IN THE SUPREME COURT OF THE STATE OF HAWAI‘I
In three summary judgment orders, the Circuit Court of the Third Circuit, the Honorable Ronald J. Ibarra presiding, found in favor of DuPont on all of the plaintiffs' claims. Significantly, the circuit court, without determining whether DuPont indeed committed fraud, found as a matter of law that the plaintiffs could not meet their burden of proving damages. According to the circuit court, the damages available to the plaintiffs was "the fair compromise value of the claim at the time of the settlement." A judgment, pursuant to Hawai‘i Rules of Civil Procedure (HRCP) Rule 54(b) (2007), (2) in favor of DuPont was entered on August 10, 2005.
The plaintiffs appeal -- and DuPont cross appeals -- from the HRCP Rule 54(b) judgment. The plaintiffs challenge, inter alia, the circuit court's order granting summary judgment on the basis that they were unable to prove damages. Although DuPont's position is that the HRCP Rule 54(b) judgment should be upheld, it cross appeals in apparent recognition of the possibility that this court may not agree with its position, challenging another order granting in part and denying in part DuPont's motion for summary judgment, discussed infra.
For the reasons stated herein, we hold that the circuit court properly granted summary judgment in favor of DuPont on the basis that the plaintiffs could not, as a matter of law, prove damages and, therefore, affirm the circuit court's August 10, 2005 judgment.
This court has previously presented a brief factual summary of the underlying product liability cases in Exotics Hawai‘i-Kona, Inc. v. E.I. Dupont De Nemours & Co., 104 Hawai‘i 358, 90 P.3d 250 (2004). However, given the resolution of this case and the fact that the instant appeal involves only four of the sixty original plaintiffs, see supra note 1, a concise version of the facts are provided below as they relate only to those four plaintiffs and the pertinent summary judgment orders -- specifically, the order granting summary judgment based on the plaintiffs' inability to prove damages.
A. The Complaint
As previously mentioned, between November 1992 and March 1993, the plaintiffs, who were commercial growers, brought product liability actions against, inter alia, Dupont, alleging that its Benlate product was defective and that it caused damage to their plants and nurseries. In 1994 and 1995, the plaintiffs entered into individual settlement agreements with DuPont that resulted in DuPont's payment of certain sums in exchange for the execution of releases by the plaintiffs. As a result of these settlement agreements, the plaintiffs entered into stipulations to dismiss their product liability actions with prejudice.
On January 6, 2000, the plaintiffs filed an eighty-four page first amended complaint against, inter alia, DuPont. The plaintiffs claimed that DuPont had defrauded them "into settling for pennies on the dollar for damages" caused by its Benlate product. Specifically, the plaintiffs alleged that DuPont wrongfully, illegally, and fraudulently withheld from discovery vital scientific data and information that it was under an obligation to produce in the underlying product liability actions. The plaintiffs' first amended complaint alleged that:
208. If, at the time the [p]laintiffs accepted settlement of their underlying [product liability] claims, they had received full, fair, truthful and complete disclosure of material information, the [p]laintiffs would not have accepted the consideration offered for settlement which was substantially less than the losses which they had suffered.
209. [The p]laintiffs would have continued to press their claims if full, complete and truthful disclosures had been made. Reliance by those [p]laintiffs on full, fair and disclosure by DuPont, which in fact was not forthcoming, resulted in injury in the form of settlement for lower compensation than was adequate or would otherwise have been available.
The plaintiffs asserted that the "appropriate measure of recovery for said conduct is the difference between [the p]laintiffs' actual total damages (e.g., crop and plant losses, soil injuries, lost market positions and lost economic advantage) and the amount, if any, previously received" from DuPont. Accordingly, the plaintiffs alleged ten counts, to wit:|
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intentional spoliation of evidence |
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negligent spoliation of evidence |
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fraud |
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fraudulent misrepresentation |
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negligent misrepresentation |
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non-disclosure (3) |
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intentional interference with prospective business advantage |
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civil conspiracy |
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violation of due process rights and rights to a fair trial as guaranteed by article I, section 4 of the Hawaii State Constitution |
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exemplary damages |
DuPont filed its answer to the first amended complaint on February 14, 2000. (4)
B. Proceedings Regarding the Motions for Summary JudgmentAs previously stated, the circuit court, in three summary judgment orders, found in favor of DuPont on all of the plaintiffs' claims. However, in light of our disposition, we recount only two of the three motions, focusing especially upon the motion concerning the plaintiffs' lack of evidence to support their damages. The other motion for summary judgment is addressed infra in section III.A.2. as it becomes relevant to the plaintiffs' other contentions.
1. Motion for Summary Judgment as to All Claims
On January 8, 2004, DuPont filed a motion for summary judgment on all of the plaintiffs' claims. Relying on this court's answers to the questions certified by the United States District Court for the District of Hawai‘i in Matsuura v. E.I. du Pont de Nemours & Co., 102 Hawai‘i 149, 73 P.3d 687 (2003) [hereinafter, Matsuura I], -- another Benlate settlement fraud action -- DuPont argued, inter alia, that summary judgment was proper for the non-fraud claims inasmuch as this court, in Matsuura I, determined that "a party is not immune from liability for civil damages based upon that party's fraud engaged in during prior litigation proceedings." Id. at 162, 73 P.3d at 700. (5) DuPont, thus, maintained that:
Since it is now clear in Hawai‘i that, absent fraud, immunity exists for any alleged "misconduct engaged in during prior litigation," . . . DuPont therefore is immune from all of [the p]laintiffs' non-fraud claims because these claims are based on allegations of "misconduct engaged in during prior litigation" such as improper discovery responses, false statements of counsel, etc.
(Emphasis in original.)Moreover, DuPont also argued that it was entitled to summary judgment on the fraud-based claims inasmuch as "no rational jury could conclude that these [p]laintiffs reasonably believed the truth of DuPont's alleged misrepresentation." (Emphasis added.) In determining whether the plaintiffs are precluded as a matter of law from bringing a cause of action for fraudulent inducement to settle, this court in Matsuura I "clarif[ied] that, under Hawai‘i law, to prevail on a claim of fraudulent inducement, [the] plaintiffs must prove that their reliance upon a defendant's representations was reasonable." Id. at 163, 73 P.3d at 701 (emphases added). (6) DuPont argued that:
In their product liability cases, where [the p]laintiffs sued DuPont for millions of dollars claiming Benlate was defective, it was [the p]laintiffs' financial interest to claim they knew/believed DuPont's statements concerning the nature of and/or non-existence of [a]dverse Benlate [scientific d]ata were false, and that they knew/believed that [a]dverse Benlate [scientific d]ata existed. And, as the record of this [c]ourt demonstrates, that is exactly what [the p]laintiffs claimed -- consistently, repeatedly, and vehemently.
(Emphases and capitalization in original.)
On January 16, 2004, the plaintiffs filed their memorandum in opposition to the motion. A hearing was held on January 26, 2004, wherein the circuit court orally denied the motion to the extent that "there's a genuine issue of material fact as to the reasonableness of the fraud claims." The circuit court, however, granted the motion as to the claims of intentional and negligent spoliation of evidence (Counts 1 and 2), intentional interference with prospective economic advantage (Count 7), and violation of constitutional rights (Count 9). A written order was entered on February 25, 2004, granting in part and denying in part the motion for summary judgment. Specifically, the circuit court granted summary judgment as to the non-fraud claims, i.e., Counts 1, 2, 7, and 9, and denied summary judgment as to the fraud and deceit claims, i.e., fraud (Count 3), fraudulent misrepresentation (Count 4), negligent misrepresentation (Count 5), and non-disclosure (Count 6). The circuit court also ruled that civil conspiracy (Count 8) and exemplary damages (Count 10) "are not separate counts, but are merely derivative to [the p]laintiffs' remaining claims."
On February 3, 2005, DuPont filed a motion for summary judgment based on the plaintiffs' inability to prove damages. Relying on E.I. DuPont de Nemours & Co. v. Florida Evergreen Foliage, 744 A.2d 457 (Del. 1999), Richardson v. Economy Fire & Casualty Co., 485 N.E.2d 327 (Ill. 1985), and Urtz v. New York Central & Hudson River Railroad Co., 95 N.E. 711 (N.Y. 1911), discussed infra, DuPont maintained that the plaintiffs' remedies are limited to either: (1) rescinding their settlement agreements, returning any benefits they may have received, and seeking a return to the status quo ante; or (2) affirming the agreements and suing for damages in a fraud action, which damages are measured based upon "the fair compromise value" of their released tort claims at the time of settlement. DuPont further contended that:
Despite electing to forego their claims for the actual judgment value of their [product liability] claims -- indeed, settling these claims, releasing these claims, and keeping DuPont's settlement money for these claims -- [the] plaintiffs have not sought the fair compromise value of their [product liability] claims as of the day of their settlements.
Rather, [the] plaintiffs in this case seek the "actual judgment value" of their RELEASED [product liability] cases as of today[, as demonstrated by the plaintiffs' statement of the appropriate measure of recovery in the first amended complaint].
(Emphases and capitalization in original.) DuPont argued that, inasmuch aswhat the compromise value factors are in a
particular case, as well as how they would be evaluated in that case, are not
matters within the common
knowledge and experience of jurors[,] . . . expert testimony by lawyers
experienced in litigating and compromising cases is required to aid the
jury
in determining the fair compromise value of a case.
(Footnote omitted.) (Emphases in original.) Consequently, DuPont asserted that the plaintiffs did not have the expert testimony required to sustain their burden of proof on the proper measure of damages, stating that:
[The plaintiffs' underlying product liability action] lawyers[, in their expert reports, as discussed infra, did] not opine about the factors relevant to the determination of the fair compromise value of each plaintiff's case on the date of the settlement, nor how those factors would be applied -- to each case. They simply state, generally, that their respective clients' [product liability] cases would have been stronger had they had the "hidden evidence," and thus the settlement value of the cases would have been higher.
(Emphases in original.)In their memorandum in opposition to DuPont's motion, filed February 17, 2005, the plaintiffs argued that their remedy should not be limited to the reasonable settlement value absent fraud. Rather, they argued the remedy should be measured by the plaintiffs' change in circumstances resulting from the fraudulent conduct, which, according to the plaintiffs, is "the value of the position that was foregone, plus any consequential costs incurred as a result of the misconduct." The plaintiffs contended that:
If [the p]laintiffs in this case are limited by the [c]ourt solely to the recovery of the value of a "reasonable" settlement in 1994, DuPont receives the benefit of its fraud. Such a ruling would serve to encourage fraud in settlements. Allowing a fraud-feasor to first reduce the value of a plaintiff's settlement (or even judgment) by withholding evidence, but then, [if] fraud is discovered, limiting the remedy 1, 2, 3 (or, in this case, 11) years later to that amount the defendant might have paid towards settlement in the absence of that fraud, but no more, would reward the fraud-feasor, who would first have had the use of the unpaid portion of the unrecovered settlement or judgment, and then protection from the court against imposition of any fuller remedy. If that were the law, every defendant in litigation would be motivated to first try fraud, and only later try to be "reasonable."
The plaintiffs maintained thatthe duty of the jury will be to measure the entire value of [the p]laintiffs' loss resulting from the fraudulent induced settlements, which naturally includes consideration of the value of the settled [product liability] claims. It will be the jury's role to determine if the consideration paid in the original settlement is more or less than the loss. . . . In this case, only after the jury had first considered the value of [the p]laintiffs' [product liability] claims ("judgment value"), should the jury next consider what the value the jury believes was actually lost through fraud.
(Emphasis in original.) Lastly, the plaintiffs argued that their expert opinions fully satisfied the evidentiary requirements inasmuch as these opinions "repeatedly touch[ed] on the issues of factors related to liability, settlement, client recommendations, and the relation between liability, damages, settlement, and judgments in the product [liability] action[s]."Following a hearing on the motion, the circuit court entered an order on February 28, 2005, granting DuPont's motion for summary judgment, concluding that,
as a matter of law, when a [p]laintiff claims to have been fraudulently induced to settle a tort claim because of discovery/litigation fraud, (s)he has two options[, i.e., two choices of remedies]: (1) to sue to rescind the settlement contract; or (2) to affirm the contract and sue for fraud. If (s)he chooses to sue for fraud, the remedy available to [the p]laintiff is the fair compromise value of the claim at the time of the settlement. In order to meet their burden of proving the fair compromise value at the time of settlement, [the p]laintiffs would need to meet this burden with expert lawyer testimony directed to the numerous compromise factors, and how they would have applied to each [p]laintiff's case. [The p]laintiffs have not submitted the expert testimony required to sustain their burden of proof on the proper measure of damages in their cases. The deadlines for [the p]laintiffs to submit their final expert reports and amend their pleadings were October 15, 2004, and December 14, 2004, respectively. This court previously made clear that expert reports were to be final and that the experts would not be allowed to testify on matters beyond their respective reports in its Order Related to Trial Procedures, filed May 6, 2004. [The p]laintiffs are therefore unable to prove the fact or amount of settlement fraud damages as a matter of law, and summary judgment is granted on all remaining claims herein.
(Emphasis added.) On August 10, 2005, the above order, inter alia, was certified, pursuant to HRCP Rule 54(b), as final judgment on all of the plaintiffs' claims. The plaintiffs filed their notice of appeal on September 6, 2005. DuPont's notice of cross-appeal was filed on September 19, 2005.II. STANDARD OF REVIEW
This court reviews the circuit court's grant of summary judgment de novo. Oahu Transit Servs., Inc. v. Northfield Ins. Co., 107 Hawai‘i 231, 234, 112 P.3d 717, 720 (2005).
A. The Plaintiffs' Appeal
1. The Order Granting Summary Judgment Based on the Plaintiffs' Inability to Prove Damages
As previously stated, the plaintiffs maintain that the circuit court erred in granting summary judgment based on their inability to prove damages. They argue that the circuit court incorrectly announced several conclusions relating to: (1) the choice of remedies; (2) the proper measure of damages; (3) the requirement of attorney expert testimony; and (4) the plaintiffs' failure to sustain their burden of proof. Each of the plaintiffs' contentions is addressed in turn.a. the choice of remedies
In its February 28, 2005 order, the circuit court expressly concluded that the plaintiffs have two available remedies -- (1) to rescind the settlement agreements or (2) to affirm the agreements and sue for fraud. The plaintiffs raise, as a point of error, that the circuit court's conclusion was erroneous. They, however, provide no discernible argument or cite to any authority with respect to their position. This court has repeatedly announced that it is not obliged to address matters for which the appellants have failed to present discernible arguments. Hawai‘i Rules of Appellate Procedure (HRAP) Rule 28(b)(7) (2007) (the opening brief must exhibit "[t]he argument, containing the contentions of the appellant on the points presented and the reasons therefor, with citations to the authorities . . . relied on"); Taomae v. Lingle, 108 Hawai‘i 245, 257, 118 P.3d 1188, 1200 (2005) (stating that the court may disregard points of error when the appellant fails to present discernible arguments supporting those assignments of error); Norton v. Admin. Dir. of the Court, 80 Hawai‘i 197, 200, 908 P.2d 545, 548 (1995) (same). Thus, on this basis alone, we could decline to address this matter. However, in light of the plaintiffs' next contention concerning the proper measure of damages in the instant fraud action, a preliminary question arises regarding the remedies afforded a defrauded plaintiff in Hawai‘i.
This court has repeatedly announced that:
As a general rule, a properly executed settlement precludes future litigation for its parties. Indeed, a settlement agreement
Amantiad v. Odum, 90 Hawai‘i 152, 161-62, 977 P.2d 160, 169-70 (1999) (internal quotation marks and some citations omitted). We have further stated that settlement agreements (1) "are simply a species of contract," Wong v. Cayetano, 111 Hawai‘i 462, 481, 143 P.3d 1, 20 (2006) (citations omitted), and, thus, (2) are governed by principles of contract law, State Farm Fire & Cas. Co. v. Pac. Rent-All, Inc., 90 Hawai‘i 315, 323-24, 978 P.2d 753, 761-62 (1999) (construing a settlement agreement under contract principles). Consequently, as with contracts, settlement agreements induced by either a fraudulent or material misrepresentation are voidable by the defrauded party because he or she has not freely bargained but has been induced to settle by the other party. Cf. Fujimoto v. Au, 95 Hawai‘i 116, 157, 19 P.3d 699, 740 (2001) (stating the general rule that, "if a party's misrepresentation of assent is induced by either a fraudulent or a material misrepresentation by the other party upon which the recipient is justified in relying, the contract is voidable by the recipient" (internal quotation marks, citations, and original brackets omitted)). In other words, a plaintiff who was induced to enter into a settlement agreement by fraudulent or material misrepresentations may "obtain a decree rescinding or cancelling the agreement ab initio." Peine v. Murphy, 46 Haw. 233, 239, 377 P.2d 708, 712 (1962) (citations omitted); see also Hong v. Kong, 5 Haw. App. 174, 181, 683 P.2d 833, 840 (1984) (stating that "[t]he rescission of a contract for fraud in the inducement is part of the law of restitution") (citations omitted). The result of rescission is to return both parties to the status quo ante, i.e., each side is to be restored to the property and legal attributes that it enjoyed before the contract was entered and performed. As the United States Court of Appeals for the Ninth Circuit (the Ninth Circuit) has stated:
Rescission reverses the fraudulent transaction and returns the parties to the position they occupied prior to the fraud. It restores the status quo ante. Under true rescission, the plaintiff returns to the defendant the subject of the transaction, plus any other benefit received under the contract, and the defendant returns to the plaintiff the consideration furnished, plus interest.
Ambassador Hotel Co. v. Wei-Chuan Inv., 189 F.3d 1017, 1031 (9th Cir. 1999) (citations omitted). Hawai‘i courts are clearly in accord with the basic contract principle that a party defrauded on a contract may seek rescission of the contract. See Restatement (Second) of Contracts § 164 (1981) (a contract is voidable when it is entered into on the basis of a fraudulent or material misrepresentation).However, whether plaintiffs who have released their tort claims may affirm a fraudulently induced settlement agreement and maintain a separate fraud action is less clear in Hawai‘i. Although this court appears to recognize such a remedy, it has yet to explicitly declare so. See, e.g., Lemle v. Breeden, 51 Haw. 426, 436, 462 P.2d 470, 475 (1969) (holding that a lease is essentially a contractual relationship, and, upon a breach of an implied warranty of habitability, a tenant would be entitled to "basic contract remedies of damages, reformation, and rescission"). Nonetheless, rather than limit a party's remedy to rescission, we believe a defrauded party should be afforded the choice of remedies, i.e., rescission or an independent action for damages. As this court has announced, because "[s]ettlement is the voluntary relinquishment of the right to a determination by a court of law[,]" "encouraging parties to forego the protections associated with a trial requires adequate assurance that appropriate remedies exist for settlements reached through bad faith and misconduct." Matsuura I, 102 Hawai‘i at 161, 73 P.3d at 699 (emphasis added).
In this regard, DiSabatino v. United States Fidelity & Guaranty Co., 635 F. Supp. 350 (D. Del. 1986), is instructive. In that case, the United States District Court for the District of Delaware was presented with the issue whether, under Delaware law, "a plaintiff who has settled a negligence suit for personal injuries may affirm that release and institute a cause of action based on fraud." Id. at 351. Although acknowledging the lack of Delaware precedent on the issue, the court proceeded to analyze Delaware law based primarily on cases involving election of remedies under contract law. Id. Focusing on the earlier Delaware decisions of the Court of Chancery in Hegarty v. American Commonwealths Power Corp., 163 A. 616 (Del. Ch. 1932), and Eastern States Petroleum Co. v. Universal Oil Products Co., 49 A.2d 612 (Del. Ch. 1946), the court concluded that the holdings in Hegarty and Eastern States Petroleum "can easily be extended to cover a contract of settlement compromising a tort claim." DiSabatino, 635 F. Supp. at 353. Consequently, the court held that the plaintiffs, who were defrauded on an agreement to settle a tort claim, may elect "either to rescind the contract or to affirm it and sue for damages resulting from the fraudulent misrepresentation[.]" Id. at 356.
In so holding, the court in DiSabatino observed that the minority of courts that have limited a defrauded plaintiff to the remedy of rescission have done so based on two grounds. First, by distinguishing between simple contracts and releases of tort actions, the minority of courts essentially reason that:
Id. at 353-54 (quoting Shallenberger v. Motorists Mut. Ins. Co., 150 N.E.2d 295, 300 (Ohio 1958)) (emphasis added). The DiSabatino court, however, disagreed with the aforementioned reasoning, stating that
[a] settlement agreement is surely a contract, for which consideration on both sides has passed. The consideration given by the plaintiff, the right to prosecute his tort claim -- like something which a seller has sold and whose value in use is bound to decline -- certainly will change in value with the passage of time. In effect, the plaintiff is a seller of a cause of action of which he must regain possession. Each change of possession of that something will ordinarily involve expense or inconvenience.
DiSabatino, 635 F. Supp. at 354 (internal quotation marks and citations omitted).Second, the minority of courts assume that "the damages in the action for fraud are too speculative because they must be measured on the basis of the personal injuries sustained. 'The measure of damages, if any, in the action for fraud and deceit is inextricably bound with the question of liability and the nature and extent of the injuries involved in the underlying tort claim which was settled.'" Id. (quoting Mackley v. Allstate Ins. Co., 564 S.W.2d 634, 636 (Mo. Ct. App. 1978)) (original brackets omitted). However, as discussed infra in section III.A.1.b., the DiSabatino court rejected such reasoning and concluded that damages for fraud are conceptually different from damages for the underlying tort claims and are not too speculative to calculate. Id. at 354-55. The court also observed that a defrauded party may be entitled to punitive damages that would not be available if the original action was reinstated through rescission. Id. at 356. Finally, the court believed that,
as a matter of policy, this cause of action should be deemed to exist[ ] . . . [because an unscrupulous party] would have everything to gain and nothing to lose by systemically defrauding tort claimants into accepting low settlement offers. In such cases[, the defendant] gambles that the deceit will not be uncovered. If the fraud is uncovered, then the [defendant] only faces litigation, or the costs of reimbursement, that it would have had to confront without a settlement.
Id. at 355.The interpretation of Delaware law in DiSabatino was later confirmed in E.I. DuPont de Nemours and Co. v. Florida Evergreen Foliage, 744 A.2d 457 (Del. 1999). In that case, the Delaware Supreme Court concluded that "DiSabatino, both in its analysis of previous Delaware decisional law and its statement of the policy concerns supporting the recognition of a damages option, is a correct foreshadowing of Delaware law." Id. at 464. The court followed DiSabatino and held that "a party alleging fraud in the settlement of a tort claim may elect rescission and restoration to the status quo ante or, alternatively, may bring an action for the recovery of special, or expectancy, damages with retention of the settlement proceeds." Id. at 465 (footnote omitted); see also Matsuura v. Alston & Bird, 166 F.3d 1006, 1008 & n.4 (9th Cir. 1999) (finding DiSabatino's analysis persuasive and rejecting the reasonings behind other courts that restricted a defrauded plaintiff's remedies to rescission). Indeed, the majority of jurisdictions that have considered the issue have also favored affording plaintiffs the choice of either of the two remedies. (7) The weight of authority, therefore, supports the conclusion of the circuit court in the instant case to allow defrauded tort plaintiffs the traditional contract remedies of either (1) rescinding the contract, returning any benefits received, and being returned to the status quo or (2) affirming the contract, retaining the benefits, and seeking damages.
Additionally, when there exists two or more concurrent but inconsistent remedies, as here, the equitable doctrine of election of remedies provides that:
[A] plaintiff need not elect, and cannot be compelled to elect between inconsistent remedies during the course of trial. If, however, a plaintiff has unequivocally and knowledgeably elected to proceed on one of the remedies he or she is pursuing, he or she may be barred recourse to the other. The doctrine acts as a bar precluding a plaintiff from seeking an inconsistent remedy as a result of his or her previous conduct or election.
Cieri v. Leticia Query Realty, Inc., 80 Hawai‘i 54, 71, 905 P.2d 29, 46 (1995) (internal quotation marks, citations, brackets, and ellipses omitted) (emphasis in original). The purpose of the election of remedies doctrine "is not to prevent recourse to any remedy, or to alternative remedies, but to prevent double recoveries or redress for a single wrong." 25 Am. Jur. 2d Election of Remedies § 3 at 665 (2004) (footnotes omitted).In the instant case, the plaintiffs did not seek rescission of their settlement agreements in their first amended complaint. In fact, the complaint wholly rested upon allegations of DuPont's fraudulent misrepresentations and concealment of scientific data and information that were allegedly vital to the plaintiffs' settlement negotiations of their product liability claims. Thus, based on the allegations of their complaint, the plaintiffs have "unequivocally and knowledgeably" elected to affirm their settlement agreements and pursue an action for fraud. Consequently, we next examine the appropriate measure of damages in the plaintiffs' asserted fraud action.
b. the proper measure of damages
The circuit court concluded that, when a defrauded party elects to affirm the settlement agreement and sue for fraud, "the remedy available [(i.e., damages)] . . . is the fair compromise value of the claim at the time of the settlement." (Emphasis added.) The plaintiffs, however, argue that the circuit court erroneously "limit[ed] the amount of recoverable damages to the difference between what [they] actually settled for, and what they could have settled for, had there been no fraud." Such limitation, according to the plaintiffs, "has never been accepted in this jurisdiction. To the contrary, the Hawai‘i [a]ppellate [c]ourts have continually held that the desired remedy in fraud cases is to restore the victim to the position he would have occupied but for the misrepresentation." (Citations omitted.) The plaintiffs, thus, believe that the circuit court's ruling
deviated from the goal of the available remedy -- to restore them to the former positions they occupied but for DuPont's deceit -- and instead served to deprive [the p]laintiffs of any possibility of recovering that which, in all likelihood, they could reasonably have achieved had the fraudulent conduct not occurred. The decision was contrary to the established law of Hawai‘i, and contrary to the proper outcome dictated by the facts of the litigation, and should now be set aside.
DuPont, on the other hand, maintains that the "fair compromise value is the proper measure of damages for full and adequate compensation of a fraudulent inducement claim, and is not a cap or limit on damages." (Emphasis in original.) (Internal quotation marks and other emphases omitted.) In DuPont's view,[t]his measure of damages is consistent with the general objective of fraud, which is to place the defrauded plaintiff in the position he would have been "but for" the fraud. Since [the plaintiffs] claim their settlement amounts were less than they were worth because DuPont had induced them to settle through certain fraudulent misrepresentations, their measure of damages logically is what their settlement amount would have been if there had been no fraud.
It is well-settled that all tort claims require that damages be proven with reasonable certainty. See, e.g., Weinberg v. Mauch, 78 Hawai‘i 40, 50, 890 P.2d 277, 287 (1995) ("[I]t is of the essence in an action . . . that the plaintiff suffer damages as a consequence of the defendant's conduct, and these damages cannot be speculative or conjectural losses." (Internal quotation marks and citation omitted.)); see also Roxas v. Marcos, 89 Hawai0145i 91, 141 n.33, 969 P.2d 1209, 1259 n.33 (citing a collection of cases for the same proposition). Specifically, in a fraud case, "the plaintiff must have suffered substantial actual damage, not nominal or speculative." Zanakis-Pico v. Cutter Dodge, Inc., 98 Hawai0145i 309, 320, 47 P.3d 1222, 1233 (2002) (citation and emphasis omitted). The "plaintiffs suing in fraud are required to show both that they suffered actual pecuniary loss and that such damages are definite and ascertainable, rather than speculative." Id.; see also Hawaii's Thousand Friends v. Anderson, 70 Haw. 276, 286, 768 P.2d 1293, 1301 (1989) ("plaintiff must show that he [or she] suffered substantial pecuniary damage"). The aim of compensation "is to put the plaintiff in the position he or she would have been had he or she not been defrauded." Zanakis-Pico, 98 Hawai‘i at 320, 47 P.3d at 1233 (quoting Ellis v. Crockett, 51 Haw. 45, 52-53, 451 P.2d 814, 820 (1969)) (original brackets and ellipsis omitted).This court has further explained that:
A distinction is made in the law between the amount of proof required to establish the fact that the injured party has sustained some damage and the measure of proof necessary to enable the jury to determine the amount of damage. It is now generally held that the uncertainty which prevents a recovery is uncertainty as to the fact of damage and not as to its amount. However, the rule that uncertainty as to the amount does not necessarily prevent recovery is not to be interpreted as requiring no proof of the amount of damage. The extent of plaintiff's loss must be shown with reasonable certainty and that excludes any showing or conclusion founded upon mere speculation or guess.
Chung v. Kaonohi Ctr. Co., 62 Haw. 594, 605, 618 P.2d 283, 290-91 (1980) (emphasis added) (citation and brackets omitted) (format altered), abrogated on other grounds by Francis v. Lee Enters., Inc., 89 Hawai‘i 234, 971 P.2d 707 (1999). In other words, where the fact of damage is established, this court will not insist upon a higher degree of certainty as to the amount of damages than the nature of the case permits, particularly where the uncertainty was caused by the defendant's own wrongful acts. Coney v. Lihue Plantation Co., 39 Haw. 129, 138 (1951). This court, however, has recognized that[t]he problem of how to measure damages, and how to establish them in fraud cases, is always a difficult one since the person defrauded has, because of the fraud, not pursued alternative courses of action, and the results of those untaken courses therefore remain speculative. In 3 Restatement (Second) of Torts (1977), a discussion of the problem of damages proof appears under § 549.[ (8)] In the Comment to subsection (2) of that section, the following appears:
The frequency of these situations has led the great majority of the American courts to adopt a broad general rule giving the plaintiff, in an action [for] deceit, the benefit of his bargain with the defendant in all cases, and making that the normal measure of recovery in actions of deceit.
Leibert v. Fin. Factors, Ltd., 71 Haw. 285, 290-91, 788 P.2d 833, 837 (1990) (emphases added); see also Zanakis-Pico, 98 Hawai‘i at 320, 47 P.3d at 1233 ("In fraud or deceit cases, the measure of pecuniary damages is usually confined to either the 'out-of-pocket' loss or the 'benefit of the bargain[.]'" (Citation and ellipses omitted.)).Notwithstanding the aforementioned well-established general principles regarding the proof of damages, this court has not had the occasion to articulate what must be proven in order to bring a meritorious settlement fraud claim. To this end, Living Designs, Inc. v. E.I. Dupont de Nemours & Co., 431 F.3d 353 (9th Cir. 2005), cert. denied, __ U.S. __, 126 S. Ct. 2861 (2006), is instructive. In that case, the Ninth Circuit reversed the federal district court's ruling in Matsuura v. E.I. du Pont de Nemours & Co., 330 F. Supp. 2d 1101 (D. Haw. 2004) [hereinafter, Matsuura II]. Relying upon Urtz v. New York Central & Hudson River Railroad Co., 95 N.E. 711 (N.Y. 1911), and Automobile Underwriters, Inc. v. Rich, 53 N.E.2d 775 (Ind. 1944), the federal district court in Matsuura II had determined that "a 'settlement fraud' plaintiff must prove not only that the settled claim had merit, but also that the value of the claim exceeded the amount of the fraudulently-induced settlement." 330 F. Supp. 2d at 1123. Applying this rule to the facts of that case, the federal district court concluded that "DuPont [wa]s entitled to summary judgment on all of the Matsuura [p]laintiffs' claims due to their inability to prove either the fact or [the] amount of damages with reasonable certainty." Id. at 1125.
In Urtz, the New York Court of Appeals determined that, where the underlying claim has no viability, there is no potential for recovery for fraud in the inducement of settlement because plaintiff would not be able to show any injury by reason of abandonment of an entirely valueless claim. 95 N.E. at 713. In Urtz, the plaintiff, relying on alleged misrepresentations, settled her claims for the wrongful death of her husband. Id. at 712. The jury found in favor of the plaintiff in her fraud action but the appellate court reversed based upon the trial court's refusal to charge the jury that, in order to maintain the action, the plaintiff must demonstrate that her original claim for wrongful death was valid and existing at the time of settlement. Id. at 714. The court offered the following example of a plaintiff claiming that she was fraudulently induced to settle a claim based on a promissory note and stated:
[S]he, in an action to recover her damages
caused by the fraud[,] must have given evidence in proof of the
validity of the note to afford the jury a
starting point for the measurement of her damages, and, if they found
that the note was forged and not made by [the] defendant, they would
find also
that she had sustained no damage and could not maintain the action.
Unless she had the valid note of the defendant, she had and released in
the
compromise nothing of value.
Id. at 712. By ascribing error to the jury instructions, the Urtz court essentially specified that, in the trial of a fraudulently induced settlement claim, the plaintiff carries the burden of proving some merit to the underlying cause of action. Likewise, in Automobile Underwriters, the Indiana Supreme Court indicated that, when the plaintiff elects to proceed with the fraud action, he or she
recognizes that the settlement is a bar to
the original action and that it is incumbent on him to allege
and prove not only that the settlement was
procured by fraud and to his damage, but also that
he had a good cause of action against the original tort feasor at the
time of the settlement.
53 N.E.2d at 777
(emphases added).
In Living Designs, the Ninth Circuit implicitly expressed its disapproval of Urtz and Automobile Underwriters to the extent that these cases required a plaintiff in an action based on settlement fraud to prove that he or she had a "good" cause of action against the tortfeasor at the time of settlement. The Ninth Circuit reasoned that, to conclude that
plaintiffs must demonstrate that their
settled claim had merit is inconsistent with the aim of compensation in
fraud cases, which is to restore plaintiffs
to the position they would be in absent the fraud and to provide
plaintiffs with the benefit of the bargain, see
Leibert, [71 Haw. at
288-90,] 788 P.2d
at 836-37, particularly as a party's decision to settle is often made
as a result of a cost-benefit analysis rather than an assessment of the
claim's
merits.
431 F.3d at 367. Rather, the Ninth Circuit, relying upon DiSabatino, held that
the relative strength of the claim in the
absence of fraud should be used by the trier of fact to determine the
amount of the defrauded party's
damages. Whether the defrauded party could have won its case if it
proceeded to trial is irrelevant to this calculation. The
critical consideration is
the settlement value of the case on the date settlement was reached.
Such a determination is not beyond the power of a jury to determine.
The use
of probability analysis, for example, in calculating settlement value
is not uncommon.
431 F.3d at 368 (emphasis added). (9)
As stated above, DiSabatino dealt with the question whether the plaintiff was permitted to affirm the settlement agreement and institute an independent cause of action based on fraud, to which the court answered affirmatively. 635 F. Supp. at 351. In declining to follow other courts' limitation of remedies to rescission based, inter alia, on the assumption that damages are too speculative, the court explained that:
In any action based on fraud, the fact finder will simply measure the extent of the plaintiff's damages by examining what the agreement would have been, had the parties known the actual material facts. The nature of the injuries in the foregone tort action are relevant only to the extent of how they would affect the value of the claim to be compromised[.]
Id. at 355. The court further indicated that:Whether a good cause of action existed at the time of the settlement was a material fact that the parties already considered in reaching a settlement. Requiring a plaintiff to prove in a court of law the existence of a good cause of action for a tort would be inconsistent with affirmance of a settlement agreement. Evidence of the legal and factual strength of the claim merely goes to the value of the claim that was compromised in determining damages from the fraud.
Id. (citation omitted) (emphasis added). According to the DiSabatino court, the better approach is for the trier of fact to determine "the probable amount of settlement in the absence of fraud after considering all known or foreseeable facts and circumstances affecting the value of the claim on the date of settlement[;] the amount in settlement already received should [then] be deducted from this total amount." Id. at 355 (citation omitted). Stated differently, the defrauded plaintiff may "recover such an amount as will make the settlement an honest one." Id. (internal quotation marks and citation omitted). "[T]he measure of damages[, therefore,] is the loss of the bargain." Id. (citation omitted).Moreover, although the Ninth Circuit rejected the holdings in Urtz and Automobile Underwriters that a defrauded plaintiff must prove that his or her settled claims had merit, the analyses of both courts as to the method of determining damages are in accord with Living Designs and DiSabatino. Specifically, the Urtz court explained that the measure of damages is
how much could the plaintiff have reasonably
demanded and the defendant reasonably have allowed as [a] final
compromise above and beyond the
[amount] in fact allowed and received? . . . [In determining the
amount, the jury] would take into view the probabilities of the
successful
enforcement of the cause of action, the probable extent and expense of
the expected litigation over this disputed claim, the law's delays, the
probability of the continuing solvency of the defendant, and such other
facts pertinent to the question of damages as the evidence presented.
95 N.E. at 713. Stated differently, the court believed that "the plaintiff, affirming the compromise agreement and unable to recover the contract balance, is entitled in accordance with the general rule to have such compromise agreement made as good for him as it reasonably and fairly would have been if only the truth had been told instead of a falsehood asserted." Id. at 714 (internal quotation marks omitted).
The Automobile Underwriters court expressed that the measure of damages in a fraud action "must take into consideration the salable value of the right of action for the purpose of compromising, and the nature and extent of the injuries known and foreseeable as of the time of the settlement, under the particular circumstances of the parties then shown existing." 53 N.E.2d at 777 (citations omitted). The proper procedure for determining damages, in the court's view, was for the jury to calculate the "probable amount" the parties would have agreed upon absent the fraud, taking into account "all of the known or foreseeable facts and circumstances which in any way affected the value of the claim on the date of settlement[.]" Id. at 779. The amount received by the releasor in exchange for signing the release is then deducted, and the balance constitutes the "true measure of the damage suffered" inasmuch as "[t]he ultimate fact to be ascertained is the actual damage caused by the fraudulent representations and not the damage for the original injury." Id.; see also Slotkin v. Citizens Cas. Co. of New York, 614 F.2d 301, 312-13 (2d Cir. 1979), cert. denied, 449 U.S. 981 (1980) (holding that, under New York law, the plaintiffs could recover as damages the "fair settlement value" less the sum they had received under the settlement; the true measure of damages was "the difference in settlement value before and after discovery of the fraud"); Dilley v. Farmers Ins. Group, 441 P.2d 594, 595 (Or. 1968) ("if fraud had been committed, the measure of damages was the difference between the amount plaintiff received in settlement and that she would have received by way of settlement had the alleged false representations not been made"); Rochester Bridge Co. v. McNeill, 122 N.E. 662, 665 (Ind. 1919) (same).
The plaintiffs, however, urge this court not to follow the aforementioned measurement of damages enunciated by the Ninth Circuit and other jurisdictions because such "limited" remedy (1) is "contrary to several significant policy concerns" expressed by this court in Matsuura I and (2) "clearly deviated from the goal of the available remedy -- to restore them to their former positions they occupied but for DuPont's deceit." The plaintiffs' contentions are without merit.
In support of their position that the limited remedy imposed by the circuit court is contrary to policy concerns, the plaintiffs rely upon this court's pronouncement in Matsuura I that limiting liability for fraud is unfavored in light of the policy of encouraging settlements. 102 Hawai‘i at 155-62, 73 P.3d at 693-700. Specifically, the Matsuura I court was presented with the certified question whether, under Hawai‘i law, a party is "immune from liability for civil damages based on that party's misconduct, including fraud, engaged in during prior litigation proceedings[.]" Id. at 154, 73 P.3d at 692. In answering negatively to the inquiry, we examined several policies underlying the litigation privilege, such as those promoting the candid, objective, and undistorted disclosure of evidence, avoiding the chilling effect resulting from the threat of subsequent litigation, encouraging settlement, and discouraging abusive litigation practices. Id. We essentially determined that the policies associated with the litigation privilege doctrine do not favor limiting liability in a subsequent proceeding where there is an allegation of fraud committed in the prior proceeding. Id. at 155-62, 73 P.3d at 693-700. We, therefore, concluded that, "[u]nder Hawai‘i law, a party is not immune from liability for civil damages based upon that party's fraud engaged in during prior litigation proceedings." Id. at 162, 73 P.3d at 700. The plaintiffs' reliance upon the Matsuura I's policy reasonings, however, is misplaced. The court in Matsuura I was not confronted with the issue concerning the method of measuring damages, but only whether a fraud action based on a party's conduct in prior litigation proceedings exists in the first instance.
Furthermore, the plaintiffs' argument that the limitation of their damages to the settlement differential is essentially contrary to the well-settled aim of compensation in deceit cases, i.e., "to put the plaintiff in the position he or she would have been had he or she not been defrauded[,]" Zanakis-Pico, 98 Hawai‘i at 320, 47 P.3d at 1233 (citation and original brackets omitted), is unavailing. The plaintiffs argue that the appropriate remedy is to allow "the parties to determine what damages they claim and seek to prove under the particular circumstances of the claim." In other words, the plaintiffs appear to assert that the proper measurement of their damages, if the jury so determined, could be the "actual judgment value" of their product liability claims (less the amount they received pursuant to the settlement agreements).
In support of their position, the plaintiffs cite to Farm Bureau Mutual Insurance Co. of Indiana v. Seal, 179 N.E.2d 760 (Ind. Ct. App. 1962), Siegel v. William, 818 N.E.2d 510 (Ind. Ct. App. 2004), and Edrei v. Copenhagen Handelsbank A/S, No. 90 Civ. 1860 (CSH), 1992 WL 322027 (S.D.N.Y. Oct. 29, 1992) (unreported). The plaintiffs partially quote from Farm Bureau Mutual Insurance that the proper evidence of damages involves "the nature and extent of the injuries known and forseeable [sic] a[t] the time of the settlement, under the particular circumstances of the parties then shown existing." 179 N.E.2d at 764. The full quote, however, actually makes clear that the "nature and extent of injuries" are pertinent only for measuring the "compromise" value of the claim:
[T]he measure of damages must take into consideration the salable value of the right of action for the purpose of compromising, and the nature and extent of the injuries known and forseeable [sic] a[t] the time of the settlement, under the particular circumstances of the parties then shown existing.
Id. (emphases added). In fact, Farm Bureau Mutual Insurance, an Indiana appellate case, follows its supreme court's Automobile Underwriters case, which held that, when a plaintiff affirms the settlement agreement, his damages are the "probable amount" the parties would have agreed upon absent the fraud, taking into account "all of the known or foreseeable facts and circumstances which in any way affected the value of the claim on the date of settlement[.]" Automobile Underwriters, 53 N.E.2d at 779.Similarly, the plaintiffs rely upon Siegel to demonstrate that the parties in that case proffered an estimation of the potential jury verdict in the underlying claim as evidence of damages. 818 N.E.2d at 513-14. The Siegel court, however, was not presented with the issue as to what would be the proper measure of damages. Rather, the issues before the court concerned the sufficiency of the evidence to support a finding of fraud and the weight of expert testimony. Id. at 515-17. However, Seigel is another Indiana appellate court case and, thus, followed Automobile Underwriters in allowing the plaintiff to recover the "probable" settlement amount, absent fraud.
The plaintiffs' reliance on Edrei for the proposition that "[t]he case law is clear that[,] when a party is defrauded into releasing a claim against another party, the proper measure of damages is the value of the foregone claim," 1992 WL 322027, at *4, is also misplaced. The Edrei court, in explaining what the "value of the foregone claim" means, quoted Slotkin for the proposition that the "true measure of damages was the difference between the settlement value before and after the discovery of the fraud[.]" Id. (emphasis added) (citation omitted). Accordingly, the plaintiffs have failed to provide any authority that would convince us that the proper measure of damages should be, as they contend, extended to the actual judgment value of their product liability claims. (10)
Indeed, as previously indicated, the plaintiffs had made an unequivocal and knowledgeable election of remedies to affirm the settlement agreements and pursue an action for fraud. However, the plaintiffs apparently sought to recover damages based upon what they would have been able to recover in their product liability suits against DuPont. (11) They cannot have it both ways, i.e., affirm an agreement not to sue for such product liability injuries and yet recover damages for those injuries. In other words, they cannot accept the settlement money, sign a release, affirm the release, keep the money, and then sue for the same damages. As DuPont asserts, the plaintiffs "are seeking the rescission remedy that, by their election to affirm their settlement contracts and sue . . . for fraud, is not available to them." (Emphasis in original.) See Morse/Diesel, Inc. v. Fid. & Deposit Co. of Maryland, 768 F. Supp. 115, 117 (S.D.N.Y. 1991) (stating the rule that a plaintiff cannot elect to pursue damages for fraud and rescission because "an award of damages for fraud affirms the contract" while "[r]escission vitiates the contract and places the parties in status quo prior to the transaction") (citation omitted); Davis v. Hargett, 92 S.E.2d 782, 786 (N.C. 1956) (holding that the plaintiff could not affirm the release and recover the difference between the value of his original claim and what he received in settlement).
Here, the plaintiffs had foregone seeking the actual judgment value of their product liability claims via rescission of the settlement agreements and instead elected to affirm the agreements and seek damages in a fraud action, and, thus, their election precludes them from seeking damages for the injuries sustained in the product liability actions. To conclude as the plaintiffs would have it would constitute an impermissible double recovery. If this court were to permit the plaintiffs to retain the benefits of the settlement agreements while seeking to recover the actual judgment value of their product liability claims, the plaintiffs would be in a better position than they would have been had the settlement negotiations been conducted in good faith. Such a result would be inconsistent with the aim of compensation in deceit cases, i.e., "to put the plaintiff in the position he would have been had he not been defrauded." Ellis, 51 Haw. at 52, 451 P.2d at 820 (citation omitted).
Accordingly, we believe that the method enunciated by the DiSabatino court and followed by the Ninth Circuit in Living Designs is persuasive -- namely, that the trier of fact determines "the probable amount of settlement in the absence of fraud after considering all known or foreseeable facts and circumstances affecting the value of the claim on the date of settlement[.]" DiSabatino, 635 F. Supp. at 355 (citation omitted). Stated differently, "[t]he critical consideration is the settlement value of the case on the date settlement was reached." Living Designs, 431 F.3d at 368. Consequently, we hold that the circuit court did not err in concluding that the measure of damages for the plaintiffs' fraud action is "the fair compromise value of the claim at the time of the settlement."
Inasmuch as the plaintiffs submitted evidence in opposition to DuPont's motion, we examine whether the circuit court properly determined that the evidence was insufficient, as a matter of law, to establish the plaintiffs' damages. Preliminarily, however, we must first determine whether, in proving damages, i.e., the fair compromise value of the claim at the time of the settlement, attorney expert testimony was necessary in the first instance.
Liability for fraud, as for other torts, requires proof of duty, breach of duty, causation, and damages. Hong, 5 Haw. App. at 181, 683 P.2d at 840 ("[f]raud is a common-law tort"); Von Holt v. Izumo Taisha Kyo Mission of Hawaii, 42 Haw. 671, 722 (1958) ("Fraud in its generic sense, especially as the word is used in courts of equity, comprises all acts, omissions[,] and concealments involving a breach of legal or equitable duty and resulting in damage to another." (Internal quotation marks and citation omitted.)), overruled on other grounds by State v. Pauline, 100 Hawai‘i 356, 60 P.3d 306 (2002). Specifically, to establish a fraud claim based on a failure to disclose a material fact,
there must be (1) a representation of a material fact, (2) made for the purpose of inducing the other party to act, (3) known to be false but reasonably believed true by the other party, and (4) upon which the other party relies and acts to his or her damage.
Matsuura I, 102 Hawai‘i at 162-63, 73 P.3d at 700-01 (citations and internal brackets omitted) (emphases added). However, DuPont's motion for summary judgment was premised solely on the element of damages, i.e., the plaintiffs' inability to prove damages. In light of the circuit court's ruling, it must be assumed that the parties and the court presumed, for purposes of summary judgment, that DuPont breached its duty by disclosing certain material scientific data and information that it knew to be false, on which the plaintiffs reasonably relied and acted upon to their detriment. Thus, the inquiry on appeal is whether the plaintiffs have supplied the evidentiary showing of damages necessary to defeat summary judgment.According to the circuit court, to carry their burden of proving damages, i.e., "the fair compromise value" of the product liability claims at the time of settlement, the plaintiffs "would need . . . expert lawyer testimony directed to the numerous compromise factors, and how they would have applied to each [p]laintiff's case." The plaintiffs, however, argue that:
It has never been the law in the State of
Hawai‘i that expert evidence is a mandatory element of a claimant's
case. Nor has it ever been required that
such experts be of a particular occupation or persuasion; it is only
necessary that they be appropriately "qualified" to render an opinion
which assists
the trier of fact in its deliberations. The [c]ircuit [c]ourt's ruling
violated both of these established tenets.
(Emphasis omitted.)
In retort, DuPont contends that
determining the fair compromise value of a complex products liability case, taking into consideration all the facts and circumstances of a particular case at a particular point in time, is a complicated undertaking and something clearly beyond the ability of a lay jury. Obviously, a jury should not speculate in an area where it could not be expected to have sufficient knowledge or experience. And without proper expert testimony, a jury would be speculating because a jury simply does not have the knowledge or experience to determine the fair compromise value of a complex, products liability action.
The reason why expert testimony is required
is because, unlike special and general damages in a typical tort
action, fair compromise value is not
based upon the judgment of a reasonably prudent person, but the
judgment of a reasonably prudent attorney. Clearly, what a
reasonable,
knowledgeable and prudent attorney would do in a complex products
liability case is beyond the experience of a lay jury.
(Emphasis in original.)
Hawai‘i Rules of Evidence (HRE) Rule 702 (1993) provides that:
If scientific, technical, or other
specialized knowledge will assist the trier of fact to understand the
evidence or to determine a fact in issue, a witness
qualified as an expert by knowledge, skill, experience, training, or
education may testify thereto in the form of an opinion or otherwise.
In
determining the issue of assistance to the trier of fact, the court may
consider the trustworthiness and validity of the scientific technique
or mode of
analysis employed by the proffered expert.
Moreover, this court has declared that:
Where the subject matter is technical,
scientific or medical and not of common observation or knowledge,
expert testimony is allowed into evidence. Such testimony is to aid the
jury in the determination of the issues involved and to provide a
sufficient basis for the conclusion to be drawn by the
jury rather than by conjecture and speculation. Expert testimony is not
conclusive and like any testimony, the jury may accept or reject it.
Bachran v. Morishige, 52 Haw. 61, 67, 469 P.2d 808, 812 (1970) (citations omitted); see also State v. Batangan, 71 Haw. 552, 556, 799 P.2d 48, 51 (1990) ("Expert testimony assists the trier of fact by providing a resource for ascertaining truth in relevant areas outside the ken of ordinary laity. Specialized knowledge which is the proper subject of expert testimony is knowledge not possessed by the average trier of fact who lacks the expert's skill, experience, training, or education." (Internal quotation marks and citations omitted.)).
It is well-settled that, in medical malpractice cases, which have been generally predicated on the negligent failure of a physician or surgeon to exercise the requisite degree of skill and care in treating or operating on a patient,
the question of negligence must be decided by
reference to relevant medical standards of care for which the plaintiff
carries the burden of proving
through expert medical testimony. The standard of care to which a
doctor has failed to adhere must be established by expert testimony
because a
jury generally lacks the requisite special knowledge, technical
training, and background to be able to determine the applicable
standard without the
assistance of an expert.
Craft v. Peebles, 78 Hawai‘i 287, 298, 893 P.2d 138, 149 (1995) (citations and internal quotation marks omitted). As this court has stated,
Bernard v. Char, 79 Hawai‘i 371, 377, 903 P.2d 676, 682 (App. 1995) (citations, brackets, and emphasis omitted); see also Carr v. Strode, 79 Hawai‘i 475, 486, 904 P.2d 489, 500 (1995) (in an informed consent claim, expert medical testimony is required to establish the materiality of the risk of harm that in fact occurs); Phillips v. Queen's Med. Ctr., 1 Haw. App. 17, 18, 613 P.2d 365, 366 (1980) (in a case for wrongful death of the plaintiff's wife, expert medical testimony as to the cause of death was necessary to sustain case against defendant hospital and physicians). Clearly, a jury of lay persons generally lacks the knowledge to determine the factual issues of medical causation, the degree of skill, knowledge, and experience required of the physician, and the breach of the medical standard of care.
Unlike medical malpractice cases, cases involving actions against attorneys "have rarely involved questions of the necessity and admissibility of expert testimony, probably because in such cases the court itself sits as an expert on the subject." Collins v. Greenstein, 61 Haw. 26, 39 n.8, 595 P.2d 275, 283 n.8 (1979) (citation omitted). This court, however, recognized that:
More attention will probably be given in the future to the need for expert evidence. In many types of situations such as letting the statute of limitations run before a suit is filed, no testimony of lawyer is needed. When the problem is one of interpretation of law, there is more likely to be a resort to expert evidence to explain the matter to the jury.
Id. 40 n.9, 595 P.2d at 283 n.9 (emphasis added). Although this case does not involve an attorney malpractice suit, the stated principle in Collins that an issue concerning the interpretation of law requires expert assistance is applicable here. In our view, the determination of the fair value of what the plaintiffs would have received had there been no fraudulent conduct at the time of settlement entails guidance from legal experts.Indeed, parties settle to avoid a trial on the merits because of the uncertainty of the outcome and the high costs of litigation. Gossinger v. Ass'n of Apartment Owners of Regency of Ala Wai, 73 Haw. 412, 424, 835 P.2d 627, 633 (1992) (noting that public policy "favors the finality of negotiated settlements that avoid the costs and uncertainties of protracted litigation") (citation omitted). In every settlement, the agreed upon amount undoubtedly is not the "best case scenario" for either side, but rather is a compromise of their respective positions to avoid the multiple risks of trial where they might face their "worse case scenario." Naturally, the compromise range of a claim will be different at different points in time based upon what is known, or reasonably foreseeable, at the time of the compromise, including the state of the law. In this respect, there are many variables that experienced lawyers routinely consider in weighing the potential risks and rewards inherent in going forward with litigation against the certainty of a compromise solution. This court has enumerated some of these factors in determining whether a settlement was made in good faith, such as:
(1) the type of case and difficulty of proof
at trial, e.g., rear-end motor
vehicle collision, medical malpractice, product liability, etc.; (2)
the realistic
approximation of total damages that the plaintiff seeks; (3) the
strength of the plaintiff's claim and the realistic likelihood of his
or her success at
trial; (4) the predicted expense of litigation; (5) the relative degree
of fault of the settling tortfeasors; (6) the amount of consideration
paid to settle
the claims; (7) the insurance policy limits and solvency of the joint
tortfeasors; (8) the relationship among the parties and whether it is
conducive to
collusion or wrongful conduct; and (9) any other evidence that the
settlement is aimed at injuring the interests of a non-settling
tortfeasor or
motivated by other wrongful purpose.
Troyer v. Adams, 102 Hawai‘i 399, 427, 77 P.3d 83, 111 (2003). In other words, whether the fair settlement value would have been greater than the actual settlement itself is a matter that would be nearly impossible for a lay person to determine without guidance from expert legal testimony. Moreover, the fact that the settlement was less than the potential recovery in the underlying product liability cases does not mean that the plaintiffs suffered damages as a result of fraud. Rather, the fraud damage claim would be the difference between the fair settlement value absent fraud and the amount of the plaintiffs' actual settlement. As one court indicated:
The fact that a proposed settlement may only
amount to a fraction of the potential recovery does not, in and of
itself, mean that the proposed
settlement is grossly inadequate and should be disapproved. In fact[,]
there is no reason, at least in theory, why a satisfactory settlement
could not
amount to a hundredth or even a thousandth part of a single percent of
the potential recovery.
In re Warner Commc'ns Sec. Litig., 618 F. Supp. 735, 745 (S.D.N.Y. 1985) (quoting City of Detroit v. Grinnell Corp., 495 F.2d 448, 455 n.2 (2d Cir. 1974)) (ellipsis and other citations omitted).
For these same reasons, the question whether DuPont's fraudulent misrepresentation caused damage to the plaintiffs in this case by preventing them from receiving the "fair compromise value" of their claims is one upon which the trier of fact must be guided by expert legal testimony. Accordingly, we hold that the circuit court did not err in concluding that "expert lawyer testimony directed to the numerous compromise factors, and how they would have applied to each [p]laintiff's case" is required.
We next address whether the plaintiffs produced sufficient evidence -- in the form of expert testimony -- to defeat summary judgment. Preliminary, we recite the well-settled legal principles governing motions for summary judgment -- specifically, that
[a] summary judgment motion challenges the very existence or legal sufficiency of the claim or defense to which it is addressed. In effect, the moving party takes the position that he or she is entitled to prevail because his or her opponent has no valid claim for relief or defense to the action. Accordingly, the moving party has the initial burden of identifying those portions of the record demonstrating the absence of a genuine issue of material fact. The moving party may discharge his or her burden by demonstrating that[,] if the case went to trial[,] there would be no competent evidence to support a judgment for his or her opponent. Cf. Celotex Corp. v. Catrett, 477 U.S. 317 . . . (1986) (a party moving for summary judgment under Federal Rules of Civil Procedure Rule 56 need not support his or her motion with affidavits or similar materials that negate his or her opponent's claims, but need only point out that there is [an] absence of evidence to support the opponent's claims). For if no evidence could be mustered to sustain the nonmoving party's position, a trial would be useless.
When a motion for summary judgment is made and supported,
HRCP Rule 56(e) (1998) (emphasis added). In other words, a party opposing a motion for summary judgment cannot discharge his or her burden by alleging conclusions, nor is he or she entitled to a trial on the basis of a hope that he can produce some evidence at that time. On motion for summary judgment, the evidence is viewed in the light most favorable to the non-moving party.
Young v. Planning Comm'n of the County of Kauai, 89 Hawai‘i 400, 407, 974 P.2d 40, 47 (1999) (internal quotation marks, citation, and original brackets omitted) (emphases added). Moreover, "[t]he evidentiary standard required of a moving party in meeting its burden on a summary judgment motion depends on whether the moving party will have the burden of proof on the issue at trial." Ocwen Fed. Bank, FSB v. Russell, 99 Hawai‘i 173, 182, 53 P.3d 312, 321 (App. 2002) (citation omitted). Where the moving party is the defendant, who does not bear the ultimate burden of proof at trial, summary judgment is proper when the non-moving party-plaintifffails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be no genuine issue as to any material fact, since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial. The moving party is entitled to judgment as a matter of law because the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof.
Hall v. State, 7 Haw. App. 274, 284, 756 P.2d 1048, 1055 (1988) (emphasis added) (internal quotation marks and citations omitted). Bearing the foregoing principles in mind, we now turn to the issue at hand, i.e., whether the plaintiffs' expert reports are "legal[ly] sufficien[t]" to sustain their claims against DuPont such that, "if the case went to trial[,] there would be . . . competent evidence to support a judgment" in their favor. Young, 89 Hawai‘i at 407, 979 P.2d at 47 (internal quotation marks and citations omitted).In this case, the plaintiffs proffered reports of their economic expert and attorney experts as evidence of damages. As indicated above, one factor among many relevant factors in determining the fair compromise value of a particular claim on the date of settlement is the validity -- or lack thereof -- of the plaintiffs' claim for damages at the time of trial: "The nature of the injuries in the foregone tort action are relevant only to the extent of how they would affect the value of the claim to be compromised[.]" DiSabatino, 635 F. Supp. at 355. Indeed, such factor requires the application of economic principles to ascertain the reasonably certain future income/profits of the plaintiffs in a particular market, and, thus, economic experts would likely be necessary to aid the jury in determining the underlying tort damages at least in the context of how those economic damages affect the settlement value, if at all.
The plaintiffs' economic expert reports (prepared by David J. Weiner of Valvoulis and Weiner) revealed that McCully sustained damages in the sum of $11,847,889.00, Willman in the sum of $3,278,202.00, Isa in the sum of $967,222.00, and the Takas in the sum of $649,871.00. Weiner calculated the total value of each plaintiff's underlying product liability claim, beginning with the alleged first day of Benlate loss through June 2005 -- ten years after their settlements. However, the submission of the economic reports does not negate the fact that the plaintiffs are also required to adduce evidence -- via attorney expert testimony -- as to the factors that must be considered when determining the fair compromise value for each of the plaintiffs' cases. In that regard, the plaintiffs presented reports from five attorneys, designated as experts, four of whom had litigated the underlying product liability actions. They were: (1) Wayne D. Parsons, who along with Kevin A. Malone (12) (a Florida attorney) represented Isa and the Takas; (2) J. Richard Peterson, who represented Willman; (3) Judith Pavey, who negotiated Willman's settlement; (4) George W. Playdon, Jr., who represented McCully; and (5) Jeffrey S. Portnoy, the only designated expert not involved in the underlying product liability cases.
According to the circuit court, however, the aforementioned attorney expert reports, as discussed more fully infra, were insufficient as a matter of law to establish the plaintiffs' damages. Specifically, the circuit court ruled that:
[The p]laintiffs have not submitted the
expert testimony required to sustain their burden of proof on the
proper measure of damages in their cases. The deadlines for [the
p]laintiffs to submit their final expert reports and amend their
pleadings were October 15, 2004, and December 14, 2004,
respectively. This court previously made clear that expert reports were
to be final and that the experts would not be allowed to testify on
matters
beyond their respective reports in its Order Related to Trial
Procedures, filed May 6, 2004. [The p]laintiffs are therefore unable to
prove the fact or
amount of settlement fraud damages as a matter of law, and summary
judgment is granted on all remaining claims herein.
(Emphasis omitted.) The plaintiffs, however, contend that the circuit court "ignored the numerous expert attorney [d]eclarations which [the p]laintiffs did, in fact, submit to substantiate their damages." The plaintiffs argue that their legal experts "averred that the valuation of [the p]laintiffs' cases would have been substantially higher had the truth of DuPont's duplicity been known." Conversely, DuPont maintains that the plaintiffs
cannot establish [ ]either the fact
[ ]or the amount of damage. [The plaintiffs] cannot meet this
burden for a variety of reasons, the pertinent one here
being that they simply cannot prove the correct measure of fraud damage
based upon the way they have positioned this case. They have no expert
testimony to provide assistance to the jury on how to evaluate [the]
fair compromise value of each [of the plaintiffs'] claims, what the
pertinent
settlement factors would be and how they would be applied in this case,
nor what methodologies could be used to determine what those amounts
should be.
(Emphasis omitted.)
As previously stated, although the determination of damages is an ultimate issue to be decided by the trier of fact, damages must be based on evidence that shows loss with reasonable certainty and eliminates speculation. Chung, 62 Haw. at 605, 618 P.2d at 291 ("[T]he rule that uncertainty as to the amount does not necessarily prevent recovery is not to be interpreted as requiring no proof of the amount of damage. The extent of plaintiff's loss must be shown with reasonable certainty and that excludes any showing or conclusion founded upon mere speculation or guess." (Citation omitted.)).
Parsons' report described the documents that were not properly produced during discovery in the product liability cases by DuPont and contended that these documents "would have proven or tended to prove that Benlate caused the damages and losses to crops suffered by [his] clients." Parsons, therefore, concluded that the concealed documents would have "increased the strength of the liability cases for [the p]laintiffs" and the plaintiffs "would have been in a stronger position regarding settlement." Parsons further concluded that:
The decision of whether to settle the case for the amount offered by DuPont to an individual client, or to take the case to trial before a jury is ultimately the decision of the client. In the Hawai‘i [product liability] case that I handled, additional evidence supporting the proposition that Benlate could cause damage to my client's crops would have reduced the risk of going to trial. The client would have been informed about the risk of going to trial in terms of the strength of the [p]laintiffs' liability claims as well as the strength of the clients' damages claims. If the client rejected their settlement offer, we would have been prepared to take the claim before a jury, in any event, and knowing the [concealed documents] would have made the plaintiffs' case stronger when taking an individual case to trial if the client rejected DuPont's settlement offer.
(Emphases added.)Peterson's report opined that, had he and his client, Willman, had the concealed information, "it most definitely would have a substantial difference in [their] analysis of liability/causation in the case against DuPont. The information, taken as a whole, would have greatly strengthened Mr. Willman's claim that Benlate was defective and the cause of his crop damage and loss." Peterson believed that had
Willman known in September 1994 all the information[,] he would have rejected DuPont's settlement amount paid to him and gone to trial. The information is strong and persuasive that Benlate was defective[.] . . . Willman's case would have been substantially stronger[.]
(Emphases added.)Pavey's report averred that:
It has been 10 years since we settled those cases, but I recall [that] we discussed and applied the same range of probability of winning on negligence/product defect to all of the cases.
Our liability assessment was made on the basis of the evidence which had been produced by DuPont, evidence developed by us as of the time of settlement and, to some extent, on prior trial and settlement outcomes. It is clear to me that DuPont fraudulently withheld significant evidence from us and even more from plaintiffs who tried or settled their cases prior to the time our clients settled.
It is my opinion that had DuPont not fraudulently withheld the evidence in the cases which were tried prior to our settlement, DuPont would probably have lost all of those cases on the issues of negligence and product defect. I know for a fact that some of the cases that settled prior to our cases would have either been settled for substantially higher sums or gone to trial had DuPont refused to pay a fair settlement[.]
We represented many clients, some of whom had a lengthy track record of being successful nurserymen and farmers, other who did not. There were individual causation and damages issues that also figured into our settlement evaluations. However, I can say without hesitation that had the previous trials all resulted in finding against DuPont on negligence and product defect, my evaluations of our client's claims would have been higher because, typically, it is true that the stronger the liability case, the more value both sides assign to any damages claim.
(Emphases added.) Playdon also stated that, in his opinion, "the concealment and/or misrepresentation of factual information by DuPont impaired [his] ability to fairly evaluate the status of [his] client's [product liability] litigation." He asserted that the information would have made a "substantial difference" in his analysis regarding "the strength of the liability/causation cases" against DuPont. Playdon concluded that, if the information had been properly disclosed, he "would not have recommended [his] client settle his claim for the amount DuPont offered during negotiations" because,[i]n [his] opinion, the value of [his] client's economic losses greatly exceeded the value of the settlement which was negotiated. In [his] opinion, assuming timely and appropriate access to all of the information[,] and further assuming that . . . DuPont would not and did not offer any settlement consideration greater than that which was in fact paid to settle [his] client's underlying Benlate litigation claim, [he] would have taken the claims before a jury.
(Emphases added.)Lastly, the plaintiffs indicated in their answers to DuPont's June 4, 2004 interrogatories that "Portnoy's opinion will not be based on any particular documents of [the plaintiffs] relating to the prior Benlate product litigation, but will be based on [the] general litigation experience of Mr. Portnoy." Consequently, in his report, Portnoy explained the general litigation and settlement practices and concluded that "had [he] been representing these claimants, the settlement value of the cases would have been dramatically impacted had the wrongfully withheld information been available" and "would have significantly increased." (13) In sum, the plaintiffs' experts offered essentially two opinions, to wit, that, if the plaintiffs and/or their attorneys had known about the concealed evidence, (1) they would not have settled and would have proceeded to trial and (2) the valuation of the plaintiffs' cases would have been "substantially higher."
Viewing the evidence in the light most favorable to the plaintiffs, as the nonmoving party, Lau v. Bautista, 61 Haw. 144, 147, 598 P.2d 161, 163 (1979), we agree with the circuit court's implicit ruling that the plaintiffs have not demonstrated the existence of a genuine issue of material fact as to damages to defeat summary judgment. As indicated above, the plaintiffs' attorney experts merely presented conclusory opinions that would do little to assist a jury. Of crucial importance is the fact that none of the attorney experts provide any opinion testimony as to what specific settlement factors were or should be considered in settling each of the plaintiffs' underlying product liability cases and the evaluation of how those factors would have been altered had they known about the concealed evidence. Although the plaintiffs have filed their claims jointly, they each have separate claims against DuPont, and each of their claims must be individually established. The experts did not explain how DuPont's conduct affected the plaintiffs' evaluation such that they would have settled for more, what each plaintiff claimed as his damages in the product liability cases at the time he settled and what he recovered, and how the settlement factors would apply to each plaintiff's case. It is not sufficient for an expert to simply state that he or she believed that, had the concealed evidence been known, the settlement value would have been greater because the existence of the concealed evidence strengthened the liability aspect of the litigation. See Acoba v. Gen. Tire, Inc., 92 Hawai‘i 1, 14, 986 P.2d 288, 301 (1999) ("Although expert testimony may be more inferential than that of fact witnesses, in order to defeat a motion for summary judgment[,] an expert opinion must be more than a conclusory assertion about ultimate legal issues." (Internal quotation marks and citation omitted.)); see, e.g., Zelinski v. Brunswick Corp., 185 F.3d 1311, 1317 (Fed. Cir. 1999) (ruling that the federal district court properly characterized patent attorney expert's statement as conclusory because the statement was an assertion without further explanation); Phillips Petroleum Co. v. Huntsman Polymers Corp., 157 F.3d 866, 876 (Fed. Cir. 1998) (reasoning that conclusory expert declarations devoid of facts upon which the conclusions were reached fail to raise a genuine issue of material fact to resist summary judgment); Burrow v. Arce, 997 S.W.2d 229, 235-36 (Tex. 1999) (holding that the attorney expert affidavit stating that he considered the relevant facts and concluded that the settlements were fair and reasonable was conclusory because he did "not explain why the settlements were fair and reasonable for each of the [plaintiffs]") (emphasis added); Griswold v. Kilpatrick, 27 P.3d 246, 248-49 (Wash. Ct. App. 2001) (the plaintiff's expert testimony that, but for the delay in prosecuting the case, the claim would have settled for a larger sum was speculative and conclusory and therefore insufficient to create a genuine issue of material fact in a legal malpractice case). The unsubstantiated conclusions of the plaintiffs' experts are insufficient to raise a genuine issue of material fact that would preclude summary judgment. (14) The circuit court properly concluded that the plaintiffs are "unable to prove the fact or amount of settlement fraud damages as a matter of law." Accordingly, we hold that the circuit court was correct in granting summary judgment in favor of DuPont. (15)
Notwithstanding the foregoing, the plaintiffs maintain that:
At the time [they] responded to DuPont's discovery, and submitted their final expert reports for trial,[ (16)] they believed (and still believe) that Hawai‘i law allowed for recovery of the losses they sustained "naturally" and "proximately" from DuPont's misrepresentations, without limitation. Their trial preparation reflected this expectation of the availability of general damages for fraud.
. . . [T]he possibility of the [c]ircuit [c]ourt imposing a limited "settlement fraud" remedy was unknown to the parties and was not foreseeable under Hawai‘i law at the time [the p]laintiffs obtained their reports, and answered discovery[.]
Consequently, the plaintiffs request that, "[s]hould this [c]ourt ultimately adopt the settlement differential as the prevailing measure of damages," i.e., the fair compromise value absent the fraud, they should "be given the opportunity (on remand) to make an appropriate record for such purpose." Stated differently, the plaintiffs believe that, because it was "unknown" and "not foreseeable" that the circuit court would adopt the fair compromise value as the measure of damages in settlement fraud actions, their case should be remanded to allow their legal experts an opportunity to present their opinions regarding the fair compromise value of the case absent the fraud.In the instant case, DuPont filed a motion for summary judgment, asserting that the plaintiffs' damages were limited to the "fair compromise value" of their released tort claims at the time of settlement. In opposition thereto, the plaintiffs maintained -- as they had up to the time DuPont filed the subject motion for summary judgment -- that their damages should not be so restricted and should be extended to the judgment value of their released claims. In giving the benefit of the doubt to the plaintiffs, we presume that DuPont's theory of damages was either first raised, or only became clear, upon the filing of its motion for summary judgment. Therefore, it can hardly be said, as the plaintiffs contend, that it was "not foreseeable" for the circuit court to conclude that the measure of damages would be the fair compromise value, especially in light of the arguments advanced by DuPont in its motion for summary judgment. (17) Clearly, this is not a case where the circuit court sua sponte rendered an outcome that could not have been expected by the parties.
More importantly, the opportunity the plaintiffs now seek, i.e., to allow their experts the opportunity to opine regarding the fair compromise value of the case absent the fraud, was available to them, via HRCP Rule 56(f) (2007), at the time the circuit court was considering DuPont's motion for summary judgment. HRCP Rule 56(f) states that:
Should it appear from the affidavits of a party opposing the motion that the party cannot for reasons stated present by affidavit facts essential to justify the party's opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.
(Emphases added.) Rule 56(f) -- like its federal counterpart, Federal Rules of Civil Procedure (FRCP) Rule 56(f), -- provides a mechanism for litigants to seek a continuance or avoid summary judgment when they "need[ ] to discover essential facts" to justify their opposition. Hall v. State of Hawai‘i, 791 F.2d 759, 761 (9th Cir. 1986) (stating that FRCP Rule 56(f) empowers the court to continue or deny a motion for summary judgment "if the opposing party needs to discover essential facts" to justify the opposition) (citation omitted); see also Stallard v. Consol. Maui, Inc., 103 Hawai‘i 468, 475, 83 P.3d 731, 738 (2004) ("As the [FRCP] are substantially similar to the HRCP, we look to federal case law for guidance."). The purpose of Rule 56(f) is "to provide an additional safeguard against an improvident or premature grant of summary judgment." Price v. Gen. Motors Corp., 931 F.2d 162, 164 (1st Cir. 1991) (internal quotation marks and citation omitted). Moreover,[t]he rule should be applied with a spirit of liberality. Although discovery need not be complete before a case is dismissed, summary judgment is proper only if the nonmovant has had adequate time for discovery. To this end, Rule 56(f) allows a party to request a delay in granting summary judgment if the party can make a good faith showing that postponement of the ruling would enable it to discover additional evidence which might rebut the movant's showing of the absence of a genuine issue of material fact. The party is required to show what specific facts further discovery might unveil.
McCabe v. Macaulay, 450 F. Supp. 2d 928, 933 (N.D. Iowa 2006) (emphasis added) (internal quotation marks, citations, original brackets omitted) (format altered); Acoba v. General Tire, Inc., 92 Hawai‘i 1, 11-12, 986 P.2d 288, 298-99 (1999) (an HRCP Rule 56(f) affidavit must provide valid reasons why a continuance is necessary and demonstrate specifically how postponement would enable rebuttal); Josue v. Isuzu Motors Am., Inc., 87 Hawai‘i 413, 416, 958 P.2d 535, 538 (1998) (same). In sum, the circuit court has the discretion to "deny the motion for summary judgment, order a continuance for additional discovery or make 'such other order as is just.'" Jensen v. Redevelopment Agency of Sandy City, 998 F.2d 1550, 1554 (10th Cir. 1993) (footnote omitted); see also Josue, 87 Hawai‘i at 416, 958 P.2d at 538 ("A [circuit] court's decision to deny a request for continuance pursuant to HRCP Rule 56(f) will not be reversed absent an abuse of discretion." (Citation omitted.)).Here, rather than request a continuance of the hearing "to permit affidavits to be obtained or depositions to be taken or discovery to be had or . . . [to seek] such other order as is just," HRCP Rule 56(f), the plaintiffs continued to assert their contrary position on damages, disregarding DuPont's position and the fact that the circuit court might be persuaded to adopt DuPont's view of the measure of damages. Having failed to request a Rule 56(f) continuance, the plaintiffs cannot now complain that the circuit court -- based on the submissions by the plaintiffs -- granted summary judgment in favor of DuPont. (18) Weinberg v. Whatcom County, 241 F.3d 746, 751 (9th Cir. 2000) (internal quotation marks, citation, and original brackets omitted) (interpreting FRCP Rule 56(f) and holding that the district court properly granted summary judgment in favor of the defendants when the plaintiff "never moved the court under Rule 56(f) for additional time to obtain expert testimony necessary to substantiate his allegations of damages"); see also Pasternak v. Lear Petroleum Exploration, Inc., 790 F.2d 828, 832-33 (10th Cir. 1986) ("where a party opposing summary judgment and seeking a continuance pending completion of discovery fails to take advantage of the shelter provided by Rule 56(f) . . . , there is no abuse of discretion in granting summary judgment"). (19)
To permit the plaintiffs to now establish another record relating to the proof of damages, after unsuccessfully maintaining their position and failing to take advantage of the Rule 56(f) remedy available to them, would entitle them to two bites of the apple. (20) Daiichi Hawaii Real Estate Corp. v. Lichter, 103 Hawai‘i 325, 348, 82 P.3d 411, 434 (2003) (in an action seeking to vacate the arbitration decision, this court stated that it "cannot accept that parties have a right to keep two strings to their bow -- to seek victory before the tribunal and then, having lost, seek to overturn it for bias never before claimed"). Accordingly, in our view, the plaintiffs waived their opportunity to secure further opinions from their experts to submit to the circuit court and cannot now raise it on appeal. See generally Chung v. McCabe Hamilton & Renny Co., 109 Hawai‘i 520, 537, 128 P.3d 833, 850 (2006) ("the failure to properly raise an issue at the [circuit] level precludes a party from raising that issue on appeal") (internal quotation marks and citation omitted); see also Avila v. Traveler's Ins. Co., 651 F.2d 658, 660 (9th Cir. 1981) (stating that "[a] contention by an opposing party that he had insufficient time in which to present specific facts in opposition to the motion [for summary judgment] normally cannot be successfully raised for the first time on appeal") (citation omitted). (21)
2. The Plaintiffs' Remaining Contention
The plaintiffs also challenge the circuit court's order granting DuPont's motion for summary judgment based on the test results conducted by Alta Analytical Laboratories, Inc. (Alta). (22) They contend, inter alia, that the circuit court erred in concluding that the Alta test results were "not material" to the plaintiffs when they settled their cases and subsequently dismissed them. However, in light of the foregoing conclusion that the plaintiffs have not presented sufficient evidence on damages to defeat summary judgment, we need not address the instant issue.
B. DuPont's Cross-AppealOn cross-appeal, DuPont raises an additional basis to affirm the circuit court's judgment. Specifically, DuPont challenges that part of the circuit court's order denying its first motion for summary judgment as to the plaintiffs' fraud claims, contending that the circuit court erred in failing to dismiss the fraud claims. However, based on the above discussion, we need not reach DuPont's cross-appeal inasmuch as it is essentially moot. Indeed, as DuPont maintains, its cross-appeal was "filed only in the event this court reverses the [circuit court's] dismissal of the entire case."
IV.
CONCLUSION
Based on the foregoing, we affirm the circuit court's August 10, 2005 judgment.
On the briefs:
1. There were originally
sixty plaintiffs in the present action; however, fifty-six plaintiffs
resolved their cases against
DuPont during the circuit court proceedings. Specifically, thirty-seven
of the original sixty plaintiffs settled their claims
against DuPont on September 27, 2002, four on September 2, 2003, and
thirteen on June 24, 2005. The remaining six
plaintiffs proceeded with their case to its conclusion; however,
apparently two of the six plaintiffs settled their claims
against DuPont inasmuch as only the instant four plaintiffs appealed to
this court. Soon after the filing of the notice of
appeal, the two plaintiffs that apparently settled with DuPont filed
their stipulation of partial dismissal of action with
prejudice. Accordingly, unless otherwise indicated, any proceedings
relating to these fifty-six plaintiffs will not be
mentioned in this memorandum inasmuch as they are not relevant to the
disposition of the instant appeal. 2. HRCP Rule 54(b) provides
in relevant part that:
3. Restatement (Second) of
Torts § 551 (1977), entitled "Liability For Nondisclosure,"
provides in relevant part:
(2) One party to a business transaction is under a duty to exercise reasonable care to disclose to the other before the transaction is consummated[:]
(a) matters known to him that the other is entitled to know because of a fiduciary or other similar relation of trust and confidence between them; and
(b) matters known to him that he knows to be necessary to prevent his partial or ambiguous statement of the facts from being misleading; and
(c) subsequently acquired information that he knows will make untrue or misleading a previous representation that when made was true or believed to be so; and
(d) the falsity of a
representation not made with the expectation that it would be acted
upon, if he subsequently learns that
the other is about to act in reliance upon it in a
transaction
with him; and
4. In answering the
complaint, DuPont also asserted a counterclaim, seeking, inter alia, damages and an
injunction
prohibiting the plaintiffs from pursuing their action in violation of
the settlement agreements, i.e.,
the covenant not to sue. However, the circuit court has yet to resolve
the counterclaim and, in fact, stayed all proceedings relating to the
counterclaim pending resolution of the instant appeal. 5. Briefly stated, the
plaintiffs in Matsuura I
settled their product liability actions against DuPont, and,
thereafter, brought a
claim in the federal district court for, inter alia, fraud and
interference with prospective economic advantage. 102 Hawai‘i
at 152, 73 P.3d at 690. The federal district court subsequently
certified three questions to this court, the answers to which
are discussed infra
as applicable. Id. at
154, 73 P.3d at 692.
6. It is well-settled that,
Id. at 162-63, 73 P.3d at
700-01 (citations and internal brackets omitted) (emphasis added).
7. See, e.g., Turkish v. Kasenetz, 27
F.3d 23, 28 (2d Cir. 1994) (applying New York law); Authentic Architectural
Millworks, Inc. v. SCM Group USA, Inc., 586 S.E.2d 726, 728 (Ga.
Ct. App. 2003); Richardson
v. Econ. Fire & Cas. Co.,
485 N.E.2d 327, 330 (Ill. 1985) (citing a collection of cases from
Indiana, Michigan and New York); Siegel v. Williams,
818 N.E.2d 510, 514 (Ind. Ct. App. 2004); Ware v. State Farm Mut. Auto. Ins.
Co., 311 P.2d 316, 320-21 (Kan. 1957);
Bilotti v. Accurate Forming
Corp., 188 A.2d 24, 30-35 (N.J. 1963); Mehovic v. Mehovic, 514
S.E.2d 730, 733 (N.C. Ct.
App. 1999); Sabbatis v.
Burkey, 853 N.E.2d 329, 332 (Ohio Ct. App. 2006); Fields v. Yarborough Ford, Inc.,
414 S.E.2d
164, 166 (S.C. 1992).
8. Section 549, entitled
"Measure of Damages for Fraudulent Misrepresentation," provides that:
(a) the difference between the value of what he has received in the transaction and its purchase price or other value given for it; and
(b) pecuniary loss suffered otherwise as a consequence of the recipient's reliance upon the misrepresentation.
9.
Based on evidence indicating that knowledge of the
withheld evidence would have substantially increased the settlement
value of the cases, including evidence of comparable settlements of
larger amounts and expert testimony, the Ninth Circuit
ruled that there was a genuine issue of fact as to whether the
plaintiffs could prove damages. Id. at 368. In so ruling,
the
court noted that such damages were "not so speculative that damages are
incapable of calculation." Id.
at 369. 10.
The plaintiffs also cite to a number of cases
that merely stand for the general proposition that defrauded plaintiffs
are
entitled to adequate compensation or that the measure of damages is
whatever losses were legally caused by the fraud or
misrepresentation. For example, they cite to and provide parentheticals
for the following cases:
These general principles lend no support to the plaintiffs' aforementioned argument.
11.
During the circuit court proceedings, the
plaintiffs' discovery responses confirmed that they were claiming the
total
product liability damage. For example, in their June 4, 2003 answers to
interrogatories, the plaintiffs explained that the
"actual judgment
value" "refers to the amount of compensatory and punitive damages which
could have been recovered by
[the p]laintiffs at trial of [their product liability cases], but for
the fraudulent settlement." In their June 10, 2003 answers to
interrogatories, the plaintiffs, in response to the inquiry as to how
the "actual settlement
value" was determined and what
factors were considered in reaching the value, stated:
Indeed, in their opening brief, the plaintiffs indicated that "their claims were not confined to the 'actual settlement value' [DuPont might have paid had it not acted fraudulently]." The plaintiffs further state that DuPont
12. Malone "represented over 200 similarly situated plaintiffs in Hawaii and Florida and in other cases filed across the country." Matsuura I, 102 Hawai‘i at 151, 73 P.3d at 689.
13. In their answers to DuPont's interrogatories, the plaintiffs also stated that Stanley Roehrig, counsel for the plaintiffs in another Benlate product liability case, Kawamata Farms, Inc. v. United Agri Prods., 86 Hawai‘i 214, 948 P.2d 1055 (1997), "may be called to testify regarding the nature of damages claimed in that action, and the damages awarded by the jury in that action." However, the record does not reflect that Roehrig submitted an expert report. Nonetheless, assuming that he would be permitted to testify, Roehrig's testimony would be directed only as to what another jury did in another case.
14. We are unconvinced by the dissent's bald assertion that, "[e]ven if the 'fair compromise value' is used as a basis for calculating damages, [the p]laintiffs have sufficiently identified 'compromise factors' to put the 'fair compromise value' in issue," i.e., creating "genuine issues of material fact as to the fairness of the prior settlement[.]" Dissent Op. at 17. The dissent fails to cite to any authority in support of its position that the conclusory statements found in the aforementioned attorney expert reports are sufficient to create genuine issues of material fact. Instead, the dissent simply asserts that "evidence and inferences must be viewed by this court in a light more favorable to the non-moving [p]laintiffs." (Internal quotation marks, citation, and original brackets omitted.) Id. Although the dissent correctly relates the principle in reviewing an award of summary judgment, such principle does not negate the fact, as the dissent even acknowledges, that expert affidavits "must at least include the factual basis and the process of reasoning which makes the conclusion viable in order to defeat a motion for summary judgment." (Emphasis added.) (Internal quotation marks and citation omitted.) Id. at 16 n.4. Yet, the dissent mistakenly believes that the expert reports, which merely "opined that the settlement value was higher than that for which the case was previously settled, were clearly based on facts and inference drawn thereon." Id. As stated above, for plaintiffs' experts to opine that the plaintiffs would not have settled and would have proceeded to trial had they known of the concealed documents, or that the concealed information would have increased the strength of their product liability cases, does not render such opinion sufficient to identify the compromise factors of the plaintiffs' particular cases. Even assuming, but not agreeing, that the attorney expert reports sufficiently identified the compromise factors, the reports fail to set forth how those factors applied to each of their cases.
Moreover, the dissent, relying upon HRE Rule 702 (governing admissibility of expert testimony), points out that the attorney expert reports "would have been admissible at trial." Dissent Op. at 11, 16. We disagree. As previously quoted, Rule 702 provides in relevant part that "[i]f scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education may testify thereto in the form of an opinion or otherwise." (Emphasis added.) As discussed supra, the plaintiffs' attorney experts' reports simply consisted of conclusory opinions, which would have provided "no assistance to the jury, and therefore should not be admitted" pursuant to HRE Rule 702. Batangan, 71 Haw. at 558, 799 P.2d at 52 (observing that, expert testimony that merely states a legal conclusion and that does not assist the jury in its determination is excludable under Rule 702).15. The plaintiffs additionally argue that the circuit court's ruling exceeded the bounds of reason and disregarded rules or principles of law or practice to the plaintiffs' substantial detriment. First, the plaintiffs maintain that, at the same time DuPont was asserting that the proper measure of damages was the fair compromise value, it reserved the right to argue that such damages were speculative. DuPont, however, contends that, because there is no controlling Hawaii law, it reserved the right to later argue the minority position that settlement fraud damages are inherently speculative. Nonetheless, the plaintiffs do not explain how DuPont's reservation would prejudice them. Second, the plaintiffs argue that they were prejudiced by DuPont's inconsistent position throughout this litigation that it "would never have paid any more to settle the plaintiffs' claims than was in fact paid in settlements"; again, the plaintiffs did not explain how they were prejudiced by DuPont's assertion and such assertion is irrelevant to the determination of the issues in this appeal. Third, the plaintiffs contend that they were prejudiced because DuPont's experts did not offer opinions on the fair compromise value in their written reports. Indeed, the dissent takes issue with DuPont's attorney expert reports, stating that:
16. As previously indicated, the parties had submitted their final expert reports by the time DuPont brought its motion for summary judgment based on the plaintiffs' inability to prove damages. The circuit court had also made clear that the parties' experts would not be allowed to testify on matters beyond their respective reports.
17. The dissent contends that "[i]t was not until the February 28, 2005 order[, i.e., the order granting DuPont's motion for summary judgment,] that [the p]laintiffs were made aware of the specific standard to which their response would be held." Dissenting Op. at 9. However, the dissent fails to take into account that the plaintiffs were placed on notice of [DuPont]'s position on damages -- at the latest -- when DuPont filed its motion for summary judgment. Rather, the dissent baldly and mistakenly states that the fact "[t]hat [the p]laintiffs may have been put on notice of DuPont's position . . . has nothing to do with the fact that [the p]laintiffs were not made aware of the specific damages standard that would be adopted by the court until the February 28, 2005 order." Id. (emphasis added) (internal quotation marks and citation to the majority opinion omitted). Indeed, as indicated infra, the plaintiffs cannot wait until after DuPont prevails on its stated theory to seek an alternative remedy.
18. We are mindful that, at the time DuPont filed the subject motion for summary judgment, final expert reports had been submitted pursuant to the circuit court's pretrial scheduling order and that the circuit court had declared that testimony outside of the experts' respective reports would not be allowed. Indeed, the dissent so observes and contends that the pretrial scheduling order "thus barred the possibility of a continuance for further discovery." Dissenting Op. at 27 (footnote omitted). However, inasmuch as Rule 56(f) "should be applied with a spirit of liberality," McCabe, 450 F. Supp. 2d at 933, and given the wide discretion afforded to the circuit court, see Josue, 87 Hawai‘i at 416, 958 P.2d at 538 (citation omitted)), to "make such other order as is just," HRCP Rule 56(f), any grant by the circuit court of a continuance to allow further discovery and the submission of additional evidence from the plaintiffs' experts to rebut DuPont's position would have, in our view, indicated the circuit court's implicit ruling that its prior limitation on expert testimony would be lifted with respect to the additional evidence. See Spiller v. Ella Smithers Geriatric Ctr., 919 F.2d 339, 343 (5th Cir. 1990) (indicating that, by allowing defendant to move for summary judgment after cut-off date for pretrial motions, district court impliedly granted motion to amend scheduling order). Thus, the dissent's contention that "[the p]laintiffs could not have appropriately moved to continue the decision on [Dupont]'s motion for summary judgment," dissenting op. at 24, because of the circuit court's pretrial scheduling order overlooks the plain reading of HRCP Rule 56(f), which confers upon the circuit court the authority to "make such other order as is just." Moreover, although the deadline for submission of expert reports had expired by the time the circuit court entered its ruling on DuPont's summary judgment, i.e., on February 28, 2005, the discovery cut-off had not yet expired. The discovery cut-off date was set for April 14, 2005.
19.
The United States Court of Appeals for the
Third Circuit, in Mid-South
Grizzlies v. National Football League, 720
F.2d 772 (3d Cir. 1983), noted that "most courts which have considered
the issue agree that [compliance with the
requirements of Rule 56(f)] is necessary for the preservation of a Rule
56(f) contention that summary judgment should be
delayed pending further discovery" and cited to a collection of cases
for the aforementioned proposition. Id. at 780 n.4.
20. Given the remedy
available pursuant to HRCP Rule 56(f), we cannot agree with the dissent
that "the only opportunity
[the p]laintiffs would have had to acquire expert testimony
re-evaluating their fraud claims . . . would have been after the
court made its February 28, 2005 order granting summary judgment."
(Dissenting Op. a 26 (bold emphasis added)
(underscored emphasis in original).
21. The dissent contends that, "[i]nasmuch as HRCP Rule 56(f) was not raised by any party but by the majority sua sponte . . . , under the circumstances it is not properly before this court[,]" dissenting op. at 23 (emphasis omitted), "is wholly irrelevant to the facts[,]" id., and, that by applying HRCP Rule 56(f), we "ha[ve] given [DuPont] another 'bite at the apple[,]'" id. at 24. The relevance of HRCP Rule 56(f) is triggered by the plaintiffs' alternative argument that the case be remanded in order to allow their experts the opportunity to opine regarding the fair compromise value and to present such evidence to the circuit court. As discussed supra, the plaintiffs had at their disposal the procedural mechanism, i.e., Rule 56(f), to do exactly what they now seek. Moreover, as previously discussed, the possibility that the circuit court might elect the fair compromise value as the measure of damages was not unforeseeable nor unknown to the plaintiffs. Finally, we reiterate that DuPont was the prevailing party at the circuit court; the plaintiffs, as the non-prevailing party and the appellant on appeal, have the burden of demonstrating that they are entitled to the relief sought before this court. See Bettencourt v. Bettencourt, 80 Hawai‘i 225, 230, 909 P.2d 553, 558 (1995) ("[t]he burden is upon appellant in an appeal to show error by reference to matters in the records") (internal quotation marks and citation omitted). As stated in Costa v. Sunn, 5 Haw. App. 419, 697 P.2d 43 (1985):
22.
Alta was
hired on behalf of DuPont to conduct tests of soil and water collected
from the properties of certain plaintiffs
who had brought Benlate claims against DuPont. Alta was one of the few
laboratories, if not the only one in the United
States, capable of performing the sophisticated soil and water analysis
to determine whether the Benlate was contaminated.