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Cox v. Cox.

Citations: 138 Haw. 476; 382 P.3d 288; 2016 Haw. LEXIS 197Docket: SCWC-12-0000762

Court: Hawaii Supreme Court; August 16, 2016; Hawaii; State Supreme Court

Original Court Document: View Document

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The Supreme Court of Hawaiʻi addressed the case of Bruce Edward Cox v. Carlyn Davidson Cox, focusing on the applicability of Hawaiʻi Family Court Rules (HFCR) Rule 68 regarding costs and attorney's fees in family court cases. The court determined that both the 2006 and 2015 versions of HFCR Rule 68 do not apply to cases governed by Hawaiʻi Revised Statutes (HRS) 580-47. The reasons for this conclusion include: (1) Rule 68 conflicts with HRS 580-47; (2) it presents analytical issues for cases under HRS 580-47; (3) its application may not align with equitable principles in family court; and (4) it could unduly pressure parties to settle. Consequently, HRS 580-47 is the sole authority for awarding attorney’s fees in relevant cases, ruling that Husband is not entitled to appellate attorney’s fees under HFCR Rule 68.

The background involves a divorce action in which Husband proposed a settlement of $9,000 to Wife, which she rejected. The family court ultimately issued a decree requiring Wife to pay Husband $22,223.46. Following an unsuccessful appeal by Wife, Husband sought post-offer attorney’s fees of $38,163.39 based on the disparity between his offer and the final decree. The family court awarded him $18,051.12 for trial fees but denied the appeal for fees, reasoning that Husband's offer did not reflect the court's order that favored him.

The family court denied Husband's request for appellate costs, stating that no Rule 68 offer was submitted regarding the appeal. The court indicated that even if Husband believed appellate costs were automatically included in the Rule 68 offer, it would still deny such costs and suggested he apply to the appellate court instead. The August 6, 2012 family court order did not show that the award of post-offer trial fees and costs was equitable or considered equitable factors as required by HRS 580-47. Husband appealed this order, arguing that the court erred in denying his motion for appellate fees related to Wife’s appeal. The Intermediate Court of Appeals (ICA) vacated the family court's order, asserting that appellate fees are recoverable under HFCR Rule 68 (2006), and remanded the case for the family court to assess the equity of awarding those fees based on HRS 580-47. Husband challenged the remand, asserting his legal entitlement to appellate fees, that the family court had already considered equitable factors in the trial, and that the denial violated his due process and equal protection rights. The certiorari question revolves around whether Husband is entitled to appellate fees under HFCR Rule 68, which states such fees are incurred after a settlement offer is made. The ICA referenced Nelson v. University of Hawaiʻi to support its position that appellate fees fall within this timeframe. However, it was determined that HFCR Rule 68 does not apply to cases governed by HRS 580-47, as the latter grants the family court discretion in awarding attorney’s fees based on equity, while the former requires fees to be awarded automatically unless the court finds it inequitable. Thus, there is a conflict between the discretionary nature of HRS 580-47 and the mandatory provisions of HFCR Rule 68.

HRS 580-47 mandates the family court to evaluate multiple factors and the overall circumstances when determining the justness and equitableness of awarding attorney’s fees. In contrast, HFCR Rule 68 simplifies this process, presenting the award of attorney’s fees to the party-offeror as presumptively mandatory, which deviates from the statutory requirement. The 2015 HFCR Rule 68 removes references to HRS 580-47, suggesting a disconnect from the statute. Under HRS 580-47, the onus is on the offeror to prove the fairness of the fee award, while HFCR Rule 68 shifts this burden to the offeree to demonstrate why the award would be inequitable. Consequently, if an offeror establishes that the judgment is not patently more favorable than their offer, a presumption for awarding fees arises, placing the burden on the offeree. This rule establishes a presumption of equity based on the judgment's comparison to the offer, diverging from HRS 580-47's requirement for a demonstrated fairness analysis. The inconsistency is illustrated in a case where the family court awarded Husband attorney’s fees based on HFCR Rule 68 after determining that Wife’s judgment was not patently more favorable than Husband’s offer, without addressing the fairness and equity principles outlined in HRS 580-47. Had Husband sought fees under HRS 580-47, the court would have needed to ascertain the justness and equitableness of the award, rather than solely comparing the offer and judgment. The court's silence on the equity of the fee award indicates a failure to consider the necessary factors, highlighting the critical differences between the rule and the statute.

HFCR Rule 68 is deemed to abridge the substantive rights of parties involved in family court proceedings by altering the criteria for awarding post-offer attorney’s fees, which conflicts with HRS 580-47's stipulation that such fees can only be awarded at the court's discretion, considering justice and equity. Consequently, HFCR Rule 68 is inapplicable to cases governed by HRS 580-47, necessitating that requests for attorney’s fees be assessed based on HRS 580-47(a) and (f). Additionally, the rule may coerce parents into settlements regarding custody and visitation due to the threat of incurring the other party's attorney’s fees, further indicating its impact on substantive rights. The court does not express an opinion on the rule's applicability to family court cases outside of HRS 580-47. The husband’s claims of constitutional due process and equal protection violations are not addressed due to a lack of substantive arguments supporting these claims, aligning with precedents that allow the court to disregard unsubstantiated contentions. Therefore, since HFCR Rule 68 does not pertain to HRS 580-47 cases, the husband’s arguments related to this rule are deemed unnecessary for consideration.

HFCR Rule 68, akin to HRCP Rule 68, allows parties to submit settlement offers more than 10 days before trial, which can lead to a judgment if accepted within that period. However, if the offeree's final judgment isn't more favorable than the settlement offer, they must cover the offeror's costs incurred post-offer. This rule is problematic in family court due to its coercive nature and incompatibility with issues often decided in such proceedings, as seen in cases like In re Marriage of Saunders and Mohr v. Mohr. These cases illustrate that similar civil procedure rules do not apply to family law matters, which require a multifactor analysis for attorney's fees based on total circumstances. Additionally, offers under HFCR Rule 68 can pertain to specific issues in divorce, including custody or support, and should be evaluated individually rather than as a comprehensive judgment. The ICA clarified that an offer of settlement can address specific items rather than all issues in a divorce case.

In Owens v. Owens, the Intermediate Court of Appeals (ICA) addressed the application of HFCR Rule 68 concerning custody offers in divorce proceedings, emphasizing that offers must be compared "as a whole" rather than item-by-item. The ICA cited other jurisdictions, like North Carolina, which exempt domestic relations cases from civil procedure rules governing offers of judgment, highlighting that such a nuanced comparison in family law cases is often unmanageable due to the complexity of issues, including custody, support, and property division. The court pointed out that while an item-by-item analysis may seem logical, it conflicts with HFCR Rule 68's requirement to evaluate the entirety of a judgment against the offer. The discussion illustrated potential complications in determining whether a judgment is "patently more favorable" than an offer, particularly when minor differences exist in custody arrangements. The analysis reflects the difficulty in quantifying the perceived value of distinct aspects of custody arrangements, as perspectives on what is favorable vary between parties, complicating the determination of post-offer attorney’s fees. Overall, the court suggested that the comparative analysis required by HFCR Rule 68 poses significant challenges in family court cases due to the personalized nature of the judgments involved.

HFCR Rule 68 presents significant challenges in family court proceedings, particularly regarding its application to non-tangible, non-monetary aspects of family court judgments. The complexity of evaluating whether to accept an HFCR Rule 68 settlement offer stems from the multifaceted nature of family court decisions, which often transcend simple monetary valuation. This complexity is compounded by the potential for the rule to coerce settlements, as it imposes sanctions that differ markedly from those under Civil Procedure Rule 68, which does not include attorneys' fees in the definition of costs. In contrast, HFCR Rule 68 explicitly requires a party who receives a judgment not more favorable than the offer to pay reasonable attorneys' fees incurred after the offer was made. This distinction can significantly influence a plaintiff's decision-making process regarding settlement offers.

Furthermore, HFCR Rule 68 is broader than its federal counterpart, as it allows for the award of post-offer costs even when the judgment is in favor of the defendant-offeror, a situation not addressed by the federal rule, which only applies when the plaintiff receives a less favorable judgment than the defendant's offer. This expansive reach of HFCR Rule 68 raises further analytical difficulties for family court parties, complicating their ability to assess the implications of accepting or rejecting settlement offers.

HFCR Rule 68 is more impactful than Civil Procedure Rule 68, particularly regarding attorney's fees, which can be substantial even in low-conflict cases. In this instance, the family court awarded the Husband $18,051.12 in post-offer trial fees and costs. Unlike the Civil Procedure Rules, which automatically grant costs to prevailing parties under HRCP Rule 54(d)(1), HFCR Rule 54(d) only allows costs when specifically provided by statute or agreement. If an offeree rejects a settlement offer under Civil Procedure Rule 68 and subsequently receives a less favorable judgment, they must pay the offeror's post-offer costs and lose their own entitlement to costs. This differs in family court, where there is no automatic entitlement to costs or fees. Thus, the consequence for an offeree rejecting an offer under HFCR Rule 68 extends beyond merely forgoing typical litigation benefits; it includes the obligation to pay costs and fees that are not routinely awarded in family court, resulting in a greater potential financial loss. HFCR Rule 68 aims to encourage settlements before contested hearings, and its stricter penalties reflect this goal, highlighting the differences in the frameworks of family court versus civil proceedings.

Decision-making in family court proceedings often involves complex motivations beyond financial considerations, as highlighted in Leeming, 490 P.2d at 345. The application of HFCR Rule 68 can inadvertently pressure parties into settlement rather than encouraging it, particularly in sensitive matters like child custody and visitation. This rule allows judgments on custody and visitation issues, which must prioritize the child's best interests (HRS 571-46). The ICA has noted that financial implications should not influence custody decisions.

Several cases illustrate the problematic nature of HFCR Rule 68 in custody disputes. In Criss, the family court's judgment closely mirrored the wife's settlement offer regarding custody, leading to the conclusion that it was not more favorable, despite additional details on visitation. Owens raised questions about the specificity of settlement terms and whether the family court appropriately compared the wife's offer with the court's judgment on an issue-by-issue basis. In Brutsch v. Brutch, the ICA criticized the family court for not separating custody issues from other divorce matters when assessing HFCR Rule 68 requests. Similarly, Nakasone v. Nakasone involved custody provisions in both parties' offers, underscoring the significance of custody discussions in the settlement process.

The custody issue was resolved through an out-of-court stipulation, and the appeal centered on whether HFCR Rule 68's comparative analysis applied to pretrial settled issues. The Intermediate Court of Appeals (ICA) affirmed its applicability. HFCR Rule 68 can impose penalties on a party-offeree, potentially discouraging them from contesting custody and visitation awards in cases where they genuinely believe the offers are not in the child's best interests. This coercive nature of the rule, particularly in family court proceedings under HRS 580-47, raises concerns about its effect on parties' willingness to seek justice. The dissent argues that the matters of appellate fees and HFCR Rule 68's applicability are distinct and should undergo traditional review processes. However, the court maintains it has the authority to modify rules without formal amendment processes, referencing previous cases where similar actions were taken. The ruling emphasizes that HRS 580-47 should govern attorney's fees and costs in related cases, limiting HFCR Rule 68's application.

Petitioner's relocation constituted a significant change in circumstances justifying a reevaluation of the child's best interests. The court addressed the necessity of applying the material change of circumstances standard for custody modification, despite neither party raising it. The Waldecker case did not invoke the plain error doctrine. In Akamine, the court resolved an issue of attorney's fees without relying on plain error because the parties did not present a crucial legal argument related to the promissory notes and mortgage. This precedent illustrates that when a court resolves a properly preserved legal issue, the plain error doctrine is inapplicable.

The primary issue at hand is whether Husband is entitled to appellate attorney's fees under HFCR Rule 68, which he properly preserved. A critical legal question remains unaddressed: the applicability of HFCR Rule 68 to family court cases under HRS § 580-47. The court must address this issue, as failing to do so simply because the parties did not raise it would contravene established legal principles. The court has previously affirmed that it is not bound by the parties' stipulations on legal questions and must conduct a de novo review. Furthermore, the court has a duty to recognize applicable law sua sponte, as demonstrated in prior cases. The ruling in Waldecker overturned earlier appellate decisions that required proof of a material change in circumstances for custody modifications, as that standard conflicted with HRS § 571-46(a)(6). The conclusion notes that the evolution of court rules is not flawless, leading to instances where the court has had to invalidate or limit rules that conflict with legislative statutes.

The court emphasizes its responsibility to address errors in its rules, particularly when such errors adversely affect litigants' substantive rights. It cites Justice Frankfurter's view that wisdom should not be disregarded, even if it arrives late. The dissenting opinion advocates for the continued application of HFCR Rule 68 in family court cases under HRS § 580-47, despite the rule's presumption of entitlement to fees and costs, which the statute does not support. The court rejects this approach, asserting that HFCR Rule 68 is inconsistent with HRS § 580-47 and undermines fairness and equity in family court proceedings. The rule's requirement for comparative analysis of nonmonetary aspects of judgments is deemed unsuitable for family law issues, and its penalties could improperly influence settlements. Thus, it concludes that HRS § 580-47 should govern attorney's fees and costs in family court cases. The court vacates the Intermediate Court of Appeals (ICA) Judgment on Appeal concerning the denial of appellate fees and costs, and the case is remanded to the family court for reconsideration of fees and costs under HRS § 580-47. This decision establishes a new legal rule applicable only to this case and others pending appeal or not yet final when rendered.