82 Hawai'i 96, GGS Co., Ltd. v. Masuda

• Decision Date: 11 July 1996
• Docket Number: No. 1,No. 17025,No. 2,1,2,17025
• Citation: 919 P.2d 1008
• Parties: 82 Hawai'i 96 GGS CO., LTD., a Japan corporation, Plaintiff-Appellee, v. Toshio MASUDA, Defendant-Appellant, and State of Hawai'i; Pal International Hawaii, Ltd., a Hawai'i corporation; Agor/ Latham Architecture (Doe Defendant); John C. Ferry, Trustee (Doe Defendant); and John Does 3-50; Jane Does 1-50; Doe Partnerships 1-50; Doe Corporations 1-50; Doe Entities 1-50; and Doe Governmental Units 1-50, Defendants.
• Court: Hawaii Court of Appeals

Page 1008

919 P.2d 1008

82 Hawai'i 96

GGS CO., LTD., a Japan corporation, Plaintiff-Appellee, v. Toshio MASUDA, Defendant-Appellant and State of Hawai'i; Pal International Hawaii, Ltd., a Hawai'i corporation; Agor/ Latham Architecture (Doe Defendant No 1); John C. Ferry, Trustee (Doe Defendant No. 2); and John Does 3-50; Jane Does 1-50; Doe Partnerships 1-50; Doe Corporations 1-50; Doe Entities 1-50; and Doe Governmental Units 1-50, Defendants.

No. 17025.

Intermediate Court of Appeals of Hawai'i.

July 11, 1996.

Syllabus by the Court

1. Defendant-Appellant Toshio Masuda (Masuda) appeals from a circuit court order granting Plaintiff-Appellee GGS Co., Ltd.'s (GGS) motion for summary judgment on GGS's foreclosure complaint.

2. In consideration of a monetary advance of one hundred fourteen million Japanese yen, Takanobu Mori (Mori) made, executed, and delivered a promissory note (the Note) to GGS. As security for the payment of the Note, New York Diamond, Inc. (N.Y. Diamond) through Masuda, its president, made, executed, and delivered to GGS an accommodation mortgage (the Mortgage) on five properties that it owned.

3. Subsequently, Masuda, individually and on behalf of N.Y. Diamond, executed an unrecorded agreement dated March 22, 1990 (the Unrecorded Agreement) with GGS. The Unrecorded Agreement was written entirely in the Japanese language. The parties debate the purpose and effect of this document. GGS claims that in the Unrecorded Agreement, Masuda assumed all of Mori's obligations under the Note. In contrast, N.Y. Diamond and Masuda claim that the Unrecorded Agreement was merely a limited power of attorney authorizing the representative of GGS and the representative of Masuda and N.Y. Diamond, to negotiate and to enter into further documents.

4. An Amendment of Mortgage and Consent to Assumption of Mortgage (the Mortgage Amendment) was subsequently executed by GGS, Masuda, and N.Y. Diamond. GGS claims that in the Mortgage Amendment, Masuda acknowledged the execution and delivery of the Note by Mori to GGS and reaffirmed his assumption of Mori's obligations to GGS.

5. The circuit court granted GGS's summary judgment motion and issued a decree of foreclosure in favor of GGS. N.Y. Diamond and Masuda were found jointly liable for all amounts due under the Note. Masuda has appealed insofar as the foreclosure order concludes that Masuda himself is personally liable for the amounts owed under the Note.

6. The Unrecorded Agreement is not in a form which can be understood without extrinsic aids. Usually, summary judgment is inappropriate if any ambiguity exists regarding the intent of the parties at the time of contract execution. An appellate court, however, may affirm a grant of summary judgment on any ground appearing on the record, regardless of whether the circuit court relied on it.

7. The recitals in the Mortgage Amendment are pertinent. A recital is a "formal statement or setting forth of some matter of fact, in any deed or writing, in order to explain the reasons upon which the transaction is founded." Black's Law Dictionary 1270 (6th ed.1990). According to the Restatement (Second) of Contracts, "in some circumstances a recital may embody a representation of fact by one party to the other, and the party making such a representation may be barred by estoppel from showing the truth contrary to the representation after another has relied on the representation." Under the facts of this case, the doctrine of equitable estoppel is applicable to sustain summary judgment.

8. Because we are in the same position as the trial court when reviewing a motion for summary judgment, we do not consider a new factual issue which was not part of the record and was not presented to the trial court.

9. Because of the flexibility of the "equity and good conscience" test and the general nature of the factors listed in Hawai'i Rules of Civil Procedure (HRCP) Rule 19(b), whether a particular non-party described in Rule 19(a) will be regarded as indispensable depends to a considerable degree on the circumstances of each case.

10. Mori was not an indispensable party under HRCP Rule 19(b) because neither Mori, Masuda nor GGS would suffer prejudice from a judgment rendered in Mori's absence.

Harlan Y. Kimura (Hong, Iwai, Hulbert & Kawano, of counsel), on the briefs, for defendant-appellant.

J. George Hetherington, Steven B. Jacobson and Brian I. Ezuka (Torkildson, Katz, Jossem, Fonseca, Jaffe, Moore & Hetherington, of counsel), on the brief, for plaintiff-appellee.

Before WATANABE, ACOBA and KIRIMITSU, JJ.

ACOBA, Judge.

On April 19, 1993, Defendant-Appellant Toshio Masuda (Masuda) appealed from a March 19, 1993 circuit court order granting Plaintiff-Appellee GGS Co., Ltd.'s (GGS) motion for summary judgment on its foreclosure complaint. We affirm.

At the time of the summary judgment hearing, the record reflected the following matters. On September 29, 1989, Takanobu Mori (Mori) made, executed, and delivered to GGS a promissory note (the Note) for the principal amount of one hundred fourteen million Japanese yen, which amount, plus interest, Mori promised to pay to GGS on September 29, 1990. As security for the payment of the Note, New York Diamond, Inc. (N.Y. Diamond) through Masuda, its president, made, executed, and delivered to GGS an accommodation mortgage (the Mortgage) on five properties that it owned in the Mokule'ia Beach subdivisions on the island of O'ahu. In the Mortgage, N.Y. Diamond agreed to pay all amounts due under the Note and gave to GGS the right to recover its fees, costs, and expenses incurred in any foreclosures, sales, and/or suits made necessary by any default under the Note and/or the Mortgage.

Subsequently, Masuda, individually and on behalf of N.Y. Diamond, executed an unrecorded agreement dated March 22, 1990 (the Unrecorded Agreement) with GGS. The Unrecorded Agreement was written entirely in the Japanese language. The parties debate the purpose and effect of this document. GGS claims that in the Unrecorded Agreement, Masuda assumed all of Mori's obligations under the Note. In contrast, N.Y. Diamond and Masuda claim that the Unrecorded Agreement was merely a limited power of attorney authorizing Toshio Iida, as the representative of GGS, and Shizuo Shibuya, as the representative of Masuda and N.Y. Diamond, to negotiate and enter into further documents that would bind Masuda to certain obligations similar to those specified in the Note. Besides this Unrecorded Agreement, the other document central to the dispute is the Amendment of Mortgage and Consent to Assumption of Mortgage (the Mortgage Amendment) executed by GGS, Masuda, and N.Y. Diamond on November 14, 1990. GGS claims that in the Mortgage Amendment, Masuda acknowledged the execution and delivery of the Note by Mori to GGS and reaffirmed his assumption of Mori's obligations to GGS. Contending that N.Y. Diamond and Masuda defaulted on their obligations by failing to pay the principal plus accrued interest on April 1, 1991, ¹ GGS filed a Complaint for Foreclosure (the Complaint) on February 7, 1992.

The Complaint named N.Y. Diamond, Masuda, the State of Hawai'i, PAL International Hawaii, Ltd., and Agor/Latham Architecture as defendants. The Complaint did not name Mori as a party. On March 3, 1992, Masuda filed an answer denying the Complaint's allegation that he had "assumed Mori's obligations under the Note and the Mortgages."

On September 9, 1992, GGS moved for summary judgment on the Complaint, an interlocutory decree of foreclosure, and an order of sale against all defendants (Summary Judgment Motion). The hearing was held on September 28, 1992. Prior to the hearing, defendants State of Hawai'i and Agor/Latham Architecture were dismissed without prejudice, and defendant PAL International Hawaii, Ltd. filed a notice of no objection to GGS's motion. The circuit court granted GGS's Summary Judgment Motion and issued a decree of foreclosure in favor of GGS. N.Y. Diamond and Masuda were found jointly liable for all amounts due under the Note. In addition, all of N.Y. Diamond's interests under the Mortgage were foreclosed.

Only Masuda chose to appeal. Masuda has appealed insofar as the foreclosure order concludes that Masuda himself is personally liable for the amounts owed under the Note and is therefore personally liable for whatever deficiency remains after the sale of N.Y. Diamond's mortgaged properties.

I.

" 'On appeal, an order of summary judgment is reviewed under the same standard applied by the trial courts.' " Pacific Int'l Serv. Corp. v. Hurip, 76 Hawai'i 209, 213, 873 P.2d 88, 92 (1994) (quoting Reyes v. Kuboyama, 76 Hawai'i 137, 138, 870 P.2d 1281, 1282 (1994)). Consequently, summary judgment is proper where, viewing all evidence in the light most favorable to the non-moving party, there is no genuine issue as to any material fact and the moving party clearly demonstrates that he or she is entitled to judgment as a matter of law. State v. Tradewinds Elec. Serv. and Contracting, Inc., 80 Hawai'i 218, 222, 908 P.2d 1204, 1208 (1995); Hawai'i Rules of Civil Procedure (HRCP) Rule 56(c). Masuda raises two questions on appeal.

II.

A.

First, Masuda asserts that the circuit court erred in granting GGS's Summary Judgment Motion because there was a genuine issue of material fact. In support of its Summary Judgment Motion, GGS relied on various documents attached to its original Complaint including: the original Mortgage (exhibit 1); a copy of the Unrecorded Agreement written in the Japanese language and executed on March 22, 1990 (exhibit 2); an "American" language translation of the Unrecorded Agreement (exhibit 3); the Mortgage Amendment (exhibit 4); the affidavit of Yutaka Sasaki (Sasaki); and the affidavit of translation of Gay Miyake (Miyake).

In relevant part, Sasaki's affidavit states that as "the loan officer for Plaintiff GGS," he was "familiar with the promissory note," and that Masuda, "by unrecorded...