80 Hawai'i 218, State for Use and Benefit of Ameron, Inc. v. Tradewinds Elec. Service & Contracting Inc.
| Citation | 908 P.2d 1204 |
| Decision Date | 28 December 1995 |
| Docket Number | No. 16675,16675 |
| Parties | 80 Hawai'i 218 STATE of Hawai'i for the Use and Benefit of AMERON, INC., dba Ameron HC & D and Wisdom Industries, Inc., Plaintiffs-Appellees, and State of Hawai'i for the Use and Benefit of Amfac Distribution Hawai'i, Inc., Plaintiff-Intervenor-Appellee, v. TRADEWINDS ELECTRICAL SERVICE & CONTRACTING INC.; United Pacific Insurance Company; Highway Construction, Ltd.; John Does 1-10; Jane Does 1-10; Doe Corporations 1-10; Doe Partnerships 1-10; Doe Entities 1-10; and Doe Governmental Units 1-10, Defendants-Appellees, and Felix Romero, Defendant-Appellant. |
| Court | Supreme Court of Hawai'i |
Thomas R. Cole, on the briefs, Wailuku, Maui, for defendant-appellant Felix Romero.
Russell Y. Tsuji (Reuben S.F. Wong and Erik W. Wong with him on the brief; Law Offices of Reuben S.F. Wong, of counsel), Honolulu, for defendant-appellee Highway Construction, Ltd. and United Pacific Insurance Company.
John A. Hoskins and Patricia K. Wall, Reinwald, O'Connor, Marrack, Hoskins & Playdon, Honolulu, for plaintiffs-appellees Ameron, Inc. dba Ameron HC & D and Wisdom Industries, Inc. (no brief filed).
Sheryl L. Nicholson and Elizabeth Kent (Paul, Johnson, Alston & Hunt, A Law Corporation, of counsel), Honolulu, for plaintiff-intervenor-appellee Amfac Distribution Hawai'i, Inc. (no brief filed).
Before MOON, C.J., and KLEIN, LEVINSON, NAKAYAMA and RAMIL, JJ.
Defendant-appellant Felix Romero (Romero) 1 appeals from the September 30, 1992 order granting defendants-appellees Highway Construction, Ltd. (Highway) and United Pacific Insurance Company's (UPIC) motion for summary judgment. In granting the motion for summary judgment, the circuit court attempted solely to resolve the issue of subrogation. In its order, the circuit court stated that claims for indemnification, reimbursement, and contribution remained undecided and open for future proceedings. Because we hold that genuine issues of material fact remain as to whether Romero was personally liable to the creditors of Romero Enterprises, Inc., dba Tradewinds Electrical Service & Contracting (Tradewinds), we affirm in part, vacate the remainder of the summary judgment, and remand the case to the circuit court for further proceedings. 2
I. BACKGROUND
On November 19, 1985, the State of Hawai'i (the State) and Highway entered into a contract calling for Highway to serve as general contractor on the "Lagoon Drive Realignment Project" (the project). UPIC was the bonding company for Highway on the project and issued the State a performance bond guaranteeing Highway's performance of the contract.
On January 2, 1986, Highway entered into a contract with Tradewinds, as a subcontractor, obligating Tradewinds to provide electrical subcontracting work on the project in exchange for a given sum. Upon the execution of the subcontracting agreement, Romero, the president of Tradewinds, gave Highway a "personal guarantee" to ensure the performance of the contract, instead of the more commonly used "performance bond."
Relevant to this appeal, Tradewinds contracted with three companies that furnished supplies for the project: (a) Ameron, Inc. (Ameron); (b) Amfac Distribution Hawaii, Inc. (Amfac); and (c) Wisdom Industries, Inc. (Wisdom).
On August 29, 1986, Tradewinds entered into a contract with Ameron, providing that Ameron would furnish materials to Tradewinds. On this same date, Romero entered into a contract with Ameron in which he personally guaranteed the obligations of Tradewinds to Ameron.
On September 10, 1976, many years prior to the project, Felix Romero, on behalf of "Tradewinds Electric," applied for a $1,500.00 line of credit with Amfac. According to Romero, the "Tradewinds Electric" referred to in the application for credit was a different corporate entity than the one involved in the project. Romero contended that the "Tradewinds" entity involved in the project was not incorporated until February 25, 1985.
Romero never executed an agreement whereby he personally guaranteed the obligations of Tradewinds to Wisdom.
Because Tradewinds was apparently having financial problems, Highway sent a letter to Tradewinds on February 26, 1987, informing Tradewinds in relevant part that:
The following decisions have been made in view of the deteriorating financial condition of your company:
1. We will be setting up a payroll account ... for the above project for you.... We will deposit the amount of money to meet payroll for our project every week in time to get your men paid every Friday. The remaining taxes and insurance prorated for our project will also be paid by us to insure no further liability on our part.
2. We will pay all approved current and past billings on your behalf related to the above project.
3. [D]ue to the uncertain amounts of money owed to other people we will not be releasing any more money to you until the end of the project or unless you can certify that you are financially able to perform.
We regret having to take this step and hope you can straighten out your affairs as soon as possible.
Throughout the project, Tradewinds purchased materials from Ameron, Wisdom, and Amfac (collectively, "the creditors"). Tradewinds owed Ameron the principal sum of $15,531.33, of which $2,403.51 was for materials purchased after February 26, 1987 (the date that the aforementioned letter was sent). Tradewinds owed Wisdom the principal sum of $13,024.22 for materials purchased after February 26, 1987. Tradewinds owed Amfac the principal sum of $57,166.67, of which $26,551.34 was for materials purchased after February 26, 1987. Upon requests for payment, Tradewinds failed to pay each company.
On May 11, 1988, Tradewinds filed for bankruptcy pursuant to Chapter 11 of the United States Code.
Thereafter, Ameron and Wisdom filed a joint complaint on July 24, 1990, naming UPIC, Highway, Romero, and various unknown persons and entities as defendants. On August 16, 1990, Amfac applied to intervene in the proceedings. On October 4, 1990, the circuit court granted Amfac's application for intervention.
On September 25, 1990, the United States Bankruptcy Court filed an order lifting the automatic stay with respect to any and all claims of all parties against Tradewinds in this proceeding. Following the order lifting the automatic stay, Tradewinds was added as a named defendant.
On November 5, 1990, Highway and UPIC filed a joint cross-complaint against Romero and Tradewinds.
On December 28, 1990, Amfac filed a motion for summary judgment against the defendants. On January 22, 1991, Wisdom filed a motion for summary judgment against the defendants. Thereafter, Highway and UPIC moved for summary judgment on their cross-claim against Tradewinds and Romero, requesting that, if the court issued a summary judgment against the defendants in favor of Wisdom or Amfac, the court should in turn grant a summary judgment in their favor against Romero and Tradewinds.
On February 5, 1991, Amfac withdrew its motion for summary judgment. On March 12, 1991, without explanation, the circuit court denied Wisdom's motion for summary judgment. Thereafter, Highway and UPIC withdrew their motion for summary judgment against Romero and Tradewinds.
On April 13, 1992, Highway and UPIC filed a new motion for summary judgment against Tradewinds and Romero on the cross-claim. In the memorandum in support of their motion for summary judgment, Highway and UPIC attached copies of settlement contracts indicating that they had settled their claims with the creditors. According to the settlement contracts, Highway and UPIC jointly paid $20,000.00 to Ameron, $13,024.22 to Wisdom, and $67,000.00 to Amfac. In exchange, the creditors each assigned their respective interests in their claims to Highway and UPIC.
On June 10, 1992, the hearing on the motion for summary judgment was heard in circuit court. Highway and UPIC contended that they were "standing in the shoes" of the creditors--i.e., pursuing the claim under a subrogation theory. Highway and UPIC contended that their motion for summary judgment was based solely on a subrogation theory and did not seek indemnification, reimbursement, or contribution. In response, Romero contended that Highway's letter, dated February 26, 1987, transferred from Tradewinds to Highway the obligations of Tradewinds to the creditors. The circuit court granted the summary judgment.
In its order filed September 30, 1992, the circuit court certified the summary judgment, pursuant to Hawai'i Rules of Civil Procedure (HRCP) Rule 54(b), 3 and indicated that indemnification, reimbursement, and contribution claims still remained in the case. This appeal followed. II. STANDARD OF REVIEW
Summary judgment is proper where there is no genuine issue as to any material fact and the moving party clearly demonstrates that it is entitled to judgment as a matter of law. This court applies a standard identical to that utilized by the trial court in its consideration of the motion. The evidence is viewed in the light most favorable to the non-moving party. Board of Directors of Ass'n of Apartment Owners v. United Pacific Ins. Co., 77 Hawai'i 358, 360, 884 P.2d 1134, 1136 (1994).
III. DISCUSSION
Romero contends that: (1) the obligation to pay the creditors was transferred from Tradewinds to Highway by Highway's amendment to the subcontract; (2) the February 26, 1987 letter amended the subcontract, creating an obligation upon Highway to pay Tradewinds' debts to the creditors; and (3) even if he was obligated to pay the creditors, the circuit court erred in granting the motion for summary judgment because there remained genuine issues of material fact. Because we held that there remained genuine issues of material fact as to whether Romero was personally liable to Wisdom and Amfac, we affirm in part and vacate the remainder of the summary judgment.
The only issue before this court for appellate review is whether Tradewinds and...
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