Cavalier Construction Inc. v. Rice

NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS OR THE PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
28-JUN-2024
04:27 PM
Dkt. 52 SO

NO. CAAP-XX-XXXXXXX

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI#I

CAVALIER CONSTRUCTION, INC., Lienor-Appellant, v.
DENNIS PATRICK RICE and DEANN MONIQUE RICE, Respondents-Appellees

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(M.L. NO. 1ML191000025)

SUMMARY DISPOSITION ORDER
(By: Leonard, Acting, C.J., and Wadsworth and McCullen, JJ.)

Lienor-Appellant Cavalier Construction, Inc. (Cavalier)
appeals from the July 29, 2020 Final Judgment, entered in favor
of Respondents-Appellees Dennis Patrick Rice and Deann Monique
Rice (together, the Rices) and against Cavalier by the Circuit
Court of the First Circuit (Circuit Court). Cavalier also
challenges the Circuit Court's: (1) June 13, 2019 "Order
Granting [the Rices'] Motion for Summary Judgment as to
[Cavalier's] March 20, 2019 Application for Mechanic's and
Materialman's Lien [(Lien Application)]" (MSJ Order); (2) April
17, 2020 "Order Granting in Part and Denying in Part [the Rices']
Motion for Attorneys' Fees and Costs" (Fees Order); and (3) July
29, 2020 "Order Granting in Part and Denying in Part [the Rices']
Supplemental Non-Hearing Motion for Attorneys' Fees"
(Supplemental Fees Order).1/

1/
The Honorable James C. McWhinnie entered the MSJ Order. The
Honorable Lisa W. Cataldo entered the Fees Order, the Supplemental Fees Order,
and the Judgment.
NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS OR THE PACIFIC REPORTER

On appeal, Cavalier contends that the Circuit Court
erred in: (1) granting the Rices' May 13, 2019 motion for
summary judgment (MSJ), where there were genuine issues of
material fact; and (2) granting in part the Rices' August 30,
2019 motion for attorneys' fees and costs (Fees Motion) and their
May 14, 2020 supplemental motion for attorneys' fees and costs
(Supplemental Fees Motion), where Cavalier's claim was not
frivolous.
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
Cavalier's contentions as follows.
(1) Cavalier contends that the Circuit Court erred in
granting the MSJ, where there were "multiple genuine issues of
material fact regarding (1) the actions of [the Rices] in
refusing or failing to sign the written Construction Agreement
and the Hawaii Contractor's Right to Repair Act disclosures
provided to them; (2) whether there was an implied contract and
if such implied contract is sufficient for [Cavalier] to be
entitled to the [subject l]ien; (3) whether the necessary
disclosures were provided, and [the Rices] as consumers were
given due notice of the terms and obligations of the agreement;
[and] (4) whether [Cavalier] substantially complied with [Hawaii
Revised Statutes (HRS) § 444-25.52/] by providing [the Rices] with

2/
HRS § 444-25.5 (2013) states:
Disclosure; contracts. (a) Prior to entering into a
contract with a homeowner, or at the time a homeowner signs
a contract, involving home construction or improvements,
licensed contractors shall:

(1) Explain verbally in detail to the homeowner all
lien rights of all parties performing under the
contract, including the homeowner, the
contractor, any subcontractor, or any
materialman supplying commodities or labor on
the project;
(2) Explain verbally in detail the homeowner's
option to demand bonding on the project, how the
bond would protect the homeowner, and the
approximate expense of the bond; and

(3) Disclose all information pertaining to the
contract and its performance and any other
(continued...)

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the required disclosures and agreement . . . ."
When a contractor fails to comply with the statutory
requirements of HRS § 444–25.5, the contractor is barred from
obtaining a mechanic's lien pursuant to HRS § 507-42.3/ See 808
Development, LLC v. Murakami, 111 Hawai#i 349, 356, 359, 141 P.3d
996, 1003, 1006 (2006) (holding that the statutory provisions of
HRS § 444–25.5 are mandatory, and a contractor who fails to
provide required disclosures to a homeowner before entering into
a construction contract is not entitled to a mechanic's lien upon
the property); Hiraga v. Baldonado, 96 Hawai#i 365, 373, 31 P.3d

2/
(...continued)
relevant information that the board may require
by rule.

(b) All licensed contractors performing home
construction or improvements shall provide a written
contract to the homeowner. The written contract shall:

(1) Contain the information provided in subsection
(a) and any other relevant information that the
board may require by rule;

(2) Contain notice of the contractor's right to
resolve alleged construction defects prior to
commencing any litigation in accordance with
section 672E-11;

(3) Be signed by the contractor and the homeowner;
and

(4) Be executed prior to the performance of any home
construction or improvement.

(c) For the purpose of this section, "homeowner"
means the owner or lessee of residential real property,
including owners or lessees of condominium or cooperative
units, notwithstanding owner-builder status.
(d) Any violation of this section shall be deemed an
unfair or deceptive practice and shall be subject to
provisions of chapter 480, as well as the provisions of this
chapter.
3/
HRS § 507–42 (2018) provides, in pertinent part:
When allowed; lessees, etc. Any person or association
of persons furnishing labor or material in the improvement
of real property shall have a lien upon the improvement as
well as upon the interest of the owner of the improvement in
the real property upon which the same is situated, or for
the benefit of which the same was constructed, for the price
agreed to be paid (if the price does not exceed the value of
the labor and materials), or if the price exceeds the value
thereof or if no price is agreed upon by the contracting
parties, for the fair and reasonable value of all labor and
materials covered by their contract, express or implied.

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222, 230 (App. 2001) (holding that "together, HRS §§ 480–124/ and
507–42 preclude the imposition of a HRS § 507–42 lien upon the
homeowner's property by any contractor who failed to comply with
the requirements of HRS § 444–25.5" (footnote added)).
Here, it is undisputed that the parties did not execute
a written contract, as required by HRS § 444–25.5(b). Cavalier
argues, based on a declaration and exhibits submitted below in
opposition to the MSJ, that Cavalier delivered a written
construction agreement and a disclosure of lien rights to the
Rices, but they refused or failed to sign the written documents.
Assuming this is true for purposes of the MSJ, there was still no
genuine issue of material fact that the parties did not execute a
written contract that met the requirements of HRS § 444–25.5(b).
As a matter of law, Cavalier "ha[d] no basis for, and [was] not
permitted to assert, a HRS § 507–42 lien upon [the Rices']
property." Hiraga, 96 Hawai#i at 373, 31 P.3d at 230; see 808
Development, 111 Hawai#i at 357, 141 P.3d at 1004.
Cavalier contends there are at least genuine issues as
to whether it substantially complied with HRS § 444-25.5 by
providing the Rices with the construction agreement and
disclosures, and as to whether an implied contract existed
between the parties. The asserted facts, however, are not
material to whether Cavalier had a legal basis to assert a
mechanic's lien against the Rices' property.5/ The supreme court
made clear in 808 Development that the statutory provisions of
HRS § 444–25.5 are mandatory rather than directory, without
exception. 111 Hawai#i at 359, 141 P.3d at 1006; see id. at 361,
141 P.3d at 1008 ("[W]e decline to create an exception to the
clear statutory requirements of HRS § 444–25.5 and, instead,
adhere to a bright-line standard that provides clear guidance to
owners and contractors alike."). Where the contractor fails to
comply with the requirements of HRS § 444–25.5, the parties'

4/
HRS § 480–12 (2008) states: "Contracts void. Any contract or
agreement in violation of this chapter is void and is not enforceable at law
or in equity."
5/
In any event, delivery of the construction agreement and
disclosures, which Cavalier and the Rices did not sign, does not constitute
substantial compliance with the requirements of HRS § 444-25.5(b).

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contract is void under HRS § 444–25.5(d) and HRS §§ 480-2(a) and
480-12. See id. at 356-57, 141 P.3d at 1003-04. The contractor
cannot assert a contract-based mechanic's lien against the
property and is left to pursue its claims in quantum meruit. See
id. at 361, 141 P.3d at 1008; Hiraga, 96 Hawai#i at 372, 31 P.3d
at 229. Accordingly, the Circuit Court did not err in granting
the Rices' MSJ.
(2) Cavalier contends that the Circuit Court abused its
discretion in granting in part the Rices' Fees Motion and
Supplemental Fees Motion, because Cavalier's claim was not
frivolous pursuant to HRS § 607-14.5.
Under HRS § 607-14.5 (2016), the circuit court may
assess reasonable attorneys' fees and costs against a party in
"[a] civil action . . . where a party seeks money damages or
injunctive relief, or both, against another party . . . upon a
specific finding that all or a portion of the party's claim or
defense was frivolous . . . ." HRS § 607-14.5(a). A trial
court's conclusion as to whether a claim was made in bad faith
and thus frivolous under HRS § 607-14.5 presents mixed questions
of fact and law, and is subject to review for clear error. See
Coll v. McCarthy, 72 Haw. 20, 28, 804 P.2d 881, 886 (1991). We
review a lower court's award of attorneys' fees for abuse of
discretion. In re Trust Agreement Dated June 6, 1974, 145
Hawai#i 300, 309, 452 P.3d 297, 306 (2019).
In the Fees Order, the Circuit Court awarded the Rices
$9,536.15 for attorneys' fees and costs pursuant to HRS § 607-
14.5, based on the following findings:

In awarding these fees and costs, . . . the Court has
determined that (1) [Cavalier's Lien Application] was
frivolous and not reasonably supported by the facts and the
law as it did not meet the minimum statutory requirements
set forth in HRS § 444-25.5; and (2) in an April 26, 2019
letter, prior to filing their successful [MSJ] as to
[Cavalier's Lien Application, the Rices] advised [Cavalier]
of its failure to meet these minimum statutory requirements
and requested that [Cavalier] dismiss the [Lien Application]
with prejudice, which [Cavalier] refused to do.

In the Supplemental Fees Order, the Circuit Court
awarded the Rices $2,854.97 for attorneys' fees incurred in
responding to Cavalier's January 31, 2020 motion for

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reconsideration of the Fees Order and in drafting the Rices'
Supplemental Fees Motion. Although the Supplemental Fees Order
does not state the statutory basis for awarding the requested
additional fees, the Supplemental Fees Motion sought the award
under HRS § 607-14.5.
As a threshold matter, it appears that the Rices'
attorneys' fees and costs were not recoverable under HRS § 607-
14.5. The statute "applies only when a party seeks 'money
damages or injunctive relief, or both.'" In re Hawaiian Flour
Mills, Inc., 76 Hawai#i 1, 14, 868 P.2d 419, 432 (1994) (quoting
HRS § 607-14.5); see Bd. of Land & Nat. Res. v. Crabtree, 154
Hawai#i 113, 116, 547 P.3d 446, 449 (2024) ("This original
proceeding does not involve monetary damages. Thus, it must
relate to injunctive relief for the Sierra Club to recover fees
under HRS § 607-14.5."). Cavalier sought neither. Instead, it
sought a lien against the Rices' property.6/ In these
circumstances, HRS § 607-14.5 could not serve as the statutory
basis for awarding the Rices their attorneys' fees and costs.
In any event, we conclude that the Circuit Court
clearly erred in determining that the Lien Application was
frivolous under HRS § 607-14.5(b). "Though HRS § 607-14.5 does
not mention 'bad faith,' [the supreme] court has determined that
the concept shapes a frivolous finding under that law. [The
court] ha[s] said that an HRS § 607-14.5(b) 'finding of
frivolousness is a high bar; it is not enough that a claim be
without merit, there must be a showing of bad faith.'" See
Crabtree, 154 Hawai#i at 119, 547 P.3d at 452 (quoting Tagupa v.
VIPDesk, 135 Hawai#i 468, 479, 353 P.3d 1010, 1021 (2015)). It
follows that "a meritless claim, without more, is not sufficient
to show that the party acted in bad faith." Id. (brackets and
ellipsis omitted) (quoting Pub. Access Trails Hawai#i v.
Haleakala Ranch Co., 153 Hawai#i 1, 29, 526 P.3d 526, 554
(2023)); see Coll, 72 Haw. at 29, 804 P.2d at 887 (a frivolous

6/
A notice attached to the Lien Application included a "demand for
payment" upon the Rices, which was repeated in the Lien Application. But the
Lien Application did not assert a claim for money damages based on an
underlying contract. See 808 Development, 111 Hawai #i at 366, 141 P.3d at
1013 ("[T]he action was for the attachment of a mechanic's lien to the subject
property, not for damages based upon the underlying contract.").

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claim is one so "manifestly and palpably without merit, so as to
indicate bad faith on the pleader's part such that argument to
the court was not required" (brackets omitted) (quoting Kawaihae
v. Hawaiian Inc. Co., 1 Haw. App. 355, 619 P.2d 1086 (1980))).
In the circumstances of this case, on this record, there was no
showing that Cavalier acted in bad faith in filing the Lien
Application, such that its "claim" was frivolous for purposes of
HRS § 607-14.5. The Circuit Court thus abused its discretion in
awarding the Rices their fees and costs pursuant to that statute.
For the reasons discussed above, the July 29, 2020
Final Judgment entered by the Circuit Court of the First Circuit
is reversed to the extent it awarded the Rices attorneys' fees
and costs, and affirmed in all other respects.

DATED: Honolulu, Hawai#i, June 28, 2024.

On the briefs:
/s/ Katherine G. Leonard
David R. Squeri and Acting Chief Judge
Sol V. Yi
(Greater Pacific Law Office,
LLLC) /s/ Clyde J. Wadsworth
for Lienor-Appellant. Associate Judge

Keith Y. Yamada,
Kirk M. Neste, and /s/ Sonja M.P. McCullen
Janjeera S. Hail Associate Judge
(Cades Schutte LLP)
for Respondents-Appellees.

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