89 Hawai'i 292, Canalez v. Bob's Appliance Service Center, Inc.

• Decision Date: 02 February 1999
• Docket Number: No. 21548,21548
• Citation: 972 P.2d 295,89 Hawaii 292
• Parties: 89 Hawai'i 292 Kevin A. CANALEZ, Plaintiff-Appellant, v. BOB'S APPLIANCE SERVICE CENTER, INC.; and Elanie Hinokuma, Defendants-Appellees, and Gregory T. Grab, Party-In-Interest-Appellant.
• Court: Hawaii Supreme Court

Page 295

972 P.2d 295

89 Hawai'i 292

Kevin A. CANALEZ, Plaintiff-Appellant, v. BOB'S APPLIANCE SERVICE CENTER, INC.; and Elanie Hinokuma Defendants-Appellees, and Gregory T. Grab Party-In-Interest-Appellant.

No. 21548.

Supreme Court of Hawai'i.

Feb. 2, 1999.

As Clarified on Denial of Reconsideration

Feb. 22, 1999.

Gregory T. Grab, on the briefs, for plaintiff-appellant.

Kevin A. Canalez, on the briefs and as Party-In-Interest-Appellant.

Jeffrey H.K. Sia and Stephen G. Dyer (of Ayabe, Chong, Nishimoto, Sia & Nakamura) on the briefs, for defendants-appellants.

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

Opinion of the Court by MOON, C.J.

This appeal arises out of a personal injury lawsuit in which plaintiff Kevin A. Canalez unsuccessfully sued defendants Bob's Appliance Service Center, Inc. (Bob's Appliance) and Elanie Hinokuma (collectively, Defendants or Appellees) following an automobile-bicycle collision in which Canalez was injured. Canalez and Canalez's attorney, Gregory T. Grab, (collectively, Appellants) appeal from the first circuit court's (1) April 16, 1998 order granting in part Defendants' motion for attorney's fees and sanctions; and (2) April 16, 1998 order granting Defendants' motion for costs. With respect to attorney's fees and sanctions, the circuit court specifically awarded Defendants attorney's fees in the amount of $19,567.25 pursuant to Hawai'i Revised Statutes (HRS) § 607-14.5 (1993). Finding that Grab had violated Hawai'i Rules of Civil Procedure (HRCP) Rule 11 as well as Hawai'i Circuit Court Rules (HCCR) Rule 12.1, the circuit court further ordered that Grab and Canalez should be personally liable for one-half each of the $19,567.25 attorney's fee award. As for costs, the circuit court awarded Defendants costs in the amount of $5,310.98 based on HRCP Rule 68.

Appellants contend that the circuit court erred by (1) granting attorney's fees under HRS § 607-14.5, (2) finding that sanctions were warranted based on Grab's violation of HRCP Rule 11 and pursuant to HCCR Rule 12.1, and (3) granting Appellants' motion for costs in its entirety. For the reasons stated below, we affirm the circuit court's orders.

I. BACKGROUND

On April 29, 1993, Canalez was riding his bicycle on Ke'eaumoku Street, in the City and County of Honolulu, when he ran into a van driven by Hinokuma, who was in the course and scope of her employment with Bob's Appliance. Severely injured, Canalez was taken by ambulance to Queen's Medical Center.

Upon arriving at the emergency room at Queen's Medical Center, Canalez was treated by Wiley Brunel, M.D. (Dr. Brunel), a trauma surgeon, who observed that Canalez suffered from multiple injuries, including blunt head trauma, a comminuted mandible fracture, multiple broken teeth, facial lacerations, and other injuries. Because Canalez could not remember the accident and asked repetitive questions, Dr. Brunel believed Canalez was "amnestic for the event." During the course of questioning Canalez about his medical history, Dr. Brunel learned from Canalez that he used marijuana. A urinalysis conducted at the hospital indicated that Canalez was "presumptive positive" for "THC," one of the compounds found in marijuana.

Bruce Y. Todoki, D.D.S. (Dr. Todoki), a dentist and oral/maxillofacial surgeon, also treated Canalez while he was in the emergency room at Queen's Medical Center. Dr. Todoki observed that Canalez had suffered a "severely fractured lower jaw, some missing teeth or fractured teeth." The fracture sustained by Canalez went "completely through the jaw."

Canalez was released from Queen's Medical Center two days after the accident, on May 1, 1993. It is undisputed that Canalez's medical bills for his stay at Queen's Medical Center were in excess of $20,000.00. On May 10, 1993, Canalez initiated the underlying suit, filing a complaint against Defendants in first circuit court. Canalez's complaint alleged, in pertinent part, that Hinokuma's negligence had caused the collision and that Canalez had thereby "suffered and continue[d] to suffer severe personal injuries and damages, including hospital and medical expenses, loss of earnings and earning capacity, pain and suffering, property damage, loss of enjoyment of life, emotional distress, and ... was otherwise injured and damaged."

Concurrently, Canalez requested that the court exempt the case from the Court Annexed Arbitration Program (CAAP) on the ground that "the probable jury award value, after any reduction on the liability issues and exclusive of interest and costs, is in excess of $150,000.00...." Pursuant to Hawai'i Arbitration Rules (HAR) Rule 6(A) (1987), only "tort cases having a probable jury award value, not reduced by the issue of liability and not in excess of [$150,000.00], exclusive of interest and costs, may be accepted into the [CAAP]...."

In support of his request to exempt the case from the CAAP, Grab represented to the court that:

This case involves severe head injuries. [Canalez] is a fully employed 27 year old male who was struck by a delivery van while riding his bicycle. He was in a coma for approximately 2 days at Queen's Hospital. He has lost a large portion of his jaw bone, lost numerous teeth, and sustained severe lacerations to his head and face.

[Canalez] is expected to undergo future reconstructive surgery to replace missing portions of his jaw bone with parts of his hip bone, and extensive dental work. His Queen's Hospital medical expenses exceed $16,000.00.

Therefore, if the Defendant(s) are found liable for his injuries, damages to [Canalez] will likely exceed the threshold amount as defined in Rule 6(a) of the [HAR].

Based on this request, the Arbitration Administrator ruled on May 12, 1993, that Canalez's case would not be admitted into the CAAP. Trial was scheduled for the week of November 21, 1994.

In order to verify the extent of Canalez's alleged injuries and to evaluate the case, Defendants initiated standard preliminary discovery by serving Grab, on June 18, 1993, with their first request for production of documents. Responses were due on July 18, 1993, but Grab did not respond.

On September 7, 1993, Defendants served Grab with their first request for answers to interrogatories; again, Grab failed to respond. After several unanswered phone calls to Grab, Defendants, on October 12, 1993, sent a letter to Grab asking for a written response to both the first request for production of documents as well as the first request for answers to interrogatories. Grab did not respond. On December 13, 1993, Defendants sent another letter to Grab, reminding Grab that they had still not received his answers to interrogatories. ¹

Notwithstanding his own failure to comply with Defendants' requests for discovery, Grab, on January 26, 1994, sent a letter to Defendants formally demanding that Defendants pay the policy limits in the case, to wit, $100,000.00. Grab's letter stated in pertinent part:

Enclosed herewith please find a copy of the report of [Canalez's] treating surgeon, Dr. Bruce Y. Todoki, D.D.S., dated January 10, 1994 for your review.

We hereby formally demand the policy limits in this matter, which you have represented to be $100,000.00. This offer of compromise is open until Friday, February 25, 1994 at the close of business, at which time it will be withdrawn.

During the next month feel free to complete any investigation you deem necessary, including an Independent Medical Examination of [Canalez's] injuries.

... [R]egretably this is a one-time only offer. We believe that the reasonable compensation to [Canalez] would range in excess of $250,000.00 given the extent and permanency of his injuries. A settlement, of course, would avoid any personal liability exposure on behalf of [Hinokuma] and the business assets.

Through a letter dated February 2, 1994, Defendants informed Grab that, in addition to an independent medical examination, they could not evaluate the settlement demand without Grab's answers to interrogatories and depositions of Canalez and Dr. Todoki. On February 10, 1994, Grab produced some answers to Defendants' interrogatory request, but failed to provide, inter alia, the names of doctors and hospitals providing medical treatment for his alleged injuries, as well as the amount of his medical expenses incurred as a result of the accident.

Via a letter dated February 18, 1994, Defendants informed Grab of the above deficiencies and informally requested supplementation of his answers. Defendants also requested that Grab extend his settlement demand deadline for at least another sixty days. On February 22, 1994, Grab sent a letter to Defendants, declaring that all medical records and bills had been produced and declining to extend the February 25, 1994 settlement demand deadline.

On March 18, 1994, Defendants moved to compel Grab to answer Defendants' first request for production of documents and first request for answers to interrogatories. A hearing on the matter was set for April 13, 1994. One day prior to the hearing, however, Grab responded with sufficient information, prompting Defendants to withdraw their motion to compel on the day of the hearing.

On May 20, 1994, Canalez failed to timely appear for his independent medical examination (IME) with Alan K.K. Sue, D.D.S. (Dr. Sue). Canalez's IME had to be rescheduled and was conducted by Dr. Sue on June 1, 1994. On July 30, 1994, Dr. Sue submitted his IME report to Defendants.

Within three weeks of investigating Canalez's claim, Defendants, by letters addressed to Grab dated August 16, 1994 and September 23, 1994, offered three proposals for structured settlement. Each of the proposals was based on the full amount of the available policy limit under the business automobile policy at issue. Under one of the proposals, Canalez's ultimate recovery could have exceeded $244,000.00. Defendants informed Grab in their September 23, 1994 letter that the structured settlement proposals...