85 Hawai'i 19, Lee v. Aiu

• Decision Date: 15 April 1997
• Docket Number: No. 18761,18761
• Parties: 85 Hawai'i 19 Elizabeth Ann LEE, a single woman, Plaintiff-Appellee/Cross-Appellant, v. Edwin I. AIU, a single man, Defendant-Appellee/Cross-Appellee, and Steven B. Dixon and Lucy Pearson-Dixon, husband and wife, Defendants-Appellants/Cross-Appellees
• Court: Hawaii Supreme Court

Page 655

936 P.2d 655

85 Hawai'i 19

Elizabeth Ann LEE, a single woman, Plaintiff-Appellee/Cross-Appellant, v. Edwin I. AIU, a single man, Defendant-Appellee/Cross-Appellee and Steven B. Dixon and Lucy Pearson-Dixon, husband and wife Defendants-Appellants/Cross-Appellees

No. 18761.

Supreme Court of Hawai'i.

April 15, 1997.

Eric A. Seitz, Honolulu, on the briefs, for defendants-appellants/cross-appellees Steven B. Dixon and Lucy Pearson-Dixon.

William J. Rosdil and Paul K. Hamano, Hilo, on the briefs, for plaintiff-appellee/cross-appellant Elizabeth Ann Lee.

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

MOON, Chief Justice.

Following a jury trial, defendants-appellants/cross-appellees Steven B. Dixon and Lucy Pearson-Dixon ¹ (collectively, the Dixons) appeal from the third circuit court's February 13, 1995 amended judgment, awarding plaintiff-appellee/cross-appellant Elizabeth Ann Lee general and punitive damages. Briefly stated, this case involves a dispute over the title to real property located at 702 Keha Place in Hilo, Hawai'i (the Keha Place property), breach of a purported settlement agreement entered into between Lee and defendant-appellee Edwin I. Aiu, ² claims of tortious interference with the purported settlement agreement by the Dixons, intentionally tortious or negligent conduct by Dixon toward Lee, and Lee's emotional distress claims.

Lee cross appeals from that portion of the amended judgment entered in favor of the Dixons and Aiu with respect to reformation of the deed to the Keha Place property and in favor of Aiu with respect to the settlement agreement. Lee also cross appeals from the trial court's denial of her request for attorney's fees.

For the reasons discussed below, we vacate that portion of the amended judgment with respect to the deed and the settlement agreement and remand this case to the trial court with instructions to: (1) equitably reform the deed to the Keha Place property to reflect Lee as the sole owner; and (2) specifically enforce the settlement agreement. We affirm the trial court's denial of Lee's request for attorney's fees against Aiu. Additionally, we affirm in part that portion of the amended judgment with respect to the Dixons' liability to Lee on the tortious interference with contractual relations claim, but remand for a new trial on the issue of damages consistent with our holding that Lee be allowed to introduce, as an element of her damages, evidence of those attorney's fees she incurred in litigation with Aiu that were caused by the Dixons' tortious interference with the contractual relation between Lee and Aiu. Additionally, we affirm the jury's finding that punitive damages are warranted, but vacate the award and remand for a new trial to determine the amount of punitive damages consistent with our holding that Lee be allowed to introduce, as an element of punitive damages, evidence of those attorney's fees she incurred in litigation with the Dixons.

Finally, because it appears from the record that Dixon, a licensed attorney, engaged in conduct that may not comport with the Hawai'i Rules of Professional Conduct (HRPC), we refer this matter to the Office of Disciplinary Counsel (ODC) for review and appropriate action.

I. BACKGROUND

According to the testimony adduced at trial, Lee met Aiu approximately one year after her husband, Clifford Lee (Clifford), passed away. By May 1983, Lee and Aiu had become romantically involved, and Aiu took up residence with Lee and her minor daughter in Lee's Oxnard, California home a few months thereafter. Upon moving in, Aiu brought approximately $5,000.00 into the relationship and contributed to the maintenance of the home and living expenses from his employment earnings and military pension. Aiu acknowledged during his testimony that he "did not have ... ownership in the Oxnard house."

As a result of many conversations Lee had with her brother-in-law, Wilbert Lee (Wilbert), who resided in Hawai'i, Lee decided to purchase a home in Hilo with proceeds from Clifford's life insurance and the sale of her two homes: the Oxnard residence and another house in Rhode Island. Aiu decided to move to Hawai'i with Lee, at least temporarily, until Lee and her daughter were settled in a new home. Both Lee and Wilbert testified that Lee had made it clear that, although Aiu was moving with her, it was her intention that she would finance the purchase of a new home and that she would be the sole owner.

The sale of the Oxnard home netted Lee $62,215.78. Because she was unable to be present at closing or during the move to Hilo, Lee instructed escrow to disburse $15,000.00 of the net proceeds to Aiu to cover the moving expenses and to disburse the balance to her. Upon her subsequent arrival in Hilo, Lee deposited the $47,215.78 balance into a joint account with Aiu (the Merrill-Lynch account). Lee testified that she did not intend to make a gift to Aiu, but put his name on the account so that if anything happened to her, Aiu could carry out her intended purpose: to purchase a home in Hilo for her daughter. Using the proceeds from Clifford's life insurance and the sale of the Rhode Island home, Lee also established a similar account with Wilbert. Lee testified that she had no intention to make a gift to Wilbert and put his name on the account for the same reason that she put Aiu's name on the Merrill-Lynch account. While looking for a home to purchase in Hilo, Aiu, Lee, and Lee's daughter [hereinafter, collectively, the threesome] stayed with Wilbert for a few months and then moved into a rental home. Eventually, the threesome located a suitable home at the Keha Place property. By that time, however, Lee was experiencing credit problems due to a stolen credit card and general financial difficulty. ³ According to Lee, Aiu offered to assist her in securing financing by co-signing the mortgage and the note. She testified that, because Aiu's name would appear on the mortgage papers, they believed that Aiu's name would also have to appear on the deed to the property.

In February 1986, Lee's offer to purchase the Keha Place property was accepted. It is undisputed that Lee made the $15,000.00 down payment exclusively from her own monies. She and Aiu then proceeded to sign all of the relevant documents as joint tenants with the right of survivorship. In response to the question whether Aiu "ever discuss[ed] the fact that [Aiu's] involvement in the purchase of a residence was to allow her to qualify for a loan[ ]," Aiu stated, "[T]hat was the key purpose."

The threesome moved to the Keha Place property and lived there together, off and on, until July 1990. Although Lee and her daughter lived in the home continuously, Aiu went back and forth between Hawai'i and California for employment purposes. Between 1985 and 1990, both Lee and Aiu contributed financially to the cost of the Keha Place property. Although Aiu made approximately $23,000.00 in mortgage payments, Lee testified that, during that period, Aiu, in conversations with various members of Aiu's family, referred to the Keha Place property as "the nice home that [Lee] had bought in Hilo."

Sometime in early 1989, the relationship between Lee and Aiu began to deteriorate. Lee testified that Aiu expressed a desire to remove his name from the deed and move back to California permanently. In July 1989, after a brief reconciliation, Lee testified that Aiu once again informed her that he was leaving Hawai'i and requested that Lee reimburse him the $23,000.00 that he had contributed to the mortgage in exchange for his consent to remove his name from the deed. Lee refused, reminding Aiu of their agreement that the house was hers. The matter was dropped for several months until December 13, 1989, when Lee learned that she had breast cancer.

Lee underwent a radical mastectomy on December 29, 1989, was released from the hospital on December 31, 1989, and immediately began a nine-month course of chemotherapy. Toward the end of January 1990, Lee testified that Aiu again announced that he wanted to leave Hawai'i. According to Lee, Aiu, on this occasion, demanded $25,000.00 in exchange for his agreement to remove his name from the deed. When asked why he wanted to leave following Lee's surgery, Aiu testified that "[s]he wouldn't talk to me.... So it was like 180 degrees switch over from loving to ... a person that ... had problems. I told her then that a mastectomy to me if she loses a breast it doesn't matter if she loses a breast...." He also testified, however, that "my feelings were that she had the problems.... I respected her very much but the mastectomy really turned me off to her. I don't know why."

In January 1990, following Lee's surgery, Aiu moved out of Lee's bedroom, and their communication became very limited. Aiu testified that, because Lee would not talk to him, he began communicating with her by way of notes. His notes contained, inter alia, repeated demands for $25,000.00 to reimburse him for his share of the mortgage payments.

Feeling harassed and badgered, Lee turned to Wilbert for counsel. He advised her that, "[i]f this is a joint tenancy and you have cancer, whoever predeceases the other will leave the survivor everything. That means [your daughter is] out. If he's asking for $25,000.00, the easier of anything may be to give him what he wants." Lee testified that it was at that point that she acquiesced and promised to give Aiu $25,000.00, and Aiu, in turn, promised not to pursue joint tenancy status by agreeing to remove his name from the deed [hereinafter, the settlement agreement]. Thereafter, Lee and Aiu discussed the logistics of how Aiu would be paid, eventually deciding that they would sell the house. From the net proceeds of the sale, Aiu would be paid $25,000.00, and the balance would be disbursed to Lee. With this plan in mind, Lee and Aiu executed a listing agreement on February 12, 1990.

Aiu, however, decided that he should consult...