305 P.3d 452
Haw.2013Background
- SDA leased Kahili Mountain Park (200 acres) from the Knudsen Trusts under a 60-year lease (1985 start). Paragraph 16 permits several uses, including recreation with a parenthetical example of vacation residence for SDA’s school/church members, and a ban on dwellings except for specified staff. SDA continued renting cabins to the public to support the School; changes in 2000 included death of a Knudsen trustee and Wong becoming trustee of the EAK Trust. In 2001 Wong asserted a default under Paragraph 16 and sought remedies including lease termination and damages, proposing a plan that would monetize commercial use; SDA rejected retroactive rent and paused cabin rentals. SDA ceased cabin rentals in March 2002 after Wong’s demand, while honoring preexisting reservations per a separate agreement. The circuit court granted Wong summary judgment on cabin rentals but SDA summary judgment on termination and other counterclaims; ICA vacated on cabin rentals and remanded for further proceedings. The parties’ certiorari questions focused on the interpretation of Paragraph 16, termination, damages, and fees/costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Paragraph 16 is ambiguous about cabin rentals to the public | SDA: vacation residences fall within permissible recreational use; parenthetical broadens use | Wong: cabin rentals constitute impermissible dwelling use by non-students/staff | Ambiguous; remand to determine if cabin rentals allowed |
| Whether Paragraph 16 prohibits commercial activities on the Property | SDA: revenues from permitted uses are allowed; not expressly prohibited | Wong: implied prohibition on commercial uses | Not prohibited; commercial revenue from permitted uses allowed |
| Whether Wong properly terminated the Lease for willful breach | Wong: termination warranted for breach of cabin rentals | SDA timely cured within 30 days of notice | Termination not warranted due to timely cure; affirmed in SDA’s favor on termination |
| Whether Wong is entitled to damages for breach of contract/unjust enrichment if Paragraph 16 prohibits public cabin rentals | Wong seeks damages or disgorgement for prohibited rentals | Lease lacks penalty/percentage rent terms; unjust enrichment unlikely | Remand to allow damages/disgorgement theories if remand finds breach |
| What about attorneys’ fees and costs on appeal | Wong prevailed on cabin rentals; should recover | Ambiguity prevents prevailing-party status | ICA’s fee/cost reversal vacated; remand to determine prevailing party |
Key Cases Cited
- Food Pantry v. Waikiki Business Plaza, 58 Haw. 606 (Haw. 1978) (equity may prevent forfeiture; compensation instead of forfeiture when appropriate)
- Aickin v. Ocean View Investments Co., 84 Hawai'i 447 (Haw. 1997) (equitable relief for nonwillful breaches; factors for extending lease)
- Lealaimatafao v. Woodward-Clyde Consultants, 75 Haw. 544 (Haw. 1994) (including indicates illustrative, not exclusive, meaning)
- Brown v. KFC National Mgmt. Co., 82 Hawai'i 226 (Haw. 1996) (contract interpretation; ascertain intention of parties)
- Cho Mark Oriental Food v. K & K Intern., 73 Haw. 509 (Haw. 1992) (contract terms interpreted by plain, ordinary meaning)
- Tsunoda v. Young Sun Kow, 23 Haw. 660 (Terr. 1917) (expressio unius est exclusio alterius; lease interpretation context)