Redemption Bible College v. International Pentecostal Holiness Church

NOT FOR PUBLICATION IN WEST'S HAWAI‘I REPORTS AND PACIFIC REPORTER

QNO. 28839
IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAfI

REDEMPTI0N B1BLE c0LLEGE, plaintiff-Appe11ad§

€I=9 H§ BZHé?5NZ

and §§
HIS HIGHEST PRAISE PENTECOSTAL HOLINESS CHURCHES, INC.,
a dissolved HawaFi non-profit corporation;
and PHILLIP ELLSWORTH, PAMELA YUEN and
CHRISTOPHER YUEN, in their capacity as Trustees,
Plaintiffs-Appellees,

VS.

THE INTERNATIONAL PENTECOSTAL HOLINESS CHURCH,
an Oklahoma Corporation; and RONALD W. CARPENTER, SR.,
Defendants~Appellees,

and

JANE DOES 1-10; DOE CORPORATIONS 1-lO;
DOE PARTNERSHIPS 1-10; DOE LIMITED LIABILITY PARTNERSHIPS 1-l0;
DOE LIMITED LIABILITY COMPANIES; and
DOE UNICORPORATED ENTITIES 1-lO,
Defendants.

JoHN DoEs 1-10;

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CIVIL NO. 07-1-0825)

SUMMARY DISPOSITION ORDER
(By: Nakamura, Chief Judge, Foley, and Fujise, JJ.)

Plaintiff~Appellant Redemption Bible College (RBC)
2007, "Judgment for Possession as to

(Judgment for Possession) filed in

appeals from the October 11,

349/355 N. Kaina1u, Kai1ua"
the Circuit Court of the First Circuit (circuit court)F in favor

of Defendant-Appellee The International Pentecostal Holiness
Church (IPHC). The circuit court issued the Judgment for

Possession pursuant to its concurrently filed "Order Granting

y The Honorable Judge Victoria S. Marks presided.

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[IPHC's] Motion for Partial Summary Judgment Filed August l3,
2007" (Partial Summary Judgment Order) and certified the Judgment
for Possession pursuant to HawaFi Rules of Civil Procedure
(HRCP) Rule 54(b) (2000).

This case involves a dispute over whether RBC would be
permitted to continue operating a school on property held in the
name of IPHC. RBC contends that oral assurances given in 1978 by
an IPHC official to Adrian Yuen, who became and at all times
relevant to this case was the President of RBC, that a school
could be operated on IPHC's property for as long as the school
desired, constituted a lease that entitled RBC to maintain its
school on the property, IPHC contends that the oral assurances
given in 1978 constituted a license to use the property that was
terminated through notice of termination provided in February
2007,

On May 8, 2007, RBC and Plaintiffs His Highest Praise
Pentecostal Holiness Churches, Inc., a dissolved Hawafi non-
profit corporation, and Phillip Ellsworth, Pamala Yuen, and
Christoper Yuen, in their capacities as Trustees, (collectively,
Plaintiffs) filed a complaint against IPHC and Roland W.
Carpenter, Sr., (collectively, Defendants) for fraud and
misrepresentation, damages to RBC, injunctive relief, a
declaratory judgment, and punitive damages. The complaint
involved two parcels of property, one located at 349/355 N.
Kainalu Drive (349/355 Property) and the other located at 361 N.
Kainalu Drive (36l Property). Defendants answered the complaint
and IPHC asserted a counterclaim against Plaintiffs for
ejectment, declaratory relief, breach of fiduciary duties, and
trespass to realty.

On August 13, 2007, IPHC moved for partial summary
judgment, seeking an order granting summary judgment on its
ejectment counterclaim for possession in favor of IPHC and
against RBC as to the 349/355 Property (Partial Summary Judgment
Motion). On October 1l, 2007, the circuit court issued its
Partial Summary Judgment Order. The circuit court determined

NOT FOR PUBLICATION IN WEST'S HAWAI‘I REPORTS AND PACIFIC REPORTER

that "[t]he unwritten understanding between IPHC and RBC, which
had permitted RBC to occupy [the 349/355 Property], was a license
and not a lease." The circuit court granted IPHC's Motion for
Partial Summary Judgment as to all claims related to the 349/355
Property, and it ruled that IPHC was entitled to recover
possession of, and to a writ of possession for, the 349/355
Property effective as of January l, 2008. The circuit court
stated that its Partial Summary Judgment Order resolved the
second claim in RBC's complaint, which sought damages for IPHC's
interference with RBC's enjoyment under its alleged "oral lease"
for the 349/355 Property and damage to RBC's business, and Count
ll of IPHC's counterclaim, which sought a declaration that there
is no valid lease between IPHC and RBC. The circuit court ruled
that "[t]he other claims and counterclaims, to the extent not
inconsistent with this order, remain pending."
I. g

On appeal, RBC asserts that the circuit court erred in
granting IPHC's Partial Summary Judgment Motion and in issuing
its Judgment for Possession as to the 349/355 Property. RBC
argues that:

1. The verbal agreement between IPHC and RBCW was
enforceable despite the Statute of Frauds, Hawaii Revised
Statutes (HRS) § 656-1 (l993), because a) the agreement could
have been performed within one year; b) the agreement was partly
performed; and c) equitable estoppel applied.

2. The failure to record the oral "lease" on the
transfer certificates of title for the 349/355 Property did not
violate HRS § 501-121 (2006) because the "lease" could have
terminated in less than one year.

3. The verbal agreement between IPHC and RBC was a

lease, not a license.

3/ In its opening brief, RBC refers to the "verbal agreement between
IPHC and The Good Shepard School, now known as [RBC] dba Redemption Academy."

3

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i4. ,IPHC could not unilaterally terminate them
agreement between IPHC and RBC.
5. There were genuine issues of material fact that
precluded summary judgment,
6. IPHC was not entitled to a Judgment of Possession.
We conclude that the dispositive issue in this appeal
is whether the oral understanding between IPHC and RBCF was a
license or a lease, Because we agree with the circuit court that
the oral understanding was a license and not a lease, we affirm
the Judgment for Possession and the Partial Summary Judgment
Order;
II.
_ When viewed in the light most favorable to RBC, the
pertinent facts are as follows.
IPHC acquired title to the 349/355 Property in 1968.
In 1977, Leon Stewart (Stewart), who was then the Director of
Evangelism and Assistant Superintendent of IPHC, recruited Adrian
Yuen to be a pastor for The Good Shepherd Pentecostal Holiness
Church and to establish and operate a Christian school on IPHC's
property. At that time, IPHC had title to the 349/355 Property
and had agreed to purchase the 361 Property by way of an
agreement of sale. However, the 361 Property was being leased to
Hawaii Care Center. Thus, in l978, when Adrian Yuen became the
Senior Pastor for The Good Shepard Pentecostal Holiness Church,
only the 349/355 Property was available for the proposed school.
The interim pastor, James Valentin (Valentin), informed
Adrian Yuen that The Good Shepard Pentecostal Holiness Church did
not have money to fund the school and that Adrian Yuen would have
to find funding elsewhere. Valentin and Stewart assured Adrian
Yuen that the school could remain on the 349/355 Property for as

long as the school wanted to be there. Adrian Yuen began

9 As discussed infra, the oral understanding was between Leon Stewart,
a representative of IPHC, and Adrian Yuen, who later became the President of
RBC. For purposes of simplicity, we will at times refer to the oral
understanding as being between IPHC and RBC.

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NOT FOR PUBLICATION IN WEST'S HAWAI‘I REPORTS AND PACIFIC REPORTER

developing plans for a school, and he discussed his plans with A.
Joel Criz (Criz), a realtor and member of The Good Shepard
Pentecostal Holiness Church, who expressed interest in providing
funds for construction of the school.

Stewart assured Adrian Yuen and Criz that the school
would be permitted to operate on the 349/355 Property and on the
361 Property, when the 361 Property became available, until the
school chose to cease using the premises. In return, Criz
donated funds and oversaw the construction of a school on the
349/355 Property at a cost of over $200,000. The school, which
was named The Good Shepherd School, began operations in l978,
Before the school was built, there was already a church sanctuary
building, a church office, and a parsonage on the 349/355
Property; The school did not have exclusive use of the 349/355
Property, but shared the property with the IPHC's The Good
Shepard Pentecostal Holiness Church, which used the sanctuary for
Sunday service.

In 1983, the school changed its name to Redemption
Academy, and Adrian Yuen established RBC to operate the school.
Prior to the lawsuit underlying this case, RBC and The Good
Shepard School did not pay any rent to IPHC for the use of the
349/355 Property. In about July 2005, Adrian Yuen withdrew from
the IPHC denomination. Thereafter, IPHC and RBC attempted to
negotiate a written lease, but were unable to reach an agreement.
Effective February 28, 2007, IPHC terminated its oral agreement
with RBC.

The 349/355 Property is covered by two Land Court
Certificates of Title. Both certificates show title in IPHC and
no interest in RBC.

III.
A.

"We review the circuit courtFs grant or denial of
summary judgment de novo." Querubin v. Thronas, 107 Hawai'i 48,
56, 109 P.3d 689, 697 (2005) (internal quotation marks omitted).

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Summary judgment is appropriate if the pleadings,
depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the
moving party is entitled to judgment as a matter of law. A
fact is material if proof of that fact would have the effect
of establishing or refuting one of the essential elements of
a cause of action or defense asserted by the parties. The
evidence must be viewed in the light most favorable to the
non-moving party. ln other words, we must view all of the
evidence and the inferences drawn therefrom in the light
most favorable to the party opposing the motion.

lQ4 (internal quotation marks and brackets omitted).
B.

RBC argues that the circuit court erred in concluding
that the oral understanding between lPHC and RBC was merely a
license, and not a lease. We disagree.

ln Kiehm v. Adams, 109 HawaiH.296, 126 P.3d 339
(2005), the HawaiH_Supreme Court identified three key factors

for determining whether an agreement is a license or a lease:

(l) Most importantly, does the grantee have the right
to occupy a distinct and separate part of the premises
(i.e., a definite parcel)? Bush |v. Watson|, 81 HawaiH
[474,] 486, 918 P.2d [ll30,] 1142 [(l996)] (Citing 49
Am.Jur.2d Landlord and Tenant § 1161); Ka iolani Park
Preservation Societv v. Citv and CountV of Honolulu], 69
Haw. [569,] 579, 751 P.2d [1022,] 1029 [(1988)]; §§§ also 49
Am.Jur.2d Landlord and Tenant § 21 ("Exclusive possession of
the leased premises is essential to the character of a lease
. . . There must be a conveyance of a definite space in
order for a lease, rather, than a license, to exist; both
the extension and the location of the space within the

lessor's premises must be specified."); Harkins v. Win
CO;Q., 771 A.2d 1025, 1027 (D.C. 2001) (eSSential

distinction between roomers and tenants is whether the
occupant has exclusive possession or control of the
premises);

(2) ls the grantee‘s right to possession assignable
(suggesting a lease) or is it a personal privilege
(suggesting a license)? Kapiolani, 69 Haw. at 579, 751 P.2d
at 1029; see also 49 Am.Jur.2d § 21 (same); and

(3) ls the agreement for a fixed term (suggesting a
lease)? Kapiolani, 69 Haw. at 579, 751 P.2d at 1029; §§§
also McCandless v. John li Estate, 11 Haw. 777, 788-89
(l899) (same); 49 Am.Jur.2d § 21 (same).

ld. at 303, 126 P.3d at 346.
Applying these factors, we conclude that under the
circumstances of this case, the oral understanding between IPHC

and RBC, as a matter of law, was a license and not a lease.

\

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First, the record shows that RBC did not have exclusive
possession of the 349/355 Property, Adrian Yuen admitted in his
declaration that the church sanctuary building, the church
office, and a parsonage were already on the 349/355 Property in
1978, when Adrian Yuen became the Senior Pastor of the Good
Shepard Church. He further acknowledged that The Good Shepard
Pentecostal Holiness Church used the sanctuary on the 349/355
Property for Sunday service. Thus, the first factor supports the
conclusion that RBC only had a license to use the 349/355
Property.

[A] licensor does not cede exclusive possession or transfer
her interest, but instead shares possession. §gg American
Jewish.Theater v. Roundabout Theatre Co., lnc., 203 A.D.2d
155, 610 N.Y.S.Zd 256, 257 (lst Dept.l994) ("The nature of
the transfer of absolute control and possession is what
differentiates a lease from a license or any other
arrangement dealing with property rights."); Roberts v. Lynn
lce Co., 187 Mass. 402, 73 N.E. 523, 524 (l905) (question of
whether an agreement concerning use of real property is a
lease or a license depends on whether the agreement cedes
exclusive possession from one party to the other). §§§
generally 49 Am.Jur.2d § 21 (discussing distinction between
lease and license).

lQ4 at 303 n.18, 126 P.3d at 346 n.l8.

Second, RBC has no basis to claim that it had a right
to possession of the 349/355 Property that was assignable. There
was no written agreement and thus no written assignment clause.
ln addition, RBC does not allege that any oral assurances Adrian
Yuen received from Stewart regarding the use of the 349/355
Property included a promise that Adrian Yuen could assign any
right regarding the use of the property to another. Contrary to
RBC's claim, the fact that IPHC allowed RBC to continue to
operate the school on the 349/355 Property after the school
changed its name and RBC was incorporated does not show that the
oral understanding created a right to possession that was
assignable. lnstead, lPHC's allowing RBC to continue operating
the school on the 349/355 Property is fully consistent with the
conclusion that the original oral understanding established a
permissive license to use the property that IPHC chose to extend
to RBC.

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Third, RBC concedes that no fixed term was established
in the oral understanding. See Francone v. McClav, 41 Haw. 72,
78 (1955) (describing the essential elements for an enforceable
lease as "definite agreement as to the name of the parties to the
lease, the extent and bounds of the property leased, a definite
and agreed term, a definite and agreed price or rental, and the
time and manner of payment").

The 1978 oral understanding between Stewart and Adrian
Yuen only created a license to use the 349/355 Property. This
license was subject to termination or revocation by lPHC. §gg
Kiehm, 109 Hawai‘i at 304, 126 P.3d at 347. There is no dispute
that in February of 2007, IPHC gave RBC written notice that RBC's
authorization to use the 349/355 Property was terminated. lPHC
thus terminated RBC's license to use the 349/355 Property. We
conclude that the circuit court was correct in granting IPHC's
Partial Summary Judgment Motion as to all claims related to the
349/355 Property and in issuing the Judgment for Possession.

C.

Our determination that RBC only had a license to use
the 349/355 Property that was terminated by IPHC renders it
unnecessary for us to address the remaining arguments raised by
RBC in this appeal.

` IV.

For the foregoing reasons, we affirm the circuit
court's Judgment for Possession and its Partial Summary Judgment
Order, which were both filed on October 11, 2007.

DATED; Honolulu, Hawai‘i, April 28, 2010.

On the briefs: z , 7/

Burt L. Snyder Chi f Judge »
for Plaintiff-Appellant

z-

Philip J. Leas Associate Judge

Taya R . Naruse z
Marion L. Reyes-Burke ’
for Defendant-Appellee Associate Judg