Amfac, Inc. v. Waikiki Beachcomber Inv. Co.

• Citation: 74 Haw. 85,839 P.2d 10
• Decision Date: 14 October 1992
• Docket Number: No. 15053,15053
• Parties: AMFAC, INC., a Hawaii corporation, Plaintiff/Counterdefendant-Appellee/Cross-Appellant, v. WAIKIKI BEACHCOMBER INVESTMENT COMPANY, a Hawaii general partnership, Defendant/Counterclaimant-Appellant/Cross-Appellee, and Waikiki Beachcomber, a Hawaii joint venture, Island Holidays, Ltd., a Hawaii corporation, and Waicomber Corporation, a Hawaii corporation, Additional Counterdefendant-Appellees/Cross-Appellants.
• Court: Supreme Court of Hawai'i

Page 10

839 P.2d 10

74 Haw. 85

AMFAC, INC., a Hawaii corporation Plaintiff/Counterdefendant-Appellee/Cross-Appellant, v. WAIKIKI BEACHCOMBER INVESTMENT COMPANY, a Hawaii general partnership Defendant/Counterclaimant-Appellant/Cross-Appellee, and Waikiki Beachcomber, a Hawaii joint venture, Island Holidays, Ltd., a Hawaii corporation, and Waicomber Corporation, a Hawaii corporation, Additional Counterdefendant-Appellees/Cross-Appellants.

No. 15053.

Supreme Court of Hawai'i.

Oct. 14, 1992.

Reconsideration Denied Nov. 17, 1992.

Syllabus by the Court

1. On appeal, an award of summary judgment is reviewed under the same standard applied by the lower court. Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law.

2. When a contract provides for one party's performance to be rendered to the "satisfaction" of another, absent any express contract language modifying the term "satisfaction," there are two standards that can be applied to determine satisfaction: the "objective reasonable satisfaction" standard and the "subjective personal satisfaction" standard.

3. Absent express language in the contract as to which standard to apply, the majority of jurisdictions apply the "objective reasonable satisfaction" standard when the contract involves commercial quality, operative fitness, or mechanical utility which knowledgeable persons are capable of judging; the "subjective personal satisfaction" standard is applied when the contract involves personal aesthetics, taste, or fancy.

4. In many cases, there is no clear demarcation between which of the two standards to apply. In the absence of specific language in the contract or a clear indication from the nature of the subject matter of the contract, many jurisdictions opt for the less arbitrary "objective reasonable satisfaction" standard. Moreover, even where the contract has explicitly stated that satisfaction relates to "artistic effect," such language will not be enforced literally if the subject matter of the contract relates to commercial quality, operative fitness, or mechanical utility.

5. Under the "objective reasonable satisfaction" standard, satisfaction is said to have been received if a reasonable person in exactly the same circumstances would be satisfied.

6. Inasmuch as the term "reasonableness" is subject to differing interpretations (i.e., is relative and not readily definable), it is inherently ambiguous. Where ambiguity exists, summary judgment is generally inappropriate because the determination of someone's state of mind usually entails the drawing of factual inferences as to which reasonable persons might differ. Thus, the determination of what would satisfy a reasonable person in exactly the same circumstances is similarly a question of fact often inappropriate for summary judgment.

7. "Reasonableness" can constitute a question of law for the court when the facts are undisputed and not fairly susceptible of divergent inferences because where, upon all the evidence, but one inference can reasonably be drawn, there is no issue for the jury. Put differently, a question of interpretation is not left to the trier of fact where the evidence is so clear that no reasonable person would determine the issue in any way but one.

8. Terms of a contract should be interpreted according to their plain, ordinary, and accepted use in common speech, unless the contract indicates a different meaning.

9. Because a writing is interpreted as a whole and all writings forming a part of the same transaction are interpreted together, they must be read in conjunction to determine whether the parties could reasonably have intended a different meaning regarding a particular contract term 10. Where the language of a contract is susceptible of two constructions, one of which makes it fair, customary, and such as prudent persons would naturally execute, while the other makes it inequitable, unusual, or such as reasonable persons would not likely enter into, the interpretation which makes a fair, rational, and probable contract must be preferred. Furthermore, in choosing among the reasonable meanings of a promise or agreement or a term thereof, a meaning that serves the public interest is generally preferred.

11. The purpose of title insurance is to reduce or mitigate the risks associated with the purchase of real property. The practice of issuing title policies based not on the results of a title search, but rather on indemnification of the title insurer, should be discouraged because it subverts the purpose of title insurance and flatly violates the mandate of HRS § 431:20-113.

12. On appeal, the standard for review of a motion for reconsideration is whether the lower court abused its discretion. Generally, to constitute an abuse of discretion a court must have clearly exceeded the bounds of reason or disregarded rules or principles of law or practice to the substantial detriment of a party litigant.

13. The purpose of a motion for reconsideration is to allow the parties to present new evidence and/or arguments that could not have been presented during the earlier adjudicated motion; the lower court does not abuse its discretion in denying a motion for reconsideration if the arguments and evidence supporting the motion could and should have been produced in opposition to the other party's motion for summary judgment.

14. A finding of fact is clearly erroneous when, despite evidence to support the finding, the appellate court is left with the definite and firm conviction in reviewing the entire evidence that a mistake has been committed. Where there is substantial evidence, which is credible evidence of sufficient quantity and probative value to justify a reasonable person in reaching conclusions that support the finding of fact, the finding of fact cannot be set aside. Moreover, an appellate court will not pass upon issues depending upon credibility of witnesses and the weight of the evidence; this is the province of the trial judge.

15. A conclusion of law is not binding upon an appellate court and is freely reviewable for its correctness; a conclusion of law that is supported by the trial court's findings of fact and that reflects an application of the correct rule of law will not be overturned.

16. A conclusion of law that presents mixed questions of fact and law is reviewed under the clearly erroneous standard because the court's conclusions are dependent upon the facts and circumstances of each individual case.

17. "Law of the case" is a rule of practice--based on considerations of efficiency, courtesy, and comity--that addresses the question, among others, whether a trial court judge is bound to follow a prior interlocutory decision of fact or law made in the same case by another judge of the same court.

18. No notice or demand for performance is required where a contracting party's executory obligation to perform is complete and unconditional under the terms of the contract, and where the obligor has the same means to perform his obligation as the party to whom performance is due.

19. The assumption of risk defense is generally applied to claims for relief sounding in tort; within the context of contractual relationships, the doctrine has most frequently been applied in master-servant cases or other cases involving a contract for services or other consensual relationships, such as host and guest or carrier and passenger.

20. Parol evidence regarding the parties' intent as to the language used in a contract may be considered only when the contract language is ambiguous.

21. It is now a well established principle in the law of damages that, when a party sustains a loss by breach of a contract, the party is entitled to have just compensation commensurate with the loss and that damages awarded should be in such amount as will actually or as precisely as possible compensate the injured party.

22. In an action for damages for breach of contract, only such damages can be recovered as were foreseeable--i.e., may reasonably be supposed to have been in the contemplation of the parties--at the time the contract was entered into. Foreseeability does not require an actual recognition by the parties at the time of contracting of the details or specifics of the injury or the damages which thereafter followed.

23. A court will consider the plain and unambiguous language of a contract in determining whether particular damages were reasonably within the contemplation of the parties.

24. Damages that might have been prevented if the parties had acted according to the scope of the agreement are direct and should be awarded.

25. In contract cases where no monetary recovery has been sought, as in a complaint for declaratory judgment, the prevailing party is entitled to attorney's fees, unrestricted by the twenty-five percent ceiling imposed by Hawaii Revised Statutes (HRS) § 607-17 (1985), reasonably and necessarily incurred in the action.

26. Prejudgment interest is awardable under HRS § 636-16 (1985) in the discretion of the trial court; the purpose of the statute is to allow the court to designate the commencement date of interest in order to correct injustice when a judgment is delayed for a long period of time for any reason, including litigation delays.

27. Award or denial of punitive damages is within the sound discretion of the trier of fact; a decision to grant or deny punitive damages will be reversed only for a clear abuse of discretion.

28. To support an award of punitive damages, the plaintiff must prove by clear and convincing evidence that the defendant has acted wantonly or oppressively or with such malice as implies a spirit of mischief or criminal indifference to civil obligations, or where there has been some wilful...