Background
Century Campus Housing Management sued Elda Hana, LLC and 2280 Kuhio Avenue Development, LLC (EH/KAD) in 2010 for breach of contract. EH/KAD counterclaimed. After prior appellate proceedings and a remand, EH/KAD filed a first amended counterclaim in March 2020, which Century answered.
Nearly four years passed with no substantive activity by EH/KAD. In January 2024, Century moved under Hawai‘i Rules of Civil Procedure Rule 41(b) to dismiss the amended counterclaim with prejudice for failure to prosecute. The circuit court decided the motion on the papers, finding that EH/KAD had taken no action for close to four years, and dismissed the counterclaim with prejudice. It later denied reconsideration and entered final and amended final judgments.
The Court’s Holding
The Intermediate Court of Appeals vacated the dismissal order, the order denying reconsideration, and both judgments, and remanded for further proceedings. A dismissal with prejudice is a severe, last-resort sanction under Erum v. Llego.
The circuit court’s record did not show that it considered lesser sanctions. Nor did it make the essential findings required for a dismissal with prejudice: deliberate delay or contumacious conduct, actual prejudice, and why a lesser sanction would not serve the interests of justice. The finding that EH/KAD had not prosecuted its counterclaim for nearly four years was therefore insufficient.
Key Takeaways
- A Rule 41(b) dismissal with prejudice requires more than prolonged inactivity.
- The trial court must make findings concerning deliberate delay or contumacious conduct and actual prejudice.
- The court must consider lesser sanctions and explain why they are inadequate before imposing dismissal with prejudice.
Why It Matters
The decision reinforces Hawai‘i’s strict requirements for terminating claims as a sanction for failure to prosecute. Trial courts must create a record showing both the necessary factual findings and why less severe measures cannot adequately address the conduct.
For litigants, even substantial delay does not by itself justify a merits-ending dismissal with prejudice absent the findings required by Erum.