86 Hawai'i 21, Eastman v. McGowan, s. 18398

• Decision Date: 29 September 1997
• Docket Number: Nos. 18398,18435,s. 18398
• Citation: 946 P.2d 1317,86 Hawaii 21
• Parties: 86 Hawai'i 21 Charles A. EASTMAN, Personal Representative of the Estate of Lesta B. Eastman, Deceased, Charles A. Eastman and Terry B. Eastman, Plaintiffs-Appellees/Cross-Appellants, v. Dale W. McGOWAN, Forest F. Cutright and Joe B. Fields, Defendants/Third-Party Plaintiffs-Appellants/Cross-Appellees, and John DOES 1 Thru 10, Jane Does 1 Thru 10, Doe Partnerships 1 Thru 10, Doe Corporations 1 Thru 10, and Doe Governmental Entities 1 Thru 10, Defendants, v. Charles A. EASTMAN, Successor Personal Representative of the Estate of Samuel V. Eastman, Deceased, Third-Party Defendant-Appellee/Cross-Appellant. 1
• Court: Hawaii Supreme Court

Page 1317

946 P.2d 1317

86 Hawai'i 21

Charles A. EASTMAN, Personal Representative of the Estate of Lesta B. Eastman, Deceased, Charles A. Eastman and Terry B. Eastman, Plaintiffs-Appellees/Cross-Appellants, v. Dale W. McGOWAN, Forest F. Cutright and Joe B. Fields, Defendants/Third-Party Plaintiffs-Appellants/Cross-Appellees, and John DOES 1 Thru 10, Jane Does 1 Thru 10, Doe Partnerships 1

Thru 10, Doe Corporations 1 Thru 10, and Doe

Governmental Entities 1 Thru 10, Defendants, v. Charles A. EASTMAN, Successor Personal Representative of the

Estate of Samuel V. Eastman, Deceased, Third-Party

Defendant-Appellee/Cross-Appellant.

Nos. 18398, 18435. ¹

Supreme Court of Hawai'i.

Sept. 29, 1997.

Everett Walton, Paul R. Dolan, on the briefs, Lahaina, for defendants/third-party plaintiffs-appellants/cross-appellees Dale W. McGowan and Joe B. Fields.

Gary Robert, and Richard A. Priest, on the briefs, Lahaina, for defendant/third-party plaintiff-appellant/cross-appellee Forest F. Cutright.

Edward F. Mason, on the briefs, Wailuku, for plaintiffs-appellees/cross-appellants.

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

Defendants/Third-Party Plaintiffs/Appellants Dale McGowan and Joe Fields, ² in Supreme Court No. 18398, appeal from: (1) the trial court's order granting Third-Party Defendant/Appellee Lesta Eastman's ³ (Lesta Eastman, as Personal Representative) motion for judgment on the pleadings, filed September 19, 1991 (Motion for Judgment on the Pleadings); (2) the trial court's order granting Plaintiffs-Appellees Lesta Eastman, ⁴ Charles Eastman, and Terry Eastman's (collectively, the Eastmans) motion and amended motion for summary judgment, filed October 1, 1993 (the Eastmans' Motion for Summary Judgment); and (3) the judgment entered on August 23, 1994, which awarded the Eastmans $80,000.00, plus prejudgment interest and attorneys' fees.

On appeal, McGowan and Fields argue that: (1) the trial court erred when it granted the Motion for Judgment on the Pleadings because Lesta Eastman, as Personal Representative, did not show that she was entitled to judgment as a matter of law; (2) the trial court erred when it granted the Eastmans' Motion for Summary Judgment because the intent of the parties in two settlement agreements needed to be discerned, and this presented a genuine issue of material fact; and (3) the judgment should not have included the amounts for prejudgment interest, certain court costs and expenses, and attorneys' fees.

Lesta Eastman, as Personal Representative, and the Eastmans, in Supreme Court No. 18398, cross-appeal from: (1) the trial court's order vacating dismissal of the counterclaim and third-party complaint, filed August 23, 1993 (Motion to Vacate Dismissal); and (2) the trial court's order denying the motion to dismiss for failure to join persons needed for just adjudication, filed October 1, 1993 (Motion to Dismiss for Failure to Join).

On cross-appeal, Lesta Eastman, as Personal Representative, and the Eastmans argue that: (1) the trial court erred in granting the Motion to Vacate Dismissal because the Defendants' attorney did not provide a satisfactory reason for failing to file pretrial statements for the complaint, the counterclaim, or the third-party complaint; (2) the trial court's reinstatement of the counterclaim and the third-party complaint was ineffective because Defendants did not comply with the requirements for reinstatement as set forth in the order granting the Motion to Vacate Dismissal; and (3) the trial court erred in denying the Motion to Dismiss for Failure to Join because certain parties who would be adversely affected by a judgment in this case were not joined.

Defendant/Third-Party Plaintiff/Appellant Forest Cutright, in Supreme Court No. 18435, appeals from: (1) the trial court's order granting the Motion for Judgment on the Pleadings; (2) the trial court's order granting the Eastmans' Motion for Summary Judgment; and (3) the judgment entered on August 23, 1994, which awarded the Eastmans $80,000.00, plus prejudgment interest and attorneys' fees.

On appeal, Cutright argues that: (1) the trial court erred when it granted the Motion for Judgment on the Pleadings because Lesta Eastman, as Personal Representative, did not show that she was entitled to judgment as a matter of law; (2) the trial court erred when it granted the Eastmans' Motion for Summary Judgment because the intent of the parties in two settlement agreements needed to be discerned, and this presented a genuine issue of material fact; and (3) the judgment should not have included the amounts for prejudgment interest, certain court costs and expenses, and attorneys' fees.

We affirm the trial court's decisions and hold that: (1) Defendants' counterclaim was barred by the statute of limitations, and the trial court properly granted the Motion for Judgment on the Pleadings; (2) the two settlement agreements were unambiguous; therefore, the parties' intent did not need to be discerned, there were no issues of material fact, and the trial court properly granted the Eastmans' Motion for Summary Judgment; (3) the judgment was not erroneous in awarding prejudgment interest and attorneys' fees to the Eastmans; and (4) Lesta Eastman, as Personal Representative, and the Eastmans' cross-appeal was untimely, and the issues raised in the cross-appeal do not need to be addressed in this opinion.

I. BACKGROUND

A. LAWSUITS AROSE OUT OF CONSTRUCTION PARTNERSHIPS

Defendants and Samuel Eastman formed two partnerships to develop a fourteen unit condominium project in Napili, Maui, Hawai'i (Napili Project). One of the partnerships included David A. Fleming, and the other partnership included three investors from Washington (the Washington Investors).

Samuel Eastman allegedly made fraudulent misrepresentations to Fleming about his investment. Fleming sued Defendants and Samuel Eastman in David A. Fleming v. Dale McGowan, et al., Civil No. 5461, in the Second Circuit Court, State of Hawai'i.

Samuel Eastman also allegedly made fraudulent misrepresentations to the Washington Investors about their investment. The Washington Investors brought suit against Defendants and Samuel Eastman in John M. Bussanich, et al. v. Samuel V. Eastman, et al., No. C84-469T, in the United States District Court for the Western District of Washington.

Samuel Eastman died on November 23, 1984, while both cases were pending, and shortly thereafter Defendants settled the cases with Fleming and the Washington Investors.

B. SETTLEMENT BETWEEN THE EASTMANS AND DEFENDANTS

In order to settle all legal claims between Samuel Eastman's estate and Defendants, the parties entered into a settlement agreement on March 7, 1985 (March 1985 Agreement).

The March 1985 Agreement established certain terms and conditions under which the Eastmans agreed to purchase two condominium units in the Napili Project. Specifically:

1. The agreed upon price for each of the condominium units was $200,000.00, for a total purchase price of $400,000.00.

2. Lesta Eastman, as Personal Representative, agreed to pay $80,000.00 to Defendants on the execution of the March 1985 Agreement. The sum was intended as a down payment against the total purchase price.

3. As soon as Defendants completed construction of the Napili Project and complied with all applicable provisions of Hawaii's condominium law, Lesta Eastman, as Personal Representative, and the Eastmans were required to sign a binding contract to purchase the two units for a purchase price of $320,000.00 ($400,000.00 less the $80,000.00 down payment).

4. Lesta Eastman, as Personal Representative, and the Eastmans were also required to

apply for conventional first mortgage financing, if necessary to complete said purchase, and ... provide to the lender all required information and documentation in a timely manner so that they can qualify for said financing.

(Emphasis added.)

5. If a Certificate of Occupancy was not issued by the County of Maui for the Napili Project within two years from the execution of the March 1985 Agreement, Defendants were to return the $80,000.00 to Lesta Eastman, as Personal Representative. Lesta Eastman, as Personal Representative, and the Eastmans would have no further obligations under the March 1985 Agreement.

The March 1985 Agreement was executed on March 7, 1985. Lesta Eastman, as Personal Representative, paid the $80,000.00 required by the March 1985 Agreement to Defendants on April 2, 1985. Thereafter, Lesta Eastman, as Personal Representative, and the Eastmans were prepared to comply with their remaining duties under the March 1985 Agreement.

C. DEFENDANTS BREACHED MARCH 1985 AGREEMENT

Nineteen months later, on December 16, 1986, the Eastmans received a letter from Defendants' attorney containing various documents and a request that the Eastmans "submit financial statements to demonstrate their financial capability to purchase the units." Among the enclosed documents was a "Condominium Public Report," which gave an estimated completion date of the Napili Project of September 1, 1987, a date six months past the day on which Defendants were required to obtain a Certificate of Occupancy or return the $80,000.00.

The Eastmans investigated the matter further and discovered that Defendants had not begun construction on the Napili Project. The Eastmans were unable to determine whether Defendants had secured any commitment from a lender.

It is undisputed that Defendants could not have obtained financing, completed construction of the Napili Project, and obtained a Certificate of Occupancy in the three months between their attorney's December 16, 1986 letter and the March 7, 1987 deadline. Defendants admitted this impossibility in a response to the Eastmans' requests for admissions.

The Eastmans decided not to continue with a purchase of the two condominium units because the Certificate of Occupancy would not be issued by March 7, 1987 and...