In re: The Application of Ala Moana Properties Limited

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
31-JAN-2025
08:41 AM
Dkt. 64 MO

NO. CAAP-XX-XXXXXXX

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI#I

IN THE MATTER OF THE APPLICATION OF ALA MOANA PROPERTIES
LIMITED, to register and confirm title to land situate at,
Waikiki, City and County of Honolulu, State of Hawaii.

TAEMI MIZUFUNE in her capacity as the Personal
Representative of the ESTATE OF TOKUJI MIZUFUNE,
Petitioner-Appellant,v. KABUHSHIKIGAISHA JAPAN
BUILD, also known as JAPAN BUILD,a Japan
Corporation; THE DAI-ICHI KANGYO BANK, LIMITED, by
merger now known as MIZUHO BANK, LTD., a Japan
Corporation; GAP, K.K., formerly known as JAPAN
BUILDING ASSOCIATION, K.K., a Japan Corporation;
ASSOCIATION OF APARTMENT OWNERS OF ILIKAI MARINA
APARTMENT BUILDING, a Hawaii non-profit
corporation; and OWNERS OF ILIKAI APARTMENT
BUILDING, INC., a Hawaii non-profit corporation,
Respondents-Appellees, and DOE INDIVIDUALS or
LEGAL ENTITIES 1-20, Respondents

APPEAL FROM THE LAND COURT OF THE STATE OF HAWAI#I
(LAND COURT CASE NO. 1LD181003034)

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

Petitioner-Appellant Taemi Mizufune, in her capacity as
the Personal Representative of the Estate of Tokuji Mizufune
(Taemi), appeals from the "Final Judgment on [Taemi's] First
Amended Verified Petition for Amendment of Land Court Certificate
of Title No. 294,085 and No. 1,092,643, Filed November 24, 2020
[(Amended Petition)]" (Judgment), entered in favor of Respondent-
Appellee Kabushikigaisha Japan Build, also known as Japan Build
(Japan Build), on April 6, 2021, by the Land Court of the State
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

of Hawai#i (Land Court).1/ Taemi also challenges the Land Court's
January 26, 2021 "Order Granting . . . Japan Build's Motion for
Summary Judgment on [Taemi's Amended Petition]" (MSJ Order). The
MSJ Order granted Japan Build's motion for summary judgment (MSJ)
on Taemi's claims for specific performance, promissory estoppel,
and quiet title relating to two condominium units (the
Properties) in Honolulu, which Taemi contends Japan Build agreed
to convey to her father, Tokuji Mizufune (Tokuji), before his
death, in a Memorandum of Understanding (MOU) dated December 20,
2004.
On appeal, Taemi contends that the Land Court erred in:
(1) granting summary judgment where there were genuine issues of
material fact as to whether Japan Build's board of directors
properly approved the MOU; (2) granting summary judgment on the
promissory estoppel claim based on the court's conclusion that
the MOU was not enforceable; (3) granting summary judgment on the
quiet title claim where there was a genuine issue of material
fact as to ownership of the Properties.
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
Taemi's contentions as follows, and vacate.

I. Background

Tokuji filed the original Verified Petition on
August 21, 2018, seeking amendment of the Land Court certificates
of title related to the Properties. Following Tokuji's death,
Taemi filed the Amended Petition on March 20, 2020, and was
substituted for Tokuji as the petitioner by order of the Land
Court on March 27, 2020. The Amended Petition sought entry of an
order transferring title to the Properties from Japan Build, a
Japan corporation, to Taemi, and amending the related
certificates of title. Taemi alleged that Japan Build breached a
written MOU to transfer title to the Properties to Tokuji in
exchange for Tokuji's assumption of a ¥154,700,000 loan (Loan)

1/
The Honorable Gary W.B. Chang presided.

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that Japan Build had obtained from Jyonan Shinyokinko. The
Amended Petition asserted claims for specific performance,
promissory estoppel, and quiet title relating to the two
Properties.
On November 24, 2020, Japan Build filed its MSJ,
contending that Taemi's three claims all relied at least in part
on the validity of the MOU, and under Japanese law, the MOU was
not valid. Japan Build asserted that because the MOU involved an
interested transaction by a director of a Japan corporation, the
"internal affairs" doctrine required application of Japanese law.
Japan Build argued Japanese law required that the MOU be approved
at a validly-noticed board meeting. It submitted declarations
from two individuals, Yoshiaki Yanada (Yanada) and Tetsuo Matsui
(Matsui), who stated: (1) when Tokuji executed the MOU on
December 20, 2004, they were both directors of Japan Build; (2)
the board did not hold a meeting to approve the MOU or the
matters it describes, and no notice of such a board meeting was
issued; and (3) they had not known of the existence of the MOU or
the matters it describes until Tokuji initiated this case. Japan
Build further argued that based on Taemi's response to an
interrogatory request, Taemi admitted there was no noticed board
meeting approving the MOU.
On December 11, 2020, Taemi filed a memorandum in
opposition to the MSJ, along with her own declaration and
numerous attached exhibits. She argued that there were genuine
issues of material fact as to whether Japan Build's board of
directors properly approved the MOU under Japanese law. Taemi's
declaration alleged, among other things: Tokuji was the
Representative Director of Japan Build in 2004, and Taemi was a
director of Japan Build "at all relevant times." In 1987, Japan
Build purchased four condominium units located in Honolulu. To
fund the purchase, Japan Build obtained the Loan from Jyonan
Shinyokinko, a Japanese financial institution. On December 20,
2004, Tokuji entered into a written MOU with Japan Build in which
it agreed to convey the four Hawai#i condominium units to Tokuji

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upon Tokuji's payoff of the Loan.2/ Tokuji signed the MOU as a
Representative Director of Japan Build, and countersigned it in
his individual capacity.
On December 21, 2020, the Land Court heard Japan
Build's MSJ and granted summary judgment on all claims, stating:

The court is not able to find that there is an issue
of fact or that there is a record that the formal
requirements of Japan law were met in order to allow
[Tokuji] to execute and enter into an agreement on behalf of
Japan Build which agreement would benefit [Tokuji], and the
subject of the agreement was property that was allegedly
owned by Japan Build, and as a result of this agreement the
title and ownership interest in that property would end up
with [Tokuji].
So the court does not believe that the plaintiff can
show that the memorandum of understanding met the
requirements for self-dealing and therefore the court would
respectfully grant the motion for summary judgment.

The Land Court subsequently entered the MSJ Order and
the Judgment. This appeal followed.

II. Discussion

A. Specific Performance Claim
Taemi's specific performance claim rests on the
enforceability of the MOU as against Japan Build. Japan Build
contended below that the MOU is not a valid and enforceable
contract under Japanese law because the subject of the MOU was a
self-dealing transaction between Japan Build and Tokuji that was
not properly approved by Japan Build's board of directors. More
specifically, Japan Build argued that under Japanese law, Tokuji
needed – and did not obtain – the approval of the Japan Build
board via a properly noticed and held board meeting. Instead,
Tokuji alone signed the MOU on behalf of both parties to the
transaction, Japan Build and himself. In granting the MSJ, the
Land Court appears to have adopted Japan Build's reasoning,
concluding there was no genuine issue of material fact that the
requirements of Japanese law for approval of a self-dealing
transaction were not met. Taemi contends on appeal that the Land

2/
Although Japan Build allegedly promised to convey four condominium
units to Tokuji when Tokuji paid off the Loan, Taemi's claims in this case are
directed to only two of the four units.

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Court erred in this conclusion.
The Land Court applied Japanese law in reaching its
decision, and the parties appear to agree that for the MOU to be
valid and enforceable, it had to meet the requirements of an
interested director transaction under Japanese law. We address
this threshold issue first.
The enforceability of the MOU, and thus Taemi's
specific performance claim, involves the "internal affairs" of a
corporation, which are the "relations inter se of the
corporation, its shareholders, directors, officers or agents[.]"
See Restatement (Second) of Conflict of Laws § 302, cmt. a
(2010). We applied the "internal affairs doctrine" in Breeden v.
Acheson, No. 28816, 2011 WL 484361, at *2 (Haw. App. Feb. 9,
2011) (SDO), noting:

The U.S. Supreme Court has recognized the "internal affairs
doctrine," which provides that "the law of the state of
incorporation normally determines issues relating to the
internal affairs of a corporation." First Nat'l City Bank
v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611,
621 (1983) (citations omitted); Edgar v. MITE Corp., 457
U.S. 624, 645 (1982); see also Restatement (Second) of
Conflict of Laws § 309 (2010). The "internal affairs" of a
corporation include "matters peculiar to the relationships
among or between the corporation and its current officers,
directors, and shareholders[.]" Edgar, 457 U.S. at 645
(citations omitted). Applying the local law of the state of
incorporation "achieves the need for certainty and
predictability of result while generally protecting the
justified expectations of parties with interests in the
corporation." First Nat'l City Bank, 462 U.S. at 621.
This result is consistent with Hawai#i conflict-of-law
rules. See Mikelson v. United Servs. Auto. Ass'n, 107
Hawai#i 192, 198, 111 P.3d 601, 607 (2005) (placing primary
emphasis on which state has the strongest interest in seeing
its laws applied to a particular case).

Id. at *2; see Roxas v. Marcos, 89 Hawai#i 91, 117 n.16, 969 P.2d
1209, 1235 n.16 (1998) (concluding that it was appropriate for
the circuit court to apply Philippine law where the Philippines
had the greater interest in the outcome of the case).
Although the present case involves a dispute over real
property in Hawai#i, the specific performance claim turns on the
enforceability of an alleged agreement involving a transaction
between Japan Build and one of its directors. Japan Build is
incorporated in Japan and the MOU was executed in Japan. Japan
has a significant interest in protecting Japanese corporations

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and their shareholders by regulating corporate transactions
involving interested directors. In these circumstances, we
conclude that Japan has the stronger interest in applying its
laws to the transaction at issue. See Mikelson, 107 Hawai#i at
198, 111 P.3d at 607. Accordingly, in addressing the specific
performance claim, the Circuit Court did not err in applying
Japanese law to this transaction.
The parties agree – as do we – that because the MOU
concerned a transfer of corporate assets to a director, it
involved an interested director transaction governed by Article
265, Paragraph 1 of the Commercial Code of Japan.3/ See Article
265, Shôhô (Comm. C.) 1899, as amended, art. 265, para. 1
(Commercial Code).4/ Article 265 provides, in pertinent part:

Article 265. (Transaction between a Director and the
Company; Transaction Causing a Conflict of
Interests)

1. In order for a director to accept a transfer of a
product or any other asset of the Company, to transfer a
product or any other asset of such director to the Company,
to receive a loan from the Company, or to effect any other
transaction with the Company, for himself or a third party,
such director shall obtain the approval of the board of
directors. The same shall also apply in cases where the
Company guarantees a director's obligation or effects a
transaction with any person other than directors with respect
to which there is a conflict of interests between the Company
and any director.

Japan Build's expert witness opined, and Taemi does not
dispute, that under Article 265, Paragraph 1, "Japan Build's
board was required to approve any transactions between Japan
build and one of its directors" and "[a]ny such transaction that
Japan Build's board did not approve would be invalid under
Japanese law." Thus, as a matter of Japanese law, Japan Build's
board had to approve the transaction at issue in order for it to
be valid.
Taemi contends that there is a genuine issue of
material fact as to whether such approval occurred. She argues

3/
Japan Build's expert witness on Japanese law so opined.
4/
Unless otherwise noted, citations to the Commercial Code of Japan
are from Commercial Code of Japan (Nishimura & Partners trans., Shojihomu Co.
Ltd. 2004).

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in part that "[w]hile one of the directors, . . . Matsui,
testified [via declaration] that he did not approve the
transaction . . ., Taemi . . . testified [via declaration] that
all the directors approved including Matsui who ratified . . . ."
In the summary judgment proceedings, the parties
disagreed as to the individuals who constituted Japan Build's
board of directors on December 20, 2004, the date of the MOU. In
her declaration, Taemi stated that on the date of the MOU, Japan
Build's board consisted of herself, Tokuji, and Matsui. Japan
Build's expert stated that there were no directors listed in the
"official commercial registry" for the period between July 1,
2002, and May 19, 2005, and concluded, based on an "indirect
method," that the directors during that period were Yanada,
Matsui, Tokuji, and Taemi. On this record, a genuine issue of
material fact exists as to whether Yanada was serving as one of
Japan Build's directors on the date of the MOU (and any approval
by Japan Build's board).
Japan Build further argued in its MSJ that Taemi
"admits that there was no noticed board of directors meeting to
discuss the MOU," and concluded that the MOU was therefore
invalid under Article 265, Paragraph 1 of the Commercial Code.
Japan Build based this claim on an interrogatory asking Taemi to
"[s]tate whether you discussed or communicated with any Director,
Auditor, agent . . . or any other person, prior to entering into
the Memorandum of Understanding," and asking Taemi to identify
the person(s) involved, date, and substance of any such
communication(s). Taemi's response referenced an explanatory
addendum to the MOU describing communications between Yanada and
Tokuji. The response then stated: "I [(Taemi)] was in the
discussion. [The MOU] was discussed and approved by Yanada,
Tokuji, and Taemi . . . ."
In opposing Japan Build's MSJ, Taemi elaborated. She
stated in her declaration that there was a board meeting
involving herself, Tokuji, and Matsui, with non-director Yanada
also in attendance, and that the directors approved the MOU at
that meeting. Taemi also stated that she, Tokuji, and Matsui
signed minutes of the meeting, but she did not retain a copy of

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the minutes, because she thought it was an internal document, and
"never believed Yanada or Matusi would claim it does not exist."
We note that Article 259-3 of Japan's Commercial Code5/
authorizes board meetings to be held without advance notice, if
consented to by all directors and the corporate auditors.
Taemi's declaration states that she, Tokuji, Yanada, and Matsui
all met and agreed to the MOU, which could indicate consent to a
meeting without notice. No party presented evidence regarding
whether Japan Build had corporate auditors, and if it did have
auditors, whether they consented to the holding of a board
meeting without notice. On this record, a genuine issue of
material fact – and, ultimately, a mixed issue of fact and law –
exists as to whether the meeting described by Taemi, assuming as
we must that it occurred, met the requirements for a board
meeting without notice under Japanese law. Relatedly, a genuine
issue of material fact – and, ultimately, a mixed issue of fact
and law – exists as to whether Japan Build's board properly
"approved" the MOU.
Japan Build argues that "much of" Taemi's declaration
is inadmissible on grounds of lack of foundation or hearsay, and
several attached exhibits are not properly authenticated. We
conclude, however, that Taemi made a sufficient showing, based on
admissible evidence, to create the genuine issues of material
fact identified above. Notably, Japan Build does not challenge
the admissibility of the MOU attached as Exhibit 6 to Taemi's
declaration or her statement in paragraph 41 that she, Tokuji,
and Matsui were the directors of Japan Build on the date of the
MOU. Japan Build does argue that paragraph 45 of the declaration
contains hearsay. Based on the record to date, however, the
challenged statements by Matsui and Yanada, who are alleged to be
directors of Japan Build, would appear to be "admissions" of a
party opponent and therefore admissible under Hawaii Rules of
Evidence Rule 803(a)(1). The Land Court did not rule otherwise.

5/
Article 259-3 (Omission of the Convocation Procedure for a Meeting
of the Board of Directors) provides:

When the unanimous consent of the directors and the
corporate auditors has been obtained, a meeting of the board
of directors may be held without a convocation procedure.

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Given our conclusion that Taemi presented sufficient admissible
evidence to create genuine issues of material fact regarding her
specific performance claim, we need not address Japan Build's
other evidentiary objections.6/
Accordingly, the Land Court erred in entering summary
judgment in Japan Build's favor on the specific performance
claim.

B. Promissory Estoppel Claim
Taemi's alternative claim for promissory estoppel is
based on the allegations that Japan Build promised Tokuji it
would convey the Properties to him in order to induce him to pay
off — or to have a third party payoff — the Loan, and Tokuji did
so in reliance on this promise. In its MSJ, Japan Build
contended that the promissory estoppel claim was based on a
promise Tokuji made to himself. Japan Build argued that Tokuji
had no authority to make the alleged promise on behalf of Japan
Build and could not reasonably rely on his own promise to
himself. The Land Court did not provide an independent rationale
for granting summary judgment on the promissory estoppel claim,
apparently treating it as derivative of the specific performance
claim. Taemi contends that the Land Court erred in doing so.
In determining whether the Land Court erred, we must
first determine, under choice of law principles, which forum's
law applies. Like Taemi's specific performance claim, her
promissory estoppel claim implicates the "internal affairs" of
Japan Build – the alleged promise by a corporate director or
other agent of Japan Build (see infra) to another director. For
the reasons previously discussed, we conclude that Japan has the
stronger interest in applying its laws to this alleged promise.
See Mikelson, 107 Hawai#i at 198, 111 P.3d at 607. Thus,

6/
Japan Build also notes that it argued below that Taemi's
declaration should be disregarded as a "sham," but the Land Court did not
adopt this argument in granting the MSJ. Japan Build does not argue on appeal
that this court should base its decision on the "sham declaration doctrine."
See Lales v. Wholesale Motors Co., 133 Hawai #i 332, 360, 328 P.3d 341, 369
(2014) ("This court has not explicitly adopted or rejected the sham affidavit
doctrine . . . ."). We thus do not consider the issue.

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Japanese law should apply to the promissory estoppel claim.7/
Taemi's expert witness opined that Japanese law
recognizes and would apply "the principal law of estoppel,"
citing the Japanese Civil Code Article 1, Paragraph 2. Article 1
provides as follows:

Article 1. (Exercise of private rights)
1. All private rights shall conform to the principles of
maintaining the public welfare.
2. The exercise of rights and performance of duties shall
be carried out in accordance with the principles of good
faith and trust.
3. No abuse of rights shall be permitted.

Doing Business in Japan, App.4A-1 (Zentaro Kitagawa, ed. 2007);
see also Kizuki Kuzuhara, Contracting Between a Japanese
Enterprise and an American Enterprise: the Differences in the
Importance of Written Documents as the Final Agreement in the
United States and Japan, 3 ILSA J. Int'l & Compar. L. 57, 71
(1996).
Taemi contends, based on her expert's conclusion, that
"promissory estoppel theory under Japanese law" applies to these
circumstances, and there is at least a genuine issue of material
fact as to whether Yanada made the alleged promise to Tokuji on
behalf of Japan Build. In opposing the MSJ, Taemi contended
that: (1) the alleged promise to Tokuji was made by Yanada and
Matsui on behalf of Japan Build; (2) if Yanada was a director as
asserted by Japan Build, Yanada's promise was Japan Build's
promise; and (3) even if Yanada was not a director, as Japan
Build's majority stockholder participating in its decision-
making, he was an agent of Japan Build. In her declaration,
Taemi stated that Tokuji "relied on the representation of the

7/
We reject Japan Build's contention that Taemi violated Hawai #i
Rules of Civil Procedure Rule 44.1 by failing to "give notice in writing that
Japanese law applied to her promissory estoppel claim." Tokuji gave notice of
his intent to rely on Japanese law in his December 22, 2018 memorandum in
opposition to Japan Build's motion to dismiss, which notice was provided
before Japan Build answered the original petition. This notice was sufficient
under Rule 44.1. See, e.g., Northrop Grumman Ship Sys., Inc. v. Ministry of
Defense of Republic of Venez., 575 F.3d 491, 496-97 (5th Cir. 2009)
(construing parallel federal rule: "The rule is intended 'to avoid unfair
surprise,' not to 'set any definite limit on the party's time for giving the
notice of an issue of foreign law.'") (ellipsis omitted).

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majority stockholder, Yanada, and director Matsui approving the
transaction as set forth in the [MOU] and paid off approximately
¥154,700,000 in Japan Build's loans from Jyonan Shinyokinko."
Although it appears that Japanese law recognizes a form
of promissory estoppel theory, at this stage, it is not clear
what the requirements are for recovery under this theory, and the
record is not sufficiently developed to determine Taemi's claim.
Japan Build moved for summary judgment on the premise that Taemi
could not recover based on a promise that Tokuji made to himself.
On this record, however, a genuine issue of material fact exists
as to whether Yanada and/or Matsui made the alleged promise to
Tokuji on behalf of Japan Build. Accordingly, the Land Court
erred in entering summary judgment in Japan Build's favor on the
promissory estoppel claim.

C. Quiet Title Claim
Taemi contends that the Land Court erred in
"derivatively dismiss[ing]" her quiet title claim where there was
a genuine issue of material fact as to ownership of the
Properties based on the evidence presented in support of her
specific performance and promissory estoppel claims. She also
contends that Japan Build lacks standing to oppose the quiet
title claim, because Japan Build has alleged that it transferred
its interest in the Properties.
Because Taemi did not raise her standing argument in
the Land Court, it is waived on appeal. See Price v. AIG Hawai#i
Ins. Co., 107 Hawai#i 106, 111, 111 P.3d 1, 6 (2005).
We conclude, however, that the Land Court erred in
entering summary judgment in Japan Build's favor on the quiet
title claim. Taemi's claim to title rests on the enforceability
of the MOU or the alleged promises made by Japan Build to Tokuji.
For the reasons discussed above, genuine issues of material fact
exist as to Taemi's related claims for specific performance and
promissory estoppel. Accordingly, summary judgment should not
have been granted on the quiet title claim.

III. Conclusion

For the reasons discussed above, we vacate the

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January 26, 2021 "Order Granting Respondent Kabushikigaisha Japan
Build aka Japan Build's Motion for Summary Judgment on
Petitioner's First Amended Verified Petition for Amendment of
Land Court Certificate of Title No. 294,085 and No. 1,092,643,
Filed November 24, 2020[,]" and the April 6, 2021 "Final Judgment
on Petitioner's First Amended Verified Petition for Amendment of
Land Court Certificate of Title No. 294,085 and No. 1,092,643,
Filed November 24, 2020," entered by the Land Court of the State
of Hawai#i. This case is remanded to the Land Court for further
proceedings consistent with this memorandum opinion.

DATED: Honolulu, Hawai#i, January 31, 2025.

On the briefs:
/s/ Clyde J. Wadsworth
Junsuke Aaron Otsuka Presiding Judge
(Otsuka & Associates)
for Petitioner-Appellant.
/s/ Sonja M.P. McCullen
Christopher J. Muzzi and Associate Judge
Leila Rothwell Sullivan
(Tsugawa Lau & Muzzi, LLLC)
for Respondents-Appellees. /s/ Kimberly T. Guidry
Associate Judge

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