Teller v. Teller

• Decision Date: 30 August 2002
• Docket Number: No. 22440.,22440.
• Parties: Mei Li TELLER, Plaintiff-Appellee, v. Howard Scott TELLER, Jr., Defendant-Appellant.
• Court: Hawaii Supreme Court

53 P.3d 240

99 Haw. 101

Mei Li TELLER, Plaintiff-Appellee, v. Howard Scott TELLER, Jr., Defendant-Appellant.

No. 22440.

Supreme Court of Hawai`i.

August 30, 2002.

Reconsideration Denied September 19, 2002.

Peter Van Name Esser and Michael J.Y. Wong, Honolulu, for defendant-appellant.

Thomas L. Stirling, Jr. and Renee M. Yoshimura of Stirling and Kleintop, Honolulu, for plaintiff-appellee.

MOON, C.J., NAKAYAMA, RAMIL, and ACOBA, JJ. and Circuit Judge BLONDIN, in Place of LEVINSON, J., Recused.

Opinion of the Court by NAKAYAMA, J.

Defendant-Appellant Howard Teller ("Howard")¹ appeals from the post-decree orders of the family court of the first circuit, the Honorable Dan T. Kochi presiding, recalculating the amount of the marital estate and denying prejudgment interest. On appeal, Howard argues that the family court erred in: (1) rejecting the Sullivan/Scott appraisal of his pre-marital intellectual property; (2) finding that his pre-marital intellectual property did not depreciate; (3) finding that $1,058,945 of the approximately $3 million earned in the sale of his business was equally divided between pre-marital intellectual property and post-marital property; (4) ruling that payments from the sale of the "latching detector" patent constituted marital income; and (5) ruling that prejudgment interest pursuant to Hawai`i Revised Statutes (HRS) § 636-16 (1993) may not be awarded in family court cases. As an initial matter, we note that Howard submitted a brief that is nonconforming with the Hawai`i Rules of Appellate Procedure (HRAP) Rule 28 requirement that the opening brief contain a concise statement of the points upon which the party alleges as error, properly identify where in the record the alleged errors can be found, and the specific finding of fact or conclusion of law that is being contested. In this case, we reach the merits of four of Howard's points of error because, despite the nonconformity, the record and the opening brief sufficiently established the merits. Inasmuch as Howard's brief falls woefully short of compliance with HRAP Rule 28 in regard to the issue of prejudgment interest, we decline to address this point. We affirm the judgment of the family court in all respects.

I. BACKGROUND

A. Procedural History

On April 2, 1976, Howard and Plaintiff-Appellee Mei Li Teller (Mei Li) were married.² Mei Li filed for a divorce on November 20, 1992. The couple had two children.³ On December 12, 1994, Howard filed a cross-complaint for divorce. There was no premarital agreement and by the time the couple divorced the estate was substantial. On February 2, 1995, the family court entered its Findings of Facts (FOFs) and Conclusions of Law (COLs). Howard filed a Notice of Appeal on February 8, 1995. The Intermediate Court of Appeals (ICA) reversed the family court's ruling that trade secrets were "goodwill," but otherwise affirmed the property division order. Howard applied for a writ of certiorari arguing that the ICA erred in affirming the family court's valuation of his pre-marital trade secrets. We granted certiorari and affirmed that part of the ICA opinion holding that trade secrets were not a type of personal goodwill and reversed the ICA's holding that the property division was otherwise valid. On July 24, 1998, this court remanded the case to the family court for recalculation of the amount of the marital estate. On March 3, 1999, the family court, the Honorable Dan T. Kochi presiding, filed its FOFs and COLs.⁴ Howard timely appealed.

B. Factual Background

Prior to and after his marriage to Mei Li, Howard was engaged in the business of inventing and promoting electronic products.⁵ On January 13, 1971, Howard incorporated Modular Radio Corporation (MRC). MRC was in the business of "designing, fabricating, promoting, marketing, and selling electronic components." Howard designed a "wall barometer with a built-in weather radio system which could be activated ... to provide local weather" information. While working on this project, Howard began designing a circuitry system that would improve the quality of reception in his product [hereinafter "weather radio"]. On April 28, 1975, Howard incorporated Radioresearch Corporation (RRC).

Howard's next invention requires a modicum of historical knowledge. The United States Department of Commerce initiated a weather system in 1953, the purpose of which was to "establish a wide-based emergency warning network for the general public." Commercializing this idea through the use of weather radios was hampered because the only product available was of relatively low quality. Howard devised a better quality weather radio that included a "weather alert," a feature that alerted the owner of the radio to turn the radio on to receive important weather information [hereinafter "weather alert"]. Radio Shack was interested in purchasing Howard's product, however, production of Howard's radios was based in Asia, which conflicted with Radio Shack's policy not to purchase products manufactured in the far east from an American agent.⁶ To resolve this conflict Howard formed a trading company, Nimbus (Hong Kong) Limited on February 15, 1977, whose parent company was MRC. In order to decrease manufacturing costs, Mei Li, through her family set up a plant in Taiwan to manufacture weather radios.⁷

Howard obtained two patents from his weather radio invention. The "latching detector" patent (Circuit Patent) was the device that alerted the owner of the radio to activate the radio. The Tuner Patent permitted the "reception of three weather radio frequencies using only one, rather than three, crystal [sic] and it improved the rejection of unwanted signals in weather radios[.]" The Circuit Patent was issued on June 12, 1979, while the Tuner Patent was issued on November 30, 1980. Howard testified that he invented the device that made up the Circuit Patent approximately three months prior to his marriage to Mei Li.

In 1981, Howard listed MRC for sale.⁸ During this process, Howard made an agreement to assign the rights of the Circuit Patent to Paignton Ltd. (Paignton) for $100,000 every month for 49 months. On April 20, 1982, four days after the assignment of the Circuit Patent, Paignton "agreed to transfer rights to the Circuit Patent under a nonexclusive license to Nimbus Ltd. in exchange" for close to $5 million dollars, to be paid in installments of $311,000 every three months. Paignton was formed three weeks prior to the assignment of rights and had $2.00 in capital at the time the assignment was made.

On December 28, 1983, Howard executed a Buy-Sell Agreement with Zinta Trading Ltd. (Zinta Agreement) which provided in part:

[The transfer of] all of the issued and outstanding shares of MRC and RRC[.]

....

Until the time of closing, [Howard] shall continue to operate each corporation to minimize the disruption associated with turning over the operation of the underlying business; and for a convenient time thereafter shall assist Buyer in taking control of the operation[.]

....

At closing [Howard] shall deliver or cause to be delivered to Buyer, and Buyer shall receipt therefore:

....

assignment of [Howard] to any future payments under Agreement, dated 16 August 1982, between [Howard] and Paignton Limited[.]

[Howard] shall agree to co-represent the Buyer, for a period of two years from the date of this Agreement, at up to three meetings per year, with Radio Shack in the United States, at Buyer's cost for First Class air travel plus accommodations for [Howard] and his family between Honolulu, Hawaii, Hong Kong, the place of meeting, and return.

[Howard] shall also agree to give to Buyer a right of first refusal, at a compensation to be agreed upon by [Howard] and Buyer on a product-by-product basis, on all new products of [Howard].

On January 13, 1988, the Circuit Patent and the Tuner Patent "were assigned to two Liberian companies nunc pro tunc as of December 29, 1983. These assignments were recorded with the Patent and Trademark Office on February 1, 1988. The preamble to the assignments of the patents recited that [Howard] was the owner of the entire right, title and interest in the Circuit Patent." In its findings pertinent to this appeal, the family court found that: (1) the parties stipulated to the findings of fact in the tax case; (2) Howard introduced no credible evidence of the value of his intellectual property; (3) Howard's intellectual property prior to marriage was dependant upon Howard's further ingenious ideas and effort during the marriage; (4) the intellectual property constituted personal goodwill; (5) Howard's net worth at time of marriage was $250,000; and (6) after reserving Howard's pre-marital net value, the remaining assets were allocated equally between the parties. The ICA held that trade secrets were not personal goodwill, but affirmed the property division.

C. The Supreme Court Memorandum Opinion

Howard applied for a writ of certiorari. We granted certiorari because of an apparent inconsistency in the ICA memorandum opinion. The ICA held that the family court erred when it ruled that Howard's "various ingenious concepts, techniques, technologies and ideas prior to marriage" amounted to personal goodwill. After determining that Howard's trade secrets were not personal goodwill, the ICA affirmed the family court's award of approximately $250,000 to Howard, based upon the value of MRC prior to marriage. We affirmed in part and reversed in part, holding that trade secrets were not personal goodwill, and that there was "insufficient basis for upholding the property division."⁹

D. The Family Court Opinion on Remand

On remand, the family court issued its FOFs and COLs on March 19, 1999. It found, inter alia, that the payments from Paignton to Howard constituted marital assets, in part, because the transaction appeared to be illusory. Finding of Fact number 6 provided:

The court agrees with the Tax Court that the Defendant-Paignton-MRC

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