OPINION OF THE COURT BY POLLACK, J.

R. Steven Geshell, for petitioner.

Carlyn Davidson Cox, respondent pro se.

McKENNA, POLLACK, AND WILSON, JJ., AND RECKTENWALD, C.J., DISSENTING, WITH WHOM NAKAYAMA, J., JOINS

OPINION OF THE COURT BY POLLACK, J.

[138 Hawai'i 478]

The 2006 and 2015 versions of Hawai‘i Family Court Rules (HFCR) Rule 68 mandate an award of costs, including reasonable attorney's fees, to a party who offers to settle certain classes of family court cases in the amount or upon the terms specified in the offer, if the offer is refused by the offeree and “the judgment in its entirety finally obtained by the offeree is patently not more favorable than the offer, unless the court shall specifically determine that such would be inequitable.”

The issue that we resolve in this case is whether Bruce Edward Cox (Husband) is entitled to appellate attorney's fees pursuant to HFCR Rule 68. We hold that both the 2006 and 2015 versions of HFCR Rule 68 do not apply to family court cases governed by Hawai‘i Revised Statutes (HRS) § 580–47 (Supp. 2011) for the following reasons: (1) the rule contravenes HRS § 580–47 ; (2) it is analytically problematic with respect to cases subject to HRS § 580–47 ; (3) its application may be unsuited to principles of equity and justice inherent in matters commonly resolved in family court proceedings governed by HRS § 580–47 ; and (4) it may improperly coerce settlements. Hence, HRS § 580–47 exclusively governs the determination of whether to award attorney's fees in all cases to which HRS § 580–47 applies. Husband is therefore not entitled to appellate attorney's fees under HFCR Rule 68.

I. BACKGROUND

This case stems from the divorce action by Bruce Edward Cox (Husband) against Carlyn Davidson Cox (Wife). While the divorce action was pending in the Family Court of the First Circuit (family court), Husband, through counsel, tendered a settlement offer to Wife, agreeing to pay Wife a property equalization in the amount of $9,000. Wife did not agree to the offer, the case was tried, and the family court ultimately issued a divorce decree that divided the parties' property, retirement funds, insurance policies, securities, bank accounts, debts, and unpaid taxes. The divorce decree provided a final property equalization payment against Wife in the amount of $22,223.46. Thereafter, following an unsuccessful appeal by wife, Husband moved in the family court for an award of post-offer attorney's fees and costs, totaling $38,163.39, pursuant to HFCR Rule 68 (2006). Husband predicated his request on the fact that the family court's decree that Wife pay Husband an equalization payment of $22,223.46 was patently not more favorable than Husband's offer to pay Wife an equalization payment of $9,000. Husband did not address whether his request for post-offer fees and costs comported with equity and fairness.

The family court granted the motion as to Husband's post-offer trial fees and costs totaling $18,051.12 and denied the motion as to Husband's appellate fees and costs (August 6, 2012 family court order). The family court mily

[138 Hawai'i 479]

concluded that because Husband's offer included an equalization payment to Wife but the divorce decree instead ordered Wife to pay Husband an equalization payment, “Husband clearly prevailed at trial” and “is entitled to an award of fees.” The family court declined to award Husband his appellate costs because “[n]o Rule 68 offer was presented to Family Court regarding the appeal.” The family court also opined that “even if Husband contends the appellate costs are automatically included in the Rule 69 [sic] offer,” the court would decline to award such costs and advised Husband “to consider applying to the appellate court for the award of his appellate fees and costs.” Nothing in the August 6, 2012 family court order indicated that the award of post-offer trial fees and costs was consistent with equity or was made after due consideration of equitable factors and the totality of the circumstances pursuant to HRS § 580–47.

Husband then appealed from the August 6, 2012 family court order, contending that the family court erred in denying his motion as to the appellate fees and costs related to Wife's appeal. The Intermediate Court of Appeals (ICA) vacated the August 6, 2012 family court order, concluding that appellate fees are recoverable under HFCR Rule 68 (2006) and remanding the case to the family court for a determination of whether an award of appellate fees to Husband would be inequitable pursuant to the provisions of HRS § 580–47. Husband challenges on certiorari the ICA's remand to the family court. He contends that he is entitled to appellate fees as a matter of law, that the equitable factors were already considered by the family court in awarding post-offer attorney's fees for the trial proceedings, and that the family court's denial of his request for appellate costs and fees deprived him of his constitutional rights to due process and equal protection.

II. DISCUSSION

The question presented on certiorari is whether Husband is entitled to appellate fees as a matter of law pursuant to HFCR Rule 68 (2006) because appellate fees, pursuant to the terms of 2006 version of HFCR Rule 68, are “incurred after the making of the offer.” The ICA, relying upon Nelson v. University of Hawai‘i, 99 Hawai‘i 262, 265, 54 P.3d 433, 436 (2002), and Nakasone v. Nakasone, 102 Hawai‘i 177, 178, 73 P.3d 715, 716 (2003), held that “appellate fees and costs ... are necessarily incurred after the making of the Rule 68 offer and thus are included within the time frame set forth in the rule.” Cox v. Cox, 134 Hawai‘i 475, 344 P.3d 359 (App. 2015), cert. granted, No. SCWC–12–0000762, 2015 WL 3539785 (Haw. June 3, 2015) (emphasis omitted). We therefore consider the [138 Hawai'i 480]

application of HFCR Rule 68 in family court proceedings in light of the existence of statutory law dealing with the same subject matter and the effect of this rule on the method by which issues subject to this rule are determined.

A. HFCR Rule 68 Does Not Apply to Cases Governed by HRS § 580-47

1. HFCR Rule 68 Contravenes HRS § 580-47

Nothing in HRS § 580–47 mandates the family court to award attorney's fees to a party in a divorce action. Indeed, an award of attorney's fees is discretionary, with the

[138 Hawai'i 481]

significant caveat that such an award “shall appear just and equitable.” HRS § 580–47(a) ; see Owens v. Owens, 104 Hawai‘i 292, 307, 88 P.3d 664, 679 (App. 2004) (“The award of attorney's fees under HRS § 580–47 is discretionary.”). Additionally, HRS § 580–47 instructs the family court, in awarding attorney's fees, to consider the following:

the respective merits of the parties, the relative abilities of the parties, the condition in which each party will be left by the divorce, the burdens imposed upon either party for the benefit of the children of the parties, the concealment of or failure to disclose income or an asset, or violation of a restraining order issued under section 580-10(a) or (b), if any, by either party, and all other circumstances of the case.

HRS § 580–47(a).

In contrast, HFCR Rule 68 mandates the award of attorney's fees to a party who tenders a settlement offer that the other party refuses to accept “[i]f the judgment in its entirety finally obtained by the offeree is patently not more favorable than the offer ... unless the court shall specifically determine that such would be inequitable.” HFCR Rule 68. Absent such a specific finding, the offeree must pay the “reasonable attorney's fees incurred after the making of the offer.” HFCR Rule 68.

Hence, the framework of the rule appears to be in conflict with the statute because, while the statute vests the family court with discretion to determine, as shall appear just and equitable, whether attorney's fees should be awarded to a party, see HRS § 580–47(a) (stating that “the court may make ... orders as shall appear just and equitable ... allocating ... the attorney's fees” (emphasis added)), the rule reformulates the family court's statutory-based discretion and instead requires the family court to award attorney's fees to a party-offeror so long as the judgment in its entirety is patently not more favorable than the offer, see HFCR Rule 68 (specifying that “the offeree must pay the costs, including reasonable attorney's fees” (emphasis added)), which can be avoided only after a court's specific finding that payment of costs would be inequitable.

Thus, while HRS § 580–47(a) requires the family court to consider a host of factors and the totality of the circumstances to determine whether it is just and equitable to award a party attorney's fees, consideration of presumably the same or similar equitable factors under HFCR Rule 68 are relegated to a mere afterthought, see HFCR Rule 68 (mandating an award of attorney's fees “unless the court shall specifically determine that such would be inequitable in accordance with the provisions of HRS section 580–47 or other applicable statutes”). The 2015 version of HFCR Rule 68 is even more problematic than the 2006 version because it omits the phrase “in accordance with the provisions of HRS section 580–47 or other applicable statutes, as amended.” By deleting the reference to HRS § 580–47, HFCR Rule 68 now appears to have been decoupled from the statute. Thus, the current form of HFCR Rule 68 does not provide any guidance or standard for its mandate that reasonable post-offer attorney's fees should not be awarded if “such would be inequitable,” making it susceptible of subjective and differing applications.

As stated, HRS § 580–47 directs the family court to determine the equity and justice of awarding attorney's fees based on a multifactor analysis in the course of deciding whether to award such fees. HFCR Rule 68, on the other hand, treats the award of attorney's fees to a party-offeror as presumptively mandatory—a presumption absent from the statute—and to be overridden only if the family court specifically finds such an award to be inequitable. Viewed another way, while HRS § 580–47 places the burden on the offeror to demonstrate that an award of attorney's fees is just and equitable, HFCR Rule 68 inherently places the burden on the offeree to show the opposite. Hence, as a practical matter, under HFCR Rule 68, the offeror need only show to the family court the terms of the offer and illustrate how the judgment obtained is patently not more favorable than the terms of the offer. Once the offeror makes this showing, the presumption that the offeror is entitled to attorney's fees attaches, and it becomes incumbent upon the offeree to demonstrate that an award of post-offer attorney's fees to the offeror would be HF

[138 Hawai'i 482]

inequitable under HRS § 580–47 or another statute. The rule creates, in essence, a presumption of fairness and equity upon a finding that the judgment is patently not more favorable than the offer, whereas the statute requires an affirmative showing of fairness and equity. In design and effect, the test under the rule is different from the test under the statute.

The inconsistency of HFCR Rule 68's mandate to that of HRS § 580-47 is clearly demonstrated in this case. After Husband moved for post-offer attorney's fees and costs, the family court determined that he is “entitled to an award of fees pursuant to [HFCR] Rule 68 ” because Wife was ordered “to pay Husband the sum of $22,222.36 as an equalization payment” while “Husband's Rule 68 offer to Wife was for Husband to pay Wife the sum of $9,000.00 as an equalization payment.” Thus, the family court applied the presumptive mandate of HFCR Rule 68 to award Husband his post-offer trial fees and costs because, in the family court's view, Wife obtained a judgment not patently more favorable than Husband's offer. Nothing in the family court's determination indicates that the award of attorney's fees was consistent with principles of fairness and equity and that the award was made in consideration of the totality of the circumstances. This is to be expected, since the language of HFCR Rule 68 —“unless the court shall specifically determine that such would be inequitable”—signifies that consideration of equitable factors under “HRS § 580–47 or other applicable statutes” is subsidiary to the threshold determination of whether post-offer fees and costs should be awarded based on the “patently not more favorable” test; an assessment of the statutory criteria is merely a secondary inquiry meant to potentially override the rule's presumptive mandate to award a party-offeror's post-offer fees and costs when the “patently not more favorable” test has been met.

On the other hand, had Husband requested attorney's fees pursuant to HRS § 580–47, the cardinal consideration of the family court would have been whether such an award appears just and equitable, not whether the judgment as a whole is patently not more favorable than the settlement offer. In such an instance, the family court's order in this case would not have sufficed because it is silent as to how the attorney fee award to Husband is just and equitable in light of the HRS § 580–47 factors and the totality of the circumstances.

2. HFCR Rule 68 Abridges Substantive Rights

The Hawai‘i Constitution accords this court the “power to promulgate rules and regulations in all civil and criminal cases for all courts relating to process, practice, procedure and appeals, which shall have the force and effect of law.” Haw. Const. art. VI, § 7. “However, pursuant to HRS § 602–11 (1985), ‘[s]uch rules shall not abridge, enlarge, or modify the substantive rights of any litigant, nor the jurisdiction of any of the courts, nor affect any statute of limitations.’ ” In re Doe, 77 Hawai‘i 109, 113, 883 P.2d 30, 34 (1994) (alteration in original) (emphasis added). Where a court-made rule affecting litigants' substantive rights contravenes the dictates of a parallel statute, the rule must give way. See In re Doe Children, 94 Hawai‘i 485, 487, 17 P.3d 217, 219 (2001) (holding that HRAP Rule 4(a)(3) cannot be construed “in such a way as to modify the requisite deadline for filing an HRS § 571–54 motion for reconsideration and the subsequent notice of appeal,” and thus, “HRAP Rule 4(a)(3) is inapplicable to family court cases governed by HRS § 571–54 ”).

Here, HFCR Rule 68 abridges the substantive rights of parties in family court proceedings because, as discussed, it modifies the standard by which the family court should decide whether to award post-offer attorney's fees to the party-offeror. Cf. Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393, 407, 130 S.Ct. 1431, 176 L.Ed.2d 311 (2010) ( “What matters is what the rule itself regulates: If it governs only ‘the manner and the means' by which the litigants' rights are ‘enforced,’ it is valid; if it alters ‘the rules of decision by which [the] court will adjudicate [those] rights,’ it is not.” (quoting Miss. Publ'g Corp. v. Murphree, 326 U.S. 438, 446, 66 S.Ct. 242, 90 L.Ed. 185 (1946) )). That HFCR Rule 68 modifies [138 Hawai'i 483]

the governing standard for awarding post-offer attorney's fees is even more apparent in the 2015 version of the rule, which explicitly decoupled the analytical framework from that prescribed by HRS § 580–47. By conferring on a party to a family court proceeding a presumptive entitlement to post-offer attorney's fees, HFCR Rule 68 creates a decisional framework that is inconsistent with the legislature's manifest directive in HRS § 580–47 that attorney's fees may be discretionarily awarded to a party only if such an award “shall appear just and equitable” after considering the factors outlined in the statute and the totality of the circumstances. See Bank of Haw. v. Shinn, 120 Hawai‘i 1, 8, 200 P.3d 370, 377 (2008) (“Allowing a party, through reliance on HRCP Rule 5(a), to avoid giving notice to a party in default prior to extension of a judgment would eviscerate the legislature's unmistakable mandate in HRS § 657–5 that ‘[n]o extension shall be granted without notice.’ ”); In re Doe, 77 Hawai‘i at 113, 883 P.2d at 34 (resolving the conflict between HFCR 59(g)(1) and HRS § 571–54 in favor of the statute and holding HFCR Rule 59(g)(1) void as “Rule 59(g)(1) mandates an earlier motion deadline than does the statute and consequently infringes on an aggrieved party's right to appeal by curtailing the time in which to file a timely notice of appeal”).

3.

Consequently, because HFCR Rule 68 affects substantive rights of parties in a divorce proceeding and it is in derogation of HRS § 580–47, we hold that HFCR Rule 68 is inapplicable to cases governed by HRS § 580–47. Correspondingly, in cases within the purview of HRS § 580–47, requests for attorney's fees and costs must be evaluated pursuant to the factors and circumstances set forth in HRS § 580–47(a) and (f) in order to determine that an award of such fees and costs is just and equitable.

B. The Operation of HFCR Rule 68 Generates Substantial Complications

In addition to HFCR Rule 68's inconsistency with HRS § 580–47, the rule is also often analytically unworkable, commonly unsuited to issues typically implicated in family court proceedings governed by HRS § 580–47, and may improperly coerce parties to settle.

1. The Inherent Difficulties in Applying HFCR Rule 68

HFCR Rule 68 is similar to Hawai‘i Rules of Civil Procedure (Civil Procedure Rule or [138 Hawai'i 484]

HRCP) Rule 68 (1999). See Criss v. Kunisada, 89 Hawai‘i 17, 968 P.2d 184 (App. 1998) (noting that Civil Procedure Rule 68 and its family court counterpart, HFCR Rule 68, “cover[ ] the same subject”). However, a rule that requires a party-offeree who rejects a settlement offer to pay the party-offeror's attorney's fees if the judgment obtained is not patently more favorable than the offer is frequently problematic in the realm of family court proceedings. See In re Marriage of Saunders, 158 Or.App. 601, 975 P.2d 927, 929–30 (1999) (reasoning that the Oregon civil procedure rule similar to HRCP Rule 68 does not apply to dissolution cases and that those cases must be governed by a statute similar to HRS § 580–47, which requires the family court to exercise its discretion to award attorney's fees after conducting a multifactor analysis and considering the totality of the circumstances); Mohr v. Mohr, 155 N.C.App. 421, 573 S.E.2d 729, 731 (2002) (holding that “offers of judgment are inconsistent with [North Carolina's] framework for determining child custody”); Leeming v. Leeming, 87 Nev. 530, 490 P.2d 342, 344 (1971) (concluding that Nevada's version of HRCP Rule 68 is “inapplicable to divorce proceedings” because they “involve entirely different social considerations than other civil actions” and “to hold [Rule] 68 applicable to divorce matters would be incompatible with the pattern and policy of our law”).

Determining whether “the judgment in its entirety finally obtained by the offeree is patently not more favorable than the offer,” as required by HFCR Rule 68 (emphases added), is incompatible with the nature of issues commonly involved in family court proceedings subject to HRS § 580–47 and consequently results in considerable complications. The ICA has held “that an offer of settlement pursuant to [HFCR Rule 68 ] may be made concerning any item as to which ‘a decree or order’ may be entered, and is not required to encompass all issues in a divorce proceeding.” Criss, 89 Hawai‘i at 18, 968 P.2d at 185. The item, for example, may involve custody, visitation, property division, or child or spousal support. In comparing an HFCR Rule 68 offer to the family court's final judgment, the ICA has explained that the comparison should be done “issue by issue.” Owens v. Owens, 104 Hawai‘i 292, 309–10, 88 P.3d 664, 681–82 (App. 2004). In Criss, the ICA concluded that “Wife's Rule 68 offer with respect to custody must be compared ‘as a whole’ to those terms of the divorce decree to which the offer was directed, i.e., custody.” Criss, 89 Hawai‘i at 25, 968 P.2d at 192. The ICA may have reasoned that HFCR Rule 68 required an item-by-item comparison because in family court cases, where a judgment often resolves issues relating to child custody and visitation, child and spousal support, valuation of real and personal property, [138 Hawai'i 485]

358 485 stocks and securities, bank accounts and retirement funds, and tax liability, the comparative analysis that Rule 68 requires would be analytically unmanageable if combinations of nonmonetary variables and monetary variables are weighed against each other. See In re Marriage of Saunders, 975 P.2d at 930 (characterizing the evaluation of the different aspects of a divorce judgment in order to determine whether the judgment is more favorable than a party's offer as “intrinsically impossible”). Although the issue-by-issue approach appears practical from a logical standpoint, we note that the ICA's interpretation appears to contravene the plain language of HFCR Rule 68, which requires a comparison between a “judgment in its entirety” and the offer. HFCR Rule 68. Further, severing different aspects of a judgment, as the ICA has suggested, in order to compare each item to a corresponding portion of an offer does not simplify the comparative analysis required under HFCR Rule 68.

Consider, under an item-by-item analysis, an offer by Party A that provides primary physical custody of the parties' children to Party A and that allows Party B once-per-week visitation rights. If the judgment awards Party B primary physical custody and once-per-week visitation rights to Party A—that is, the exact opposite of what the offer provided—there is little doubt that the judgment is patently more favorable than the offer, and the family court should not award post-offer attorney's fees and costs to Party A. The difficult complication arises in cases where an item in the offer differs slightly from the parallel item in the final judgment. Suppose the judgment awards Party A primary physical custody of the children and gives Party B an extra day of visitation in alternate months. Is the judgment obtained, despite the additional visitation days, “patently not more favorable” than the offer even though, in Party B's view, the extra visitation is critical to the children's well-being? To what extent must the visitation days awarded in the judgment exceed those contained in the offer in order for the offeree to surmount the “patently not more favorable” threshold and avoid paying the offeror's post-offer attorney's fees and costs? The obvious answer is that it is unclear, for the weight that parties to family court proceedings ascribe to different aspects of the judgment undoubtedly differs in every case. See Leeming, 490 P.2d at 345 (reasoning that “an offer's ‘favorable’ character will often depend on the parties' personal goals”).

In short, the comparative analysis embodied by HFCR Rule 68 is analytically problematic given the issues and concerns that a family court judgment typically encompasses in cases governed by HRS § 580–47, and the ICA's efforts to make the required analysis workable do not resolve difficulties associated with the application of HFCR Rule 68 to nontangible, nonmonetary aspects of a family court judgment in such cases.

2. The Magnitude and Expansive Reach of HFCR Rule 68

Not only are the sanctions provided for in HFCR Rule 68 problematic in the context of family court proceedings, the rule's breadth and character are also remarkably more extensive than the parallel Civil Procedure Rule 68, such that, under certain facts and circumstances, the rule may coerce, rather than just encourage, a settlement. Under Civil Procedure Rule 68, this court has unequivocally held “that ‘costs' ... do not include attorneys' fees.” [138 Hawai'i 486]

Collins v. S. Seas Jeep Eagle, 87 Hawai‘i 86, 90, 952 P.2d 374, 378 (1997). In contrast, HFCR Rule 68 is unambiguous in its express requirement that a party-offeree who obtains a judgment not patently more favorable than the offer must pay “reasonable attorney's fees incurred after the making of the offer.” As this court has recognized in Collins, “the inclusion or exclusion of attorneys' fees within the definition of ‘costs' will make a significant difference in a plaintiff's consideration of whether to accept or reject an offer of judgment.” Id. at 88, 952 P.2d at 376. The express inclusion of reasonable attorney's fees as awardable costs under HFCR Rule 68 renders this rule significantly more potent than Civil Procedure Rule 68, since attorney's fees are generally not insubstantial even in the least contentious of cases. In this case, for example, the family court determined that Husband is entitled to post-offer trial fees and costs of $18,051.12.

The more potent nature of HFCR Rule 68 is further illustrated by a comparison of the respective frameworks in which HFCR Rule 68 and Civil Procedure Rule 68 operate. Under the Civil Procedure Rules, prevailing parties as a matter of course are awarded costs. HRCP Rule 54(d)(1) (providing that “costs shall be allowed as of course to the prevailing party” unless a statute, Civil Procedure Rule, or the court otherwise directs (emphasis added)). Hence, “[i]f the offer is rejected, and the offeree ultimately obtains a judgment that is less favorable than the offer, the offeree must pay the offeror's post-offer costs, and the offeree is precluded from obtaining his or her post-offer costs.” Collins, 87 Hawai‘i at 88, 952 P.2d at 376. If an offeree “rejects a [Civil Procedure] Rule 68 settlement offer, he [or she] will lose some of the benefits of victory if his [or her] recovery is less than the offer.” Id.(emphasis added) (quoting Delta Air Lines v. August, 450 U.S. 346, 352, 101 S.Ct. 1146, 67 L.Ed.2d 287 (1981) ). The prevailing offeree essentially forfeits his or her entitlement to costs under Civil Procedure Rule 54 and must instead pay the offeror's respective costs. Id. Thus, under Civil Procedure Rule 68, the penalty that may encourage offerees to settle is the possibility of foregoing some attendant “benefits of victory” that are recoverable as a matter of course pursuant to the Civil Procedure Rules. Id.(quoting August, 450 U.S. at 352, 101 S.Ct. 1146 ); see HRCP Rule 54.

The same framework does not underlie family court proceedings. The Hawai‘i Family Court Rules do not include a provision requiring a party as a matter of course to pay the other party's costs, including reasonable attorney's fees. Compare HFCR Rule 54(d) (stating that “[c]osts shall be allowed where expressly provided by statute, stipulation, agreement, order, or these rules”), with Civil Procedure Rule 54(d)(1). Thus, the possible penalty, under HFCR Rule 68, for the party-offeree who declines an offer is not merely to forego something that he or she would commonly receive as an incident to winning the litigation; instead, the penalty is the payment of something that does not normally accrue as a matter of course to a party in family court proceedings, i.e., costs and [138 Hawai'i 487]

attorney's fees. See HRS § 580–47. Plainly, a party stands to lose more, both in kind and in magnitude, under HFCR Rule 68 than under Civil Procedure Rule 68.

Consequently, there may be instances where HFCR Rule 68 would go beyond merely effectuating the purpose for which it was created—to “encourage settlements ... before a contested matrimonial trial or a contested hearing for an order is scheduled to begin.” Nakasone v. Nakasone, 102 Hawai‘i 177, 181, 73 P.3d 715, 719 (2003) (quoting Criss, 89 Hawai‘i at 22, 968 P.2d at 189 ). Decision-making in which parties to a family court proceeding engage in the course of litigation too often involves “interrelated as well as unrelated motives and problems, where far more may be at stake than the mere dollar amount of a support award.” Leeming, 490 P.2d at 345. By subjecting such sensitive and often emotionally charged decision-making to the threat of paying the other party's attorney's fees, under some factual scenarios, HFCR Rule 68 has the tendency to coerce a party to settle instead of simply encouraging settlements.

This tendency to potentially coerce a settlement is all the more problematic in actions involving child custody and visitation, which are both subject to HFCR Rule 68 (stating that a judgment offered under the rule “may be made as to all or some of the issues, such as custody and visitation”). Because the determination of the terms of custody and visitation is dictated by the “best interests of the child,” HRS § 571-46 (Supp. 2013), the ICA has thoughtfully observed that “the possible impact on a party's pocketbook should have no influence on the child custody issue.” Nakasone v. Nakasone, 102 Hawai‘i 108, 117 n.5, 73 P.3d 62, 71 (App. 2002)rev'd on other grounds, 102 Hawai‘i 177, 73 P.3d 715 (2003). However, HFCR Rule 68's threat of penalizing a party-offeree, by requiring payment of the party-offeror's attorney's fees, could “deter a party whose genuine concern for the best interests of the child is motivating him or her to contest the award of child custody and/or visitation from continuing to contest the award of child custody and/or visitation.” Id. It is contrary to societal interests that HFCR Rule 68 should penalize and, thus, dissuade a party from continuing with litigation to contest an offer of settlement involving custody or visitation, when a party genuinely believes that the offer is not in the best interests of the child. See id.(“[T]he possibility that a party is contesting the award of [138 Hawai'i 488]

child custody and/or visitation for reasons other than the best interests of the child is insufficient to justify imposition of an HFCR Rule 68 type bright line rule that would deter a party whose genuine concern for the best interests of the child is motivating him or her to contest the award of child custody and/or visitation from continuing to contest the award of child custody and/or visitation.”).

In sum, the breadth, scope, and application of HFCR Rule 68 may, in certain cases, improperly coerce parties to settle rights and issues whose resolution should not be driven by the threat of monetary penalties. This attribute of HFCR Rule 68, exacerbated in its deleterious effect by its application to family court proceedings governed by HRS § 580–47, provides another reason for our holding that HRS § 580–47 controls the determination of whether to award attorney's fees and costs in all cases subject to HRS § 580–47.

C.

The dissent asserts that the issue of appellate fees and the applicability of HFCR Rule 68 to cases governed by HRS § 580–47 are distinct issues and that we are therefore engaging in plain error review. Because we resolve a properly preserved issue by answering, at the threshold, a dispositive question of law, the plain error doctrine has no application. In Waldecker v. O'Scanlon, one of the issues raised was whether the petitioner's relocation was a material change in circumstances that would warrant a reexamination of the best interests of the child. 137 Hawai‘i 460, 375 P.3d 239, 245–246 (2016). The dispositive argument that this court chose to resolve, even though neither party asserted it, was the continued application of the material change of circumstances standard as a prerequisite to modifying a custody order. Id. at 246–250. The Waldecker court did not utilize the plain error doctrine. In Akamine & Sons, Ltd. v. Hawaii National Bank, the issue of attorney's fees was raised, but the parties failed to advance a dispositive legal argument contained in the provisions of the promissory notes and mortgage involved in that case. 54 Haw. 107, 114–15, 503 P.2d 424, 429 (1972). The court resolved the issue by answering the dispositive legal argument, and plain error was not invoked. Id. at 114–20, 503 P.2d at 429–31. Thus, in cases similar to Waldecker and Akam ine, where this court resolves a properly preserved issue by answering a threshold or dispositive question of law, even though the argument is not advanced by the parties, the plain error doctrine simply has no application.

Here, the overarching issue is whether Husband should have been awarded appellate attorney's fees under HFCR Rule 68, an issue that Husband raised and properly preserved. A foundational and dispositive question of law that the parties did not advance is whether HFCR Rule 68 applies to family court cases governed by HRS § 580–47. In resolving this dispositive legal question in this case, plain error review is not triggered. Id.;Waldecker, 375 P.3d at 246–50. To not address this threshold question regarding the application of HFCR Rule 68 to cases governed by HRS § 580–47 because neither party advances this argument would mean employing a legal principle that is not applicable in this case to resolve the issue on appeal, a course of action that this court has repeatedly rejected. See, e.g., Hawaiian Ass'n of Seventh – Day Adventists v. Wong, 130 Hawai‘i 36, 46, 305 P.3d 452, 462 (2013)[138 Hawai'i 489]

(holding that “the parties' stipulation as to a question of law is not binding on the court, and does not relieve us from the obligation to review questions of law de novo”); Chung Mi Ahn v. Liberty Mut. Fire Ins. Co., 126 Hawai‘i 1, 10, 265 P.3d 470, 479 (2011) (disregarding the parties' agreement that the statute involved had retrospective effect and instead holding that the statute was not retroactive); State v. Schnabel, 127 Hawai‘i 432, 445, 279 P.3d 1237, 1250 (2012) (judicially noticing on appeal an unraised statute because “[i]t is axiomatic that a court must ‘know’ the law within its jurisdiction; hence a court is required to ‘notice’ applicable law and to instruct the jury thereon” (quoting State v. West, 95 Hawai‘i 22, 18 P.3d 884, 888–89 (2001) )); Waldecker, 375 P.3d at 249–50 (sua sponte overturning prior appellate decisions that required a showing of a material change of circumstances as a prerequisite to modifying a custody order because that standard deviated from HRS § 571–46(a)(6) ).

III. CONCLUSION

Our process in crafting court rules is not infallible, and this infallibility generated occasions where this court, in the context of litigation, had to invalidate or limit the scope of rules that it promulgated based upon their dissonance with statutes enacted by the legislature. See, e.g., In re Doe Children, 94 Hawai‘i 485, 487, 17 P.3d 217, 219 (2001) ; In Interest of Doe, 77 Hawai‘i 109, 113–14, 883 P.2d 30, 34–35 (1994) ; Bank of Haw. v. Shinn, 120 Hawai‘i 1, 8, 200 P.3d 370, 377 (2008). These cases illustrate this court's obligation not to knowingly ignore errors in the rules that it promulgated, especially when those errors, brought to light by litigation, produce unintended consequences detrimental to the substantive rights of litigants subject to the rules. As Justice Frankfurter once said, “Wisdom too often never comes, and so one ought not to reject it merely because it comes late.” Henslee v. Union Planters Bank, 335 U.S. 595, 600, 69 S.Ct. 290, 93 L.Ed. 259 (1949) (Frankfurter, J., dissenting) (quoted with approval by Boys Markets, Inc. v. Retail Clerks Union, Local 770, 398 U.S. 235, 255, 90 S.Ct. 1583, 26 L.Ed.2d 199 (1970) (Stewart, J., concurring)). The dissent's preferred alternative is to allow HFCR Rule 68 to continue to be applied in cases governed by HRS § 580–47 even if the rule contains a presumption of entitlement to fees and costs that is plainly absent from the statute. Employing this approach will jeopardize the fairness, integrity, and public reputation of family court proceedings in this jurisdiction and penalize Wife and similarly situated parties. See Johnson v. United States, 520 U.S. 461, 117 S.Ct. 1544, 137 L.Ed.2d 718 (1997). We therefore elect not to follow this course.

We hold that both the 2006 and 2015 versions of HFCR Rule 68 do not apply to family court cases governed by HRS § 580–47 because they are contrary to the provisions of HRS § 580–47 and abridge substantive rights of litigants; because HFCR Rule 68's breadth, magnitude, and application are inconsistent with the concepts of fairness and equity inherent in family court proceedings subject to HRS § 580–47 ; because HFCR Rule 68 requires a comparative analysis of nontangible, nonmonetary aspects of family court judgments, a process unsuited to the host of issues that the family court is routinely called upon to resolve; and because the rule's penalty has a potential to coerce settlement of rights and issues whose resolution should not be driven primarily by financial motivations. Hence, the provisions of HRS § 580–47 must govern in all instances where a party to a family court proceeding seeks an award for attorney's fees and costs subject to this statute.

Accordingly, we vacate the ICA's Judgment on Appeal to the extent it vacated the [138 Hawai'i 490]

portion of the August 6, 2012 family court order denying appellate fees and costs. The ICA's Judgment on Appeal is also vacated as to the ICA's March 12, 2015 order that denied Husband's HRAP Rule 39 motion for appellate costs “without prejudice to an award by the Family Court” and the April 9, 2015 order that awarded appellate costs to Husband pursuant to HRAP Rule 39(d). The case is remanded to the family court for consideration, as appropriate, of appellate fees and costs under HRS § 580–47.

DISSENTING OPINION BY RECKTENWALD, C.J., IN WHICH NAKAYAMA, J., JOINS

I. Introduction

Since 1982, the Hawai‘i Family Court Rules (HFCR) have contained a provision entitled Rule 68, “Offer of Settlement.” The rule establishes a process for awarding costs and attorney's fees against litigants who reject an offer to settle and then fail to obtain a result that is patently more favorable than the offer.

The parties here evidently thought that the adoption of HFCR Rule 68 was a legitimate exercise of this court's authority, since they never, at any point in this proceeding, suggested otherwise. At no point in the history of this case—whether in the family court, the Intermediate Court of Appeals (ICA), or in this court—did either of the parties suggest that HFCR Rule 68 should be invalidated because it conflicts with Hawai‘i Revised Statutes (HRS) § 580–47. Rather, the dispute as framed by the parties is whether the family court and the ICA misapplied the rule in determining whether and to what extent Petitioner Bruce Cox (Husband) was entitled to fees and costs.

Today, without any request from the parties to do so, the Majority determines “HFCR Rule 68 do[es] not apply to family court cases governed by [HRS] § 580–47.” This holding effectively invalidates the rule in all divorce proceedings in this state.

This result—with the disruption that it entails to the settled expectations of the bar and the public concerning the operation of the HFCR—is avoidable. The rule can be upheld by construing it in a manner that is consistent with HRS § 580–47. And, even if one shares the Majority's concerns about the effects and operation of HFCR Rule 68, the appropriate forum for addressing those concerns is this court's rule-making process. Following that process would enable the court to release revisions to the rule for comment, and thus benefit from the input of the bar and the public.

Thus, I respectfully dissent from the Majority's analysis of the validity of HFCR Rule 68.

II. Discussion

The Majority decides an issue that has not been challenged in this case and is therefore waived. The question presented to this court was whether Husband is entitled to appellate fees and costs under HFCR Rule 68. We were not asked whether HFCR Rule 68 is contrary to HRS § 580–47, provides an unworkable framework, or should otherwise be invalidated. In fact, neither Husband nor Carolyn Davidson Cox (Wife) made any arguments to the family court, the ICA, or this court relating to the validity of HFCR Rule 68. We need not and should not sua sponte address an issue that was never raised or disputed by the parties at any point. See Ass'n of Apartment Owners of Wailea Elua v. Wailea Resort Co., Ltd., 100 Hawai‘i 97, 107, 58 P.3d 608, 618 (2002) (“Legal issues not raised in the trial court are ordinarily deemed waived on appeal.”); Alvarez Family Tr. v. Ass'n of Apartment Owners of Kaanapali Alii, 121 Hawai‘i 474, 488, 221 P.3d 452, 466 (2009) (“It is well-established in this jurisdiction that, where a party does not raise specific issues on appeal to the ICA or on application to this court, the issues are deemed waived and need not be considered.”).

The Majority asserts that it is not deciding a waived issue, and that it can therefore address the purported conflict between HRS § 580–47 and HFCR Rule 68 without resorting to the plain error doctrine. It suggests that “the overarching issue is whether husband should have been awarded appellate attorney's under HFCR 68, an issue that Husband raised and properly preserved.” [138 Hawai'i 491]

Respectfully, I believe that Husband will be surprised to learn that he “raised and properly preserved” the question resolved by the court today, since in no way can his application to this court be read as challenging the underlying validity of HFCR Rule 68. Thus, the majority's characterization of the “overarching issue” is so expansive as to eviscerate the plain error doctrine.

Second, while this court has the discretion to address waived issues under the plain error doctrine, the recognition of plain error here to address the validity of HFCR Rule 68 is unprecedented. An appellate court “should invoke the plain error doctrine in civil cases only when justice so requires.” Okada Trucking Co., Ltd. v. Bd. of Water Supply, 97 Hawai‘i 450, 458, 40 P.3d 73, 81 (2002) (internal quotation marks and citation omitted). This discretion “is always to be exercised sparingly” because “the plain error doctrine represents a departure from the normal rules of waiver that govern appellate review.” Id. at 458, 40 P.3d at 81 (internal quotation marks, brackets, and citation omitted).

As such, this court has rarely recognized plain error in civil cases. Based on my research, there are only five such cases. See Fujioka v. Kam, 55 Haw. 7, 514 P.2d 568 (1973) ; Earl M. Jorgensen Co. v. Mark Constr. Inc., 56 Haw. 466, 540 P.2d 978 (1975) ; Montalvo v. Lapez, 77 Hawai‘i 282, 884 P.2d 345 (1994) ; Hill v. Inouye, 90 Hawai‘i 76, 976 P.2d 390 (1998), as amended on reconsideration (Jan. 13, 1999); Office of Hawaiian Affairs v. State, 96 Hawai‘i 388, 31 P.3d 901 (2001).

Notably, I could not find a single civil case in which this court noticed plain error—as the Majority effectively does here—where neither party raised the issue or asked this court to recognize plain error.

Indeed, this court has explicitly declined to notice plain error in cases in which a party did raise a plain error issue, but failed to provide supporting arguments or evidence regarding the issue. For example, in Alvarez Family Trust, this court declined to recognize plain error regarding estoppel, in part because the petitioners “did not set forth any arguments in their application with regard to plain error[.]” 121 Hawai‘i at 492–94, 221 P.3d at 470–73. Similarly, in U.S. Bank National Association v. Castro, this court declined to notice plain error regarding a due process claim because the petitioners “did not include any transcripts of the district court proceedings in the record on appeal” and “also did not specify the manner in which [they] were allegedly denied due process[.]” 131 Hawai‘i 28, 42, 313 P.3d 717, 731 (2013).

Underlying these decisions is an understanding that questions presented without any relevant support—based on the record or our case law—are beyond the scope of appellate review. This is because an appellate court cannot fairly and thoroughly decide a case without the parties shaping the issues and presenting the relevant considerations. Not only does this approach promote judicial economy, efficient resolution of disputes, and finality, but also recognizes that we simply do not have the resources to raise issues on behalf of the parties. Fundamentally, courts are “neutral arbiter[s] of justice,” deciding issues that are brought before us. United States v. Kyle, 734 F.3d 956, 966 (9th Cir. 2013). We cannot fulfill this role without the parties presenting the issues for us to decide.

Unlike the petitioners in Alvarez Family Trust and Castro, the parties never asked this court to invoke the plain error doctrine. Like the petitioners in Alvarez Family Trust and Castro, the parties here have not submitted briefing, supporting arguments, or evidence on the validity of HFCR Rule 68. Consequently, we are in even less of a position to notice plain error—discretion which is “always to be exercised sparingly.” Okada Trucking, 97 Hawai‘i at 458, 40 P.3d at 81. I therefore respectfully disagree with the Majority's sua sponte recognition of plain error in this civil case.

Third, even if the validity of HFCR Rule 68 was properly before this court, the Majority's concerns regarding the potential conflict between HFCR Rule 68 and HRS § 580–47 [138 Hawai'i 492]

can be addressed without invalidating the rule. The Majority reads HFCR Rule 68 as “treat[ing] the award of attorney's fees to a party-offeror as presumptively mandatory” whereas HRS § 580–47 allows “attorney's fees [to] be discretionarily awarded to a party only if such award ‘shall appear just and equitable[.]’ ” Based on this reading, the Majority concludes that HFCR Rule 68 abridges the substantive rights of parties to family court proceedings because “it modifies the standard by which the family court should decide whether to award post-offer attorney's fees to the party-offeror.”

However, we do not need to interpret HFCR Rule 68 in a manner that conflicts with HRS § 580–47. The HFCR expressly direct us to construe and apply the rules “in such manner as will advance the fair, equitable... determination of every action.” HFCR Rule 1(b) (emphasis added). Further, “[t]he interpretation of a rule promulgated by the courts involves principles of statutory construction.” Ass'n of Condo. Homeowners of Tropics at Waikele ex rel. Bd. of Dirs. v. Sakuma, 131 Hawai‘i 254, 255, 318 P.3d 94, 95 (2013) (quoting Cresencia v. Kim, 85 Hawai‘i 334, 335-36, 944 P.2d 1277, 1278–79 (1997) ).

Under our principles of statutory construction, “[c]ourts are bound to give effect to all parts of a statute, and ... no clause, sentence, or word shall be construed as superfluous, void, or insignificant if a construction can be legitimately found which will give force to and preserve all words of the statute.” Sakuma, 131 Hawai‘i at 256, 318 P.3d at 96 (quoting Keliipuleole v. Wilson, 85 Hawai‘i 217, 221, 941 P.2d 300, 304 (1997) ) (interpreting HRAP 4(a)(3) based upon statutory interpretation principles).

Moreover, “this court has said that it will interpret a statute so as to preserve its constitutionality whenever feasible.” Doe v. Doe, 116 Hawai‘i 323, 331, 172 P.3d 1067, 1075 (2007) ; see also State v. Raitz, 63 Haw. 64, 73, 621 P.2d 352, 359 (1980) (“[I]f feasible within bounds sets by their words and purpose, statutes should be construed to preserve their constitutionality.”).

Thus, we must interpret HFCR Rule 68 to advance equitable considerations and, if possible, give effect to all parts of the rule and preserve its validity.

With this guidance in mind, I turn to the plain language of the applicable version of HFCR Rule 68 (2006), which provides in relevant part:

If the judgment in its entirety finally obtained by the offeree is patently not more favorable than the offer, the offeree must pay the costs, including reasonable attorney's fees incurred after the making of the offer, unless the court shall specifically determine that such would be inequitable in accordance with the provisions of HRS section 580–47 or other applicable statutes, as amended.

(Emphasis added).

In other words, the court can decide not to award attorney's fees and costs if it determines that an award would be inequitable. As the Majority acknowledges, the court makes this determination by considering “presumably the same or similar equitable factors” as in HRS § 580–47.

However, the Majority asserts that the phrase “unless the court shall specifically determine that such would be inequitable” in HFCR Rule 68 is “a mere afterthought.” This characterization ignores the plain meaning of HFCR Rule 68 and fails to “give force to and preserve all words” of the rule. Sakuma, 131 Hawai‘i at 256, 318 P.3d at 96. It also fails to construe the rule in a way to preserve it. See Doe, 116 Hawai‘i at 331, 172 P.3d at 1075.

If read to advance equitable considerations and preserve its validity, HFCR Rule 68 provides that the court retains discretion over awarding attorney's fees and costs and [138 Hawai'i 493]

must exercise this discretion based on equitable concerns. HFCR Rule 68 thus does not force the court to award attorney's fees and costs in conflict with HRS § 580–47. Rather, HFCR Rule 68 establishes a presumptive entitlement to fees, which can be overcome consistent with HRS § 580–47.

Therefore, HFCR Rule 68 does not abridge the parties' rights contained in HRS § 580–47 and does not need to be invalidated on these grounds.

Fourth, by declaring HFCR Rule 68 invalid, the Majority bypasses this court's usual process for amendments to the HFCR. Typically, proposed amendments are reviewed by the Permanent Committee on the Family Court Rules, which is composed of judges who serve in our family courts and lawyers who specialize in family law. The Committee's recommendations are critical, given its members' familiarity with the applicable law and the cases that will ultimately be governed by the HFCR.

Additionally, we generally ask for public comment regarding proposed amendments so that we can receive input from any interested parties. See Proposed Rule Changes, Hawai‘i State Judiciary, http://www.courts.state.hi.us/legal_references/rules/proposed_rule_changes/proposedRuleChanges (last visited June 14, 2016) (seeking public comment on recent proposed rule changes). For rule amendments relating to “the [Hawai‘i State] Bar, its authority, functions and duties[,]” we must also notify the Board of Directors of the Hawai‘i State Bar Association so that they have an opportunity to comment. Rules of the Supreme Court of Hawai‘i Rule 17(g). Practitioner and public participation ensures that our court rules create the most effective and just framework for resolving disputes.

In sum, I do not believe that we should sua sponte invalidate Rule 68 for the reasons advanced by the Majority. Rather, I would address the issue actually raised by the parties and hold that Husband is not entitled to appellate fees and costs under HFCR Rule 68. HFCR Rule 68 states, “If the judgment in its entirety finally obtained by the offeree is patently not more favorable than the offer, the offeree must pay the costs, including reasonable attorney's fees incurred after the making of the offer, unless the court shall specifically determine that such would be inequitable.” (Emphases added). Further, HFCR Rule 54(a) provides that “ ‘[j]udgment’ as used in these rules includes a decree and any order from which an appeal lies.” (Emphasis added). A plain reading of these [138 Hawai'i 494]

rules in pari materia indicates that HFCR Rule 68 allows for the award of attorney's fees and costs incurred “after the making of the offer” and until the family court enters a final appealable judgment.

This reading is consistent with HFCR Rule 68's purpose of “encourag[ing] settlements ... before a contested matrimonial trial or a contested hearing for an order is scheduled to begin.” Nakasone v. Nakasone, 102 Hawai‘i 177, 181, 73 P.3d 715, 719 (2003) (internal quotation marks and citation omitted). It is also consistent with our previous cases, which applied HFCR Rule 68 to attorney's fees and costs incurred in the family court only. See, e.g., id. at 182, 73 P.3d at 720 ; Owens v. Owens, 104 Hawai‘i 292, 310, 88 P.3d 664, 682 (2004) ; Criss v. Kunisada, 89 Hawai‘i 17, 25–26, 968 P.2d 184, 192–93 (App. 1998). Therefore, HFCR Rule 68 does not apply to appellate attorney's fees and costs.

III. Conclusion

The court today invalidates our own rule, which we amended only last year, with no suggestion by the parties that we should do so. Nothing in the record indicates that this 2015 version of the rule, which the Majority now describes as particularly problematic, has caused any unintended consequences or operated in any way other than the manner in which it was intended. Lastly, the rule can be interpreted in a way which preserves its validity. Respectfully, invalidating the rule in these circumstances undercuts confidence in the predictability and stability of our laws. For these reasons, I dissent.