Calipjo v. Purdy., 439 P.3d 218

Background

In 2002 Calipjo entered into Deposit Receipt Offer and Acceptance (DROA) reservation agreements with Regal Capital Corporation (Regal Corp.) to buy two Kauaʻi lots (Aliʻi and Moana); the Moana sale was contingent on the Aliʻi sale.
Purdy was sole owner/officer of Regal Corp. and sole member/manager of Regal Capital Company, LLC (Regal LLC). Purdy directed adding the words “or Seller” to a contingency (condition C‑67) in the Aliʻi DROA, giving the seller an unconditional right to terminate before issuance of a Final Condominium Public Report; Calipjo initialed and backdated the addendum.
Calipjo deposited $10,000 into escrow and later found buyers; months after transferring the lots from Regal Corp. to Regal LLC (for no documented consideration), Purdy — on Regal Corp.’s letterhead — cancelled the Aliʻi DROA (which by contingency cancelled the Moana DROA) and refunded escrow checks that Calipjo refused to accept.
Calipjo sued Regal Corp., Regal LLC, and Purdy for specific performance and damages, alleging breach of contract, breach of the implied covenant of good faith and fair dealing, unfair and deceptive acts or practices (UDAP), and that Purdy was the alter ego of the companies.
A jury found Regal Corp. breached the DROAs and the implied covenant; found Regal Corp. and Regal LLC committed UDAP; and found Purdy was the alter ego of both entities, making him personally liable; the ICA later reversed parts of that judgment, holding insufficient evidence of breach by Regal Corp., UDAP by Regal LLC, and that Purdy was alter ego.
The Hawaiʻi Supreme Court reviewed de novo whether evidence supported the jury verdicts and reinstated the trial court’s judgment in part, holding there was evidence to support findings that Purdy was alter ego, Regal Corp. breached the DROAs, and Regal LLC committed UDAP.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Purdy was the alter ego of Regal Corp. and Regal LLC	Purdy exercised exclusive control, caused asset transfers leaving Regal Corp. undercapitalized, altered contracts to benefit himself, and used entities to perpetrate a fraud	Sole ownership alone insufficient; no evidence of undercapitalization or abuse of corporate form; transfers were routine/book entries	Evidence supported alter‑ego finding (control, transfers for no consideration, unity of interest, and risk of injustice)
Whether Regal Corp. breached the DROAs by cancelling after transferring property	The addendum giving seller termination was not supported by new consideration and thus void; cancelling breached original contract	DROAs were non‑binding reservation agreements allowing either party to cancel per amended C‑67	Evidence supported breach: modification lacked consideration, so cancellation violated original agreement
Whether Regal LLC engaged in unfair and deceptive acts or practices (UDAP)	Regal LLC’s ownership/role and failure to disclose transfers/misleading representations were material and likely to mislead a buyer	No sufficient evidence that Regal LLC committed UDAP; acts pertained to Regal Corp. only	Evidence supported UDAP finding against Regal LLC given its role in development, receipt of transfers, and likely material effect on consumer decision
Whether, absent alter‑ego, Purdy could be held personally liable for contract, implied covenant, and UDAP claims	Purdy liable because jury found alter ego; alternatively, corporate officers can be liable under statutes for corporate acts	Without alter‑ego finding, Purdy was not a party to DROAs and could not be personally liable	Because evidence supports alter‑ego, Purdy is liable; ICA erred reversing judgment against Purdy

Key Cases Cited

Ray v. Kapiolani Med. Specialists, [citation="125 Hawai'i 253, 259 P.3d 569"] (Haw. 2011) (standard for reviewing motions for judgment as a matter of law)
Robert's Hawaii School Bus, Inc. v. Laupahoehoe Transp. Co., [citation="91 Hawai'i 224, 982 P.2d 853"] (Haw. 1999) (factors and two‑part test for alter‑ego / piercing corporate veil)
Copperweld Corp. v. Indep. Tube Corp., 467 U.S. 752 (U.S. 1984) (unity of interest concept cited in alter‑ego analysis)
Douglass v. Pflueger Hawaii, Inc., [citation="110 Hawai'i 520, 135 P.3d 129"] (Haw. 2006) (consideration as essential element of contract enforceability)
Shanghai Inv. Co. v. Alteka Co., [citation="92 Hawai'i 482, 993 P.2d 516"] (Haw. 2000) (contract modification requires new consideration)
Hungate v. Law Office of David B. Rosen, [citation="139 Hawai'i 394, 391 P.3d 1"] (Haw. 2017) (definition and objective test for deceptive acts under UDAP)