Background
Jared Kawaoka Murayama alleged that he hired Kalani Construction Incorporated to build a warehouse on land owned by a family trust and purchased equipment for the project. He sued KCI, Randal K. Miyashiro, Sr., and others over the alleged conversion of that equipment. KCI and Miyashiro counterclaimed, alleging that the parties had formed an oral partnership to develop the property and that Murayama had failed to pay or share project profits.
The circuit court dismissed Murayama’s complaint on summary judgment, reasoning that the trust, rather than Murayama individually, was the real party in interest. Following an eight-day trial limited to the counterclaims, a jury awarded KCI and Miyashiro approximately $10.76 million across declaratory-relief, breach-of-contract, unjust-enrichment, and misrepresentation claims. The circuit court also imposed separate sanctions of $8,968.58 for Murayama’s attempt to pursue an interlocutory appeal and $329,763.18 for a question asked at trial, and later awarded prevailing-party fees and costs.
The Court’s Holding
The Intermediate Court of Appeals held that the circuit court erroneously dismissed Murayama’s complaint. The record supported Murayama’s status as the real party in interest, and, even if the claims should have been brought in the trustees’ names, KCI and Miyashiro waited more than three years to raise the objection. Hawai‘i Rule of Civil Procedure 17(a) did not permit dismissal on that late, technical ground without allowing reasonable time for ratification, joinder, or substitution. Because the complaint and counterclaims arose from the same construction arrangement and equipment dispute, they should have been tried together.
The appellate court also held that denying all requested discovery relief was outside the circuit court’s permissible discretion after KCI disclosed, only after discovery closed, that project bookkeeping records had existed but had been deleted. It reversed both sanctions because the record did not establish sanctionable bad faith or fees caused by the challenged conduct. The court affirmed the denial of Murayama’s partial-summary-judgment motion concerning the alleged partnership and affirmed summary judgment for Samuel K. Thronas Construction, Inc., but vacated the final judgment, related trial and judgment orders, and prevailing-party fee award and remanded for a new trial on the complaint and counterclaims.
Key Takeaways
- A real-party-in-interest objection may be waived when it is not raised with reasonable promptness, and Rule 17(a) generally requires an opportunity to cure before dismissal.
- A court may exceed its discretion by denying every form of discovery relief when a party belatedly reveals that relevant business records existed and were deleted.
- Bad-faith sanctions require specific findings supported by clear evidence, and fee sanctions must be tied to attorneys’ fees unnecessarily caused by the sanctioned conduct.
- On remand, the verdict form must distinguish the parties’ individual and trustee capacities, avoid damages for declaratory relief, and present unjust enrichment only as an alternative to contract recovery.
Why It Matters
The decision underscores Hawai‘i courts’ preference for resolving disputes on their merits instead of dismissing claims through late procedural objections. It also illustrates the risks created when missing records are disclosed only after discovery has closed and the opposing party receives no meaningful opportunity to investigate or use that disclosure.
For trial lawyers, the opinion offers practical guidance on sanctions and special verdicts: findings of bad faith must be precise and evidence-based, damages must correspond to properly pleaded claims and parties, and equitable recovery cannot duplicate an available contract remedy.