Thomas Capital Investments v. Fidelity National Title and Escrow of Hawaii

NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
21-AUG-2024
08:33 AM
Dkt. 80 SO

NO. CAAP-XX-XXXXXXX

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAIʻI

THOMAS CAPITAL INVESTMENTS, a Hawaiʻi Limited Partnership,
RANDALL CURTIS MARTIN WHITNEY, and JILL VIRGINIA RUTH WORSLEY,
Plaintiffs-Appellants, v.
FIDELITY NATIONAL TITLE AND ESCROW OF HAWAII, INC.,
a Hawaiʻi Corporation, Defendant-Appellee.

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CASE NO. 1CC181001194)

SUMMARY DISPOSITION ORDER
(By: Hiraoka, Presiding Judge, Wadsworth and McCullen, JJ.)

Plaintiffs-Appellants Randall Curtis Martin Whitney

and Jill Virginia Ruth Worsley (together, Sellers) and Thomas

Capital Investments (TCI) appeal from the Circuit Court of the

First Circuit's 1 October 1, 2020 Final Judgment entered in

favor of Defendant-Appellee Fidelity National Title and Escrow

of Hawaii, Inc.

1 The Honorable Dean E. Ochiai presided.
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In this appeal, we must determine if the circuit

court erred in granting summary judgment in favor of Fidelity

on claims of (1) breach of contract and (2) tortious

interference with a contractual relationship (TICR). This

inquiry turns on whether the Escrow Agreement required

Fidelity upon resignation to return the buyer's money. It

did. It also turns on whether Fidelity tortiously interfered

with Sellers' contract with a third party, Takao Miyahara. It

didn't.

Upon careful review of the record and the briefs

submitted by the parties and having given due consideration to

the issues raised and the arguments advanced, we resolve this

appeal as discussed below, and affirm.

As relevant to the facts of this case, Hawai‘i law

requires withholding tax from the sale of real property in

Hawai‘i unless the transferor is a Hawai‘i resident. Hawai‘i

Revised Statutes (HRS) § 235-68 (2017, Supp. 2019).

Based on the uncontroverted evidence proffered by

the parties, Sellers (residents of California) entered into a

Purchase Contract with Miyahara (a citizen of Japan) to sell

their apartment, Unit 2102 at 1350 Ala Moana Boulevard, for

$1,195,000.00 to Miyahara.

Two days before closing, Miyahara deposited the

necessary funds into the Fidelity escrow account. That same

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day, Sellers executed a Seller Information Sheet identifying

TCI (a Hawai‘i limited partnership) 2 and Worsley as the

sellers.

However, TCI was not a party to the Purchase

Contract, TCI did not sign the Purchase Contract, and TCI was

not referenced in the Purchase Contract.

Moreover, Miyahara did not agree to a conveyance

from TCI, the Purchase Contract did not require Miyahara to

accept a conveyance from TCI, and Miyahara declined to execute

a proposed amendment allowing conveyance from TCI.

Nonetheless, Sellers demanded that the transaction

be closed without Miyahara's express permission, beyond the

applicable contractual deadlines. Sellers failed and refused

to timely tender full performance under the terms of the

Purchase Contract and Escrow Agreement.

Because the parties could not agree, and it appeared

Sellers were attempting to circumvent the tax withholding

requirement under HRS § 235-68, Fidelity notified the parties

it intended to resign in 15 days, cancel escrow, and return

Miyahara's funds.

The apartment was later sold to another party for

$10,000.00 less. In this later transaction, the purchase

contract provided for transfer of title from TCI.

2 TCI conveyed title to Sellers as tenants in common in late 2009 and
"Whitney and Worsley were officers of the corporate general partner of TCI."

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TCI and Sellers then filed the underlying complaint

against Fidelity for (1) breach of contract and (2) TICR. 3

Fidelity moved for summary judgment, which the circuit court

granted. TCI and Sellers timely appealed.

(1) Breach of Contract. As to the breach of

contract claim, TCI and Sellers acknowledge Fidelity could

resign, but assert Fidelity could not return the money to

Miyahara because the money belonged to TCI. TCI and Sellers

rely on the statutory definition of escrow, and argue the money

belonged to TCI because the "conveyance from [Sellers] to TCI

and then from TCI to Miyahara is merely an indirect conveyance

from [Sellers] to Miyahara which is the equivalent of a direct

conveyance from [Sellers] to Miyahara." (Formatting altered.)

TCI and Sellers thus conclude the circuit court erred because

Fidelity should not have returned the funds to Miyahara.

We review the grant of summary judgment, and the

construction of a statute or contract de novo. U.S. Bank N.A.

v. Mattos, 140 Hawaiʻi 26, 30, 398 P.3d 615, 619 (2017)

(reviewing the granting of summary judgment de novo); Castro v.

Melchor, 142 Hawai‘i 1, 11, 414 P.3d 53, 63 (2018) (noting

3 TCI and Sellers also claimed negligent infliction of emotional
distress but do not raise this as an issue on appeal.

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statutory construction is reviewed de novo); Kahawaiolaa v.

Hawaiian Sun Invs., Inc., 146 Hawai‘i 424, 432, 463 P.3d 1081,

1089 (2020) (reviewing construction of contract as question of

law); see Clarabal v. Dep't of Educ., 145 Hawai‘i 69, 79, 446

P.3d 986, 996 (2019) (noting questions of law reviewed de novo).

The contract purportedly breached was the Escrow

Agreement, to which TCI was not a party. See Calipjo v. Purdy,

144 Hawai‘i 266, 273, 439 P.3d 218, 225 (2019) (explaining the

first element for a breach of contract claim is existence of a

contract). Because TCI failed to prove it had a contract with

Fidelity, summary judgment on its breach of contract claim was

proper.

Turning to Sellers' claim that Fidelity breached the

Escrow Agreement, the definition of escrow under Hawai‘i law

requires a transaction affecting title to real property be made

in accordance with the terms of the agreement between the

parties:

"Escrow" means any transaction affecting the title to
real property . . . in which a person not a party to the
transaction and neither having nor acquiring any interest
in the title receives from one party to the transaction,
holds until the happening of an event or performance of a
condition and then delivers to another party to the
transaction, any money or other consideration or any
instrument affecting the title to that real property, all
in accordance with the terms of the agreement between the
parties to the transaction.

HRS § 449-1 (2013) (emphases added).

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The parties to the transaction were Sellers and

Miyahara, not TCI. Sellers point to no term in the Purchase

Contract obligating Miyahara to accept conveyance of the

apartment from TCI, which is what Sellers demanded occur. When

Sellers failed to convey title to the apartment according to the

terms of the Purchase Contract, Fidelity opted to resign.

Resignation was permissible under Paragraph 8 of the

Escrow Agreement, which also required Fidelity to return funds

to the party who deposited them: "Escrow Holder has the right

to resign upon fifteen (15) days written notice delivered to the

principals herein. If such right is exercised, all funds and

documents shall be returned to the party who deposited them and

Escrow Holder shall have no liability hereunder."

After opting to resign, Fidelity returned the funds to

Miyahara. By returning the funds to Miyahara, Fidelity complied

with the express terms of Paragraph 8 of the Escrow Agreement.

Thus, the circuit court did not err in granting

summary judgment on Sellers' breach of contract claim because

Fidelity showed there were no genuine issues as to whether it

breached the Escrow Agreement by returning the money to

Miyahara, and it was entitled to judgment as a matter of law.

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(2) Tortious Interference with a Contractual

Relationship. Next, TCI and Sellers contend, among other

things, that Fidelity induced Miyahara to refuse indirect

conveyance through TCI.

For a TICR claim, a plaintiff must prove the following

elements:

(1) a contract between the plaintiff and a third party;
(2) the defendant's knowledge of the contract; (3) the
defendant's intentional inducement of the third party to
breach the contract; (4) the absence of justification on
the defendant's part; (5) subsequent breach of the contract
by the third party; and (6) damages to the plaintiff.

Alii Sec. Sys., Inc. v. Pro. Sec. Consultants, 139 Hawai‘i 1, 8-

9, 383 P.3d 104, 111-12 (App. 2016) (emphasis added and

formatting altered) (citing Meridian Mortg., Inc. v. First

Hawaiian Bank, 109 Hawai‘i 35, 45, 122 P.3d 1133, 1143 (App.

2005)). If TCI and Sellers fail to prove any one element, their

TICR claim fails. See generally, Garner v. State Dept. of

Educ., 122 Hawai‘i 150, 166, 223 P.3d 215, 231 (App. 2009)

(noting because requirements of intervention were stated in the

conjunctive it was necessary to meet all of them).

TCI cannot maintain a TICR claim because it was never

a party to the Purchase Contract, and it never had a contract

with Miyahara.

Turning to Sellers' TICR claim, the e-mail they rely

on does not demonstrate that Fidelity induced Miyahara to breach

the Purchase Contract.

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In its motion for summary judgment, Fidelity asserted

Sellers' complaint failed "to make any factual allegations that

[it] intentionally induced Miyahara to breach the Purchase

Contract."

To show inducement, Sellers pointed to the following

Fidelity escrow officer's May 5, 2017 e-mail:

Hi, all. I was informed that the seller found another
escrow company to handle the sale transaction. Please send
us a [sic] cancellation instructions by May 13 if the
seller & the buyer agree to transfer this sale to other
escrow company. Then, I will be able to release the docs
and funds to the other escrow company. Please note that
TIR was already done and I will transfer the invoice to the
escrow company too. If I don't receive the mutually agreed
cancellation instructions by 5/13, all funds are returned
to the depositor (the buyer).

Sellers argued before the circuit court (as they do on appeal)

that this e-mail shows inducement because Miyahara would be

unlikely to continue with the transaction if he would get his

money back.

The May 5, 2017 e-mail cannot be reasonably construed

as inducing Miyahara to breach the Purchase Contract. In that

e-mail, Fidelity simply asked the parties to send over

cancellation instructions if they found another escrow company.

By then, Sellers had already refused to convey title according

to the terms of the Purchase Contract. The May 13, 2017

deadline the escrow officer set was the day Fidelity's

resignation would take effect, following its notification to the

parties 15 days prior, on April 28, 2017, that it was resigning.

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Fidelity was thus required under the Escrow Agreement to return

the funds to Miyahara on May 13, 2017 anyway.

By failing to present evidence that Fidelity

intentionally induced Miyahara to breach the Purchase Contract,

Sellers failed to make a showing sufficient to establish the

existence of the third element for their tortious interference

with contractual rights claim. See Saplan v. U.S. Bank Nat'l

Ass'n, as Tr. for BAFC 2007-A, 154 Hawai‘i 181, 187, 549 P.3d

266, 272 (2024) (explaining "summary judgment is proper when the

non-moving party-plaintiff fails to make a showing sufficient to

establish the existence of an element essential to that party's

case, and on which that party will bear the burden of proof at

trial") (citation and internal quotation marks omitted).

Accordingly, the circuit court did not err in granting

summary judgment on Sellers' tortious interference with

contractual rights claim.

Based on the foregoing, we affirm the circuit court's

October 1, 2020 Final Judgment.

Additionally, IT IS ORDERED that the appellate clerk

shall mail a copy of this summary disposition order to:

(1) Eric Lee Niemeyer at his mailing address on record with the

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Hawaii State Bar Association; and (2) Ashford & Wriston at the

address listed on Appellee's answering brief. 4

DATED: Honolulu, Hawai‘i, August 21, 2024.

On the briefs: /s/ Keith K. Hiraoka
Presiding Judge
Walter R. Schoettle,
for Plaintiffs-Appellants. /s/ Clyde J. Wadsworth
Associate Judge
Wayne Nasser,
(Ashford & Wriston), /s/ Sonja M.P. McCullen
for Defendant-Appellee. Associate Judge

4 Attorney Walter R. Schoettle (Schoettle) represented TCI and the
Sellers. Pursuant to Hawaiʻi Rules of Evidence Rule 201, we take judicial
notice of Case No. SCAD-XX-XXXXXXX, noting Schoettle passed away in 2021, and
that attorney Eric Lee Niemeyer was appointed trustee over Schoettle's legal
practice.

Attorney Wayne Nasser (Nasser) of Ashford & Wriston, a Hawai‘i Limited
Liability Law Partnership LLP, filed the answering brief for Fidelity. We
take judicial notice that the Hawaii State Bar Association lists Nasser as
deceased. Rules of the Supreme Court Rule 2.20(b)(1) allows the Office of
Disciplinary Counsel to appoint a trustee when "a subject attorney does not
have a partner as defined by Rule 1.0(g) of the Hawai‘i Rules of Professional
Conduct." Although it appears Nasser had a partner, no other attorney has
entered an appearance for Fidelity.

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