Lopresti v. Haseko

NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
16-SEP-2024
09:13 AM
Dkt. 552 MO

NO. CAAP-XX-XXXXXXX

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI‘I

MATTHEW LOPRESTI, JULIA LOPRESTI, ROBERT JOHNSON, REGENA
JOHNSON, KYLE MCKEE, MARITES MCKEE, EMIL GOCONG, LIZ GOCONG,
KENNETH TYLER, on Behalf of Themselves and All Others Similarly
Situated, Plaintiffs-Appellees/Cross-Appellants,
v.
HASEKO (HAWAII), INC.; HASEKO (EWA), INC.; HASEKO DEVELOPMENT,
INC.; HASEKO HOMES, INC.; HASEKO INVESTMENTS, INC.; HASEKO
REALTY (HAWAII), INC.; HOAKALEI; HOAKALEI CORPORATION; HOAKALEI
DEVELOPMENT, LLC; HOAKALEI RESIDENTIAL, LLC,
Defendants-Appellants/Cross-Appellees,
and
DOE DEFENDANTS 1-10, Defendants

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CASE NO. 1CC131001995)

MEMORANDUM OPINION
(By: Wadsworth, Presiding Judge, McCullen and Guidry, JJ.)

Defendants-Appellants/Cross-Appellees Haseko (Hawaii),

Inc., Haseko (Ewa), Inc., Haseko Development, Inc., Haseko
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Homes, Inc., Haseko Investments, Inc., Haseko Realty (Hawaii),

Inc., Hoakalei Corporation, Hoakalei Development, LLC, and

Hoakalei Residential, LLC1 appeal from the Final Judgment

(Judgment), entered on September 27, 2019, by the Circuit Court

of the First Circuit (circuit court). Haseko also challenges

the circuit court's January 29, 2018 Findings of Fact (FOF),

Conclusions of Law (COL), and Order Regarding Counts 1 and 9

(Equitable Trial Court Order).2

Plaintiffs-Appellees/Cross-Appellants Matthew

Lopresti, Julia Lopresti, Robert Johnson, Regena Johnson, Kyle

McKee, Marites McKee, Emil Gocong, Liz Gocong, and Kenneth Tyler

(collectively Plaintiffs) cross-appeal from the Judgment.

Plaintiffs also challenge the circuit court's:

(1) October 18, 2016 Order Regarding Plaintiffs'

Motion for (1) Entry of the Order Granting

Defendants Haseko (Hawaii), Inc., Haseko (Ewa),

1 We refer to these nine Haseko entities collectively as Haseko.
Of these nine entities, as further explained below, the following four were
found by the jury to have engaged in unfair or deceptive acts or practices
(UDAP) under Hawaii Revised Statutes (HRS) § 480-2: Haseko (Hawaii), Inc.,
Haseko (Ewa), Inc., Haseko Development, Inc., and Haseko Realty (Hawaii),
Inc. We refer to these four entities collectively as the Haseko Defendants
or Defendants.

2 The Honorable Karen T. Nakasone (the Equitable Trial Court)
presided over Plaintiffs' equitable claims, and entered the Equitable Trial
Court Order. The Honorable Gary W.B. Chang (the Legal Trial Court) presided
over Plaintiffs' legal claims and entered the Judgment, as well as the orders
referred to below as the Legal Trial Court Order and the Order Denying New
Legal Trial.

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Inc., Haseko Development, Inc., Haseko Homes,

Inc., Haseko Investments, Inc., Haseko Realty

(Hawaii), Inc., Hoakalei Corporation, Hoakalei

Development, LLC, and Hoakalei Residential, LLC's

Renewed Motion for Judgment as a Matter of law,

Filed October 8, 2015 and in the Alternative

Clarification Regarding the Same; and (2) Entry

on Class Plaintiffs' Motion for New Trial on

Damages or, in the Alternative, to Reconsider

Decision Granting Defendants' Motion for Judgment

as a Matter of Law Filed October 9, 2015, Filed

September 29, 2016 (Legal Trial Court Order);

(2) February 2, 2017 Order Denying "Class Plaintiffs'

Motion for New Trial on Damages, or in the

Alternative, to Reconsider Decision Granting

Defendants' Renewed Motion for Judgment as a

Matter of Law Filed October 9, 2015" Filed on

February 26, 2016 (Order Denying New Legal

Trial); and

(3) the Equitable Trial Court Order.

Haseko raises nine points of error on appeal;

Plaintiffs raise five points of error on cross-appeal. Upon

careful review of the record and relevant legal authorities, and

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having given due consideration to the arguments advanced and the

issues raised by the parties, we resolve these points of error

as follows.

I. Background

This appeal concerns a large multi-purpose real estate

project in the ʻEwa District of Oʻahu (the Project), which had

included, as part of its original master plan, the construction

of a man-made marina (the Marina). Haseko was the Project's

developer. After years of representing that the Marina would be

constructed as the "focal point" and "main benefit" of the

Project, Haseko, in July 2011, abandoned the Marina as too

expensive to construct, and decided to construct a lagoon

instead.

In July 2013, nearly 3,000 Project homeowners filed a

class action complaint, seeking damages from Haseko for changing

the master plan of the Project by substituting the Marina for a

lagoon. Plaintiffs set forth nine claims in their operative

First Amended Complaint. Two claims were dismissed before

trial.3 The remaining claims were addressed through bifurcated

judicial proceedings.

3 In August 2015, the Legal Trial Court also granted judgment as a
matter of law "as to all class members that were not the original purchasers
of homes in Ocean Pointe/Hoakalei[,]" thus limiting the class to the original
purchasers of property within the Haseko development.

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The Legal Trial Court presided over a nine-week jury

trial on Plaintiffs' UDAP, Bad Faith, and Negligent

Misrepresentation claims. In September 2015, the jury returned

a special verdict in favor of Plaintiffs on the UDAP claim only,

finding that the Haseko defendants had engaged in UDAP

violations under HRS § 480-2. The jury awarded Plaintiffs

$1,300 per home in special damages, and $20 million in punitive

damages.

The Legal Trial Court set aside both the jury's

punitive and special damages awards. With respect to special

damages, the Legal Trial Court explained that, "the measure of

damage was inappropriate and was not consistent with applicable

legal principles that govern the determination of damages in an

unfair and deceptive claim practice case."

The Legal Trial Court then recused itself from the

Plaintiffs' remaining Condominium Property Act (CPA), Promissory

Estoppel, Estoppel, and Unjust Enrichment claims. In November

2015, these claims were reassigned to the Equitable Trial Court,

pursuant to Hawaiʻi Rules of Civil Procedure (HRCP) Rule 63.

In September 2016, the Equitable Trial Court dismissed

Plaintiffs' estoppel claims. The Equitable Trial Court ruled in

favor of Plaintiffs on the CPA claim, by granting Plaintiffs the

right to rescind their purchase agreement with Haseko. The

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Equitable Trial Court also ruled in favor of Plaintiffs on the

unjust enrichment claim, awarding a sum of $20 million to be

divided among Plaintiffs who elected not to rescind.

The Legal Trial Court entered Judgment, and the

parties timely appealed.

II. Standards of Review

We review questions of law and conclusions of law de

novo under the right/wrong standard. Hawaiʻi Gov't Emps. Ass'n,

AFSCME Local 152, AFL-CIO v. Lingle, 124 Hawaiʻi 197, 202,

239 P.3d 1, 6 (2010). We review findings of fact for clear

error. Dan v. State, 76 Hawaiʻi 423, 428, 879 P.2d 528, 533

(1994).

We review the application of equity for abuse of

discretion. In re Est. of Campbell, 106 Hawaiʻi 453, 461, 106

P.3d 1096, 1104 (2005).

III. Discussion

A. Plaintiffs' Damages Remedy for the UDAP Violation

Following trial, the Legal Trial Court jury found that

the Haseko Defendants violated the UDAP statute. Pursuant to

HRS § 480-2, "[u]nfair methods of competition and unfair or

deceptive acts or practices in the conduct of any trade or

commerce are unlawful." To prevail on a UDAP claim, a plaintiff

consumer must prove "(1) either that the defendant violated the
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UDAP statute (or that its actions are deemed to violate the UDAP

statute by another statute), (2) that the consumer was injured

as a result of the violation, and (3) the amount of damages

sustained as a result of the UDAP violation." Lima v. Deutsche

Bank Nat'l Tr. Co., 149 Hawaiʻi 457, 464-65, 494 P.3d 1190, 1197-

98 (2021) (citations omitted).

In cases involving fraud or deceit, the measure of

damages "is usually confined to either the out-of-pocket loss or

the benefit of the bargain." Zanakis–Pico v. Cutter Dodge,

Inc., 98 Hawaiʻi 309, 320, 47 P.3d 1222, 1233 (2002) (cleaned

up). Under the out-of-pocket rule, "the damages are the

difference between the actual value of the property received and

the price paid for the property, along with any special damages

naturally and proximately caused by the fraud prior to its

discovery, including expenses incurred in mitigating the

damages." Lima, 149 Hawaiʻi at 469, 494 P.3d at 1202 (cleaned

up). In contrast, the benefit-of-the-bargain rule "allows the

[recipient of the fraud or deceit] to recover the difference

between the value of the property received and the value to

plaintiff that the property would have had if the representation

had been true." Santiago v. Tanaka, 137 Hawaiʻi 137, 159, 366

P.3d 612, 634 (2016) (quoting B.F. Goodrich Co. v. Mesabi Tire

Co., 430 N.W.2d 180, 182 (Minn. 1988)).
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Plaintiffs raise five points of error on cross-appeal,

contending that the Legal Trial Court erred in: (1) instructing

the jury on the proper measure of damages for a UDAP violation;

(2) granting judgment in favor of the Haseko Defendants when

instead it should have ordered a new trial on damages; (3)

denying Plaintiffs relief based on HRS § 480-12, despite the

jury's finding that the Haseko Defendants breached HRS Chapter

480; (4) refusing "Plaintiffs' Proposed Jury Instruction 21,"

and later finding that Plaintiffs introduced no evidence that

they suffered monetary damages; and (5) allowing evidence of a

subsequent increase in property values, including the testimony

of Haseko's appraisal expert James Hallstrom (Hallstrom).

We address each of these points, some of which raise

overlapping issues, below.

1. Jury Instructions Regarding the Measure of Damages

In their first and fourth points of error, Plaintiffs

contend, respectively, that the Legal Trial Court improperly

instructed the jury on the measure of special damages and erred

in refusing "Plaintiffs' Proposed Jury Instruction 21."

At trial, the Legal Trial Court instructed the jury on

the measure of damages for a UDAP violation as follows (the UDAP

damages instructions):

If you find that plaintiffs have prevailed against a
defendant on the claim of unfair or deceptive acts or
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practices, you must decide the amount that will reasonably
and fairly compensate plaintiffs for the actual economic
loss legally caused by the unfair or deceptive acts or
practices.

In determining the amount of special damages, if any,
to award plaintiffs, you may consider whether plaintiffs
are entitled to the benefit of the bargain they believed
they purchased, contracted for, or invested in. The
benefit of the bargain is the difference, if any, between
the value of the personal investment represented to
plaintiffs, and the value of such personal investment
received by plaintiffs. You may award plaintiffs special
damages only if the value of what was received is less than
the value of what was represented.

In awarding damages, if any, for unfair or deceptive
acts or practices, you must not include any amount:

1. For non-economic losses, such as emotional
distress; or

2. To punish or make an example of a defendant by
awarding punitive damages; or

3. For legal fees or costs of this lawsuit.

The Legal Trial Court further instructed the jury: "Damages are

established at the time of the sale, and those damages are not

later reduced by a subsequent beneficial event."4

The jury returned a special verdict in which it found

that the four Haseko Defendants violated the UDAP statute. The

jury awarded Plaintiffs $1,300 per home in special damages, and

$20 million in punitive damages.5

4 Notably, in their closing, Plaintiffs argued to the jury that
Hallstrom's testimony was "100 percent worthless[,]" because "you have a jury
instruction that says you measure the damages at the time of sale."

5 Plaintiffs confirm in their Cross-Appeal Opening Brief that they
do not challenge the Legal Trial Court's decision to set aside the jury's
punitive damages award.

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Plaintiffs argue that the UDAP damages instructions

"failed to properly instruct the [j]ury on how to properly

determine and calculate damages via the [t]hree [s]tep process

mandated by Davis [v. Wholesale Motors, Inc., 86 Hawaiʻi 405, 949

P.2d 1026, (App. 1997)]." In Davis, a plaintiff consumer sued a

car dealer for damages caused by the dealer's unfair and

deceptive trade practice in selling a car to him. This court

decided that under HRS § 480-13, "the plaintiff should be placed

in the position he or she would have held had he or she not been

defrauded[,]" but should not be permitted to reap a benefit

received from the defendant dealer under the parties' contract.

Id. at 421, 949 P.2d at 1042. We thus upheld an award of

damages to the defendant dealer on its counterclaim – which we

referred to as a "setoff award" – for the rental value of the

car and repair costs for damage done to the car while the

plaintiff possessed it. Id. We further held that any damages

sustained by the plaintiff should be trebled under HRS § 480-

13(b)(1) before the award to the defendant was applied. Id.

Based on Davis, Plaintiffs contend that "the legally

correct standard for measure of damages in this case should have

been to take the value reflected in each sales contract, treble

that number as required by the statute, and then any offset

applied against the trebled number." Plaintiffs argue that

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"[t]he value of the residence received . . . may serve as an

offset to the [damages] to be trebled first per Davis . . . ."

Plaintiffs appear to challenge the UDAP damages instructions for

failing to reflect their interpretation of this "three-step

process."

Initially, we note that the court's UDAP damages

instructions essentially track Hawaiʻi Civil Jury Instructions

(HCJI) 19.6, 19.7, and 19.8, though the order of Instruction

Nos. 19.7 and 19.8 is reversed. In particular, HCJI Instruction

No. 19.86 sets out the benefit-of-the-bargain rule for measuring

UDAP damages, consistent with the rulings in Ellis, Zanakis-

Pico, and Santiago, supra. This is the measure of damages that

Plaintiffs appeared to advocate in trial memoranda submitted to

the Legal Trial Court. Indeed, on September 1, 2015, Plaintiffs

filed their own proposed jury instructions based on HCJI

Instructions 19.6, 19.7, and 19.8, in the same order as the

6 HCJI Instruction No. 19.8 states:

DAMAGES – BENEFIT OF THE BARGAIN

In determining the amount, if any, to award
plaintiff(s), you may consider whether plaintiff(s) is/are
entitled to the benefit of the bargain he/she/they believed
he/she/they purchased, contracted for, or invested in. The
benefit of the bargain is the difference, if any, between
the value of the goods, services, or investment represented
to plaintiff(s), and the value of such goods, services, or
investment delivered to plaintiff(s).

(Footnote omitted.)

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court later adopted. Although the court modified certain

phrases in HCJI Instruction No. 19.8 to fit the facts of the

case, and added an explanatory sentence, Plaintiffs do not

challenge any of these minor modifications.7 Rather, they fault

the court for not giving a Davis-based instruction that they

themselves did not propose, and which they do not specify on

appeal.

At bottom, Plaintiffs fundamentally misread Hawaiʻi

law, including Davis, on the measure of UDAP damages in cases

involving fraud or deceit. Plaintiffs were required to prove

that they sustained damages as a result of Haseko's fraud-based

UDAP violation. To the extent they relied on the benefit-of-

the-bargain measure, they were required to establish the

difference, if any, between the value of the personal investment

represented to plaintiffs, i.e., the value of their homes as

represented with the promised marina, and the value of what they

received, which was essentially the promise of a home without a

marina, measured at the time of the purchase/sale. See Ellis,

7 As to HCJI Instruction No. 19.8, the court replaced the phrase
"goods, services, or investment" with the phrase "personal investment[,]" and
replaced the phrase "delivered to plaintiff(s)" with "received by
plaintiffs[,]" consistent with the facts of the case. The court also added
the explanatory sentence, "You may award plaintiffs special damages only if
the value of what was received is less than the value of what was
represented[,]" which follows as a matter of logic from the benefit-of-the-
bargain measure set out in the preceding sentence.

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51 Haw. at 53, 451 P.2d at 820 (measuring fraud damages at the

time of the transaction). Plaintiffs established the value of

their homes as represented based on the purchase prices they

paid. See infra. We address the evidence presented on the

value of what Plaintiffs received in section 2, below. For

purposes of the UDAP damages instructions, however, the value of

what Plaintiffs received, measured at the time of purchase, is

not a set-off to their benefit-of-the-bargain damages; it is the

subtrahend in the calculation of their damages. Trebling the

prices paid for the homes without subtracting the value received

by Plaintiffs would result in an unjust windfall to Plaintiffs

that finds no support in Davis.

Plaintiffs also argue that the Legal Trial Court erred

in refusing "Plaintiffs' Proposed Jury Instruction 21." They do

not quote the proposed instruction or identify where it is in

the voluminous record. See Hawaiʻi Rules of Appellate Procedure

(HRAP) Rule 28(b)(4). Plaintiffs drop a brief footnote to their

point of error suggesting that the proposed instruction was

based on the Restatement (Second) of Torts § 549 (Am. L. Inst.

1965), but do not otherwise present any argument as to how the

court erred in declining to adopt the proposed instruction.

Their point is thus deemed waived. See HRAP Rule 28(b)(7). In

any event, the UDAP damages instructions given by the court

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adequately covered the principles derived from the applicable

statute and case law.8 On this record, we cannot conclude that

"when read and considered as a whole, the [UDAP damages]

instructions given [were] prejudicially insufficient, erroneous,

inconsistent, or misleading." Moyle v. Y & Y Hyup Shin, Corp.,

118 Hawaiʻi 385, 391, 191 P.3d 1062, 1068 (2008) (cleaned up).

2. Evidence Supporting Plaintiffs' Damages

In their second point of error, Plaintiffs contend

that the Legal Trial Court erred in granting judgment in favor

of the Haseko Defendants rather than ordering a new trial on

damages. Relatedly, in their fourth point of error, Plaintiffs

contend in part that the Legal Trial Court erred in finding that

Plaintiffs introduced no evidence of their damages.

On October 28, 2015, the Legal Trial Court set aside

the jury's damages award, stating with regard to special damages

that "the court does not know what the jury intended to do by

8 Plaintiffs' footnote suggests that the proposed instruction
included an out-of-pocket measure of damages. They do not explain, however,
why they could not have argued for an award of such damages based on the
court's jury instruction to "decide the amount that will reasonably and
fairly compensate plaintiffs for the actual economic loss legally caused by
the unfair or deceptive acts or practices." Moreover, Plaintiffs do not
explain how damages based on an out-of-pocket measure would have differed
from those based on a benefit-of-the-bargain measure under the facts of this
case. Here, by definition, the price paid for the homes (for purposes of the
out-of-pocket measure) was the value of the homes as represented (for
purposes of the benefit-of-the-bargain measure), and the value of what was
received was the same (for purposes of both measures).

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way of their award, but in looking at how the evidence was

structured, the only evidence the court really focussed [sic] on

in terms of proof of compensatory damages was this contention

that the damages should be measured by the cost of constructing

the marina."9 Ultimately, the Legal Trial Court determined that

there was insufficient evidence of Plaintiffs' damages to

support the jury's verdict. The Legal Trial Court granted the

Haseko Defendants' motion to set aside the verdict, and entered

judgment on the UDAP claim in favor of the Haseko Defendants.

We conclude that the Legal Trial Court erred in

setting aside the jury verdict and entering judgment in favor of

the Haseko Defendants on Plaintiffs' UDAP claim, which was

contrary to the jury's ultimate determination that the Haseko

9 The court elaborated:

. . . So the court does not conclude that a cost analysis
would be an appropriate measure of damage.

The alternative theory, which was actually the
primary theory of the plaintiff, is that the plaintiff's
benefit of the bargain damages takes the form of the cost
to construct the marina in the case at bar. . . .

. . . And when the case law talks about benefit of the
bargain, the law contemplates that the wrongful conduct in
question affected the value of the property, and if plaintiffs
suffered a harm, that the value of the property would decrease
after the wrongful conduct. Therefore, the measure of damage is
expressed in terms of the difference between the value of the
property as represented with a marina, minus the value of the
property that was actually received with lagoon. So it requires
evidence of the value of these properties, the plaintiffs'
properties with a marina minus the value with a lagoon. And
there was simply no such evidence in the record.

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Defendants violated the UDAP statute. Plaintiffs presented

sufficient evidence for the jury to award them UDAP damages

based on a benefit-of-the-bargain measure. First, Plaintiffs

presented evidence of the value of their homes as represented

with the proposed marina based on the purchase prices they paid,

as reflected in their sales contracts. Second, Plaintiffs

presented evidence of the value of what they received at or near

the time of purchase. Specifically, Plaintiffs showed at trial

that Haseko spent approximately $60 million on Marina

construction from 2008 to 2010.10 Lawrence Chang, Haseko's

controller, confirmed that this $60-million expenditure "came

from homeowners for the marina and the cost was allocated into

. . . each home[.]" Plaintiffs thus presented evidence

sufficient to show that revenue from each home sale –

approximately $20,000 per home ($60 million/3,000 Plaintiffs) –

was allocated to cover the costs of building the Marina. This

evidence supported Plaintiffs' argument that they overpaid for

10 Relatedly, the Equitable Trial Court's later FOFs and COLs were
based in part on the court's review of "the trial record of the 2015 jury
trial[.]" The Haseko Defendants do not dispute the court's finding in FOF 22
that: "From 2008 to 2010, Haseko spent approximately $60 million on Marina
construction, dredging and lining the basin with armor stone. These $60
million in Marina costs were allocated into every home that was sold. At the
time the $60 million was spent on Marina construction, from 2008 to 2010,
Haseko intended to complete the Marina." Unchallenged findings of fact are
binding on appeal. Okada Trucking Co. v. Bd. of Water Supply, 97 Hawaiʻi 450,
458, 40 P.3d 73, 81 (2002).

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their homes by approximately $20,000 per home, i.e., that the

value of what they received at the time of purchase was $20,000

less than the purchase price. Plaintiffs were not required to

prove their UDAP damages with scientific precision; reasonable

certainty was sufficient. See Lima, 149 Hawaiʻi at 467, 494 P.3d

at 1200. Although the jury was free to reject all or any part

of the evidence Plaintiffs presented on their damages – and it

appears the jury rejected much of it – the evidence was

sufficient to support a UDAP damages award based on a benefit-

of-the-bargain measure. The Legal Trial Court erred in

concluding otherwise.

In setting aside the jury's damages award, the Legal

Trial Court also appears to have imposed an incorrect legal

standard on Plaintiffs. Specifically, the court ruled that

Plaintiffs had failed to show "the difference between the value

of the property as represented with a marina, minus the value of

the property that was actually received with lagoon." (Emphasis

added.) The proper measure of benefit-of-the-bargain damages,

however, was the difference between the value of Plaintiffs'

homes as represented with a marina, and the value of what they

received at the time of the purchase (which, again, was

essentially the promise of a house without a marina). See

Ellis, 51 Haw. at 53, 451 P.2d at 820.

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Accordingly, the Legal Trial Court erred in setting

aside the jury verdict and entering judgment in favor of the

Haseko Defendants on Plaintiffs' UDAP claim.

3. Rescission

In their third point of error, Plaintiffs contend that

the Legal Trial Court erred in denying relief to Plaintiffs

pursuant to HRS § 480-12, and "simply should have voided the

sales contracts following HRS [§] 480-12's plain mandate that

contracts entered into on the basis of UDAP violations are

simply void."

The plain language of HRS § 480-12 states that "[a]ny

contract or agreement in violation of this chapter is void and

is not enforceable at law or in equity." On this basis, "a

transaction that includes an unfair or deceptive business

practice is typically null and subject to rescission." Sakal v.

Ass'n of Apartment Owners of Hawaiian Monarch, 148 Hawaiʻi 1, 8

n.11, 466 P.3d 399, 406 n.11 (2020).

Here, the record reflects that the Plaintiffs

contracted with only one of the nine Haseko entities - Hoakalei

Residential, LLC – when they purchased homes. Neither the Legal

Trial Court jury, nor the Equitable Trial Court, found that

Hoakalei Residential, LLC was liable for violating HRS § 480-12.

Notably, the Legal Trial Court jury further found, in its

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special verdict, that none of the nine Haseko entities acted as

the alter ego of any other Haseko entity. Plaintiffs have not

advanced any cognizable legal theory permitting the rescission

of sales contracts that were entered into with a party that was

not found liable for a UDAP violation.

The Legal Trial Court did not err in concluding that

Plaintiffs are not entitled to elect the rescission of their

home sales contracts pursuant to HRS § 480-12.

4. Evidence of Subsequent Increases in Property Values

Plaintiffs contend that the Legal Trial Court erred in

allowing evidence, including Hallstrom's testimony, regarding "a

subsequent increase in property values[,]" i.e., subsequent to

the home sales at issue. Plaintiffs argue that Hallstrom's

testimony conflicts with Hawaiʻi law that fraud damages are

measured "at the time of the misrepresentation."11 (Emphasis

omitted.)

Initially, we note that Plaintiffs do not quote the

specific evidence and testimony that they challenge or otherwise

identify where it is in the voluminous record. See HRAP

Rule 28(b)(4). In any event, Plaintiffs' broad-brush argument

11 More precisely, in fraud or deceit cases, damages are measured at
the time of the transaction. See Ellis, 51 Haw. at 53, 451 P.2d at 820.

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challenging Hallstrom's testimony fails to show his testimony

was inadmissible.

Hallstrom essentially testified, based on the studies

he conducted, that property values in the Haseko development did

not drop when Haseko announced in late 2011 that a lagoon rather

than a marina would be built. Although this testimony did not

relate directly to the measure of Plaintiffs' damages at the

time of their home purchases,12 it was at least relevant to

whether Plaintiffs were injured as a result of Haseko's alleged

misrepresentations that a marina would be built, or alleged

failure to disclose that it would not be built. Relevant

evidence is "evidence having any tendency to make the existence

of any fact that is of consequence to the determination of the

action more probable or less probable than it would be without

the evidence." Hawaii Rules of Evidence Rule 401. Evidence

that home prices did not drop in the Haseko development when

Haseko announced that a lagoon rather than a marina would be

built, tended to show – or at least Haseko was free to argue

that such evidence tended to show – that the announced switch

had no effect on the market prices of those homes. Such

12 Indeed, Plaintiffs argued to the jury in closing that Hallstrom's
testimony was "100 percent worthless, [because] you have a jury instruction
that says you measure the damages at the time of the sale."

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evidence would, in turn, demonstrate that the prices of those

homes were not artificially inflated by the false promises of a

marina, and that Plaintiffs therefore suffered no loss as a

result of the false promises. Indeed, if prices had dropped (or

had not kept pace with increasing values of comparable

properties) after the announcement, Plaintiffs would have been

able to present such evidence in support of their argument that

the false promises caused their loss.13 Because Hallstrom's

testimony was relevant to an issue "of consequence to the

determination of the action," i.e., whether Plaintiffs were

injured as a result of the alleged UDAP violation, the Legal

Trial Court did not err in admitting the evidence.

5. Summary

For the reasons discussed above, the Legal Trial Court

did not err in instructing the jury on the measure of damages

for a UDAP violation, in not ordering rescission of Plaintiffs'

sales contracts based on HRS § 480-12, and in allowing

13 In a somewhat related context, class action plaintiffs in
securities fraud cases frequently point to the price drop of a stock after
bad corporate news is announced as evidence that the failure to disclose
relevant facts months or even years earlier, when the facts first became
known, artificially inflated the price of the stock, and that the eventual
price drop is evidence of "loss causation," i.e., "that the defendant's
deceptive conduct caused [the plaintiff investors'] claimed economic loss."
In re Tesla, Inc. Sec. Litig., Case No. 18-cv-04865-EMC, 2022 WL 7374936, at
*7 (N.D. Cal. Oct. 13, 2022) (quoting Lloyd v. CVB Fin. Corp., 811 F.3d 1200,
1209 (9th Cir. 2016), and citing numerous other Ninth Circuit "fraud-on-the
market" cases).

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Hallstrom's testimony. The Legal Trial Court did err in setting

aside the jury verdict, and entering judgment in favor of the

Haseko Defendants, on Plaintiffs' UDAP claim. On remand, the

jury's special damages award of $1,300 per home should be

reinstated and trebled pursuant to HRS § 480-13(b)(1) and (3),

and Plaintiffs should be permitted to seek all additional relief

available under these provisions.

B. Plaintiffs' Equitable Remedies

Haseko raises nine points of error on appeal, which

fall into two categories. First, Haseko contends that the

Equitable Trial Court erred in allowing Plaintiffs to rescind

their sales contracts under the CPA because: (1) the court's

rescission order was based on an erroneous finding that "[t]his

lawsuit concerns a marina that was included in the original

master plan for a 1,100-acre condominium regime . . . ." ; (2)

Plaintiffs were bound by their election to seek damages rather

than rescission; and (3) Plaintiffs' rescission claim was time-

barred pursuant to HRS § 514B-94(b). Second, Haseko contends

that the Equitable Trial Court erred in awarding $20 million on

Plaintiffs' unjust enrichment claim because: (1) the award was

based on the same erroneous finding quoted above; (2) as no

Plaintiff can rescind, none can claim an unjust enrichment

award; (3) Plaintiffs had an adequate remedy at law; (4) the

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Hawaiʻi Legislature did not provide an unjust enrichment remedy

for a UDAP violation; (5) the evidence did not support the Legal

Trial Court's conclusion that any enrichment was unjust; and (6)

Haseko's decision to switch to a lagoon caused Haseko to incur a

net loss, and thus did not enrich it.

1. Rescission Under the CPA

We conclude that Plaintiffs' claims for rescission

under the CPA are time-barred because HRS § 514B-94(b), which

governs claims brought under the CPA, is a statute of repose and

not a statute of limitations. We thus need not address Haseko's

remaining contentions challenging the Equitable Trial Court's

rescission order.

"A statute of repose 'bar[s] any suit that is brought

after a specified time since the defendant acted (such as by

designing or manufacturing a product), even if this period ends

before the plaintiff has suffered a resulting injury.'" Zyda v.

Four Seasons Hotels and Resorts, 371 F. Supp. 3d 803, 806 (D.

Haw. 2019) (quoting Black's Law Dictionary 1546 (9th ed. 2009).

HRS § 514B-94(b) states, in pertinent part, that "no action

shall be brought for the recovery of the purchase price after

two years from the date of the sale[.]" This language

definitively specifies the time for bringing a CPA action as

calculated "from the date of the sale." We find persuasive the

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District Court for the District of Hawaiʻi's analysis in Zyda

that the language in HRS § 514B-94(b) is similar, albeit not

identical, to the language in HRS §§ 657-5 and 657-7.3, which

the Hawaiʻi appellate courts have recognized as statutes of

repose. Id. at 806-10.

Here, Plaintiffs filed their complaint on July 17,

2013, which was more than two years after all of the named class

action Plaintiffs who owned condominiums within the Project

purchased their units. Plaintiffs' claim for rescission under

the CPA is time-barred pursuant to HRS § 514B-94(b).

2. Unjust Enrichment

a. Finding of Fact 2

Haseko contends that FOF 2 erroneously states: "This

lawsuit concerns a marina that was included in the master plan

for a 1,100-acre condominium regime . . . ." Haseko asserts

that "[t]he project is not a condominium property regime[,]" but

does not present any discernible argument explaining how FOF 2

affects, let alone undermines, the Equitable Trial Court's

unjust enrichment award. This point is therefore deemed waived.

See HRAP Rule 28(b)(7).

b. No Rescission, No Unjust Enrichment

Haseko contends that "because no homeowner may now

rescind, no homeowner may claim the unjust enrichment award."

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This argument depends on Haseko's cramped and

inaccurate reading of the Equitable Trial Court Order. The

relevant portion states: "[F]or any Class member who does not

elect [rescission and] restitution of the full purchase price

plus interest as set forth above, i.e. Class members who wish to

continue living within the Ocean Pointe/Hoakalei, they are

awarded the remedy of unjust enrichment in the amount of their

pro rata share of $20,000,000." Thus, if a class member cannot

elect rescission because it is not legally available in these

circumstances, nothing in the Order prevents that class member

or any other class member who wishes to continue living within

Ocean Pointe/Hoakalei, from sharing in the Equitable Trial

Court's unjust enrichment award. Haseko's argument is without

merit.

c. Adequacy of Legal Remedy

Haseko contends that Plaintiffs were not entitled to

the equitable remedy of restitution on their unjust enrichment

claim because they had adequate legal remedies for their breach

of contract and UDAP claims.

"As to the question of when an equitable remedy may be

invoked, this court observes the principle, long-invoked in the

federal courts, that equity has always acted only when legal

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remedies were inadequate." Porter v. Hu, 116 Hawaiʻi 42, 55,

169 P.3d 994, 1007 (App. 2007) (cleaned up).

Here, Plaintiffs did not contract with any of the four

Haseko Defendants found liable for a UDAP violation. The only

contracts Plaintiffs had were with Hoakalei Residential, LLC.

Plaintiffs thus had no breach of contract remedy, or contract-

based UDAP remedy, against the Haseko Defendants.14 The

Equitable Trial Court did not err or otherwise abuse its

discretion in determining that "[n]o contracts exist between the

Haseko Defendants and Plaintiffs to bar relief through unjust

enrichment[,]" and that Plaintiffs' breach of contract remedies

were inadequate as to the Haseko Defendants. See id. at 56, 169

P.3d at 1008 ("the circuit court . . . imposed an equitable

remedy upon determining that the contract remedies available did

not adequately address Defendants' unjust enrichment (a matter

within the circuit court's discretion)").

Plaintiffs also lacked an adequate tort remedy. In

Porter, this court ruled:

Although the jury returned a verdict in [Plaintiffs'] favor
and awarded tort damages, Plaintiffs contend the jury's
award was insufficient to adequately compensate their
losses as a result of Defendants' wrongful conduct. This
court agrees with Plaintiffs and concludes that the mere

14 Relatedly, because Plaintiffs did not contract with any of the
Haseko Defendants, none of those defendants are shielded by the rule that
when an express contract exists between the parties concerning the same
subject matter, equitable remedies are not available. Porter, 116 Hawaiʻi at
54, 169 P.3d at 1006.
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availability of some figure of tort damages does not by
itself preclude an award founded on unjust enrichment. As
Palmer notes in his treatise on restitution, "[t]he
objectives of the two remedies are different, however: in
the damage action the plaintiff seeks to recover for the
harm done to him, whereas in the restitution action he
seeks to recover the gain acquired by the defendant through
the wrongful act." 1 George E. Palmer, The Law of
Restitution § 2.1, at 51 (1978). Although the tort and
unjust enrichment claims are, in a sense, founded on the
same wrongful conduct—the deprivation of Plaintiffs' books
of business by Defendants—the remedies sought are
sufficiently distinct, in this court's view, to exclude
this case from the realm of "double recovery" situations.

We conclude, in light of the foregoing, the circuit court
did not abuse its discretion in ruling that no adequate
remedy at law existed and the equitable remedy of unjust
enrichment was therefore appropriate.

Id. (emphases added).

Similarly, here, the jury returned a verdict in

Plaintiffs' favor and awarded tort-based UDAP damages, but

Plaintiffs contend that the jury's award did not provide an

adequate remedy. Based on the Equitable Trial Court's

unchallenged FOFs, we agree that the jury's verdict was

insufficient to adequately compensate Plaintiffs for their

losses – and the Haseko Defendants' unjust gains – as a result

of the Defendants' wrongful conduct. The Equitable Trial Court

determined that Plaintiffs "have shown the absence of an

adequate remedy at law[,]" based on the Legal Trial Court's

decision to set aside the jury's award of damages for "deceptive

UDAP conduct." However, the court also noted that the jury's

factual findings of wrongdoing by the Haseko Defendants were not

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set aside, and recounted the details of that wrongdoing in the

court's own FOFs, none of which (except for FOFs 2 and 55) the

Haseko Defendants contest on appeal. The uncontested FOFs

support the conclusion that the jury's award of $1,300 per home

did not provide an adequate remedy, where Plaintiffs established

that the Haseko Defendants were unjustly enriched by their

wrongful conduct. As in Porter, "[a]lthough the [UDAP] and

unjust enrichment claims are, in a sense, founded on the same

wrongful conduct[,] . . . the remedies sought are sufficiently

distinct . . . to exclude this case from the realm of 'double

recovery' situations." Id.; see also id. at 58-59, 169 P.3d at

1010-11 ("the damages alleged to have resulted from the tort are

different in type and character from those arising under the

equitable principle of unjust enrichment."). Accordingly,

Plaintiffs established that they lacked an adequate remedy at

law, and the equitable remedy of unjust enrichment was therefore

appropriate.

d. Equitable Remedies Not Provided by the Legislature

Haseko contends that the legislature has provided

several remedies under the UDAP statute, but did not choose to

allow monetary damages based on unjust enrichment. Haseko

argues that the Equitable Trial Court therefore "had no

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authority to add equitable remedies not allowed by the

Legislature."

Contrary to Haseko's contention, nothing in the

statutory language or history of HRS §§ 480–2 and –13 expresses

a legislative intent to make statutory remedies exclusive or to

otherwise preclude an unjust enrichment claim and related remedy

in appropriate circumstances. Cf. E. Star Inc., S.A. v. Union

Bldg. Materials Corp., 6 Haw. App. 125, 142, 712 P.2d 1148, 1159

(1985) (HRS §§ 480–2 and –13(a)(1) "do not supersede common law

fraud claims based on deception in the course of trade and

commerce").

e. Evidence of Unjust Enrichment

Haseko contends in its last two points of error that

the switch from marina to lagoon did not enrich Haseko, the

amount of the $20 million unjust enrichment award was clearly

erroneous, and any enrichment to Haseko was not unjust.

We note once again that the Haseko Defendants do not

contest, except for FOFs 2 and 55, the numerous, detailed FOFs

underlying the Equitable Trial Court's decision to award $20

million in restitution on Plaintiffs' unjust enrichment claim.

Moreover, upon review, the record contains substantial evidence

supporting FOF 55 and the Equitable Trial Court's mixed

conclusion of fact and law that the Haseko Defendants were

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unjustly enriched in the amount of $20 million. This finding

and conclusion is not clearly erroneous, and in the

circumstances of this case, the Equitable Trial Court did not

abuse its discretion in awarding that amount in restitution to

Plaintiffs.

IV. Conclusion

For the reasons discussed above, we vacate the

Judgment, and we affirm in part and vacate in part the Legal

Trial Court Order, Equitable Trial Court Order, and Order

Denying New Legal Trial. We remand for further proceedings

consistent with this memorandum opinion.

DATED: Honolulu, Hawaiʻi, September 16, 2024.

On the briefs: /s/ Clyde J. Wadsworth
Presiding Judge
Steven K.S. Chung,
for Defendants-Appellants/ /s/ Sonja M.P. McCullen
Cross-Appellees. Associate Judge

Terrance M. Revere, /s/ Kimberly T. Guidry
P. Kyle Smith, Associate Judge
for Plaintiffs-Appellees/
Cross-Appellants.

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