Opinion
NOS. CAAP-18-0000118 CAAP-18-0000365 CAAP-18-0000443
10-28-2021
MAUI HARBOR SHOPS, LP, Plaintiff-Appellee, v. OCTAGON CORPORATION, dba Treasure Island Entertainment Center, Defendant-Appellant
On the briefs: Gary Victor Dubin and Frederick J. Arensmeyer (Dubin Law Offices) for Defendant-Appellant. Loren K. Tilley and Magdalena Bajon (Merchant Horovitz & Tilley) for Plaintiff-Appellee.
On the briefs:
Gary Victor Dubin and Frederick J. Arensmeyer (Dubin Law Offices) for Defendant-Appellant.
Loren K. Tilley and Magdalena Bajon (Merchant Horovitz & Tilley) for Plaintiff-Appellee.
(By: Hiraoka, Presiding Judge, Wadsworth and McCullen, JJ.)
SUMMARY DISPOSITION ORDER
These consolidated appeals arise out of a commercial lease dispute between Defendant-Appellant Octagon Corporation d/b/a Treasure Island Entertainment Center (Octagon ) and Plaintiff-Appellee Maui Harbor Shops, LP (MHS ).
In CAAP-18-0000118, Octagon appeals from the January 30, 2018 order granting MHS's Ex Parte Motion for Default Judgment in the amount of $120,309.51 (Default Judgment ), entered in the District Court of the Second Circuit, Wailuku Division (District Court ).
In CAAP-18-0000365, Octagon appeals from the District Court's:
(1) March 29, 2018 "Order Denying [Octagon's] Motion for Reconsideration and Relief from Judgment Filed on January 29, 2018";
(2) December 18, 2017 Judgment for Possession;
(3) March 29, 2018 "Order Denying [Octagon's] Motion for Reconsideration and Relief from Default Judgment Filed on February 9, 2018"; and
(4) Default Judgment.
In CAAP-18-0000443, Octagon appeals from the District Court's:
(1) May 1, 2018 "Order Granting [MHS's] Ex Parte Motion for Writ of Execution"; and
(2) May 1, 2018 Writ of Execution.
On appeal, Octagon contends that the District Court erred: (1) in entering judgment by default against Octagon when the court allegedly lacked personal jurisdiction over Octagon because it was not adequately served; (2) in entering judgment by default against Octagon when the court allegedly lacked subject matter jurisdiction over the action because the parties had contractually limited the forum for any dispute to the "Second Circuit Court"; (3) in entering judgment against Octagon when there was no evidentiary basis for breach of the parties' lease due to a force majeure clause in the lease; (4) in entering the Default Judgment against Octagon ex parte, without a proof hearing to determine the actual amount of any damages; and (5) in entering the Default Judgment against Octagon when it exceeded the amount requested in MHS's pleading. Octagon further contends that each of the above alleged errors violated Octagon's federal and state due process rights.
After reviewing the record on appeal and the relevant legal authorities, and giving due consideration to the issues raised and the arguments advanced by the parties, we resolve Octagon's contentions as follows:
(1) Octagon contends that the District Court lacked personal jurisdiction over Octagon because Octagon "was not served adequately by posting in the absence of the exercise of due diligence" or, alternatively, that the District Court erroneously denied an evidentiary hearing on the issue of MHS's due diligence. MHS argues that the service by posting complied with the court's order authorizing the manner of service, which was issued pursuant to applicable state law.
On December 11, 2017, Octagon failed to appear before the District Court to answer the October 20, 2017 "Complaint (Assumpsit-Summary Possession/Landlord - Tenant, Damages)" (Complaint ). The District Court entered default against Octagon, granted a judgment for possession and writ of possession, and directed MHS to file an ex parte motion for damages. The Judgment for Possession and Writ of Possession were entered on December 18, 2017. On or about January 24, 2018, MHS submitted its Ex Parte Motion for Default Judgment (Motion for Default Judgment ) to the District Court. The Default Judgment was signed by the court on January 26, 2018, and entered on January 30, 2018.
Octagon first raised the personal jurisdiction issue in its January 29, 2018 motion for reconsideration and relief from judgment (First Motion for Reconsideration ), which sought to set aside the Judgment for Possession and Writ of Possession pursuant to District Court Rules of Civil Procedure (DCRCP ) Rules 4(d), 59(e) and 60(b)(4). Octagon raised the personal jurisdiction issue again in its February 9, 2018 motion for reconsideration and relief from default judgment (Second Motion for Reconsideration ), which sought to set aside the Default Judgment pursuant to the same DCRCP rules.
DCRCP Rule 59(e) motions for reconsideration are reviewed under the abuse of discretion standard. Yoshimura v. Kaneshiro, 149 Hawai‘i 21, 33, 481 P.3d 28, 40 (2021) (construing Hawai‘i Rules of Civil Procedure (HRCP ) Rule 59(e) ; see Chen v. Mah, 146 Hawai‘i 157, 172, 457 P.3d 796, 811 (2020) ("The trial court's ruling on a motion for reconsideration is reviewed under the abuse of discretion standard." (quoting Kamaka v. Goodsill Anderson Quinn & Stifel, 117 Hawai‘i 92, 104, 176 P.3d 91, 103 (2008) )). A trial court's denial of a motion under DCRCP Rule 60(b) is likewise reviewed under the abuse of discretion standard. Citicorp Mortg., Inc. v. Bartolome, 94 Hawai‘i 422, 428, 16 P.3d 827, 833 (App. 2000) (construing HRCP Rule 60(b) ). However, with respect to motions under DCRCP Rule 60(b)(4), alleging that a judgment is void, this court has noted:
[T]he determination of whether a judgment is void is not a discretionary issue. It has been noted that a judgment is void only if the court that rendered it lacked jurisdiction of either the subject matter or the parties or otherwise acted in a manner inconsistent with due process of law. Wright & Miller, Federal Practice and Procedure: Civil § 2862 (1973)....
Id. (quoting In re Hana Ranch Co., 3 Haw. App. 141, 146, 642 P.2d 938, 941-42 (1982) ). Furthermore, when a party seeks to set aside a default judgment due to improper service of process, it raises a question of the trial court's jurisdiction, which is reviewed de novo. See Wagner v. World Botanical Gardens, Inc., 126 Hawai‘i 190, 197, 268 P.3d 443, 450 (App. 2011) (citing Citicorp Mortg., Inc., 94 Hawai‘i at 430, 16 P.3d at 835 ).
The record reflects the following regarding service of process in this case: MHS and Octagon, as landlord and tenant, respectively, entered into the Lease for Maui Harbor Shops (Lease ), dated October 17, 2016, under which Octagon leased the premises at 300 Ma‘alaea Road, #1C/CS & 1E, Wailuku, Hawai‘i (300 Ma‘alaea Road Address ). At all relevant times, Octagon was a Nevada corporation and Dr. Jon Van Cleave (Van Cleave ) was the owner and President of Octagon. Van Cleave was also Octagon's registered agent for service of process, with an address of 83 Kainehe Place, Kihei, HI 96753 (83 Kainehe Place Address ).
On or about November 14, 2017, MHS submitted to the District Court an Ex Parte Motion for Service of Process by Posting and by Certified Mail (Motion re Service ). The Motion re Service listed three "Attempted Service Dates" — October 30, November 3, and November 8, 2017 — for service of process on Octagon, via its "registered agent ... Van Cleave," at the 83 Kainehe Place Address. The Motion re Service cited Hawaii Revised Statutes (HRS ) § 666-8 (quoted infra ) and was supported by a process server's declaration, dated November 9, 2017. The process server's declaration stated in relevant part:
I attempted service on the Attempted Service Dates at the ... Other Address(es) listed on page 1 [i.e. , the 83 Kainehe Place Address], that are the only known address(es) for Defendant(s). I have checked the telephone directory of this circuit and I have not been able to find any other address for Defendant(s). Despite my efforts, I have not been able to locate and serve said Defendant(s). I am informed and believe that Defendant(s) continues to reside and/or do business in the State of Hawai‘i but is avoiding service of process.
On November 20, 2017, the District Court filed its order granting the Motion re Service (Order re Service ), which stated in relevant part:
NOW, THEREFORE, YOU ARE COMMANDED to leave certified copies of this Motion and the Complaint for Summary Possession with some agent or employee of Defendant(s), provided an agent or employee can be found upon the premises or elsewhere within the circuit, and also to affix in a conspicuous place upon the certain premises located at Premises Address listed on page 1, certified copies of this Motion and the Complaint for Summary Possession, such posting to be not less than ten (10) days before the return date, and make due return of this Order with what you have done endorsed thereon.
IT IS FURTHER ORDERED that Plaintiff send to Defendant(s), by certified mail, return-receipt requested, certified copies of this Motion and the Complaint for Summary Possession and file in these proceedings a declaration of the certified mail in the appropriate form.
(Emphasis omitted.)
On November 30, 2017, MHS filed two returns of service both indicating that Octagon had been "[s]erved by [p]osting per Court Order." The first return of service stated that the Complaint, Motion re Service, and other documents were posted at the 300 Ma‘alaea Road Address on November 22, 2017, and included photographs that appeared to show the posting on the door of the premises. The second return of service stated that the Complaint, Motion re Service, and other documents were posted at the 83 Kainehe Place Address on November 22, 2017, and included photographs that appeared to show the posting on the door of a residential property. Additionally, a later declaration and supporting exhibits filed by counsel for MHS showed that counsel had sent, via certified mail on November 20, 2017, a copy of the "Summons and Complaint" to Van Cleave at the 83 Kainehe Place Address, which mail apparently went unclaimed for some weeks before being returned to sender on January 4, 2018.
Under Hawai‘i law,
it is service of process, not actual knowledge of the commencement of the action which confers jurisdiction. Otherwise a defendant could never object to the sufficiency of service of process, since he must have knowledge of the suit in order to make such objection. ... The crux of the matter is not whether [a] defendant has knowledge of the action but whether it has been put to the defendant, in the proper way, that he must appear and defend or be in default.
Tropic Builders, Ltd. v. Naval Ammunition Depot Lualualei Quarters, Inc., 48 Haw. 306, 319, 402 P.2d 440, 448-49 (1965) (emphasis added; footnote omitted). Notice of an action "must be of such nature as reasonable to convey the required information. If with due regard for the practicalities and peculiarities of the case these conditions are reasonably met, the constitutional requirements [of due process] are satisfied." Applications of Herrick, 82 Hawai‘i 329, 343, 922 P.2d 942, 956 (1996) (quoting Klinger v. Kepano, 64 Haw. 4, 10, 635 P.2d 938, 942 (1981) ).
DCRCP Rule 4(d)(3) provides that a summons and complaint shall be served together upon a corporation "by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process and, if the agent is one authorized by statute to receive service and the statute so requires, by also mailing a copy to the defendant." Under DCRCP Rule (4)(d)(8), when a defendant is a corporation, "it is also sufficient if the summons and complaint are served in the manner prescribed by any statute." (Emphasis added.)
One such manner of service is prescribed in HRS § 666-8 (2016), which addresses service of process in summary possession proceedings. Section 666-8 states, in relevant part:
Service. The summons shall be served as provided by the rules of court.
....
If any defendant cannot be served with process within the State, and the facts shall appear by affidavit or otherwise to the satisfaction of the court, service as to such defendant may be made according to the special order of the court, but such order shall in any case include a direction to the officer to leave a certified copy of the complaint and summons with some agent or employee of mature years of the defendant, provided the agent or employee can be found upon the premises or elsewhere within the circuit, and also to affix in a conspicuous place upon the premises (as upon the wall of any store, shop, dwelling, or other building thereon, and if there is no such building, then upon some other permanent object thereon, as a tree or fence) a certified copy of the complaint and summons. The order shall further require that a certified copy of the complaint and summons be sent to the defendant by certified or registered mail, postage prepaid, unless it is shown by affidavit or otherwise to the satisfaction of the court that the address of the defendant is unknown and cannot be ascertained.