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FOR PUBLICATION IN THE INTERMEDIATE COURT OF APPEALS OF THE STATE OF HAWAI#I ---o0o--JAZ, INC.; JOZAC, INC.; ZACHARIAH VANDERSCHYFF; and JOYCE HAVERKATE, Plaintiffs-Appellants/Cross-Appellees, v. RICHARD B. FOLEY dba ENVIRONMENTAL FIRST, Defendants, and FIRST HAWAIIAN LEASING, INC., Defendant-Appellee/Cross-Appellant NO. 24699 APPEAL FROM THE THIRD CIRCUIT (CIVIL NO. 98-160K) FEBRUARY 3, 2004 WATANABE, ACTING C.J., FOLEY, J., AND CIRCUIT JUDGE SAKAMOTO IN PLACE OF BURNS, C.J., AND LIM, J., RECUSED OPINION OF THE COURT BY FOLEY, J. I. INTRODUCTION

This case arises out of the purchase of a photo processing machine by Plaintiffs-Appellants/Cross-Appellees JAZ, Inc. (JAZ), JOZAC, Inc. (JOZAC), Zachariah Vanderschyff (Vanderschyff), and Joyce Haverkate (Haverkate) (collectively referred to as Jaz or Lessee). Jaz purchased the photo

processing machine from Richard B. Foley dba Environmental First

FOR PUBLICATION (Foley or Vendor) by way of an equipment lease through DefendantAppellee/Cross-Appellant First Hawaiian Leasing, Inc. (First HI Leasing or Lessor). Jaz appeals from the Amended Final Judgment filed October 30, 2001 (Amended Final Judgment) and the Findings of Fact, Conclusions of Law and Order filed February 12, 2001 in the Circuit Court of the Third Circuit (circuit court).1 Jaz contends the circuit court erred in holding: On appeal,

(1) Jaz had

accepted the equipment; (2) the risk of loss had passed to Jaz; (3) First HI Leasing's premature payment to Vendor was not a material violation of the lease; and (4) Jaz was obligated to begin lease payments when the equipment had not been delivered, installed, and inspected. First HI Leasing appeals from the Amended Final Judgment and the "Order Granting in Part Defendant First Hawaiian Leasing, Inc.'s Motion for an Award of Attorney's Fees and Costs Filed February 22, 2001," filed March 13, 2001 in the circuit court. First HI Leasing contends the circuit court abused its

discretion when it denied First HI Leasing reasonable attorney's fees based upon the amount of the Amended Final Judgment for prevailing on the claims of Jaz's complaint. First HI Leasing

also contends it should have been awarded attorney's fees based upon the amount of the alleged damages sought at trial by Jaz.

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The Honorable Ronald Ibarra presided.

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FOR PUBLICATION We conclude the circuit court erred as contended by Jaz and therefore vacate the Amended Final Judgment and the Findings of Fact, Conclusions of Law and Order filed February 12, 2001. II. BACKGROUND

In 1998 JAZ owned and operated a photo processing store at the King's Shop complex in Waikoloa, Hawai#i. JOZAC owned and

operated a store called "Zac's Photo" in the North Kona Shopping Center; the store provided photo processing, copying, and shipping services. Vanderschyff was the president of JAZ and

JOZAC, and Haverkate was the vice president, secretary, and treasurer of JAZ and JOZAC. On or about March 1998, Jaz sought to acquire a photo processing machine to expand their business. Jaz contacted Foley

about purchasing a used Noritsu, model 2211, photo processing machine (Noritsu). $50,000.00. Foley quoted the price of the Noritsu as

Jaz had previously purchased other photo processing Jaz contacted First HI Leasing to arrange

equipment from Foley.

a lease to acquire the Noritsu. On April 8, 1998, First HI Leasing approved a lease application from JAZ. On April 13, 1998, First HI Leasing and

JAZ executed Master Lease Agreement No. A3196 (Master Lease), a Non-Tax-Oriented Lease Addendum, an Addendum to Master Lease Agreement No. A3196, a UCC-1 Financing Statement, and Lease Schedule No. 66179. Vanderschyff and Haverkate, as individual

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FOR PUBLICATION guarantors, executed a Continuing Guaranty. On behalf of JOZAC,

Haverkate executed a Certificate for Corporate Resolutions Authorizing Guaranty of Lease(s). On behalf of JAZ, Vanderschyff

and Haverkate also executed an Officer's Certificate for Corporate Leasing Resolutions, and Vanderschyff executed a Negative Pledge Agreement. On April 13, 1998, Vanderschyff and Haverkate, on behalf of JAZ, also signed, but did not date, an Acceptance Certificate. On April 14, 1998, First HI Leasing prepared Purchase Order No. 11740 to Environmental Leasing and a check request in the amount of $50,065.00 payable to First Hawaiian Bank. On

April 15, 1998, Vanderschyff, as President of JAZ, signed a Notice of Warranties in Connection with Finance Lease and, as President of JOZAC, signed the April 13, 1998 Continuing Guaranty, making JOZAC a guarantor. At some point between April 13 and April 15, First HI Leasing filled in the date of April 15, 1998 on the Acceptance Certificate. On April 15, First Hawaiian Bank made a wire

transfer of $50,000.00 to Environmental First based upon a Wire Transfer Customer Authorization signed by First HI Leasing. Foley never delivered the Noritsu to Jaz. Jaz made

monthly lease payments totaling $13,732.02 to First HI Leasing; the last payment was received by First HI Leasing on March 3,

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FOR PUBLICATION 1999. On August 10, 1998, Jaz filed a complaint against Foley On May 17, 1999, First HI Leasing filed a

and First HI Leasing.

counterclaim against Jaz and a cross-claim against Foley. Default judgments against Foley were entered in favor of Jaz and First HI Leasing. After a bench trial, the circuit

court awarded judgment against Jaz and in favor of First HI Leasing on Jaz's complaint and First HI Leasing's counterclaim. The circuit court awarded First HI Leasing attorney's fees on its counterclaim based on twenty-five percent of the judgment amount, costs, and interest. III. A. STANDARD OF REVIEW

Findings of Fact (FoF) and Conclusions of Law (CoL)

We review a trial court's FOFs under the clearly erroneous standard. An FOF is clearly erroneous when, despite evidence to support the finding, the appellate court is left with the definite and firm conviction in reviewing the entire evidence that a mistake has been committed. An FOF is also clearly erroneous when the record lacks substantial evidence to support the finding. We have defined "substantial evidence" as credible evidence which is of sufficient quality and probative value to enable a person of reasonable caution to support a conclusion. [State v. ]Kotis, 91 Hawai#i[, 319,] 328, 984 P.2d[, 78,] 87 [(1999)] (footnote omitted). Hawai#i appellate courts review conclusions of law de novo, under the right/wrong standard. Under the right/wrong standard, this court examines the facts and answers the question without being required to give any weight to the trial court's answer to it. Robert's Hawaii School Bus, Inc. v. Laupahoehoe Transportation Co., Inc., 91 Hawai#i 224, 239, 982 P.2d 853, 868 (1999).

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FOR PUBLICATION Leslie v. Estate of Tavares, 91 Hawai#i 394, 399, 984 P.2d 1220, 1225 (1999) (internal quotation marks, citations, and brackets omitted; bracketed material in citation added). IV. A. Introduction. DISCUSSION

The central issue of this case is whether, under the Master Lease or Hawaii Revised Statutes (HRS) Article 490:2A (Leases), Jaz owes money to First HI Leasing for the Noritsu that was not delivered by Foley. There is a dispute as to whether

goods can be accepted prior to delivery under the Master Lease or HRS Article 490:2A. There is also a dispute as to whether Jaz

accepted the Noritsu under the terms of the Master Lease or HRS Article 490:2A. The parties also dispute whether Jaz owes rental

payments to First HI Leasing under a "hell or high water" clause in the Master Lease or under HRS

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