellate judges to assume the truth of the facts alleged in the complaint--in this case, the Independent Action in Equity. Therefore this Honorable Court must assume the truth of movants' allegations of multiple judicial errors committed by this Honorable Court in its previous Hanauma Bay decision.
This is impossible legal legerdemain. (1) If this Honorable Court attempts to adjudicate this issue, there is thus an impropriety in fact or at least the appearance of impropriety. For that reason, voluntary recusal is in order, in lieu of disqualification.
(Footnote added.)
Movants argue that even members of the ICA who did not sit on the panel that decided appeal No. 18388 should voluntarily recuse themselves merely because they are members of the ICA.
We state the dispositive question as follows: When a panel of the ICA has affirmed a trial court's judgment, and the appellant subsequently files an IAIE seeking relief from the trial court's judgment and the judgment on appeal, are the members of the ICA panel that affirmed the trial court's judgment disqualified from reviewing the trial court's judgment that decided that the IAIE's claims "are frivolous and are not reasonably supported by the facts and the law, in that they are barred by the doctrines of res judicata and collateral estoppel, they are not based on any new evidence, and plaintiffs can prove no set of facts entitling them to relief?"
The answer to this question requires an understanding of Hawaii Rules of Civil Procedure (HRCP) Rule 60(b) motions and the IAIE and their relationship.
HRCP Rule 60(b) states as follows:
On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment. The motion shall be made within a reasonable time, and for reasons (1), (2), and (3) not more than one year after the judgment, order, or proceeding was entered or taken. A motion under this subdivision (b) does not affect the finality of a judgment or suspend its operation. This rule does not limit the power of a court to entertain an independent action to relieve a party from a judgment, order, or proceeding, or to set aside a judgment for fraud upon the court. Writs of coram nobis, coram vobis, audit a querela, and bills of review and bills in the nature of a bill of review, are abolished, and the procedure for obtaining any relief from a judgment shall be by motion as prescribed in these rules or by an independent action.
In their opening brief, Movants contend,
To put it more generally, an [IAIE] is an alternative remedy to a Rule 60(b) motion. This is stated in the rule itself, as just quoted. Thus an [IAIE] may be based on "any grounds for relief of a judgment that were available at the time of the promulgation of Rule 60(b)." 47 Am.Jur.2d Judgments, § 875 at p. 354 (1995). There are very good reasons to choose an [IAIE] over a Rule 60(b) motion: the availability of discovery and the absence of any time limits[.]
We conclude that Movants misunderstand the relationship and difference between HRCP rule 60(b) motions and the IAIE.
HRCP Rule 60(b)
provides two types of procedure to obtain relief from judgments. The usual procedure is by motion in the court and in the action in which the judgment was rendered. . . . The other procedure is by a new or independent action to obtain relief from a judgment, which action may, but need not, be begun in the court that rendered the judgment.
11 Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d § 2851, at 229 (1995).
"Relief under Rule 60(b) ordinarily is obtained by motion in the court that rendered the judgment." Id. § 2865, at 377 (footnote omitted).
"The normal procedure to attack a judgment should be by motion in the court that rendered the judgment. . . .
A party is not bound by the label he puts on his papers. A motion may be treated as an independent action or vice versa as is appropriate.
Id. § 2868, at 404-5 (footnote omitted).
"[N]omenclature is unimportant, so that an application that is mistakenly designated as being one of the old writs will be treated as a motion under the rule." Id. § 2867, at 395 (footnote omitted).
The indispensable elements of [an independent action to set aside a judgment] are: (1) a judgment which ought not, in equity and good conscience, to be enforced; (2) a good defense to the alleged cause of action on which the judgment is founded; (3) fraud, accident, or mistake which prevented the defendant in the judgment from obtaining the benefit of his defense; (4) the absence of fault or negligence on the part of the defendant; and (5) the absence of any adequate remedy at law.
National Sur. Co. of New York v. State Bank of Humboldt, Humboldt, Neb., 120 Fed. 593, 599 (C.C.A. 8th, 1903);
47 Am. Jur. 2d, Judgments § 874 (1995).
This court has stated as follows:
Resort to the independent equitable action may be had only rarely and then only under unusual and exceptional circumstances. In order to succeed, the movant must show a recognized ground for equitable relief, such as fraud, accident, or mistake, and the absence of any other adequate remedy.
The purpose of the independent action is not to relitigate issues that were finally determined in a previous action between the same parties, nor is it a remedy for inadvertence or oversight by the losing party in the original action. Equity will not grant relief where the movant had an adequate remedy at law or could have opened, vacated, modified the decree or judgment, or obtained relief in the original action by exercising proper diligence, or where the situation from which relief is sought has been caused by movant's own fault, neglect, inadvertence or carelessness.
Additionally, as in all equitable actions, the doctrine of laches is applicable and undue delay may again bar relief.
Hayashi v. Hayashi, 4 Haw. App. 286, 292, 666 P.2d 171, 175, 176 (1983).
The United States Supreme Court has stated that
[t]he new [1946 FRCP Rule 60(b)] thus made clear that nearly all of the old forms of obtaining relief from a judgment, i.e., coram nobis, coram vobis, audita querela, bills of review, and bills in the nature of review, had been abolished. The revision made equally clear, however, that one of the old forms, i.e., the "independent action," still survived. . . .
. . . .
This is not to say, however, that the requirements for a meritorious independent action have been met here. If relief may be obtained through an independent action in a case such as this, where the most that may be charged against the Government is a failure to furnish relevant information that would at best form the basis for a Rule 60(b)(3) motion, the strict 1-year time limit on such motions would be set at naught. Independent actions must, if Rule 60(b) is to be interpreted as a coherent whole, be reserved for those cases of "injustices which, in certain instances, are deemed sufficiently gross to demand a departure" from rigid adherence to the doctrine of res judicata.
. . . .
The sense of these expressions is that, under the Rule [60(b)], an independent action should be available only to prevent a grave miscarriage of justice.
U.S. v. Beggerly, 542 U.S. 38, 45-48 (1998).
From the above, it is clear that HRCP Rule 60 motions are ordinarily and normally presented to and heard by the court that rendered the judgment. That being true of the trial court, there is no reason for it not be true of the appellate court. In light of the relationship between HRCP Rule 60(b) motions and the IAIE, there is no reason why the IAIE seeking relief from the judgment cannot be presented to and heard by the trial court that rendered the judgment and the appellate court that affirmed it.
In light of the above, our answer to the dispositive question is yes. No member of the ICA has any personal interest in the judgment on appeal entered appeal No. 18388. Moreover, as noted above, "[t]he purpose of the independent action is not to relitigate issues that were finally determined in a previous action between the same parties." Hayashi, supra. If Movants have validly alleged the material elements of an IAIE and a grave miscarriage of justice, they have a legal right to survive a motion to dismiss. The fact that the IAIE seeks relief from a judgment on appeal entered by the ICA does not disqualify the ICA from deciding an appeal of the circuit court's dismissal of the IAIE.
CONCLUSION
Accordingly, we deny Movants' motion for reassignment of appeal No. 22611 to the Hawaii Supreme Court and Movants'
alternative request for voluntary recusal in lieu of disqualification.
On the motion:
Robert A. Smith
for Plaintiffs-Appellants.
The word "legerdemain" means "sleight of hand, any deception or trickery, hocus-pocus."