78 Hawai'i 40, Weinberg v. Mauch

• Decision Date: 19 January 1995
• Docket Number: No. 16018,16018
• Citation: 78 Hawaii 40,890 P.2d 277
• Court: Hawaii Supreme Court
• Parties: 78 Hawai'i 40 Harry WEINBERG, Plaintiff-Appellee, v. Patrick J. MAUCH and Jeanine Cripe Mauch, Defendants-Appellants, and James C. Blackwell, Jr., Virginia R. Blackwell, Defendants-Appellees and Robert J. Waugh, Doris J. Waugh, Case, Kay & Lynch, John Does 1-50, Jane Does 1-50, Doe Corporations 1-50, Doe Entities 1-50, Doe Governmental Units 1-50, Defendants, and Patrick J. MAUCH and Jeanine Cripe Mauch, Third-Party Plaintiffs v. Gerry ANDERS, Anthony Behm, Chet Hunt, and Sleeping Giant Realty, Inc., Third-Party Defendants.

Page 277

890 P.2d 277

78 Hawai'i 40

Harry WEINBERG, Plaintiff-Appellee, v. Patrick J. MAUCH and Jeanine Cripe Mauch, Defendants-Appellants, and James C. Blackwell, Jr., Virginia R. Blackwell, Defendants-Appellees

and

Robert J. Waugh, Doris J. Waugh, Case, Kay & Lynch, John

Does 1-50, Jane Does 1-50, Doe Corporations 1-50,

Doe Entities 1-50, Doe Governmental

Units 1-50, Defendants, and Patrick J. MAUCH and Jeanine Cripe Mauch, Third-Party Plaintiffs v. Gerry ANDERS, Anthony Behm, Chet Hunt, and Sleeping Giant

Realty, Inc., Third-Party Defendants.

No. 16018.

Supreme Court of Hawai'i.

Jan. 19, 1995.

Reconsideration Denied March 15, 1995.

Thomas R. Grande (Stanley E. Levin with him on the briefs), Honolulu, for defendants-appellants.

Richard F. Dvonch (Reuben S.F. Wong, Erik W. Wong and Russell Y. Tsuji with him on the brief), Honolulu, for plaintiff-appellee, Harry Weinberg, Deceased.

Robert Mark Grinpas, Kapaa, Kauai, for defendants-appellees James C. Blackwell, Jr. and Virginia R. Blackwell.

Before MOON, C.J., LEVINSON, NAKAYAMA and RAMIL, JJ., and Intermediate Court of Appeals, BURNS, Chief Judge, in place of KLEIN, J., recused.

NAKAYAMA, Justice.

Defendants-appellants Patrick and Jeanine Mauch (the Mauchs) appeal the decisions of the circuit court relating to an unsuccessful land sale transaction. Specifically, the Mauchs appeal from four orders granting summary judgment in favor of plaintiff-appellee Harry Weinberg regarding the Mauchs' claims for: (1) breach of contract; (2) negligence and nondisclosure; (3) conspiracy; and (4) violation of Hawai'i Revised Statutes (HRS) Chapter 480. The Mauchs also appeal from two orders granting directed verdicts in Weinberg's favor as to interference with contract and punitive damages claims. Lastly, the Mauchs appeal the circuit court's findings of fact, conclusions of law and decree of foreclosure that awarded attorneys' fees and costs to Weinberg and ordered the property to be foreclosed.

I. FACTS

On September 12, 1979, Weinberg entered into an agreement with James and Virginia Blackwell (the Blackwells) whereby Weinberg agreed to sell Anini Vista Estates, a parcel of land located on Kaua'i that was in the process of being subdivided to the Blackwells (1979 Weinberg/Blackwell agreement). This agreement prohibited assignment of the Blackwells' interest in the property without Weinberg's prior written consent. ¹

In February 1980, the Blackwells and Mauchs entered into an agreement whereby the Mauchs loaned the Blackwells $112,500.00 in exchange for a mortgage lien secured by a 7.56% interest in Anini Vista Estates (1980 Blackwell/Mauch agreement). This agreement also provided that: 1) the Mauchs could opt to have the Blackwells convey to them an unencumbered one half interest in Lot 1 of the Anini Vista subdivision as satisfaction in full of the $112,500.00 loan; 2) the Blackwells would give the Mauchs a right of first refusal on the remaining undivided one half interest in Lot 1; and 3) the Blackwells would give the Mauchs a right to cure any default under the Blackwells' agreement of sale with Weinberg. The 1980 Blackwell/Mauch agreement, however, was subject to the approval and consent of Weinberg and until such consent was given, the assignment was invalid.

On March 4, 1980, Weinberg consented in writing "to the execution of an Assignment of Agreement of Sale as Security by [the Blackwells] to [the Mauchs] of 7.56% of [the Blackwells'] right, title and interest in and to the ... Agreement of Sale[.]" The consent was "upon the express condition that it shall not be deemed or construed to be a waiver of any term, covenant, condition or provision contained in the aforesaid Agreement of Sale nor to authorize any other or further assignment[.]" Weinberg did not consent to any other term of the 1980 Blackwell/Mauch agreement.

The subdivision of Anini Vista Estates was approved by the County of Kaua'i on November 24, 1980, and Anini Vista Estates was then subdivided into ten lots. Pursuant to the 1980 Blackwell/Mauch agreement, the Mauchs relinquished their 7.56% mortgage interest in the property in exchange for an undivided one half interest in Lot 1 and executed a release of the Blackwells' mortgage on January 10, 1981. On February 2, 1981, the Blackwells and the Mauchs entered into a new agreement (1981 Blackwell/Mauch agreement or 1981 assignment) entitled "Partial Assignment of Agreement of Sale[,]" whereby the Blackwells agreed to assign and transfer to the Mauchs all of their "right, title and interest, under the certain Agreement dated September 12, 1979 ... between [the Blackwells], as Purchaser, and Harry Weinberg, as Seller, ... in and to an undivided one-half ( 1/2) interest in Lot 1 of the Anini Vista Estates Subdivision[.]" All terms of the 1980 Blackwell/Mauch agreement not inconsistent with the 1981 assignment were incorporated into the new agreement.

Because the Blackwells were having difficulty making the required payments on the Anini Vista Estates, they and Weinberg executed another agreement on April 7, 1981 (1981 or second Weinberg/Blackwell agreement). This agreement provided for a partial cancellation of the original agreement of sale and allowed Weinberg to repossess Lots 2, 4, 7, 8, and the Blackwells' remaining one half interest in Lot 1. Although the second Weinberg/Blackwell agreement did not contain Weinberg's express consent to the 1981 Blackwell/Mauch agreement, it did acknowledge "that with respect to Lot No. 1, [the Blackwells have] assigned an undivided interest therein to Patrick J. Mauch and Jeanine Cripe Mauch, by Assignment dated February 2, 1981[.]" The 1981 Weinberg/Blackwell agreement further provided that the Blackwells would indemnify and hold Weinberg harmless against any loss, liabilities, damages and expenses arising out of any claims, demands or actions brought by the Mauchs by reason of the 1981 Blackwell/Mauch agreement or by reason of the second Weinberg/Blackwell agreement, including the repossession by Weinberg of a one half interest in Lot 1.

The Blackwells subsequently failed to make timely payments on Lots 5, 6, 9, 10, and the one half of Lot 1, the lots remaining after the second Weinberg/Blackwell agreement. ² On February 28, 1984, Weinberg filed a foreclosure action in the Circuit Court of the Fifth Circuit against the Blackwells, the Mauchs and other parties. Weinberg prayed for a decree of foreclosure with respect to Lots 5, 6, 9, 10, and the one half interest in Lot 1 that the Blackwells had assigned to the Mauchs. Although Weinberg recognized the Mauchs' interest in Lot 1, he maintained that the interest was merely a security interest subordinate to his interest in the property. The Mauchs countered that Weinberg could not recover on his claim because he had specifically consented to and had notice of the Mauchs' property interest in Lot 1. The Mauchs filed a counterclaim alleging: (1) breach of contract; (2) interference with contract; (3) intentional misrepresentation; and (4) negligent misrepresentation; and also requesting punitive damages.

On January 23, 1985, the circuit court granted Weinberg's motions for summary judgment and a decree of foreclosure. The Mauchs appealed. By memorandum opinion, Weinberg v. Mauch, No. 10751, (Haw. June 25, 1986) (mem.) (hereafter referred to as Weinberg I ), this court reversed the circuit court's decision, finding that "[i]nasmuch as there is a dispute on the nature and validity of the assignment of the Blackwells' equitable interest in Lot 1, the grant of summary judgment was improper." After remand and discovery, the Mauchs amended their answer, adding numerous counterclaims.

Again Weinberg moved for summary judgment and again the circuit court granted his motion. The Mauchs again appealed. By memorandum opinion, this court stated that "because we concluded [in Weinberg I ] 'there [was] a dispute on the nature and validity of the assignment of the Blackwells' equitable interest in Lot 1, ... the grant of summary judgment was improper.' " Once more, we found that summary disposition of the case was error and we reversed the circuit court's decision and remanded the case for trial. Weinberg v. Mauch, Nos. 12419 & 12495, (Haw. April 22, 1988) (mem.) (hereafter referred to as Weinberg II ).

The case was then transferred from the fifth circuit to the first circuit. The Circuit Court of the First Circuit granted summary judgment in favor of Weinberg as to the Mauchs' counterclaims for: (1) breach of contract; (2) negligence and nondisclosure; (3) conspiracy; and (4) violation of HRS Chapter 480. The circuit court denied Weinberg's motion for summary judgment on the Mauchs' interference with contract claim and allowed the Mauchs to present their claim to a jury. After presentation of the case, the circuit court found that there was no evidence upon which a reasonable juror could find that the Mauchs suffered actual damages as a result of Weinberg's alleged interference with contract and directed a verdict in favor of Weinberg. The circuit court also directed a verdict in favor of Weinberg as to the Mauchs' related claim for punitive damages.

Thereafter, the circuit court conducted a trial in equity to consider the Mauchs' affirmative equitable counterclaims and Weinberg's prayer for a decree of foreclosure. The court's lengthy and thorough findings of fact traced the evolution of the case, explaining in part that: (1) the claims for damages asserted by the Mauchs against Weinberg were partly resolved by the summary judgment entered in favor of Weinberg; (2) the claims not resolved by the summary judgment were tried before a jury, but directed verdicts were rendered in favor of Weinberg; and (3) the equitable claims were heard by the court.

The circuit court concluded that: (1) the Mauchs' right to cure extended only to a mortgage lien secured by a fifty percent interest in the property identified as Lot 1, not to all of the subject property, and...