Chang v. Buffington
| Decision Date | 13 July 2011 |
| Docket Number | No. 30259.,30259. |
| Citation | 125 Hawai'i 186,256 P.3d 694 |
| Court | Hawaii Supreme Court |
| Parties | Walter Y.C. CHANG, Individually and as Trustee under that certain unrecorded Trust Agreement of Walter Yin Choy Chang dated August 3, 1982, and Sylvia S.W. Chang, Individually and as Trustee under that certain unrecorded Trust Agreement of Sylvia Seu Way Chang, dated August 3, 1982, Respondents/Plaintiffs–Appellees,v.Eadean Michie BUFFINGTON, Petitioner/Defendant–Appellant,andSteve Montgomery Crouch, Naomi Hokulani Crouch, Hokulani Square, Inc., Investors Funding Corporation, Respondents/Defendants–Appellees,andIntegrity Escrow and Title Company, Inc., fka First Financial Title and Escrow Agency of Hawaii, Inc., nka Hawaii Escrow & Title, Inc., Petitioner/Third–Party Defendant–Appellant. |
OPINION TEXT STARTS HERE
Carl H. Osaki, on the application, for petitioner/defendant-appellant.RECKTENWALD, C.J., Circuit Judge SAKAMOTO, in Place of DUFFY, J., Recused, and Circuit Judge AHN, Assigned by Reason of Vacancy; with NAKAYAMA, J., Dissenting, with whom Circuit Judge Trader, in Place of ACOBA, J., Recused, Joins.Opinion of the Court by RECKTENWALD, C.J.
In this appeal, we consider whether the Intermediate Court of Appeals had jurisdiction to review a good faith settlement determination, which was made by a federal bankruptcy court prior to the case being remanded to state court.
Eadean Michie Buffington seeks review of the Intermediate Court of Appeals' June 4, 2010 order dismissing Buffington and Integrity Escrow and Title Company, Inc.'s 1 appeal for lack of appellate jurisdiction. Buffington and Integrity appealed pursuant to Hawai‘i Revised Statutes § 663–15.5(e) (Supp. 2009), quoted infra, from an order entered by the federal bankruptcy court determining that a settlement of tort claims was made in good faith. They filed their notices of appeal in the circuit court, after the case had been remanded to that court. The Intermediate Court of Appeals dismissed the appeal for lack of appellate jurisdiction for three reasons: (1) one of the defendants in the tort action was in bankruptcy; (2) the bankruptcy court's good faith settlement order was not in the record on appeal; and (3) Hawai‘i Revised Statutes §§ 602–57 and 663–15.5(e) do not authorize an appeal to a Hawai‘i appellate court from a good faith settlement determination made by a federal court.
For the reasons set forth below, we hold that the Intermediate Court of Appeals had jurisdiction. Accordingly, we vacate the Intermediate Court of Appeals' dismissal order and remand to the Intermediate Court of Appeals for further proceedings consistent with this opinion.
The following facts are taken from the record on appeal (ROA), which includes all documents filed in the Circuit Court of the First Circuit (circuit court) before the case was removed to the United States Bankruptcy Court for the District of Hawai‘i (bankruptcy court), including the third amended complaint, and documents filed in circuit court after the case was remanded, discussed further infra.2
On September 23, 2005, the Walter Y.C. Chang Trust, Walter Y.C. Chang, and Sylvia S.W. Chang (collectively the Changs) filed a Complaint for Foreclosure and Other Relief in Civil No. 05–1–1708 (the foreclosure action) in circuit court. The Changs filed their first, second, and third amended complaints in the circuit court. According to the third amended complaint, the subject of the foreclosure action was a Middle Street apartment building that the Changs sold in 2003 to Steve Crouch and Naomi Crouch (the Crouches). The sale was by way of a purchase money mortgage executed by Hokulani Square, Inc., a corporation of which the Crouches were the only directors, officers, and shareholders. Hokulani Square subsequently mortgaged the Middle Street building to secure a $1.9 million loan from Investors Funding Corporation (Investors Funding) and purchased commercial property on School Street. Investors Funding's mortgage on the Middle Street property was elevated over the Changs' purchase money mortgage on the property via a subordination agreement that the Crouches allegedly secured from the Changs.
The Changs' third amended complaint alleged, inter alia, that the Crouches and Hokulani Square were in default of the purchase money mortgage. The third amended complaint further alleged that the sale of the Middle Street building and the execution of the subordination agreement were the result of undue influence and/or fraud, and a breach of fiduciary duty by the Changs' attorney, Eadean Buffington (Buffington). The complaint sought, inter alia, prioritizing of the Changs' claims to the Middle Street and School Street properties, an equitable lien on the Middle and School Street properties, and damages against the Crouches, Hokulani Square, and Buffington.
On May 10, 2007, Hokulani Square filed a petition for bankruptcy in bankruptcy court. On October 11, 2007, Hokulani Square removed the Changs' circuit court action to the bankruptcy court as an adversary proceeding.3 In the adversary proceeding, Integrity was added as a third party defendant.
On July 21, 2009, in the adversary proceeding, the Changs filed a notice of settlement with Investors Funding, among other parties, and petitioned the bankruptcy court for a determination, pursuant to Hawai‘i Revised Statutes (HRS) § 663–15.5(b),4 that the settlement was made in good faith. The bankruptcy court issued an order on December 2, 2009 granting the Changs' petition pursuant to HRS § 663–15.5.5 The order stated in relevant part:
This order does not decide whether the Uniform Contribution among Tortfeasors Act [HRS] § 663–11–663.17[sic] ) applies to any of the claims in this case. This order does decide, however, that the settlement was made in good faith within the meaning of [HRS] § 663–15.5.
On December 10, 2009, pursuant to HRS § 663–15.5(e),6 Buffington and Integrity appealed the bankruptcy court's December 2, 2009 good faith settlement determination in the adversary proceeding. Buffington and Integrity also filed statements electing to have their appeals heard by the United States District Court for the District of Hawai‘i (district court).7
On December 16, 2009, while the appeal to the district court was pending, the bankruptcy court filed its Order Remanding Adversary Proceeding to State Court. The bankruptcy court's order remanding the adversary proceeding provided:
On October 11, 2007, Debtor Hokulani Square, Inc., removed this action, Civil No. 05–1–1708–09, from the Circuit Court of the First Circuit, State of Hawaii, pursuant to 28 U.S.C. § 1452(a).8 On April 13, 2009, the court entered an Order Regarding Remand of This Adversary Proceeding, setting a deadline of May 15, 2009, for a party to file a motion to withdraw reference of this matter to the district court in order to conduct a jury trial. The order further provided for remand of the action to the state court absent the filing of such a motion. The original deadline was most recently extended to December 15, 2009. No timely motion to withdraw reference has been filed.
NOW, THEREFORE, IT IS HEREBY ORDERED that this adversary proceeding is remanded to the Circuit Court of the First Circuit, State of Hawaii, pursuant to 28 U.S.C. § 1452(b).9 The clerk shall forthwith transmit a certified copy of this order together with a copy of the docket sheet of this adversary proceeding to the clerk of the Circuit Court of the First Circuit. The parties shall be responsible for providing copies of any process and pleadings to the state court.
This order does not determine the effect of the remand on the pending appeals of the Order Granting Plaintiffs' Petition for Determination of Good Faith Settlement Pursuant to [HRS] § 663–15.5 Filed on July 21, 2009 (“Good Faith Order”), entered December 2, 2009. Notwithstanding the remand, the clerk shall accept for filing in this adversary proceeding documents necessary to perfect the appeals, such as a designation of items to be included in the record on appeal and a statement of issues to be presented.10
On December 22, 2009, Buffington and Integrity each filed, in the circuit court, notices of appeal to the Intermediate Court of Appeals (ICA), pursuant to HRS § 663–15.5(e), from the bankruptcy court's December 2, 2009 good faith settlement determination.
On December 31, 2009, the bankruptcy court sent the following four documents to the circuit court: (1) a certified copy of the bankruptcy court's December 16, 2009 remand order; (2) a Notice of Remand advising the circuit court that the bankruptcy court “maintains the official record of its cases and proceedings in electronic format[ ]” and “[t]herefore, no case file with paper documents is available for transmission with this notice[,]” but that “[a] complete set of the documents in this action may be accessed through the Federal Judiciary's centralized electronic records center on the Internet, Public Access to Court Electronic Records (PACER) at http:// pacer. psc. uscourts. gov[;]” (3) a copy of the docket sheet of the adversary proceeding; and (4) a certified copy of the December 2, 2009 good faith settlement determination. The circuit court filed these four documents in the record of the foreclosure action (i.e., Civil No. 05–1–1708) on December 31, 2009.
On February 22, 2010, the circuit court record from the foreclosure action, including the four documents transmitted from bankruptcy court, was transmitted to the ICA as the ROA.
On April 21, 2010, Buffington and Integrity moved the ICA to “modify” the ROA to include paper copies of 35 documents filed in the adversary proceeding, including the December 2, 2009 good faith settlement determination.11 The Changs filed a Statement of No Opposition to the motion.
In its June 4, 2010 Order Dismissing Appeal, the ICA dismissed Buffington...
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