Goran Pleho, LLC v. Lacy. ICA mem.op., filed 07/29/2016. Motion for Partial Reconsideration of Memorandum Opinion, filed 08/08/2016.
439 P.3d 176
Haw.2019Background
- In 2005 attorney David Lacy represented Goran and Ana Pleho (and their LLC) in the purchase of Resorts Limousine Services (RLS) from Dragan Rnic; Plehos later sued Lacy, his firm, and Rnic alleging multiple claims including violation of Hawai‘i’s unfair or deceptive acts or practices statute (HRS Chapter 480).
- Plehos alleged Lacy failed to disclose his relationship with Rnic, misrepresented RLS’s value and viability, advised the Plehos to pay $1.5M despite knowledge of a prior $800K offer, and discouraged independent appraisal; a later appraisal valued RLS at ~$128K.
- The circuit court granted the defendants’ motion for partial summary judgment as to the Plehos’ HRS Chapter 480 claims, reasoning those allegations amounted to the “actual practice of law” and were therefore outside the statute’s scope.
- On appeal the ICA agreed that the statute did not apply to the practice of law and affirmed the partial summary judgment; the Plehos sought certiorari to the Hawai‘i Supreme Court.
- The Hawai‘i Supreme Court reviewed de novo whether conduct by an attorney in facilitating a business sale falls within HRS §480-2(a) and whether a practice-of-law label creates a categorical exception to the statute.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lacy’s conduct occurred in "trade or commerce" under HRS §480-2(a) | Lacy actively facilitated a commercial purchase using professional expertise; conduct was in the business context | Lacy’s actions were part of the practice of law, not commerce | Held: Conduct facilitating a business sale is necessarily "in trade or commerce" (Cieri controls); claim falls within HRS §480-2(a). |
| Whether the practice of law is categorically exempt from HRS §480-2(a) | Plehos: No categorical exemption; attorneys can be liable when business-transaction conduct is deceptive | Lacy: The statute should not reach the actual practice of law; applying it threatens judicial regulation of the profession | Held: No categorical exception; actions that "necessarily involve" trade or commerce are covered even if intermingled with legal services. |
| Whether federal precedent interpreting FTCA §5(a)(1) forbids applying consumer-protection laws to attorneys | Plehos: Legislature directed courts to consult FTCA authorities, which recognize coverage of lawyer conduct in commerce | Lacy: FTCA and related authority focus on unfair competition, not deceptive practices by lawyers | Held: FTCA and Supreme Court precedent (Goldfarb, Bates, etc.) support applying such statutes to aspects of legal practice; no meaningful distinction between unfair methods and unfair or deceptive acts regarding "in commerce." |
| Whether applying HRS §480-2(a) to attorney conduct improperly intrudes on this Court’s authority to regulate the bar | Plehos: Statute complements professional discipline and provides civil redress without displacing disciplinary power | Lacy: Civil liability under the statute would conflict with judicial regulation and chill advocacy | Held: No forbidden intrusion; HRS §480-2(a) addresses commercial harms and civil remedies distinct from professional discipline and can coexist with the Court’s regulatory authority. |
Key Cases Cited
- Cieri v. Leticia Query Realty, Inc., 80 Hawai‘i 54, 905 P.2d 29 (Haw. 1995) (broker’s active participation in real estate transactions "necessarily" constitutes conduct in trade or commerce under HRS §480-2)
- Goldfarb v. Virginia State Bar, 421 U.S. 773 (U.S. 1975) (Sherman Act applies to lawyers; practice of law is not implicitly exempt from antitrust statutes)
- Bates v. State Bar of Arizona, 433 U.S. 350 (U.S. 1977) (rejecting view that lawyers are above trade and recognizing commercial aspects of legal services)
- F.T.C. v. Superior Court Trial Lawyers Ass’n, 493 U.S. 411 (U.S. 1990) (antitrust and FTC authority can apply to lawyer conduct involving competition-restraint)
- Hungate v. Law Office of David B. Rosen, 139 Hawai‘i 394, 391 P.3d 1 (Haw. 2017) (HRS §480-2 can apply to attorneys in some contexts; caution about chilling advocacy when lawyer is opposing counsel)