Honda v. Ers

• Decision Date: 17 June 2005
• Docket Number: No. 23625.,23625.
• Citation: 118 P.3d 1155
• Parties: Katsumi HONDA, Deceased, by Helen S. Honda, Petitioner, Appellant-Appellee v. BOARD OF TRUSTEES OF THE EMPLOYEES' RETIREMENT SYSTEM OF THE STATE of Hawai`i, Appellee-Appellant.
• Court: Hawaii Supreme Court

118 P.3d 1155

Katsumi HONDA, Deceased, by Helen S. Honda, Petitioner, Appellant-Appellee v. BOARD OF TRUSTEES OF THE EMPLOYEES' RETIREMENT SYSTEM OF THE STATE of Hawai`i, Appellee-Appellant.

No. 23625.

Supreme Court of Hawai`i.

June 17, 2005.

Reconsideration Denied September 15, 2005.

COPYRIGHT MATERIAL OMITTED

Diane Erickson and Kristin E. Izumi-Nitao, Deputy Attorneys General, on the briefs, for Appellee-Appellant.

Reid A. Nakamura and Guy C. Zukeran, Honolulu, (Oliver, Lau, Lawhn, Ogawa & Nakamura), on the briefs, for Appellant-Appellee.

NAKAYAMA, ACOBA, JJ., and Circuit Judge DEL ROSARIO, in place of DUFFY, J., Recused; and LEVINSON, J., Dissenting, with whom MOON, C.J., joins.

Opinion of the Court by ACOBA, J.

We hold that Appellee-Appellant Board of Trustees of the Employees' Retirement System of the State of Hawai`i (the ERS Board) has a fiduciary duty to provide its members, including Appellant-Appellee Katsumi Honda (Katsumi), deceased, by Helen Honda (Helen), Petitioner, with clear, understandable information concerning retirement benefits. Its failure to do so in this case may have resulted in Katsumi's unilateral mistake with respect to his chosen mode of retirement and, additionally, constituted negligent misrepresentation. In that connection, the ERS Board's findings Nos. 18 and 19 regarding Katsumi's understanding and intent as to his choice of a retirement option appear clearly erroneous in view of the reliable, probative and substantial evidence in the whole record. In any event, assuming arguendo the findings were supported by substantial evidence, we are left with a firm and definite conviction that a mistake was made. See Lanai Co., Inc. v. Land Use Comm'n, 105 Hawai`i 296, 314, 97 P.3d 372, 390 (2004) (asserting a "definite and firm conviction" that the Land Use Commission "made a `mistake'" in its enforcement of an order). Helen did not raise these matters before the circuit court of the first circuit<sup>1</sup> (the court). However, in the exercise of our general superintendence of the trial courts, Hawai`i Revised Statutes (HRS) § 602-4 (1993),² and under our power to make such orders and mandates as necessary for the promotion of justice,³ and based on the reasons stated herein, this case is remanded to the court with instructions to remand the case to the ERS for further proceedings. Consequently, the court's July 28, 2000 final judgment in favor of Appellant-Appellee is vacated and the case remanded as aforesaid to enable the ERS Board to hold further proceedings in light of the matters discussed in this opinion.

I.

Katsumi was born on November 11, 1928 and obtained an eighth grade education. He began civil service employment in 1970 as a custodian at Kipapa Elementary School and had approximately twenty-three years of service at the time of his retirement.

In November 1993, upon reaching the age of 65, Katsumi requested estimates of his retirement benefits and a retirement application. On the request, Katsumi indicated that he would retire in June 1994. On December 10, 1993, Katsumi received a letter from the Branch Chief of the State of Hawai`i Employees' Retirement System (ERS) providing him estimates of the monthly benefits for four "Methods of Retirement." The letter indicated that the "Normal Option" would yield Katsumi $239 in monthly benefits.⁴

It is not clear when Katsumi received the application for retirement form (application). However, it was notarized on January 3, 1994. The application indicated that he checked off the "Normal" "Mode of Retirement" and listed his wife, Helen, as beneficiary.

In an affidavit submitted to the court, Helen stated that "[Katsumi] was afraid of heights and would not go to the [ERS] offices because they were not located on the ground floor. Because of that, [Katsumi] completed the calculations and application process by mail, without the assistance of any ERS personnel."

In or about March 1994, Katsumi was diagnosed with cancer and was admitted to Kuakini Medical Center on March 3, 1994. On March 25, 1994, Katsumi was released but continued with radiation therapy.

Katsumi was readmitted on April 2, with increasing shortness of breath and he died on April 6, 1994, five days after his retirement, from complications resulting from cancer. Helen received a letter from the ERS retirement claims examiner dated May 24, 1994, informing her that she would not receive any benefits under her husband's retirement plan.

On November 15, 1998, Katsumi, by his wife Helen, filed a petition with the ERS Board for a declaratory order allowing Helen to select a new mode of retirement for Katsumi, retroactive to April 1, 1994. On August 16, 1999, the ERS Board issued its final decision denying Helen's request. The ERS Board concluded that Helen was not entitled to relief.⁵

On September 15, 1999, Helen appealed to the court.⁶ On January 31, 2000, the court held a hearing on the appeal.

The court took the matter under advisement and on February 7, 2001, issued a minute order in favor of Helen. Helen filed a motion for clarification of the minute order and the court granted the motion, issuing findings of fact and an order on July 6, 2000. In essence, the court reversed the ERS Board.⁷ The court ordered that Helen be authorized to revise Katsumi's "election of a mode of distribution of retirement allowance to one of the three statutorily authorized methods described in [HRS] § 88-283." The court entered its final judgment on July 20, 2000. The ERS Board filed its notice of appeal on July 31, 2000.

II.

On appeal the ERS Board raised several matters to which Helen responded.⁸ On appeal from an agency decision and order the circuit court may affirm or remand the case or it may revise or modify the agency's decision and order. HRS § 91-14(g). On appeal to this court, the "standard of review [for secondary appeals] is one in which this court must determine whether the [circuit] court was right or wrong in its decision[.]" Soderlund v. Admin. Dir. of Courts, 96 Hawai`i 114, 118, 26 P.3d 1214, 1218 (2001) (brackets and citation omitted).

It is axiomatic that findings of fact by an agency must be disregarded if clearly erroneous because of a lack of substantial evidence, or if we are "left with a definite and firm conviction in reviewing the entire evidence that a mistake has been committed[,]" despite evidence to support the finding. Bremer v. Weeks, 104 Hawai`i 43, 51, 85 P.3d 150, 158 (2004). Assuming, arguendo, there was substantial evidence to support the findings, we are left with a definite and firm conviction that a mistake has been made in view of the "entire evidence" as recounted herein.

III.

Findings Nos. 18 and 19 of the ERS Board stated as follows:

18. Upon review of the ERS forms and documents completed and submitted by Katsumi Honda, it does not appear that he had trouble understanding the forms or following instructions. There is no credible evidence in the record that Katsumi Honda did not understand.

19. The Board finds that [Helen] is speculating on what Katsumi Honda did or intended.

(Emphases added.) The statement in No. 18 that there was "no credible evidence in the record that Katsumi . . . did not understand" is unsupported by the record inasmuch as, from an objective standpoint, the retirement process and the forms themselves were not only confusing, but misleading. See discussion infra Parts V and VI. Indeed, Helen's affidavit to the Board stated that (1) Katsumi completed the application process by mail without the assistance of any ERS personnel, (2) Katsumi designated Helen as "beneficiary" on his retirement documents, (3) Katsumi selected "normal" retirement because he thought he would lose service credit, and (4) during his illness, Katsumi told Helen "`not to worry' because she would receive his pension."⁹ Thus, substantial evidence existed to support an inverse finding that Katsumi did not understand that by selecting "normal" retirement, Helen would not be entitled to survivor benefits. Accordingly, the Board's finding that "there [was] no credible evidence . . . that Katsumi . . . did not understand" (emphasis added) was not supported by substantial evidence or, assuming arguendo it was, the record gives rise to a definite and firm conviction that such a determination was a mistake.

Likewise, the record is bereft of any substantial evidence to support the statement in finding No. 19 that Helen was "speculating" on Katsumi's intent. The Board did not proffer a reason for questioning Helen's statements. Moreover, considering the record as a whole, the objectively misleading nature of the forms support Helen's contention that Katsumi believed she would receive his benefits upon his death. Katsumi designated her as "beneficiary" and, as discussed infra, no distinction between the meaning of "beneficiary" with respect to the "normal" option, and "beneficiary" with respect to options A, B, and C, was apparent on the face of the form.

IV.

Inasmuch as Helen was the prevailing party below, she does not have to raise points of error in accordance with Hawai`i Rules of Appellate Procedure Rule 28(b)(4)(D). Although she did not specifically label her arguments "unilateral mistake" or "negligent misrepresentation," she did represent to the Board that Katsumi indicated "she would receive his pension[,]" that the ERS was "alerted . . . that [Katsumi] was mistaken as to the effect of his election[,]" and that "the ERS breached its obligation to effectively administer the retirement plan by failing to properly advise [Katsumi]." (Emphases added.) Indeed, Helen asserted breach of duty on three occasions: in her petition to the ERS Board and in her opening and reply briefs to the circuit court. In her supplemental memorandum in support of her petition to the Board, Helen argued that

[d]espite having knowledge of [Katsumi's] condition and his election of retirement, ERS did not take any action to counsel [him] or his family as to the...