80 Hawai'i 54, Cieri v. Leticia Query Realty, Inc.

• Decision Date: 28 September 1995
• Docket Number: No. 17445,17445
• Citation: 80 Hawaii 54,905 P.2d 29
• Parties: 80 Hawai'i 54 Lawrence CIERI, Jr. and Janis Cieri, Plaintiffs-Appellees/Cross-Appellants, 1 v. LETICIA QUERY REALTY, INC., and Leticia Query, Defendants-Appellants/Cross-Appellees, and Joseph Y. Yamaji and Violet N. Yamaji, Defendants-Appellees.
• Court: Hawaii Supreme Court

Page 29

905 P.2d 29

80 Hawai'i 54

Lawrence CIERI, Jr. and Janis Cieri, Plaintiffs-Appellees/Cross-Appellants, ¹ v. LETICIA QUERY REALTY, INC., and Leticia Query,

Defendants-Appellants/Cross-Appellees, and Joseph

Y. Yamaji and Violet N. Yamaji,

Defendants-Appellees.

No. 17445.

Supreme Court of Hawai'i.

Sept. 28, 1995.

As Amended Oct. 12, 1995.

Edward C. Kemper of Kemper & Watts, on the briefs, Honolulu, for defendants-appellants/cross-appellees Leticia Query Realty, Inc. and Leticia Query.

Joseph A. Kinoshita of Kinoshita & Steele, on the briefs, Honolulu, for plaintiffs-appellees/cross-appellants Lawrence Cieri, Jr. and Janis Cieri.

Before MOON, C.J., and KLEIN, LEVINSON, NAKAYAMA and RAMIL, JJ.

MOON, Chief Justice.

This is a case involving real estate fraud and statutory unfair practices. Plaintiffs-appellees Lawrence Cieri, Jr. and Janis Cieri (collectively, the Cieris) purchased a residence from defendants-appellees Joseph and Violet Yamaji (collectively, the Yamajis). In the transaction, defendants-appellants Leticia Query and Leticia Query Realty, Inc. (collectively, the Query entities) served as the Yamajis' licensed real estate broker. Immediately after moving into the residence, the Cieris discovered undisclosed plumbing problems, and they subsequently filed suit against the Yamajis and the Query entities for tortious breach of contract, fraud/misrepresentation, and unfair or deceptive trade acts or practices in violation of Hawai'i Revised Statutes (HRS) chapter 480. By special verdict, a jury found Query individually liable for fraud and for violating HRS § 480-2; the jury exonerated the Yamajis and Leticia Query Realty of any wrongdoing.

Pursuant to the jury's special verdict, the trial court entered judgment against Query for $10,878.00 in treble damages, $12,252.00 in attorneys' fees, and $851.36 in costs. Query appeals the amount of the judgment and the court's denial of her motion for judgment notwithstanding the verdict (JNOV). For the following reasons, we affirm.

I. BACKGROUND

A. Facts

On September 21, 1989, the Cieris and the Yamajis signed a Deposit Receipt, Offer and Acceptance (DROA) form for the sale of the Yamajis' twenty-year-old residence to the Cieris. The Yamajis did not live in the residence and had been renting the property to others for some time. The Query entities had served as the property manager for the property, screening potential renters, collecting rents, making mortgage payments, and reporting problems to the Yamajis. They also ordered and made payments for necessary repairs to the property as directed by the Yamajis.

Mr. Yamaji testified at trial that the property had always been used for rental, and, for the last three years prior to its sale, the residence was rented by the Milliners. Mr. Milliner testified at trial that there were drainage problems with a toilet in one of the bathrooms, that the washing machine would back up and flood the garage, and, when it rained heavily, water often leaked into the family room. Mr. Milliner also testified that, due to problems with the washing machine, flooding occurred approximately once a month during the last two years of his residency. Query was contacted on each occasion, and, according to Mr. Milliner, "responded quickly" by calling plumbers. Query and Mr. Milliner also advised the Yamajis about the problems on several occasions.

Receipts, admitted into evidence at trial, indicated that plumbers had visited the residence on October 15, 1988, December 30, 1988, and April 17, 1989. Problems were found with the laundry washer line, the main bathroom toilet, and a bathtub drain.

In June 1989, because the rental income was becoming insufficient to cover the mounting insurance and mortgage costs, the Yamajis decided to sell the property. Query recommended that, before selling the property, certain repairs be made to the house by the Yamajis, including repairs to the plumbing system. Mr. Yamaji testified that, among other repairs that he had done himself, including raising the family room floor and installing a new shake roof, he had hired a plumber to repair the washer hose.

On September 17, 1989, the Yamajis entered into an exclusive-right-to-sell listing agreement with Leticia Query Realty to sell the residence. The Yamajis, with the assistance of Query, filled out a "Sellers Real Property Disclosure Statement" (the disclosure statement), dated September 29, 1989, in conjunction with the DROA. Question 3-d of the disclosure statement asked: "Have there been any problems with the plumbing (including solar systems, septic tank, or other), electrical, water and/or gas?" Question 1-c asked: "Have you ever had any leaks repaired?" The answers to both questions were "no." The Cieris and Yamajis both signed the disclosure statement. At trial, Mr. Yamaji and Query explained that they had answered the questions in the negative in part because they considered the water in the family room to be "seepage" and the washer and bathtub incidents to be "maintenance" rather than "problems."

Although the sale was to close on December 1, 1989, the Yamajis agreed to let the Cieris move in three days early, subject to prorated rent and an early occupancy agreement. On November 30, 1989, a backup in a second floor bathroom flooded the house and seeped downstairs, damaging the carpet. The Cieris notified Mr. Yamaji, who notified Query, who in turn called a plumber.

Two days later, on December 2, 1989, after Mrs. Cieri used the washing machine, water apparently backed up from the sewage line and flooded the garage. Mr. Cieri testified that human waste was in the water and that the house smelled badly. According to Query, there was some question whether the December 2, 1989 problem was caused by a preexisting condition, or by damage made by the plumber two days earlier on November 30, 1989. The plumbing eventually was fixed, but the Cieris had to relocate for three days and thereby incurred various expenses.

B. Prior Proceedings

On November 23, 1990, the Cieris filed suit against the Yamajis and the Query entities for: (1) tortious breach of contract; (2) fraud/misrepresentation; and (3) unfair and deceptive trade practices under HRS chapter 480. At trial in February 1993, although the jury found that the Yamajis and Query had made false representations to the Cieris, the jury determined that: (1) only Query "[made] the false representation with the intent to defraud"; ² (2) the Cieris relied on Query's misrepresentations; ³ and (3) the fraud/misrepresentation on the part of Query was a legal cause of the Cieris' damages. ⁴ The jury also found that Query, but not Leticia Query Realty, had committed "a deceptive act or practice." ⁵

In answer to question No. 11 on the special verdict form, which asked the jury to determine "the amount of [the Cieris'] damages as a result of the breach of contract, ⁶ fraud, and/or deceptive acts or practices," the jury awarded the sum of $3,626.00. ⁷ The jury also awarded $7,950.00 for punitive damages.

Pursuant to the jury's special verdict, the trial court, on April 6, 1993, initially entered a judgment in the amount of $10,878.00 ($3,626.00 trebled) pursuant to HRS § 480-13(b)(1) (Supp.1992). ⁸ The Cieris and Query subsequently filed cross-motions to alter the judgment, or for a JNOV, or for a new trial, arguing that under the Intermediate Court of Appeals' (ICA) decision in Eastern Star v. Union Building Materials, 6 Haw.App. 125, 712 P.2d 1148 (1985), the court must award the highest damages chosen by the jury as between fraud and the HRS § 480-2 claim. ⁹ In Eastern Star, the ICA held that, where an award is made under HRS § 480-13 and punitive damages are also awarded for common law counts, "the recovery should be either treble damages or punitive damages, whichever is the greater amount." 6 Haw.App. at 142, 712 P.2d at 1160 (emphasis in original).

On May 7, 1993, the trial court held a hearing on the cross-motions. At the hearing, counsel for the Cieris--confronted with Eastern Star--opted for the award for fraud and punitive damages, totaling $11,576.00 ($3,626.00 plus $7,950.00). The court therefore ruled that judgment be entered in that amount.

Thereafter, counsel for the Cieris attempted to recover attorneys' fees on the fraud claim, and the parties filed supplemental memoranda. On September 28, 1993, the court reversed its prior position and entered a new judgment in the amount of $10,878.00 in treble damages, $12,252.00 in statutory attorneys' fees, and $851.36 in costs. Query timely appeals from this judgment.

II. DISCUSSION

A. Statutory Unfair or Deceptive Acts or Practices

Query first argues that the trial court erred in basing the amount of the judgment on the Cieris' claim under HRS chapter 480, because the Cieris do not qualify as "consumers" under HRS § 480-1 and therefore do not have standing to sue for unfair or deceptive acts or practices. Preliminarily, however, we take this opportunity to discuss the scope of the applicability of HRS § 480-2, which proscribes "unfair or deceptive acts or practices in the conduct of any trade or commerce" (emphasis added), as it pertains to the transaction and the defendants at issue in this case.

An interpretation of a statute is a question of law reviewed de novo. Mehau v. Reed, 76 Hawai'i 101, 112, 869 P.2d 1320, 1331 (1994).

1. The "Trade or Commerce" Requirement of HRS § 480-2

a. Federal Beginnings

The genesis of Hawai'i's consumer protection statute is in federal antitrust law. Although the federal arsenal of antitrust laws is comprised of several differently worded statutes of varying scope that have generated volumes of case law, all of the acts have a common focus on trade, commerce, and business, and all share a concern for the preservation of unrestrained economic competition and free trade. See, e.g., Sherman Act, 15 U.S.C. § 1 (1973) ("Every contract, combination in the form of trust or otherwise, or conspiracy, in...