Lau v. Valu-Bilt Homes, Ltd., VALU-BILT

• Decision Date: 30 June 1978
• Docket Number: VALU-BILT,No. 5722,5722
• Citation: 582 P.2d 195,59 Haw. 283
• Parties: Calvin C. F. LAU, Plaintiff-Appellee, v.HOMES, LTD., Urban Development Company, Limited, and Kazuyoshi K. Nobuta, also known as Kenneth Nobuta and Richard K. Ho, Project Coordinator's Office, Inc., Defendants-Appellants.
• Court: Hawaii Supreme Court

Page 195

582 P.2d 195

59 Haw. 283

Calvin C. F. LAU, Plaintiff-Appellee, v. VALU-BILT HOMES, LTD., Urban Development Company, Limited and Kazuyoshi K. Nobuta, also known as Kenneth Nobuta and Richard K. Ho, Project Coordinator's Office, Inc. Defendants-Appellants.

No. 5722.

Supreme Court of Hawai'i.

June 30, 1978.

Syllabus by the Court

1. Ordinarily, an action at law will not lie in favor of a partner against another partner on a demand growing out of a partnership transaction until there has been a settlement of accounts and balance struck. There is an exception to this rule, however, where a partner may sue another partner at law regarding a partnership transaction where no accounting is necessary.

2. A joint venture is closely akin to a partnership, and the rules governing the creation and existence of partnerships are generally applicable to joint ventures.

3. A joint venturer has the right to bring an action at law against his fellow venturer for damages for breach of contract of joint venture, for share of the profits of the joint venture, or for losses of the joint venture, or for contribution for advances made to a joint venture, if the amount sued for is capable of computation and ascertainment by a jury without a full accounting.

4. Where one joint venturer brings an action against his fellow joint venturers for contribution for advances made to the joint venture and the amount claimed is incapable of computation and ascertainment by a jury without a full accounting, relief at law will be denied as it is inadequate and incomplete; the appropriate remedy being in equity for a full accounting.

5. Under Section 6(1) of Act 17, of the Regular Session Laws of Hawaii 1972, which enacted the Uniform Partnership Act for this jurisdiction, a partnership is defined as an association (including a joint venture) of two or more persons to carry on as co-owners a business for profit. In view of such statute, we hold that the rules of partnerships apply to joint ventures.

6. A former client of an attorney can raise the issue of representation of conflicting interests at any time to the extent that there has been actual prejudice to the former client caused by the appearance of counsel for the other side.

7. In the absence of evidence of actual prejudice, one, who is entitled to object to an attorney representing an opposing party on the ground of conflict of interest but who knowingly refrains from asserting it promptly in order to reserve it for the most expedient time, may be deemed to have waived that right.

8. The doctrine of partnership by estoppel has no application as between actual partners for partners generally become such by agreement and not by estoppel. This same principle is applicable to joint ventures.

9. The question of the effect of holding out as partners arises only in dealings with third persons and cannot be raised between the parties themselves, for everyone is presumed to know who are his associates in business.

10. Where appellant's opening brief fails to comply substantially with the requirements of Rule 3(b)(5) of this court relating to concise statement of points on which he intends to rely, namely, where the points involve the admission or rejection of evidence and also the charge of the court, the supreme court may decline to consider such matters.

Stanley S. Mah, Honolulu (Sterry, Mah & Gallup, and Daniel A. Donegan, Honolulu, of counsel), for defendants-appellants.

Ronald G. S. Au, Honolulu (Kelso, Spencer, Snyder & Stirling, Honolulu, of counsel) (Mark S. Davis, Honolulu, with him on the brief), for plaintiff-appellee.

Before RICHARDSON, C. J., and KOBAYASHI, OGATA, MENOR and KIDWELL, JJ.

OGATA, Justice.

Defendants-appellants, Valu-Bilt Homes, Ltd., Urban Development Co., Limited, Kazuyoshi K. Nobuta, Richard K. Ho, and Project Coordinator's Office, Inc. ¹ (hereinafter referred to as appellants), appeal from the final judgment entered in the court below on April 5, 1974, on a jury verdict for $89,903.00 in favor of plaintiff-appellee, Calvin C. F. Lau (hereinafter referred to as appellee). The amended complaint consists of two causes of action: (1) for contributions for advances made by appellee to a joint venture and (2) for breach of a joint venture agreement.

Basically, appellants contend before us that the trial court a) erred in allowing appellee to pursue his claim set forth in his first cause of action before the jury in the absence of an accounting of the joint venture and the striking of a balance; b) erred in denying appellants' motion to disqualify appellee's counsel from representing appellee in the present case; c) erred in denying appellants' motion to dismiss appellant Project Coordinator's Office, Inc. (hereinafter PCO), as a party-defendant and in instructing the jury on the doctrine of partnership by estoppel in connection with the liability of PCO in the joint venture; d) erred in refusing to instruct the jury as to the statute of limitations with regard to appellee's first cause of action; e) erred in allowing parol evidence to contradict and vary the complete and unambiguous written terms of agreements between appellee and third-parties; and f) abused its discretion in awarding attorney's fees to appellee's attorney, based upon 25 percent of appellee's recovery.

On October 12, 1964, appellants, other than appellant PCO, and appellee entered into a letter agreement to form a joint venture to acquire, improve, develop and market 55 residential lots in the Hawaii Kai Maunalua Triangle Bay View Area in Honolulu. Pursuant to the letter agreement, appellee entered into a separate agreement with Kaiser-Hawaii Kai Development Co. on October 13, 1964, to purchase the 55 house lots for development purposes. Thereafter, the letter agreement was replaced by a formal agreement dated October 14, 1964.

The formal agreement provided, Inter-alia : that appellants Nobuta, Valu-Bilt Homes Ltd., and Urban Development Co., Limited, would control a 70% Interest of the venture and appellee would control a 30% Interest; that appellee as trustee would hold appellants' interests and rights to secure the Hawaii Kai lots in trust; that appellee would represent all of the parties in the management and control of the project which would be shared by all of the parties; that appellee should obtain the written majority decision of the parties before the project was committed toward any course of action; that in his negotiations with others the appellee would not disclose in any manner the interests and participation of the appellants; that commissions to the parties would be based upon 35 lots of the project; that 20 lots of the project would be transferred to a Hin Chiu Lau or such others as specified by the appellants with the 20 lots not being subject to the agreement; that the life of the agreement would continue for the term of the project unless otherwise mutually amended or terminated by the parties; that losses of the project would be shared by each party according to the percentage interests mentioned earlier; that in the event any party causes any other party or parties to pay for his share of loss, the other party or parties would have the right of contribution from the person failing to pay his percentage share of loss; that if suit is brought to enforce contribution, the defaulting party would pay all costs and expenses, including reasonable attorney's fees; and that appellant Ho, in consideration of this agreement and to induce others to execute this agreement, would personally guarantee the performance by appellants Valu-Bilt Homes, Ltd., and Urban Development Co., Limited, under the terms of this agreement.

Absent from the agreement, however, was the mode of financing for the project. All parties agree that the financial situation of the project was never sound and that, the joint venture floundered from its inception. Evidence offered at trial indicates that the appellants, other than appellant PCO, and appellee had orally agreed that the latter was to raise the financing for the project. The evidence further indicates that this unstable predicament contributed greatly to Kaiser-Hawaii Kai Development Co.'s subsequent cancellation of the sales contract with appellee for purchase of the 55 residential lots by the joint venture sometime in April of 1965.

Thereafter, the joint venture managed to salvage 15 out of the original 55 lots purchased from Kaiser-Hawaii Kai and proceeded with the development of the reduced number of lots. In June of 1966, appellee, as trustee and in behalf of the joint venture, sued Kaiser-Hawaii Kai Development Co. for wrongful cancellation of the sales contract. The suit was tried in 1968, and appellee prevailed. He was awarded a judgment in that case which he later compromised in 1969, without the consultation of the appellants.

It was alleged in the amended complaint that appellee on several occasions requested appellants to contribute funds for the continued operation of the project but that appellants did not comply with appellee's demand. To this, appellants claimed that they would have contributed funds to the project had appellee first given them an accounting as requested.

On March 28, 1968, appellants' attorney wrote appellee a letter informing him of appellants' withdrawal from the joint venture because of appellee's repeated failure to render an accounting of the joint venture which appellants alleged constituted a breach of trust on the part of the appellee. However, appellee continued the operation of the project until 1973, allegedly sustaining a substantial loss.

On January 15, 1973 appellee filed this action against appellants ² to recover contribution for advances made to the joint venture and for damages for breach of the joint venture agreement, requesting a jury trial on all issues. Appellants ³ filed their answer and a counterclaim. Appellee replied to the counterclaim and, subsequently,...