Guaschino v. Eucalyptus, Inc.

• Decision Date: 26 January 1983
• Docket Number: No. 7755,7755
• Citation: 3 Haw.App. 632,658 P.2d 888
• Parties: Corrado GUASCHINO and Moira McVie, Plaintiffs-Appellees, v. EUCALYPTUS, INC., a Hawaii corporation, and Lawrence Enterprises, a general partnership, Defendants-Appellants.
• Court: Hawaii Court of Appeals

Page 888

658 P.2d 888

3 Haw.App. 632

Corrado GUASCHINO and Moira McVie, Plaintiffs-Appellees, v. EUCALYPTUS, INC., a Hawaii corporation, and Lawrence

Enterprises, a general partnership, Defendants-Appellants.

No. 7755.

Intermediate Court of Appeals of Hawai'i.

Jan. 26, 1983.

Order Clarifying Decision

Feb. 11, 1983.

Syllabus by the Court

1. An appellate court will sustain a summary judgment only if the record shows that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law.

2. Unless they are either sworn to or certified, documents attached to a motion for summary judgment must be disregarded.

3. Unverified statements of fact in counsel's memorandum cannot be considered in the determination of a summary judgment motion.

4. The apparent authority of a corporate officer or agent is determined by all of the facts and circumstances in evidence. There must be corporate manifestation that can reasonably be construed as giving the officer or agent authority.

5. Absent a showing of prejudice, the lack of a ten-day notice of hearing required by Rule 56(c), Hawaii Rules of Civil Procedure (HRCP), is not reversible error.

6. Mutual reciprocal promises constitute good and sufficient consideration for a contract.

7. The motion for judgment notwithstanding the verdict may be granted only when, without weighing the credibility of the evidence, there can be but one reasonable conclusion as to the proper judgment.

8. No party may assign as an error the refusal to give an instruction unless he objects thereto before the jury retires to consider its verdict. However, Rule 51(e), HRCP, is construed in a liberal manner, if the error is plain.

9. There was no error where the trial court instructed the jury that an agreement was a "valid and binding" contract while an interrogatory in the special verdict form asked whether the agreement was "valid and enforceable," since the instruction expressly stated that the agreement was valid and binding, "subject to the defenses" of defendants.

Madelyn D'Enbeau, Wailuku, for defendants-appellants.

Robert J. Smolenski, Honolulu (Smolenski, Wooddell & Sorensen, Honolulu, of counsel), for plaintiffs-appellees.

Before BURNS, C.J., and HEEN and TANAKA, JJ.

TANAKA, Judge.

This action involves two agreements, one between plaintiff Corrado Guaschino (Corrado) and defendant Eucalyptus, Inc., a Hawaii corporation (Eucalyptus), hereinafter called the "Eucalyptus Agreement," and the other between plaintiffs Corrado and Moira McVie (Moira) and defendant Lawrence Enterprises, a general partnership (Enterprises), hereinafter referred to as the "Enterprises Agreement." Corrado and Moira are hereinafter sometimes collectively referred to as "plaintiffs," and Eucalyptus and Enterprises, as "defendants." Defendants appeal from the jury verdict and judgment holding them liable in damages for the breach of both agreements.

The dispositive issues on appeal are:

A. As to the Eucalyptus Agreement, whether the trial court erred in granting in part plaintiffs' cross-motion for partial summary judgment. We hold that it did, and reverse.

B. As to the Enterprises Agreement, whether the trial court erred in granting in part plaintiffs' cross-motion for partial summary judgment, in denying defendants' motion for judgment notwithstanding the verdict (hereinafter "judgment n.o.v."), in refusing to give defendants' requested Instruction No. 13 concerning duress, and in asking the jury to answer a special interrogatory as to the validity and enforceability of the agreement. ¹ We answer no, and affirm.

John B. Lawrence (John) and Sharon D. Lawrence (Sharon), husband and wife, each own fifty percent of the shares of Eucalyptus stock. John is the president of Eucalyptus. John and Sharon are also the general partners of Enterprises. John or Enterprises is the lessee of the property at 730 Front Street, Lahaina, Maui.

In 1971, Corrado and Moira began renting space in an old building located on the property on a month-to-month basis at $225 per month. They operated a boutique-antique shop called Bibah in the rented space.

Corrado and John entered into an understanding whereby they would design and build a restaurant on the second floor of the old building. This understanding was reflected in an unsigned draft memorandum dated June 18, 1973 (the Memo) prepared by John and addressed to Corrado. The Memo also provided that "very firm legal agreements" protecting Corrado would be made, which would include the "basic understandings" specified therein.

Based on the Memo, Corrado and John began working on renovation designs and plans. They soon learned that the old building could not be renovated.

Corrado and John then decided to demolish the old building and construct a new building on the property to house the restaurant. Corrado prepared the preliminary plans for a new two-story building which were then given to a local architect who worked on and completed the working drawings for construction. On February 26, 1974, John and Sharon entered into a building construction contract with contractor Gold Coast, Ltd. The old building was demolished in April 1974.

In the interim, Corrado had discussed with John the possibility of a firm lease for the Bibah shop. John orally agreed to such a lease but with rent of $400 per month. Corrado and Moira began paying rent at the higher rate. The understanding was that Corrado and Moira would have space in the new building for a lease term of three years.

Both Corrado and John exerted efforts in the completion of the new building and the Blue Max restaurant opened for business on March 24, 1975.

Corrado requested John to have their understanding as first evidenced in the Memo reduced to writing. John instructed his attorney to prepare two agreements which were subsequently signed and are now in dispute.

The Eucalyptus Agreement dated April 4, 1975 was executed by John, as President of Eucalyptus, and Corrado. The agreement provides, inter alia:

2. Eucalyptus shall pay to Dado [Corrado] for a period beginning on 10 May, 1975 and on the same day of each month thereafter until Eucalyptus sells the restaurant business conducted on the property or until said restaurant business ceases, whichever first occurs, ... the sum of $500 per month or more at Eucalyptus' discretion until such time as Eucalyptus has cash assets equaling or exceeding $30,000 and thereafter a sum equal to 50% of the net profits after taxes from the restaurant business ....

John and Sharon, as general partners of Enterprises, and Corrado and Moira signed Lawrence [Enterprises], Dado [Corrado] and Moira reached an oral agreement with respect to Lawrence's property on Front Street in Lahaina, Maui, Hawaii. Dado and Moira agreed to help Lawrence make the property rentable. In return therefor Lawrence agreed to pay Dado and Moira a portion of the rental income from that part of the property now rented to John Hurley, dba "Jade & Jewels." Dado and Moira performed their said obligations under the agreement.

the Enterprises Agreement dated April 4, 1975. The agreement contains the following recitals:

The agreement states in pertinent part:

2. ... Lawrence [Enterprises] shall pay for a period of three years beginning on 10 May, 1975 and on the same day of each month thereafter during the three year period ..., a sum equal to the difference between $600 and the minimum rent payable under the Hurley sublease for the month preceeding [sic] Lawrence's payment. Lawrence shall pay one-half of said sum by check payable to the order of Dado [Corrado] and the other one-half of said sum by check payable to Moira.

Defendants initially made some payments under both agreements. However, due to nonpayment, on July 12, 1977, plaintiffs sued defendants for breach and damages under both agreements. Defendants counterclaimed against plaintiffs.

On April 20, 1979, defendants moved for partial summary judgment that (1) John had no authority to bind Eucalyptus to the Eucalyptus Agreement and (2) Corrado had breached the Eucalyptus Agreement. On April 26, 1979, plaintiffs filed their cross-motion for partial summary judgment that (1) John had authority and (2) the facts of Corrado's breach were in dispute. They also sought summary judgment that both agreements were valid and binding.

After a hearing held on April 27, 1979, the trial court denied defendants' motion and granted plaintiffs' motion in part by finding that (1) both agreements were valid and binding, subject to other defenses; (2) sufficient consideration supported both agreements; and (3) John had authority to bind Eucalyptus to the Eucalyptus Agreement.

On May 8, 1979, the jury rendered its special verdict finding that (1) the Eucalyptus Agreement was valid and enforceable and Eucalyptus owed Corrado $6,500 plus interest; (2) the Enterprises Agreement was valid and enforceable; ² (3) Corrado was not liable to Eucalyptus for damages caused by the lack of a waterproof covering on the restaurant's kitchen floor; and (4) Corrado breached an oral agreement to inform John and Sharon of any problems at the Blue Max during their absence from Hawaii, but they suffered no damage. ³

On May 17, 1979, defendants filed their motion for judgment n.o.v., which was denied.

On October 26, 1979, the judgment was entered, and on February 21, 1980, the second supplemental judgment was filed. Defendants' appeal followed.

I. EUCALYPTUS AGREEMENT

Defendants contend that the trial court erred in granting in part plaintiffs' cross-motion for partial summary judgment, and in finding that John, as Eucalyptus' president, had authority to bind the corporation to the Eucalyptus Agreement and that the agreement was valid and binding, subject to certain defenses. ⁴ We agree. ⁵

An appellate court will sustain a summary judgment only if the record shows that there is no genuine issue of material fact and that the movant is entitled to...