K.M. Young & Associates, Inc. v. Cieslik

• Decision Date: 29 December 1983
• Docket Number: No. 8505,8505
• Citation: 675 P.2d 793,4 Haw.App. 657
• Court: Hawaii Court of Appeals
• Parties: K.M. YOUNG & ASSOCIATES, INC., a Hawaii corporation, for itself and as General Partner for Hualalai Holding Co., a registered limited partnership, Plaintiff, v. Manfred CIESLIK and Thomas COSSEY, Defendants, Third-Party Plaintiffs, v. K.M. YOUNG aka Kenny Young, Lanihau Corp., and McClean Ranch Properties, Inc., Third-Party Defendants, and McCLEAN RANCH PROPERTIES, INC., Counter-claimant, Cross-claimant, v. K.M. YOUNG & ASSOCIATES, INC., a Hawaii corporation, for itself and as General Partner for Hualalai Holding Co., a registered limited partnership, Cross-claim Defendant, and Manfred Cieslik and Thomas Cossey, Counterclaim Defendants. K.M. YOUNG & ASSOCIATES, INC., a Hawaii corporation, for itself and as General Partner for Hualalai Holding Co., a registered limited partnership, Plaintiff, v. McCLEAN RANCH PROPERTIES, INC., a California corporation, Defendants. Ronald Eugene LANET, Everett Franklin Shrewsbury, Pherne Craig Shrewsbury and John Dickmeyer, Plaintiffs in Intervention-Appellees, v. McCLEAN RANCH PROPERTIES, INC., a California corporation, K.M. Young & Associates, Inc., a Hawaii corporation, Individually and as General Partner of Hualalai Holding Company, a limited partnership, Ernest A. Wilfong, Gay D. Wilfong and Tamekichi Ishimaru, Defendants in Intervention, and Manfred Cieslik, Defendant in Intervention-Appellant.

Page 793

675 P.2d 793

4 Haw.App. 657

K.M. YOUNG & ASSOCIATES, INC., a Hawaii corporation, for

itself and as General Partner for Hualalai Holding

Co., a registered limited partnership, Plaintiff, v. Manfred CIESLIK and Thomas COSSEY, Defendants, Third-Party Plaintiffs, v. K.M. YOUNG aka Kenny Young, Lanihau Corp., and McClean Ranch

Properties, Inc., Third-Party Defendants, and McCLEAN RANCH PROPERTIES, INC., Counter-claimant, Cross-claimant, v. K.M. YOUNG & ASSOCIATES, INC., a Hawaii corporation, for

itself and as General Partner for Hualalai Holding

Co., a registered limited partnership,

Cross-claim Defendant,

and

Manfred Cieslik and Thomas Cossey, Counterclaim Defendants.

K.M. YOUNG & ASSOCIATES, INC., a Hawaii corporation, for

itself and as General Partner for Hualalai Holding

Co., a registered limited partnership, Plaintiff, v. McCLEAN RANCH PROPERTIES, INC., a California corporation,

Defendants.

Ronald Eugene LANET, Everett Franklin Shrewsbury, Pherne

Craig Shrewsbury and John Dickmeyer, Plaintiffs in Intervention-Appellees, v. McCLEAN RANCH PROPERTIES, INC., a California corporation,

K.M. Young & Associates, Inc., a Hawaii corporation,

Individually and as General Partner of Hualalai Holding

Company, a limited partnership, Ernest A. Wilfong, Gay D.

Wilfong and Tamekichi Ishimaru, Defendants in Intervention,

and

Manfred Cieslik, Defendant in Intervention-Appellant.

No. 8505.

Intermediate Court of Appeals of Hawai'i.

Dec. 29, 1983.

Syllabus by the Court

1. A motion for summary judgment is properly granted under Rule 56(c), HRCP, if the record shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. In deciding the motion, both the trial court and the reviewing court must view the evidence in the light most favorable to the non-moving party.

2. The non-moving party in a properly supported motion for summary judgment must respond by affidavit or otherwise setting forth specific facts showing a genuine issue of material fact and may not rely on allegations of the pleadings.

3. Memorandum of counsel and an affidavit that is merely an assertion of conclusions which are filed by the non-moving party are not sufficient to raise a genuine issue of material fact on a motion for summary judgment.

4. Usury is an affirmative defense which must be pleaded and the essential facts of which must be averred. The defense may not be raised by counsel's memorandum and a conclusory affidavit that does not aver essential facts in response to a motion for summary judgment.

5. A motion for reconsideration of the court's ruling on a motion for summary judgment is permissible under Rule 59(e), HRCP. Matters which could and should have been presented to the trial court prior to its ruling on the motion for summary judgment are not properly presented as grounds for the motion for reconsideration.

6. The appellate court will not disturb a correct ruling of the lower court which was based on an erroneous reason.

7. In a case involving breach by the vendee of an agreement for the sale of land, a court of equity will grant relief from forfeiture where the vendee has been free from gross negligence or bad faith and the vendor can reasonably and adequately be compensated for his injuries.

8. The relief granted by a court of equity is discretionary and will not be overturned on review unless the trial court has abused its discretion by issuing a decision that exceeds the bounds of reason or disregarded rules or principles of law or practice to the substantial detriment of the appellant.

Glenn K. Sato and Yoshio Shigezawa, Honolulu, on the briefs, for Manfred Cieslik.

S.V. Quitiquit, Kailua-Kona (Cook, Choi, Quitiquit & Crudele, Kailua-Kona, of counsel), on the brief, for plaintiffs in intervention-appellees.

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

HEEN, Judge.

Defendant in intervention Manfred Cieslik (Cieslik) appeals from the summary judgment of the court below in favor of plaintiffs in intervention Ronald Eugene Lanet (Lanet), Everett Franklin Shrewsbury, Pherne Craig Shrewsbury (Shrewsbury) and John Dickmeyer (Dickmeyer) (hereinafter collectively referred to as Intervenors). Cieslik raises the following issues on appeal:

(1) Whether the trial court erred in awarding summary judgment; and

(2) Whether the trial court erred in denying Cieslik's motion for reconsideration.

We answer no to both questions. However, for reasons set forth below we remand this matter to the lower court for redetermination of the relief to be granted to Intervenors.

Intervenors intervened as plaintiffs in this consolidation of Civil Nos. 5087 and 5148 ¹ by complaint filed on September 19 1980. ² Count I of the complaint alleged that Intervenors owned a 55.017% undivided interest in a parcel of land in Honokohau, Kona, identified as Tax Map Key No. 7-4-8-26, parcel 7, which is the subject of the original actions. Lanet and the two Shrewsburys alleged ownership under a deed from Cieslik of 90% of his 61.13% undivided interest in the property. Dickmeyer alleged ownership under a separate warranty deed. ³ Count II alleged that Intervenors purchased the undivided interest through a written agreement with Cieslik for a purchase price of $1,840,000.00, payable as follows: four promissory notes, which were equal in amount, executed by one Roger D. Miles and totalling $135,583.16 (hereinafter Miles notes), secured by a second deed of trust on land located in Sunnyvale, California; $264,416.84 cash; Intervenors' promissory note for $100,000 (hereinafter $100,000 note), payable within sixty days of the close of escrow; a second promissory note, also executed by Intervenors, for $1,340,000 secured by a mortgage on the subject property (hereinafter note and mortgage). The note and mortgage would be paid according to the terms set forth in Exhibit "A" attached to the agreement. Exhibit "A" reads as follows:

The note will be payable with interest at nine percent (9%) per annum. Interest to begin to accrue twelve (12) months after closing. Principal and interest payments to begin after property has been subdivided and lots are sold or optioned. The note shall be payable by receipt of seventy-five percent (75%) of all proceeds from sale or option payments until debt and interest are satisfied. In any event, the principal and interest will be paid in full on or before three (3) years from closing. Said note will be secured with a mortgage on the real property. The mortgage will contain a release clause for approximately thirty-six (36) individual lots and a provision permitting subordination of the lien to a subsequent security for a note payable to a recognized lender. Provided the proceeds of a note to which 2nd Party subordinates shall be used only for financing improvements on the property, including a reasonable loan fee. Subordination and release agreements to be prepared by an attorney mutually satisfactory to both parties.

Count II also alleged that Intervenors anticipated and believed that Cieslik would "fail and/or refuse to repurchase the property pursuant to the Agreement."

The repurchase provision of the agreement reads as follows:

7. Second party does hereby agree to attempt to have said property re-zoned adequately to develop an industrial park and any and all subdivision necessary permits on or before July 1, 1980, and shall devote all efforts necessary to accomplish said re-zoning, second party shall re-purchase said property for the sum of TWO MILLION SIXTY THOUSAND EIGHT HUNDRED DOLLARS payable by cancellation of the Note and Mortgage received by second party from first party, plus transfer of those Notes from Roger D. Miles, in the sum of ONE HUNDRED THIRTY-FIVE THOUSAND FIVE HUNDRED EIGHT [sic] THREE DOLLARS AND SIXTEEN CENTS plus the balance by cash, within sixty days after July 1, 1980. In the event second party fails and/or refuses to re-purchase said property within six months after due, second party shall have the right to sell property to obtain the balance of monies due plus twelve percent interest per annum on the said sum of TWO MILLION SIXTY THOUSAND EIGHT HUNDRED DOLLARS AND NO CENTS from the date of commencement of said SIX (6) months this Agreement until said sum is paid off. Second party shall be agreeable to cooperating in a IRC 1031 tax deferred exchange. [Emphasis in original.]

Intervenors prayed for (1) a partition or sale of the property; (2) damages, costs and fees; and (3) attorney's fees.

In his answer Cieslik denied the allegation that he would refuse to repurchase the property. Cieslik admitted the genuineness of the agreement and did not deny Intervenors' allegations of ownership, but indicated he intended "to rely on the defense that the documents speak for themselves." ⁴ Cieslik alleged that he owned 61.13% of the property, and prayed for partition or for sale of the property and distribution of the proceeds. Cieslik also counterclaimed against Intervenors for principal and interest due on the $100,000 note which was unpaid. ⁵

After filing their answer to Cieslik's counterclaim and their own "counterclaim in reply," Intervenors moved for partial summary judgment as to Count I on November 13, 1980. The motion asked the court to (1) partition the property, allot Intervenors their portion, and set the rest apart for the other parties; or (2) sell the property, give Intervenors their share of the proceeds and set the remainder apart for the other parties; and (3) appoint a commissioner to report on the practicability of partition or to sell the property. On November 25, 1980, Cieslik filed a memorandum supporting a partition in kind rather than by sale, but did not file any documents opposing the motion.

On January 7, 1981, the court entered an order granting Intervenors' motion and appointing Katsuya Yamada commissioner to report forthwith on the practicability of partition or to sell the property if partition would be...