Tsang et al v. Porter McGuire Kiakona, LLP et al

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
LAI YING TSANG and SCOTT
JEFFERSON,
Plaintiffs,
vs.
PORTER MCGUIRE KIAKONA,
LLP and ASSOCIATION OF
APARTMENT OWNERS OF THE
PACIFIC ISLANDER,
Defendants.
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Civil No. 23-00333 MWJS-KJM
FINDINGS AND
RECOMMENDATION TO GRANT
PLAINTIFFS’ PETITION FOR
DETERMINATION OF GOOD
FAITH SETTLEMENT PURSUANT
TO HRS § 663–15.5
FINDINGS AND RECOMMENDATION TO GRANT
PLAINTIFF’S PETITION FOR DETERMINATION OF
GOOD FAITH SETTLEMENT PURSUANT TO HRS § 663–15.5
On May 26, 2024, Plaintiffs Lai Ying Tsang (“Plaintiff Tsang”) and Scott
Jefferson (“Plaintiff Jefferson”) (collectively, “Plaintiffs”) filed a Petition for
Determination of Good Faith Settlement Pursuant to HRS § 663–15.5 (“Petition”).
ECF No. 40. The Petition seeks a determination that the settlement between
Plaintiffs and Defendant Association of Apartment Owners of the Pacific Islander
(“Defendant AOAO”) was made in good faith pursuant to Hawaii Revised Statutes
(“HRS”) § 663–15.5. Id. On June 3, 2024, Defendant AOAO filed a Statement of
Position regarding the Petition. ECF No. 41. On June 14, 2024, Defendant Porter
McGuire Kiakona, LLP (“Defendant PMK”) filed a Statement of No Opposition to
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the Petition. ECF No. 46. On June 28, 2024, Plaintiffs filed a Notice of No Reply
regarding the Petition. ECF No. 51.
The Court elected to decide this matter without a hearing pursuant to Rule
7.1(c) of the Local Rules of Practice for the United States District Court for the
District of Hawaii. ECF No. 42. After carefully considering the Petition, the
parties’ submissions, applicable law, and the record in this case, the Court FINDS
that the settlement between Plaintiffs and Defendant AOAO was made in good
faith under HRS § 663–15.5 and RECOMMENDS that the district court GRANT
the Petition.
BACKGROUND
The Court and the parties are familiar with the facts and issues in this case.
The Court therefore will only recite those relevant to the Petition.
On or about July 25, 2019, Plaintiffs purchased Unit 203 at the Pacific
Islander Condominiums, located at 249 Kapili Street, Honolulu, Hawaii 96815 (the
“Unit”). After purchasing the Unit, the account associated with the Unit became
delinquent due to unpaid monthly maintenance fees and other related amounts.
Thereafter, Defendant PMK, as counsel for Defendant AOAO, initiated efforts to
collect the outstanding balance for the Unit.
On October 25, 2022, Defendant AOAO, with Defendant PMK as its
counsel, filed a complaint against Plaintiff Tsang in the Circuit Court of the First
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Circuit, State of Hawaii. ECF No. 1-8. Therein, Defendant AOAO seeks
foreclosure and a monetary judgment against Plaintiff Tsang for non-payment of
maintenance fees and other related amounts. See id.
On August 8, 2023, Plaintiffs filed their Complaint in this district court,
alleging misconduct in connection with the collection of the debt. ECF No. 1.
Plaintiffs assert claims of violations of the Fair Debt Collection Practices Act,
unfair or deceptive acts or practices, breach of the duty of good faith and fair
dealing, and intentional infliction of emotional distress. Id. at 48–69. Trial is set
for January 14, 2025. ECF No. 28 at 1 ¶ 1.
On January 17, 2024, the Court held an early settlement conference, but no
settlement was reached. ECF No. 36. On February 1, 2024, Plaintiffs participated
in a further early settlement conference with Plaintiffs only (“02/01/2024
Conference”). ECF Nos. 37, 38. The court minutes from the 02/01/2024
Conference indicate that settlement discussions were ongoing. ECF No. 38.
Plaintiffs and Defendant AOAO subsequently settled and executed a Settlement
and Mutual Release Agreement (“Settlement Agreement”) on May 15, 2024. ECF
No. 40-3. On May 26, 2024, Plaintiffs filed the Petition. ECF No. 40.
DISCUSSION
A finding of good faith settlement accomplishes the following:
(1) discharges the settling party from liability for contribution to other
joint tortfeasors, (2) reduces a plaintiff’s claims against joint
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tortfeasors by the amount stipulated to in the release or in the amount
of the consideration paid for it, whichever is greater, (3) bars other
joint tortfeasors from further claims against the settling joint
tortfeasor, except where there is a written indemnity agreement, and
(4) results in dismissal of all crossclaims against the settling joint
tortfeasor, except where there is a written indemnity agreement.
Tansey v. Marriott Hotel Servs., Inc., CIVIL NO. 19-00231 JAO-WRP, 2020 WL
1495993, *1 (D. Haw. Mar. 10, 2020) (citing Haw. Rev. Stat. § 663–15.5(a) and
(d)), adopted by 2020 WL 1493041 (D. Haw. Mar. 27, 2020).
The Hawaii Supreme Court has adopted a “totality of circumstances”
analysis to determine whether a settlement is made in good faith under HRS
§ 663–15.5. 	Doyle v. Hawaiian Cement, Civ. No. 08-00017 JMS /KSC, 2009 WL
1687022, *2 (D. Haw. June 15, 2009) (citing Troyer v. Adams, 102 Haw. 399,
77 P.3d 83 (2003)). The Hawaii Supreme Court set forth a nonexclusive list of
issues that courts may consider when deciding whether a settlement was made in
good faith:
(1) the type of case and difficulty of proof at trial, e.g., rearend motor
vehicle collision, medical malpractice, product liability, etc.;
(2) the realistic approximation of total damages that the plaintiff
seeks;
(3) the strength of the plaintiff’s claim and the realistic likelihood of
his or her success at trial;
(4) the predicted expense of litigation;
(5) the relative degree of fault of the settling tortfeasors;
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(6) the amount of consideration paid to settle the claims;
(7) the insurance policy limits and solvency of the joint tortfeasors;
(8) the relationship among the parties and whether it is conducive to
collusion or wrongful conduct; and
(9) any other evidence that the settlement is aimed at injuring the
interests of a non-settling tortfeasor or motivated by other wrongful
purpose.
Id. (citing Troyer, 102 Haw. at 427, 77 P.3d at 112) (the “Troyer factors”).
A settlement agreement is made in good faith when the totality of
circumstances show that the settlement was not collusive or aimed at injuring the
interests of the non-settling parties. Id. The non-settling defendant has the burden
to show that the settlement was not reached in good faith. Id. (citing Haw. Rev.
Stat. § 663–15.5(b)).
The Court has reviewed the Troyer factors and the terms of the Settlement
Agreement. After carefully considering the Petition and the totality of the
circumstances, and the absence of opposition thereto1, the Court finds that the
1 In its Statement of Position, Defendant AOAO points out that the Petition
incorrectly states that the Settlement Agreement requires Plaintiffs to amend the
Complaint to remove Defendant AOAO as a party to this lawsuit. ECF No. 41 at 2
(citing ECF No. 40-1 at 9). Rather, Paragraph 2.c. of the Settlement Agreement
requires the parties to submit a “Stipulation for Partial Dismissal With Prejudice of
All Claims Against the Association.” Id.; ECF No. 40-3 at 2. Defendant AOAO
states that it has no opposition to the Petition provided that Plaintiffs acknowledge
and agree to comply with Paragraph 2.c. ECF No. 41 at 2. In the Notice of No
Reply, Plaintiffs state that they will cooperate with dismissal of Defendant AOAO.
ECF No. 51 at 2.
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terms of the Settlement Agreement meet the purpose of HRS § 663–15.5 and were
entered into in good faith. Accordingly, the Court recommends that the district
court grant the Petition.
CONCLUSION
Based upon the foregoing, the Court FINDS that the settlement between
Plaintiffs and Defendant Association of Apartment Owners of the Pacific Islander
was made in good faith under Hawaii Revised Statutes § 663–15.5. The Court thus
RECOMMENDS that the district court GRANT the Petition.
IT IS SO FOUND AND RECOMMENDED.
DATED: Honolulu, Hawaii, July 1, 2024.
Tsang, et al. v. Porter McGuire Kiakona, LLP, et al.; Civil No. 23-00333 MWJS-KJM; Findings and
Recommendation to Grant Plaintiffs’ Petition for Determination of Good Faith Settlement Pursuant to
HRS § 663–15.5
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