EXOTICS HAWAI'I-KONA v. EI DUPONT

Decision Date18 May 2004
Docket NumberNo. 24626.,24626.
Citation90 P.3d 250,104 Haw. 358
CourtHawaii Supreme Court
PartiesEXOTICS HAWAI'I-KONA, INC.; Sharon Murakami as Special Representative for the Estate of Chiaki Kato; Harvey Tomono; Andraea Partners; Arvak Agronomics, Inc.; C & L Orchids and Island Agribusiness, Ltd.; Ernest Carlbom and Donna Carlbom; Cymbidium Partners; Floral Resources/Hawai'i, Inc.; Flowers, Inc.; Glenwood Cymbidium Partners; Green Point Nurseries, Inc.; Daniel Hata dba Hata Farm; Hawaiian Anthuriums, Ltd.; Hawaiian Greenhouses, Inc.; Hawaiian Heart, Inc.; Albert Isa dba Albert Isa Nursery; Kaimu Nursery, Inc.; Kaohe Nursery; Margaret Kincaid and Peter Kincaid dba Anuenue Farms; Kona Orchids, Inc.; Alan Kuwahara dba Puna Floriculture; James Kuwahara dba James S. Kuwahara Farm; Yoso Kuwahara, Inc.; Henry Liljedahl; Malaai Partners; James McCully; Mitsuo Miyatake dba Miyatake Farms; Curtis Nakaola dba Kona Grown Nurseries; George J. Nakashima dba Nakashima Farm; Jeffrey Newman dba Newman's Nurseries; Mark K. Nozaki dba Nozaki Farms; Big Rock Anthuriums, Inc.; Patrick Oka dba Oka Nursery; Carl Okamoto dba Carl Okamoto & Lehua Tropical Flowers; Clyde Okamoto dba Ho'onanea Farms; Wade Okamoto dba Paradise Anthuriums; Ronald Okazaki and Dora Okazaki dba Lehua Anthurium Nursery; Neal Okimoto dba Pacific Paradise Orchids; Orchid Partners; Pacific Nurseries, Inc.; Polynesian Orchids & Anthuriums, Inc.; Puna Flowers & Foliage, Inc.; Sunshine Farms; George Shiroma dba G. Shiroma Farms; Masato Shiroma dba Mae's Nursery; Masao Sunada; Samuel H. Taka and Sylvia A. Taka dba S. Taka; Yoshio Takemoto, Midori Takemoto, Cary Takemoto, Morris Takemoto and Norma Takemoto dba Takemoto Farm; Fetulima Tamasese dba Pacific Kona Orchids; Harold S. Tanouye & Sons, Inc.; Henry Terada and Loraine Y. Terada dba H & L Terada Farm; Vantage Partners; Uniwai I Limited Partners; Uniwai II Limited Partners; Waiakea Partners; Dwight E. Walker, Jr. and Bernice K. Walter dba Puna Ohana Flowers; Mark Willman dba Hawai'i Orchids; Exotics Hawai'i, Ltd., Plaintiffs-Appellees, v. E.I. DUPONT De NEMOURS & COMPANY, Allen Teshima; and Reginald Hasegawa, Defendants-Appellants.

Warren Price, III (Kenneth T. Okamoto, Terence S. Yamamoto, and Robert S. Marks, with him on the briefs), of Price Okamoto Himeno & Lum, Honolulu, HI; and A. Stephens Clay, James F. Bogan, III, and C. Allen Garrett, Jr. (also on the briefs), of Kilpatrick Stockton LLP, Atlanta, GA, pro hac vice, for defendants-appellants.

Peter V.N. Esser (Melvin Y. Agena, with him on the briefs), Honolulu, HI; and Mark B. Hutton and Chan P. Townsley (also on the briefs), of Hutton & Hutton, Wichita, KS, pro hac vice, for plaintiffs-appellees.

Carl H. Osaki, Honolulu, HI; Kris A. LaGuire, Hilo, HI; Stephen T. Cox and Scott J. Allen, San Franciso, CA, pro hac vice; and A. Camden Lewis, Columbia, SC, pro hac vice, on the brief, for amicus curiae David Matsuura, individually and dba Orchid Isle Nursery, and Stephen Matsuura, individually and dba Hawaiian Dendrobium Farm.

MOON, C.J., LEVINSON, NAKAYAMA, RAMIL,1 and ACOBA, JJ.

Opinion of the Court by MOON, C.J.

The Circuit Court of the Third Circuit, the Honorable Ronald Ibarra presiding, submitted the following reserved question to this court pursuant to Hawai'i Rules of Appellate Procedure (HRAP) Rule 15 (2000):2 "Is the doctrine of nonmutual offensive issue preclusion recognized under Hawai'i law, and, if so, what standards govern its application?" Nonmutual offensive issue preclusion "occurs when the plaintiff seeks to foreclose the defendant from litigating an issue the defendant has previously litigated unsuccessfully in an action with another party."3 Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n. 4, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979) [hereinafter, Parklane]; see also Rosa v. CWJ Contractors, Ltd., 4 Haw.App. 210, 221, 664 P.2d 745, 752 (1983)

. Essentially, the issue the plaintiffs in this case seek to foreclose the defendants from relitigating centers around the defendants' fraudulent actions during the discovery phase of lawsuits underlying the instant action. In light of the following, we hold that nonmutual offensive issue preclusion is recognized under Hawai'i law. However, we express no opinion with respect to its applicability in this case and leave that decision to the trial court to decide pursuant to the standards set forth herein.

I. BACKGROUND
A. The Underlying Actions

Plaintiffs-appellees Exotics Hawai'i-Kona, Inc. and fifty-nine other named plaintiffs-appellees [hereinafter, collectively, the plaintiffs or Exotics] are among numerous commercial growers that filed lawsuits against E.I. du Pont de Nemours & Co. (DuPont) and others from November 1992 through March 1993 [hereinafter, the underlying actions], asserting products liability and other claims relating to Benlate, a fungicide manufactured by DuPont.4 In September 1993, seventy-two actions concerning Benlate that were filed in the third circuit court, including those brought by the plaintiffs in the instant case, were consolidated for discovery purposes. Throughout discovery in 1993 and 1994, the plaintiffs filed numerous motions to compel and for sanctions alleging, inter alia, that DuPont had failed to comply with its discovery obligations. In particular, the parties disputed the discoverability of test results performed by Alta Laboratories [hereinafter, Alta test results], which the plaintiffs believed to be the "smoking gun" evidence necessary to show that Benlate was contaminated. See Matsuura v. E.I. du Pont de Nemours & Co., 102 Hawai'i 149, 151, 73 P.3d 687, 689 (2003)

.

During the time period from April through October 1994, the plaintiffs in the instant case executed settlement agreements with DuPont.5 However, some of the other plaintiffs in the underlying actions did not settle their claims, such as Kawamata Farms, Inc., as well as Stanley T. Tomono and Cynthia T. Tomono, owners and operators of S.T.T. Farms [hereinafter, collectively, the Kawamata Farms plaintiffs]. Kawamata Farms, Inc. v. United Agric. Prods., 86 Hawai'i 214, 222, 948 P.2d 1055, 1063 (1997).

In May 1994, DuPont finally produced the Alta test results to those plaintiffs who had not settled their cases. Matsuura, 102 Hawai'i at 151, 73 P.3d at 689. Because the Kawamata Farms plaintiffs had not settled, their lawsuit went to trial in June 1994. Id. During trial, the Kawamata Farms plaintiffs utilized the Alta test results to show that Benlate may have been contaminated with toxins. Id. Ultimately, the Kawamata Farms plaintiffs prevailed and were awarded nearly $10 million in compensatory damages and more than $14 million in punitive damages. Id. (citation omitted). In addition, because the circuit court found that DuPont had engaged in serious discovery violations, it imposed sanctions of $1.5 million payable to the State of Hawai'i. Id.

Furthermore, after the verdict was entered, the Kawamata Farms plaintiffs learned of additional discovery violations, which they brought to the circuit court's attention via motion pursuant to Hawai'i Rules of Civil Procedure (HRCP) Rule 60(b)(3) (1995).6 Id. (citation omitted). In its HRCP Rule 60(b)(3) order, the circuit court found, inter alia, that some of "Du Pont's representations to this court ... were false and misleading[ ]" and that "Du Pont intentionally withheld ... crucial information in an effort to prevent the disclosure to the [Kawamata Farms] plaintiffs and this [c]ourt of Benlate and soil contamination data [(i.e., the Alta test results)] disclosed in said documents which goes to the heart of this case." Moreover, the court amended several orders that it had previously entered because such orders "were based on misleading, incomplete, inaccurate and false information[.]" The court then sanctioned DuPont by ordering it to pay for the Kawamata Farms plaintiffs' attorneys' fees and costs.7

B. The Instant Action

On January 6, 2000, the plaintiffs in the instant case filed their first amended complaint8 in circuit court against DuPont, Allen Teshima,9 Reginald Hasegawa,10 and various Doe defendants [hereinafter, collectively, DuPont], alleging various "settlement fraud" claims.11 They claimed that DuPont had defrauded them "into settling for pennies on the dollar for damages caused by its Benlate WP and Benlate DF fungicides." They also alleged that DuPont had, inter alia, intentionally failed to respond, testified falsely in prior depositions or trials, filed fraudulent, improper, or obstructive motions, disobeyed stipulations or court orders, and assumed false litigation positions. In response, DuPont filed a counterclaim alleging that, by filing suit, the plaintiffs had breached their settlement agreements, in which they had covenanted not to "commence or prosecute against DuPont any action based upon or in any way related to any claims which are the subject of the [settlement agreement r]elease."

On January 18, 2000, one of the plaintiffs in the instant action, Harvey Tomono, filed a motion for summary judgment on the issue of DuPont's fraudulent conduct. Therein, Tomono argued that "[the circuit court's Rule 60(b)(3) ] Discovery Fraud Order and the decision of the Hawaii Supreme Court in the Kawamata [Farms] [c]ase indisputably shows that Du Pont committed discovery fraud during the Consolidated Discovery phase of the Benlate Product [c]ases." Tomono also argued that "the doctrine of [issue preclusion] prevents Du Pont from re-litigating or contesting the issue that it had committed discovery fraud against Tomono." In response, DuPont contended that Hawai'i courts have not adopted the doctrine of nonmutual offensive issue preclusion and that such issue preclusion would be improper in this case.

Meanwhile, David Matsuura, individually and doing business as Orchid Isle Nursery, and Stephen Matsuura, individually and doing business as Hawaiian Dendrobium Farm (collectively, the Matsuuras), both of whom had settled with DuPont in the underlying...

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