Davis v. Warsh

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Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
26-JAN-2026
08:24 AM
Dkt. 72 SO

NO. CAAP-XX-XXXXXXX

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAIʻI

HAROLD G. DAVIS, Plaintiff-Appellee,
v.
STEVE WARSH; MAUI POOLS DESIGN & MASONRY, LLC;
STEVE WARSH DBA MAUI MEADOWS POOLS AND MASONRY, LLC;
Defendants-Appellees,
DUARTE LIMA; Defendant-Appellant,
ACACIA HOMES CONSTRUCTION & REMODELING, LLC; Defendant-Appellee,
and DOES 1–100, Defendants.

APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUIT
(CASE NO. 2CCV-XX-XXXXXXX(2))

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

Defendant-Appellant Duarte N. Lima appeals from the

Circuit Court of the Second Circuit's September 26, 2025 First

Amended Final Judgment in favor of Plaintiff-Appellee Harold G.

Davis and against Lima and Defendants Steve Warsh, Maui Pools
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Design & Masonry, LLC, DBA Maui Meadows Pools and Masonry, LLC,

and Acacia Homes Construction & Remodeling, LLC. 1

On appeal, Lima raises five points of error

challenging: (1) the entry of default; (2) the denial of his

motion to set aside and motion for reconsideration; (3) the

default judgment; (4) the $191,151.73 in contract damages; and

(5) the attorneys' fees in excess of the 25% allowed under

Hawaiʻi Revised Statutes (HRS) § 607-14 (2016).

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 vacate and remand.

Davis contracted Warsh to build a custom pool at

Davis's home in Wailuku, Maui. The contract price was

$163,415.62. After a dispute arose between Davis and Warsh,

1 The Honorable Peter T. Cahill presided. The circuit court assigned
the Honorable Kelsey T. Kawano to preside over the settlement conference.

Lima appealed from the circuit court's December 11, 2023 Judgment,
which was superseded by the September 26, 2025 First Amended Final Judgment.

Lima also appeals from various underlying orders, including (1) the
Settlement Judge's November 30, 2022 oral ruling finding Lima and the other
Defendants in default; (2) the January 17, 2023 "Order Entering Default
Against All Defendants as to All Claims"; (3) the February 17, 2023 "Order
Denying Defendant Duarte Lima's Motion to Set Aside the Order Entering
Default Against All Defendants as to All Claims Filed January 17, 2023";
(4) the September 19, 2023 "Order Denying Defendant Duarte Lima's Motion for
Reconsideration and Granting Motion for Default Judgment Against Steve Warsh,
Maui Pools Design & Masonry, LLC, and Acacia Homes Construction & Remodeling,
LLC as to All Claims"; (5) the November 24, 2023 "Findings of Fact and
Conclusions of Law and Order"; and (6) the December 8, 2023 "Order Awarding
Attorneys' Fees and Costs".

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Warsh did not complete construction of the pool. Davis claims

he spent an additional $27,736.11 above the contract price to

finish building the pool. 2

Davis, then self-represented, filed suit against the

Defendants seeking general, special, and punitive damages. The

circuit court entered an order scheduling a settlement

conference with another judge (Settlement Judge) and a non-jury

trial. Under the order, the parties were required to "deliver

directly to the settlement judge a confidential settlement

conference letter" (Confidential Letter).

At the settlement conference, there were no

Confidential Letters submitted by the Defendants, who were also

self-represented. Lima maintained that there was nothing for

him to settle because he was not part of the contract between

Warsh and Davis. The Settlement Judge stated, "So Mr. Lima is

out with regard to any kind of settlement discussion." The

Settlement Judge then continued the conference ordering the

Defendants to submit their Confidential Letters pursuant to

Rule 12.2(b) of the Rules of the Circuit Court of the State of

Hawaiʻi (RCCH). Lima acknowledged he understood.

At the continued conference, the Defendants again

submitted no Confidential Letters to the Settlement Judge.

2 The alleged total expense of completing the pool, $191,151.73, less
the contract price, $163,415.62, equals the additional expense, $27,736.11.

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Instead, Lima and Warsh each submitted letters addressed to the

circuit court judge, which the circuit court clerk treated as ex

parte communication, filing the letters and serving the letters

upon all parties.

Lima explained to the Settlement Judge that his

failure to comply resulted from his misunderstanding that the

circuit court would preside over the case and that the

Settlement Judge was only "a stand-in for the day." Warsh

explained that he tried to comply by filing in person, "thinking

that that was the safest, most expedient way to get it done,

well ahead of the deadline."

When the Settlement Judge threatened defaulting Warsh

and Lima, Warsh argued for another opportunity to comply: "We

were unaware of that. We did not thumb our nose at anything,

and we thought we were complying. It was out of ignorance, not

out of lack of respect. I'm asking you to give us one more

opportunity."

The Settlement Judge then asked Davis if he was

willing to accept the $7,500.00 Warsh offered in his letter to

the circuit court. Davis rejected the offer. Lima's letter to

the circuit court made no offer to settle on the basis that he

was not party to the contract.

The Settlement Judge found Lima and Warsh "in utter

noncompliance" and entered default against all Defendants.

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Lima, then represented by counsel, moved to set aside the entry

of default, which the circuit court denied. Lima then moved for

reconsideration, which the circuit court also denied.

Ultimately, the circuit court entered judgment in

favor of Davis and against the Defendants, awarding over a half-

million dollars in money damages, including contract damages,

treble damages, and attorneys' fees and costs. The circuit

court, however, limited Lima's liability to $191,151.73 in

damages 3 and $51,217.68 in attorneys' fees and costs, jointly and

severally liable with the other Defendants.

On appeal, Lima raises five points of error, but his

first point is dispositive.

In his first point of error, Lima contends that none

of the enumerated conditions under RCCH Rule 12.2 "for imposing

sanctions include failure to submit a settlement conference

statement." Lima argues that RCCH Rule 12.2 should be strictly

construed to not permit sanctions under the facts of this case

because courts have construed identical language in RCCH

Rule 12.1 as only permitting sanctions where one of the three

conditions expressly imposed by the rule were met:

3 It appears that the circuit court awarded Davis the full contract
price for the pool in addition to the cost Davis claims he expended to
complete the pool.

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Pursuant to clause (6) of RCCH Rule 12.1(a), one of three
conditions must be present to trigger the imposition of
sanctions: (1) a party or his or her attorney must fail to
appear at a scheduled settlement conference; (2) a party or
his or her attorney must neglect to discuss or attempt to
negotiate a settlement prior to the conference; or (3) a
party must fail to have a person authorized to settle the
case present at the conference.

Kamaunu v. Kaaea, 99 Hawaiʻi 432, 440, 56 P.3d 734, 742

(App. 2002), aff'd, 99 Hawaiʻi 503, 57 P.3d 428 (2002). Lima's

argument has merit.

This court reviews an award of RCCH Rule 12.2

sanctions under the abuse of discretion standard. See Canalez

v. Bob's Appliance Serv. Ctr., Inc., 89 Hawaiʻi 292, 300, 972

P.2d 295, 303 (1999) (discussing standard of review for

sanctions under identical language in RCCH Rule 12.1(a)(6)). "A

court abuses its discretion whenever it exceeds the bounds of

reason or disregards rules or principles of law or practice to

the substantial detriment of a party." Dela Cruz v. Quemado,

141 Hawaiʻi 338, 344, 409 P.3d 742, 748 (2018) (ellipsis omitted)

(quoting Shanghai Inv. Co. v. Alteka Co., 92 Hawaiʻi 482, 491-92,

993 P.2d 516, 525-26 (2000)).

Here, the Settlement Judge sanctioned Lima for failing

to file a Confidential Letter under RCCH Rule 12.2(a)(6). RCCH

Rule 12.2(a)(6) allows for sanctions when (1) the party or

party's attorney fails to appear at the settlement conference,

(2) the party or party's attorney neglects to negotiate prior to

the conference, or (3) the party fails to have someone

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authorized to settle present at the conference. 4 Failing to file

a Confidential Letter is not one of the permitted reasons for

sanctioning a party under RCCH Rule 12.2(a)(6).

In an attempt to show the Settlement Judge did not

abuse his discretion, Davis cites Dela Cruz and Rearden Family

Trust v. Wisenbaker, 101 Hawaiʻi 237, 65 P.3d 1029 (2003), as

contrary authority that sanctions are permissible under RCCH

Rule 12.2(a)(6) "when the defaulted party neglects to obey the

court's orders, either intentionally or negligently, or when

parties negotiate in bad faith."

Both Dela Cruz and Rearden involved a failure to

appear for a settlement conference, not a failure to file a

4 RCCH Rule 12.2(a)(6), "Sanctions," provides:

The failure of a party or the party's attorney to
appear at a scheduled settlement conference, the neglect of
a party or the party's attorney to discuss or attempt to
negotiate a settlement prior to the conference, or the
failure of a party to have a person authorized to settle
the case present at the conference shall, unless a good
cause for such failure or neglect is shown, be deemed an
undue interference with orderly procedures. As sanctions,
the court may, in its discretion:

(i) Dismiss the action on its own motion, or on the
motion of any party, or hold a party in
default, as the case may be;

(ii) Order a party to pay the opposing party's
reasonable expenses and attorneys' fees;

(iii) Order a change in the calendar status of the
action; and/or

(iv) Impose any other sanction as may be
appropriate.

(Formatting altered and emphasis added.)

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Confidential Letter. Sanctions for failure to appear are

expressly contemplated under RCCH Rule 12.2(a)(6). As such,

both Dela Cruz and Rearden are materially distinguishable.

Conversely, in Kamaunu, this court construed the identical

language of RCCH Rule 12.1(a)(6) as not permitting sanctions for

failing to make a pretrial monetary settlement offer. 99 Hawaiʻi

at 440, 56 P.3d at 742.

And even if the failure to file a Confidential Letter

were sanctionable pursuant to other authority, 5 the circuit court

nevertheless abused its discretion in so doing under the five-

factor test adopted in Weinberg v. Dickson-Weinberg, 123 Hawaiʻi

68, 71, 229 P.3d 1133, 1136 (2010).

In Weinberg, the Hawaiʻi Supreme Court adopted the

Ninth Circuit's five-factor test to determine on appellate

review whether "a discovery sanction constitutes an abuse of

discretion." 123 Hawaiʻi at 71, 229 P.3d at 1136. Under that

test, the relevant factors are: "(1) the public's interest in

the expeditious resolution of litigation; (2) the court's need

to manage its docket; (3) the risk of prejudice to the party

5 Here, because the circuit court's scheduling order requiring the
Confidential Letters was entered pursuant to Hawaiʻi Rules of Civil Procedure
(HRCP) Rule 16, entry of sanctions, including default, may have been proper
under subsection (f) of that rule for "fail[ure] to obey a scheduling or
pretrial order." HRCP Rule 16(f) (allowing sanctions as set forth in HRCP
Rule 37(b)(2)(B)-(D) governing discovery); Rearden, 101 Hawaiʻi at 253, 65
P.3d at 1045. However, this argument was not raised below or in the briefing
and so is waived on appeal. Hawaiʻi Rules of Appellate Procedure
Rule 28(b)(7) ("Points not argued may be deemed waived.").

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moving for sanctions; (4) the public policy favoring disposition

of cases on their merits; and (5) the availability of less

drastic sanctions." Id. (brackets omitted) (quoting W.H.

Shipman, Ltd. v. Hawaiian Holiday Macadamia Nut Co., 8 Haw. App.

354, 362, 802 P.2d 1203, 1207 (App. 1990) (quoting United States

ex rel. Wiltec Guam, Inc. v. Kahaluu Constr. Co., 857 F.2d 600,

603 (9th Cir. 1988))).

Applying the five-factor test here, the first and

second factors both weigh in favor of default because the

default expedited resolution of the case. See Kamaunu, 99

Hawaiʻi at 444, 56 P.3d at 746 (concluding the first two factors

weighed against default where trial was still required despite

default). However, beyond that, the last three factors all

weigh against default.

On the third factor, Davis was not prejudiced by

Lima's conduct because the failure to file a Confidential Letter

did not "impair[ Davis's] ability to go to trial or threaten[]

to interfere with the rightful decision of the case." W.H.

Shipman, Ltd., 8 Haw. App. at 364, 802 P.2d at 1208 (quoting

Kahaluu Constr. Co., 857 F.2d at 604).

On the fourth factor, public policy "weighs heavily"

against default. See Kamaunu, 99 Hawaiʻi at 444, 56 P.3d at 746

(concluding public policy of hearing cases on the merits "weighs

heavily" against default); see, e.g., Chen v. Mah, 146 Hawaiʻi

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157, 176, 457 P.3d 796, 815 (2020) (citing BDM, Inc. v. Sageco,

Inc., 57 Haw. 73, 76, 549 P.2d 1147, 1150 (1976); County of

Hawaiʻi v. Ala Loop Homeowners, 123 Hawaiʻi 391, 423, 235 P.3d

1103, 1135 (2010)) ("Our cases have also expressed our policy of

disfavoring defaults and default judgments and of resolving any

doubt in favor of the party seeking relief, so that, in the

interests of justice, there can be a full trial on the

merits.").

Finally, on the fifth factor, the availability of

"less drastic sanctions" weighs against default because any

prejudice suffered by Davis as a result of Lima's failure to

comply with the circuit court and the Settlement Judge's orders

could have been remedied through the imposition of appropriate

monetary sanctions such as Davis's expenses for the two

conferences where Lima did not comply with the circuit court's

order. See Kamaunu, 99 Hawaiʻi at 444, 56 P.3d at 746

(concluding that where less "drastic" sanctions than default are

available, the fifth factor weighs against default).

Thus, on balance, the entry of default was an abuse of

discretion. On remand, Lima is returned to the same position as

before the error occurred. See Gurrobat v. HTH Corp., 135

Hawaiʻi 128, 134, 346 P.3d 197, 203 (2015) (citing Nelson v.

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Univ. of Hawaiʻi, 99 Hawaiʻi 262, 267, 54 P.3d 433, 438 (2002)).

As such, we need not reach Lima's remaining points of error.

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

September 26, 2025 First Amended Final Judgment and underlying

orders, and remand this case for further proceedings consistent

with this summary disposition order.

DATED: Honolulu, Hawaiʻi, January 26, 2026.

On the briefs: /s/ Katherine G. Leonard
Presiding Judge
Keith Y. Yamada,
Michael R. Soon Fah, /s/ Clyde J. Wadsworth
(Cades Schutte) Associate Judge
for Defendant-Appellant.
/s/ Sonja M.P. McCullen
Jessica A. Daye, Associate Judge
for Plaintiff-Appellee.

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