Court: Hawaii Intermediate Court of Appeals; October 28, 2005; Hawaii; State Appellate Court
Plaintiffs Bryan and Lilibeth Toney appeal the June 16, 2004 Final Judgment favoring Defendant Lemoto “Ray” Fauhiva, which also awarded Fauhiva $8,245.25 in costs and $5,745.00 in attorney fees. The Toneys owned residential land in North Kona, Hawai'i, where they were acting as owner-builders while constructing a residence. They contracted Fauhiva, a licensed masonry contractor, to build a retaining wall, which collapsed in August 2002. The Toneys filed a complaint on December 10, 2002, seeking damages related to the wall's collapse and alleging Fauhiva's non-compliance with HRS 444-25.5. After being permitted to amend their complaint, the Toneys asserted that Fauhiva's violations entitled them to relief under both HRS 444 and Chapter 480.
During the trial, it was agreed that the applicability of HRS Chapter 444 was a legal question, and that while the Toneys were owner-builders and Fauhiva was a licensed contractor, HRS 444-25.5 was not followed. The circuit court granted Fauhiva's motion for directed verdict, determining that Chapter 444 did not apply. The jury found Fauhiva 30% negligent and Bryan 70% negligent regarding the damages. The Final Judgment stated that the Toneys would recover nothing and dismissed all other claims with prejudice, concluding the case definitively.
On April 7, 2004, Fauhiva requested attorneys' fees and costs, leading to the circuit court partially granting this request on June 10, 2004, awarding him $8,245.25 in costs and $5,745.00 in attorney fees. A formal judgment was entered on July 14, 2004. The Toneys filed a notice of appeal on July 16, 2004, followed by an amended notice on July 20, 2004, with the appeal assigned to the court on December 20, 2004.
In their appeal, the Toneys argue:
A. The circuit court erred in granting Fauhiva a directed verdict regarding the Toneys’ claims under Hawaii Revised Statutes (H.R.S.) § 444-25.5, as noted in the March 30, 2004 order.
B. The court also erred in implicitly denying the Toneys’ motion for a directed verdict.
C. The circuit court's final judgment issued on June 16, 2004, and the July 14 judgment failed to include awards for the Toneys as mandated by H.R.S. § 444-25.5 and Chapter 480.
Hawaii appellate courts review directed verdict motions de novo, evaluating whether the evidence, viewed favorably toward the plaintiffs, lacks sufficient support for a jury verdict. Substantial evidence is defined as credible evidence of sufficient quality to support a reasonable conclusion. The court emphasizes that directed verdicts or judgments notwithstanding the verdict may only be granted when only one reasonable conclusion can be drawn.
Questions of statutory interpretation are also reviewed de novo, focusing on the legislature's intent derived from the statutory language within its overall context. Ambiguities in statutes must be addressed with careful consideration of their purpose.
In interpreting ambiguous statutes, courts can examine the surrounding context of the language, compare ambiguous terms, and utilize extrinsic aids to discern legislative intent. Legislative history and the underlying purpose of the law are key interpretive tools.
Specifically, HRS Chapter 444 pertains to contractors and includes an exemption for property owners or lessees who construct or improve buildings for personal use, provided they do not sell or lease these structures. This exemption excludes electrical or plumbing work, which must be performed by licensed individuals. Proof of sale or lease within one year after completion of the structure serves as prima facie evidence that the construction was intended for sale or lease, though there are exceptions for residential properties leased to employees.
Owners or lessees must register for these exemptions and face a three-year prohibition from engaging in related activities if found in violation. Additionally, repeated requests for exemptions within two years create a presumption of violation. Licenses are mandatory for acting as contractors under this chapter, and local permits require that applicants certify their licensing status or provide justification for any claimed exemptions. If claiming an exemption under section 444-2(7), applicants must confirm that the use of the building is personal and not for public occupancy.
Each county or local subdivision in the State is required to maintain an owner-builder registration list, which must include: the name of any owner or lessee claiming an exemption under section 444-2(7), the property address for the exempt activity, a description of the building or improvement, the approximate construction dates, and details about any electrical or plumbing work, including the name and license number of the involved contractor. Lack of registration serves as prima facie evidence that the exemption does not apply.
The county must verify the contractor's license against a state-provided list, updated quarterly, and confirm the applicant is the licensed contractor or their authorized agent. To qualify for the exemption, applicants receive a disclosure statement outlining that state law mandates construction by licensed contractors, allowing property owners or lessees to act as their own general contractor under certain conditions. They must supervise the construction and hire licensed subcontractors for electrical and plumbing work, ensuring compliance with all relevant laws and regulations.
If the owner sells or leases the building within one year of completion, it is presumed to be a violation of the exemption. Penalties for violations include fines of $5,000 or 40% of the building's appraised value for the first offense, and $10,000 or 50% for subsequent offenses. A building permit will not be issued until the applicant signs a statement confirming understanding of the disclosure form. Additionally, building inspectors must report any suspected violations of this chapter to the regulated industries complaints office.
Licensed contractors, before entering into contracts for home construction, must verbally explain all lien rights to the homeowner, covering the rights of all parties involved in the project.
Homeowners have the option to demand bonding for construction projects, which provides protection against contractor non-performance or failure to meet contract terms. The bonding cost is approximate but varies based on project specifics. Licensed contractors must furnish a written contract to homeowners prior to starting work, which includes detailed information as specified by regulations, must be signed by both parties, and is necessary for compliance. "Homeowner" encompasses owners or lessees of residential properties, including condominium and cooperative units. Violations of these requirements are classified as unfair or deceptive practices and fall under the enforcement provisions of HRS Chapter 480.
The Toneys are appealing a circuit court ruling that deemed HRS Chapter 444-25.5 inapplicable in their case, referencing previous court decisions. In Hiraga v. Baldonado, the court determined that a contractor’s failure to meet disclosure requirements barred recovery for work done and invalidated any lien claims on the property due to the contract being void under HRS 480-12. In Jones v. Phillipson, it was ruled that an owner-builder could still sue a contractor despite not meeting certain licensing conditions. The Toneys were operating under the owner-builder exemption, allowing them to act as their own contractors without needing to comply with licensing requirements, provided the work is for personal use.
Owner-builders are not required to comply with the provisions of HRS 444-9, but they are still subject to HRS 444-9.1. Licensed subcontractors hired by owner-builders must comply with HRS 444-25.5 when working with them. Owner-builders must act as their own general contractors, supervise their construction, and ensure compliance with all applicable laws and regulations. Building permits cannot be issued to owner-builders until they acknowledge understanding of a required disclosure form. Consequently, while owner-builders are exempt from many burdens under HRS Chapter 444, they also do not receive its benefits and protections. In this case, the Toneys did not benefit from HRS 444-25.5, and Fauhiva was not obligated to comply with it concerning the Toneys. The court affirmed the earlier judgments in favor of Fauhiva.
Bryan Toney testified about an agreement with Fauhiva for cash payment for construction services, while Fauhiva confirmed the agreement to build a retaining wall at $6 per square foot, with Toney providing materials and a "lifetime supply of fish." The total labor cost for the project was $5,500, and Fauhiva stated he intended for the wall to be permanent.
