Porter v. Hu, 26438.

• Decision Date: 04 October 2007
• Docket Number: No. 26438.,No. 26602.,26438.,26602.
• Citation: 169 P.3d 994
• Parties: Gay PORTER, Sumie Abe as Personal Representative of Motoyoshi Abe, Mark Rodrigues, Glenn Santos, and Duane Sugihara, Plaintiffs/Counterclaim Defendants/Appellees, v. Joseph HU, Wayne Wehr, William F. Schnitzer, Michele Clark, American Insurance Agency, and Servco Pacific Inc., Defendants/Counterclaimants/Appellants, and John Does 1-10, Jane Does 1-10, Doe Corporations 1-10, Doe Partnerships 1-10, Doe Governmental Units 1-10, Defendants.
• Court: Hawaii Court of Appeals

169 P.3d 994

Gay PORTER, Sumie Abe as Personal Representative of Motoyoshi Abe, Mark Rodrigues, Glenn Santos, and Duane Sugihara, Plaintiffs/Counterclaim Defendants/Appellees, v. Joseph HU, Wayne Wehr, William F. Schnitzer, Michele Clark, American Insurance Agency, and Servco Pacific Inc., Defendants/Counterclaimants/Appellants, and John Does 1-10, Jane Does 1-10, Doe Corporations 1-10, Doe Partnerships 1-10, Doe Governmental Units 1-10, Defendants.

No. 26438.

No. 26602.

Intermediate Court of Appeals of Hawai`i.

October 4, 2007.

Margery S. Bronster, Alan B. Burdick (Bronster & Hoshibata), on the briefs, Honolulu, for Defendants/Counterclaimants/Appellants.

Colin O. Miwa, W. Keoni Schultz (Cades Schutte LLP), on the briefs, Honolulu, for Plaintiffs/Counterclaim Defendants/Appellees.

FOLEY, Presiding Judge, FUJISE, J., and Circuit Judge WONG in Place of WATANABE and NAKAMURA, JJ., Recused.

Opinion of the Court by FOLEY, J.

In this consolidated appeal, Defendants/Counterclaimants/Appellants Joseph Hu, Wayne Wehr, William F. Schnitzer, Michele Clark, Servco Pacific Inc., and American Insurance Agency appeal from the January 29, 2004 Final Judgment (No. 26438) and the May 4, 2004 First Amended Final Judgment (No. 26602), both filed in the Circuit Court of the Third Circuit.¹

I.

In a contract dispute between independent insurance agents and their former employer, Plaintiffs/Counterclaim Defendants/Appellees Gay Porter (Porter), Motoyoshi Abe (Abe), Mark Rodrigues (Rodrigues), Glenn Santos (Santos), and Duane Sugihara (Sugihara) (collectively, Plaintiffs) were independent insurance agents working in Hilo, Hawai`i for American Insurance Agency (AIA). Servco Pacific Inc. (Servco) was the parent company of AIA, and Joseph Hu (Hu), Wayne Wehr (Wehr), William F. Schnitzer (Schnitzer), and Michele Clark (Clark) were employees of AIA (Hu, Wehr, Schnitzer, Clark, AIA, and Servco are collectively referred to as Defendants).

In the early-to-mid 1990's, Plaintiffs entered into individual contracts with AIA under which Plaintiffs agreed to work as independent insurance agents for AIA. Plaintiffs brought with them numerous clients and insurance accounts that generated commissions (books of business). Plaintiffs' respective contracts provided that either Plaintiffs or AIA could terminate any contract by giving the other party prior written notice of the termination within a certain minimum number of days in advance of the termination date.

In May 2001, Plaintiffs communicated to Hu and Wehr that Plaintiffs were considering the possibility of leaving AIA to work for Business Insurance Service, Inc. (BIS). Plaintiffs gave AIA written notice on June 11, 2001 that they were terminating their contracts with AIA as of September 1, 2001, after which they would begin working for BIS. On July 2, 2001, without prior written notice as required under the contracts, AIA terminated Plaintiffs' employment. AIA retained the books of business generated by Plaintiffs.

On November 9, 2001, Plaintiffs filed a Complaint against Defendants. Plaintiffs' Complaint alleged breach of contract, tortious interference with contractual relations, tortious interference with prospective business advantage, violations of Hawaii Revised Statutes (HRS) Chapter 481A (Uniform Deceptive Trade Practice Act), common law unfair competition, reliance and promissory estoppel, negligent misrepresentation, conversion, and unjust enrichment/accounting. On January 16, 2002, Defendants filed their answer and a Counterclaim against Plaintiffs. Plaintiffs filed their answer to the Counterclaim on February 7, 2002.

Trial began on May 27, 2003, and the jury returned a detailed Special Verdict on June 25, 2003. On Count I of the Complaint (breach of contract), the jury awarded damages to each Plaintiff from AIA in the sum of one dollar. The jury found both Servco and AIA liable on Count III (tortious interference with prospective business advantage), but awarded collective damages of $50,859 in favor of Plaintiffs and against only Servco. As to Count IV (violation of HRS Chapter 481A), the jury found in favor of Plaintiffs and ordered injunctive relief. As to Count IX (unjust enrichment), the jury found in favor of Plaintiffs and against AIA in the following amounts: Porter-$22,960, Abe-$4,138, Rodrigues-$23,798, Santos-$23,696, and Sugihara-$12,368. The jury found in favor of AIA and Servco on Counts VII (negligent misrepresentation) and VIII (conversion). As to Count X (punitive damages), the jury awarded $5,000 in punitive damages to each Plaintiff from AIA and the same amount to each Plaintiff from Servco.

As to the Counterclaim, the jury found that Plaintiffs had not breached their agency contracts with AIA, Santos had not breached the Purchase of Assets and Affiliation Agreement with AIA, and Plaintiffs had not breached their duty of loyalty.²

The circuit court entered its Final Judgment on January 29, 2004. On February 6, 2004, Plaintiffs filed a(1) Motion to Amend Final Judgment to Correct Clerical Mistakes, (2) Motion for Partial Stay of Injunctive Relief Pending Appeal, and (3) Motion for Order Conditionally Staying Execution of Money Judgment Pending Appeal.

On February 27, 2004, Defendants filed a Notice of Appeal from the Final Judgment (No. 26438).

On April 2, 2004, the circuit court entered an Order Granting in Part Defendants' Motion for Partial Stay of Injunctive Relief Pending Appeal, in which the court vacated the injunctive relief language in paragraph 4(a) and (c) of the Final Judgment and ordered that revised language in the order replace the vacated language. The circuit court also granted Defendants' motion to stay the money judgment portion of the Final Judgment on the condition that Defendants post security. On May 4, 2004, the circuit court granted Plaintiffs' motion to amend the Final Judgment to correct the clerical mistakes.

On May 4, 2004, the circuit court entered its First Amended Final Judgment,³ which disposed of the claims in Plaintiffs' Complaint as follows:

Count I (breach of contract): pursuant to Special Verdict, judgment entered in favor of each Plaintiff; $1 awarded to each Plaintiff from AIA; Plaintiffs to forgo this remedy in favor of their unjust enrichment award.

Count II (tortious interference with contractual relations): dismissed as to all Defendants by July 23, 2003 "Order Granting in Part and Denying in Part Defendants' Motion for Directed Verdict Filed on June 12, 2003" (Order Granting Directed Verdict).

Count III (tortious interference with prospective business advantage): dismissed against Hu, Wehr, Schnitzer, and Clark pursuant to Order Granting Directed Verdict; pursuant to Special Verdict, judgment entered in favor of AIA and against Plaintiffs (non-monetary) and in favor of Plaintiffs and against Servco in the following amounts:

                  PORTER       $14,647
                  ABE              171
                  RODRIGUES     17,667
                  SANTOS        15,786
                  SUGIHARA       2,588
                               _______
                    Total      $50,859
                

Count IV (violation of HRS Chapter 481A): dismissed against Hu, Wehr, Schnitzer, and Clark pursuant to Order Granting Directed Verdict; judgment entered in favor of Plaintiffs and against Servco and AIA; AIA to publish newspaper advertisements with Plaintiffs' current business addresses; AIA and Servco to disclose to any person requesting such information Plaintiffs' whereabouts and to remove Plaintiffs' names from all AIA's and Servco's correspondence, bills, and insurance-related documents sent to any of Plaintiffs' former customers, to the extent such documents implied that Plaintiffs remained associated with AIA.

Count V (common law unfair competition): dismissed against all Defendants pursuant to Order Granting Directed Verdict.

Count VI (reliance and promissory estoppel): dismissed against all Defendants pursuant to Order Granting Directed Verdict.

Count VII (negligent misrepresentation): dismissed against Hu, Wehr, Schnitzer, and Clark pursuant to the Order Granting Directed Verdict; pursuant to Special Verdict, judgment entered in favor of AIA and Servco and against Plaintiffs on the claims asserted by Plaintiffs against AIA and Servco.

Count VIII (conversion): dismissed against Hu, Wehr, Schnitzer, and Clark pursuant to Order Granting Directed Verdict; pursuant to Special Verdict, judgment entered in favor of AIA and Servco and against Plaintiffs on the claims asserted by Plaintiffs against AIA and Servco.

Count IX (unjust enrichment/accounting): dismissed against Hu, Wehr, Schnitzer, and Clark pursuant to Order Granting Directed Verdict; pursuant to August 6, 2003 "Findings of Fact and Conclusions of Law as to Plaintiff's Unjust Enrichment Claim," judgment entered in favor of Plaintiffs and against Servco and AIA, and Plaintiffs awarded the following sums from Servco and AIA, jointly and severally⁴:

                  PORTER       $ 87,901.20
                  ABE            25,519.70
                  RODRIGUES     102,078.81
                  SANTOS        204,157.62
                  SUGIHARA      147,447.17
                               ___________
                    Total      $567,104.50
                

Count X (punitive damages): dismissed against Hu, Wehr, Schnitzer, and Clark pursuant to Order Granting Directed Verdict; pursuant to August 6, 2003 "Order Granting in Part and Denying in Part Defendants' Motion for Judgment Notwithstanding the Jury Verdict Filed July 7, 2003," the jury's award of punitive damages in favor of Plaintiffs and against AIA and Servco vacated.

The First Amended Final Judgment dismissed all counterclaims made by Hu, Wehr, Schnitzer, Clark, and Servco against Plaintiffs and resolved AIA's counterclaims against Plaintiffs.⁵

The First Amended Final Judgment awarded:

(1) discovery sanctions in favor of Plaintiffs and against Defendants;

(2) sanctions in favor of Defendants and against Plaintiffs;

(3) attorneys' fees in the amount of $141,776.12 on the Unjust Enrichment Claim and $295,074.67 on the HRS Chapter 481A Claim, as well as costs in the amount of $66,825.15, in favor of Plaintiffs...