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Posts Tagged ‘HRS 607-14’

Recovery of Hawaii Attorneys Fees (Part 2)

Wednesday, February 29th, 2012

As we wrote in our previous post regarding HRS § 607-14, “[t]he Hawaii Supreme court has defined an “assumpsit” case as a claim “for the recovery of damages for the non performance of a contract . . . as well as quasi contractual obligations.”  Schulz v. Honsador, Inc., 67 Haw. 433 (1984).

Since then, the Hawaii Supreme Court and Intermediate Court of Appeals have elaborated on the types of “quasi contractual obligations” that constitute a claim in the nature of assumpsit that will result in an award of attorneys fees.  Specifically, the Courts have also clarified that a claim for “unjust enrichment” may also be an “action in the nature of assumpsit.”  In Hawaii, “[a] claim for unjust enrichment requires only that a plaintiff prove that he or she ‘confer[red] a benefit upon’ the opposing party and that the ‘retention [of that benefit] would be unjust.” Wagner v. World Botanical Gardens, Inc., 2011 WL 6811263, *11 (Hawai‘i App. 2011) (citations omitted).

In Porter v. Hu, 116 Hawai’i 42 (Hawai‘i App. 2007), a number if insurance agents sued their employer for unjust enrichment.  The agents were fired by the insurance company, but the employer kept the agents’ insurance commissions.  The Agents successfully sued to recover their commissions based on unjust enrichment and were awarded attorneys’ fees based on HRS § 607-14.  The Intermediate Court of Appeals determined that the Plaintiffs’ claim for unjust enrichment was in the nature of assumpsit because the agents and their employer had a “promise implied by law, which arises to prevent one man from being inequitably enriched at another’s expense.”  It thus affirmed the circuit court’s award of attorneys fees under HRS § 607-14.

In contrast, in First Hawaiian Bank v. Lau, 116 Hawai’i 71, 169 (Hawai‘i 2007), the Hawaii Supreme Court determined that the plaintiff’s successful claim for unjust enrichment was not in the nature of assumpsit and denied attorneys fees.  In Lau, the defendant requested a transfer from her elderly mother’s account into a bank account that she jointly held with her mother.  First Hawaiian Bank mistakenly transferred money from the wrong account into the defendant’s bank account.  The defendant was unaware that the money transferred into her account was from the wrong account and used the money.  Plaintiff First Hawaiian Bank successfully sued to recover the money transferred under an unjust enrichment theory.  Nevertheless, First Hawaiian Bank was denied attorneys fees.  In affirming the denial, the Hawaii Supreme Court stated that even though the defendant was unjustly enriched, this did not “give rise to a contract claim and FHB did not prove that any type of contract or agreement existed between the parties to create an obligation between them.”

In their recent rulings the Hawaii Supreme Court and Intermediate Court of Appeals have clarified that while unjust enrichment can be a “quasi contractual obligation,” there must still exist some agreement “between the parties to create an obligation between them” in order for the claim to be “in the nature of assumpsit.”

Recently, the collection of attorneys fees in arbitrations has been clarified by the Intermediate Court of Appeals in Kona Village Realty, Inc. v. Sunstone Realty Partners, XIV, LLC, 121 Hawai’i 110, 214 P.3d 1100 (Hawai‘i App. 2009).  This will be the subject of our next blog.

 

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Recovery of Hawaii Attorneys Fees (Part 1)

Friday, February 24th, 2012

This is an updated version of a blog first published on September 19, 2006

Under Hawaii law, in certain commercial cases, the prevailing party may recover some or all of its attorneys fees from the losing party. HRS § 607-14, states as follows:

§ 607-14 Attorneys’ fees in actions in the nature of assumpsit, etc. In all the courts, in all actions in the nature of assumpsit . . . there shall be taxed as attorneys’ fees, to be paid by the losing party and to be included in the sum for which execution may issue, a fee that the court determines to be reasonable . . . . The court shall then tax attorneys’ fees, which the court determines to be reasonable, to be paid by the losing party; provided that this amount shall not exceed twenty-five per cent of the judgment.

* * * *

The above fees provided for by this section shall be assessed on the amount of the judgment exclusive of costs and all attorneys’ fees obtained by the plaintiff, and upon the amount sued for if the defendant obtains judgment.

Haw. Rev. Stat. § 607-14 (emphasis added).

There are certain key points regarding this statute about which each client should be made aware, including the following:

1. Plaintiff’s recovery of attorneys fees is capped at twenty five percent (25%) of the judgment awarded. Thus, for example, if the plaintiff is awarded a judgment of $100,000, the plaintiff’s recovery is capped at 25% of $100,000 or $25,000.

2. The defendant’s recovery is capped at 25% of the damages unsuccessfully sought by plaintiff. Thus, for example, if the plaintiff seeks $100,000, the defendant’s potential award is capped at $25,000.

3. If the plaintiff doesn’t specify the amount that he is seeking and it is impossible for the Court to determine the damages sought by the plaintiff, the prevailing defendant may be awarded all of its reasonable attorneys fees. Thus, the plaintiff is highly encouraged to specify early in the case the damages that plaintiff is seeking to ensure that if the plaintiff is unsuccessful, the attorneys fees award is capped.

4. The Hawaii Supreme Court has held that the attorneys fees award under HRS § 607-14 is not discretionary. The Court must award attorneys fees to the prevailing party.

5. The statute only applies to cases concerning “assumpsit” damages. The Hawaii Supreme court has defined an “assumpsit” case as a claim “for the recovery of damages for the non performance of a contract . . . as well as quasi contractual obligations.” Schulz v. Honsador, Inc. 67 Haw. 433 (1984). Although this law only applies to matters of “assumpsit,” it has been applied to various types of litigation including breach of contract, breach of fiduciary duty, and legal malpractice so long as they concern (i) an attempt to recover damages and (ii) a contractual arrangement.

Unfortunately, Hawaii does not have a similar attorneys fee provision in personal injury cases. Moreover, although HRS § 607-14 is not the only Hawaii law that allows for the recovery of attorneys fees. Therefore, when analyzing a case, a Hawaii attorney should also explore other theories that may allow the recovery of attorneys fees. Those theories will be discussed in subsequent entries of this blog.

In part two of this blog, we will discuss recent decisions by the Hawaii Intermediate Court of Appeals and the Hawaii Supreme Court which have clarified when HRS § 607-14 applies to quasi contractual obligations.

Part three of this blog will address the case of Kona Village Realty, Inc. v. Sunstone Realty Partners, XIV, LLC, 121 Hawai’i 110, 214 P.3d 1100 (Hawai‘i App. 2009), in which the Intermediate Court of Appeals clarified the collections of attorneys fees in arbitrations, which was affirmed by the Hawaii Supreme Court.

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