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IN THE SUPREME COURT OF THE STATE OF HAWAI#I
---o0o---
CARMEN T. NAKASONE, Respondent/Plaintiff-Appellee
vs.
GERALD NAKASONE, Petitioner/Defendant-Appellant
NO.  23460
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(FC-D NO.  98-0009)
JULY  30,  2003
MOON, C.J., LEVINSON, NAKAYAMA, AND ACOBA, JJ.,
AND CIRCUIT JUDGE PERKINS, ASSIGNED BY REASON OF VACANCY
OPINION OF THE COURT BY ACOBA, J.
We hold that matters in an offer of settlement made
pursuant to Hawai#i Family Court Rules  (HFCR) Rule  68, which are
initially rejected but later settled by agreement before trial,
are not subject to an award of attorney’s fees and costs under
Rule  68.    We granted certiorari to review the decision of the
Intermediate Court of Appeals1  (ICA) in No.  23460, Nakasone v.
1
ICA  Chief  Judge  James  S.  Burns  authored  the  opinion,  and was
joined  by  Associate  Judges  Corinne  K.A.  Watanabe  and  Daniel  R.  Foley.




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Nakasone, slip op.  (Haw. Ct. App. Feb.  27,  2002), which held to
the contrary.2
I.
On November  24,  1998, Petitioner/Defendant-Appellant
Gerald Nakasone  (Petitioner) made a HFCR Rule  68 offer to
Respondent/Plaintiff-Appellee Carmen T. Nakasone  (Respondent) as
to certain terms of the divorce decree to be entered between
them.    On December  3,  1998, Respondent responded by disagreeing
with parts of the offer and effectively rejected it.    On March  2,
1999, the fifth circuit family court  (the court)3 accepted a
stipulation by Petitioner and Respondent as to certain issues,
which effectively mirrored some of the terms in the November  24
offer.    However, certain parts of the offer were not accepted and
the issues involved were ultimately tried by the court.    On
September  9,  1999, the court filed its findings, conclusions and
decree granting the divorce and awarding child custody.    On
September  17,  1999, Petitioner moved for attorney’s fees and
costs in the amount of  $19,488.36.    On January  27,  2000, the
court entered an order awarding attorney’s fees in the amount of
2
Hawai#i  Revised  Statutes  (HRS)  §  602-59(b)  (1993)  provides  as
follows:
(b)    The  application  for  writ  of  certiorari  shall
tersely  state  its  grounds  which  must  include  (1)  grave
errors  of  law  or  of  fact,  or (2)  obvious  inconsistencies in
the  decision  of  the  intermediate  appellate  court  with  that
of  the  supreme  court,  federal  decisions,  or  its  own
decision,  and  the  magnitude of  such  errors  or
inconsistencies  dictating  the  need  for  further  appeal.
3
The  Honorable  Max  W.J.  Graham,  Jr.  presided  over  this  matter.
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$5,000.00.    In its findings to the order, the court determined
which issues had been settled by stipulation, which had been
tried, and the disposition of those issues tried.
In his appeal considered by the ICA, Petitioner
maintained that he should be awarded  $19,488.36 in attorney’s
fees and costs he reasonably incurred after a November  24,  1998
offer made pursuant to HFCR Rule  68, instead of the  $5,000,00
awarded by the court.    Petitioner did not contest any of the
findings of fact contained in the January  27,  2000 court order
granting Petitioner’s request for attorney’s fees in part and
denying the request of Respondent for attorney’s fees.    However,
he contested conclusions of law nos.  6,  7,  8 and  12 and paragraph
2 of the order.4    The court’s conclusions concerned HFCR Rule  68,
which permits the court to award attorney’s fees and costs to the
offeror of a Rule  68 offer that is more favorable than the terms
of the ultimate decree or order.    In its conclusions, the court
determined that attorney’s fees would not be awarded, however, as
to those parts of the offer that were initially rejected by
Respondent but later settled without trial.    The aforesaid
conclusions and paragraph of the order state as follows:
4
In  her  answering  brief,  Respondent  raised  as  error  several
statements  in  findings  of  fact  nos.  24f,  h,  and  k  as  “clearly  erroneous”  and
conclusions  of  law  nos.  7,  10,  and  12  as  “wrong.”    However,  Respondent  did  not
appeal  or  cross-appeal  from such  findings  and  conclusions  and,  therefore,
could  not  raise  these  matters  as  error.    The  ICA  noted  that  Respondent
“challenges  the  January  27,  2000  [findings  of  fact]  nos. 24f,  24h,  and  24k,
and  [conclusions  of  law]  nos.  7,  10,  and  12[,  but]  did  not  cross-appeal  and,
therefore,  is  not  authorized to  assert  such  challenges[.]”    Slip  op.  at  16.
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II.    CONCLUSIONS  OF  LAW
2.    If  the  requirements  under  HFCR  Rule  68  are  met,
then  the  [c]ourt  shall  make an  award  of  resonable  attorney’s
fees  and  costs unless  the  [c]ourt  specifically  determines
that  such  an  award  would  be inequitable  considering  the
provisions  of  HRS  [§]  580-47.
6.    The  reference  in  HFCR  Rule  68  to  the  equitability
provisions  in  HRS  [§]  580-47 gives  the  [f]amily  [c]ourt the
discretion,  in  the  light  of the  consideration  stated  in HRS
[§]  580-47,  to  award  such  attorney’s  fees  and  costs  as  shall
appear  just  and  equitable.
7.    The  [c]ourt  concludes  that  where  one  party  makes  a
HFCR  Rule  68  offer  which  is rejected  by  the  other  party, but
where  they  subsequently  enter  into  a  settlement  agreement
resolving  some  of  the  issues contained  in  the  Rule  68  offer,
and  where  no  provision  is  made  in  the  settlement  agreement
for  an  award  of  attorney’s  fees,  then those  Rule  68  issues
which  are  resolved  shall  not be  subject  to  a  further  award
of  attorney’s  fees  under  HFCR  Rule  68.
8.    As  a  result,  the  [c]ourt  concludes  that  the  matters
raised  in  [Petitioner’s  o]ffer  which  were  rejected by  [Respondent]
in  [Respondent’s  r]esponse, but  were  later  settled pursuant  to  the
Stipulation, are  not  subject  to  a  further award  of  attorney’s  fees
or  costs.
12.    On  the  basis  of  HFCR  Rule  68,  and  taking  into
consideration  the  factors  set  forth  in  HRS  [§]  580-47,  and
giving  consideration  to  all of  the  circumstances  of  this
case,  the  [c]ourt  concludes that  it  would  be  just  and
equitable  to  order  [Respondent]  to  pay  a  portion  of
[Petitioner’s]  costs  and  attorney’s  fees  in  the  amount  of
FIVE  THOUSAND  AND  NO/100  DOLLARS  ($5,000.00).
III.    ORDER
2.  [Petitioner’s]  request  for  attorney’s  fees  and
costs  is  granted  in  part  and [Respondent]  is  ordered  to pay
for  a  portion  of  [Petitioner’s]  attorney’s  fees  the  sum of
FIVE  THOUSAND  AND  NO/100  DOLLARS  ($5,000.00).
(Emphases added.)
On appeal, the ICA vacated the January  27,  2000 order
and the May  15,  2000 order denying reconsideration and remanded
the case.    Because the divorce proceedings were filed in  1998,
the  1999 version of HFCR Rule  68 applied.    The ICA  “conclude[d]
that there is no substantive difference between HFCR Rule  68
(1999) and HFCR Rule  68  (2000)[]  .  .  .  [and] appl[ied] HFCR
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Rule  68  (2000).”    Slip op. at  7.    We agree with respect to the
issue relevant to this case.    As set forth by the ICA,
HFCR  Rule  68  was  amended  effective  January  1,  2000.    With
the  additions  bolded  and  deletions  bracketed,  HFCR  Rule  68
(2000)  states  as  follows:
At  any  time  more  than  20  days  before  any
contested  hearing held  pursuant  to  HRS  sections  571-11
to  14  (excluding  law  violations  and  criminal  matters)
is  scheduled  to  begin,  [either]  any  party  may  serve
upon  the  adverse  party  an  offer  to  allow  a  [decree  or
order]  judgment  to  be  entered  to  the  effect  specified
in  the  offer.    Such  offer  may  be  made  as  to all  or
some  of  the  issues,  such  as custody  and  visitation.
Such  offer  shall  not  be  filed  with  the  court,  unless
it  is  accepted.    If  within  10  days  after  service  of
the  offer  the  adverse  party serves  written  notice  that
the  offer  is  accepted,  [either]  any  party  may  then
file  the  offer  and  notice  of acceptance  together  with
proof  of  service  thereof  and thereupon  the  court  shall
treat  [the  matter  as  an  uncontested  proceeding  and
schedule  an  appropriate  hearing,  if  necessary] those
issues  as  uncontested.    An  offer  not  accepted  shall  be
deemed  withdrawn and  evidence  thereof  is  not
admissible,  except  in  a  proceeding  to  determine  costs
and  attorney’s  fees.    If  the  [decree  or  order]
judgment  in  its  entirety finally  contained  by  the
offeree  is  patently  not  more favorable  [as  a  whole]
than  the  offer,  the  offeree must  pay  the  costs,
including  reasonable  attorney’s  fees  incurred  after
the  making  of  the  offer,  unless  the  court  shall
specifically  determine  that such  would  be  inequitable
in  accordance  with  the  provisions  of  HRS  section  580-
47,  [as  amended.    The  fact  that  an  offer  is  made  but
not  accepted  does  not  preclude  a  subsequent  offer] or
other  applicable  statutes,  as  amended.
Slip op. at  2  (boldfaced font in original)  (emphases added).
The ICA posited that  “an HFCR Rule  68 offer may be made
to completely settle one or more of the following issues:
(1) dissolution of marriage;  (2)(a) child custody  (legal and
physical) and visitation;  (2)(b) child support and education;
(3) spousal support; and/or  (4) division and distribution of all
of the joint and separate property and debts of the parties[,]”
id. at  19  (footnote omitted), and that Petitioner had  “made
offers regarding issues  (2)(a),  (2)(b), and  (4).”    Id.
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After reviewing Petitioner’s Rule  68 offer, the ICA
held that,  “[w]ith respect to issue  (4),  .  .  .  [Petitioner’s
o]ffer was insufficient for purposes of HFCR Rule  68 because it
pertained to the division and distribution of some but not all of
the joint or separate real and personal property and debts.”    Id.
In arriving at this conclusion, the ICA indicated that Petitioner
“offered that  [Respondent]  ‘can have all of the personal property
and household effects at the marital residence’ and that the  1996
pipe horse trailer, the fishing rods/reels, the horse, the animal
trophies, the  1998 trash trailer and the  1995 Jeep Cherokee were
located at the marital residence[, but that h]is silence as to
the  1989 Ford  350 and the guns indicates that they were not at
the marital residence and[, thus,] were not covered by his
offer.”    Id. at  19-20.    The ICA then disagreed with conclusion
nos.  7 and  8, see supra, on the ground that settlement of a
previously rejected offer or portion thereof did not preclude an
award of attorney’s fees under HRCR Rule  68:
The  family  court  erroneously imposes  the  burden  of  settling
the  question  of  attorney  fees  and  costs  on  the  HFCR  Rule 68
offeror  who  settled  whereas that  burden  should  be  imposed  on
the  HFCR  Rule  68  offeree  who settled  after  previously
rejecting  the  HFCR  Rule  68  offer.    With  respect  to  HFCR Rule
68,  the  fact  that  the  decree or  order  resulted  from  a  post-
offer  stipulation  rather  than  a  contested  trial  is  not
relevant  or  material.
Id. at  20.
As to issues  2(a) and  2(b) that it posited, the ICA
apparently held that:                                                    (1) the question remaining was  “whether
the entirety of those parts of the judgment resolving issues  2(a)
and  2(b)  ‘is patently not more favorable to  [Respondent] than the
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offer’ pertaining to issues  2(a) and  2(b)[,]” id. at  20-21
(brackets omitted), and that the court must decide that question
on remand; and  (2) as to issues  2(a) and  2(b), if the court did
not award attorney’s fees and costs as requested because  “it
would be inequitable in accordance with the provisions of HRS
§  580-47 to order the party to pay more than  $5,000[,]” it must,
“pursuant to HFCR Rule  68, specifically determine[] that it would
be inequitable  .  .  .  [and] state its reasons for its decision.”
Id. at  22  (parentheses omitted).
II.
In his application, Petitioner maintains that  (1)  “the
ICA exceeded the proper scope of review  .  .  . when it found
invalid that portion of  [Petitioner’s] offer which pertained to
the division of the parties’ property and debts[,]”  (2) his offer
was  “sufficiently comprehensive as to the division of the
parties’ property and debts[,]” and  (3) the family court was
obligated to  “make an award of those attorney’s fees and costs
reasonably incurred by the offeror following the date of the
Rule  68 offer”  “[w]here the  [c]ourt has determined that it would
not be inequitable to award the offeror his attorney’s fees and
costs.”
With all due respect, we must disagree with the ICA
and, accordingly, we reverse the ICA’s decision.
III.
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Initially, as to the first and second grounds raised by
Petitioner’s writ application, we believe the ICA erred in
holding that Petitioner’s offer with respect to joint and
separate property and debts5 of the parties was insufficient.    As
Petitioner points out, his  “offer  .  .  . was sufficiently specific
to satisfy the requirements of Rule  68.”    Paragraph  10 of
Petitioner’s offer indicated that Respondent  “can have all of the
personal property and household effects at the marital residence
should she accept this proposal.”    Petitioner maintains in his
Application that
[Respondent’s]  December  3,  1998  response  to  [Petitioner’s]
offer  confirms  the  parties’ mutual  understanding  that  all
items  of  personal  property  had  been  previously  divided  and
that  the  present  allocation of  personal  property  would  be
confirmed  should  [Respondent]  accept  [Petitioner’s]  offer.
She  stated  at  number  10:
10.                                                                                      [Petitioner]  has  household  effects  and  personal
property  at  his  Crossley  Road  residence.    When
[Petitioner]  moved  from  the marital  residence
all  of  the  household  items  and  personal  property
in  the  house  were  equally  divided  and  all  of
[Petitioner’s]  personal  property  was  given  to
him.
Petitioner relates that  “[n]either party asked for clarification
of any aspect of the offer  .  .  .  [and Respondent did not] raise
the issue in response to  [Petitioner’s] Rule  68  [m]otions and
this  [a]ppeal.”    The court found at finding  24j as follows:
j.    Paragraph  10.    Both  parties  seemingly  agreed  that
they  would  retain  their  household  effects  and  personal
property  at  their  individual residence.    The  Divorce  Decree
eventually  awarded  certain  other  personal  property  which was
5
The  ICA  did  not  address  how the  offer  failed  to  pertain to  debts.
The  only  items  noted  to  be  omitted  from  the  offer  concerning  property  were
“the  1989  Ford  350  and  the  guns[.]”    Slip  op.  at  20.
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not  itemized  in  either  [Petitioner’s]  Offer  or
[Respondent’s]  Response  to  the  parties.
Furthermore, Petitioner declares that  “[t]he ICA did not review
the evidence as to the location and value of the parties’
property, nor did the  [c]ourt even have the transcript of the
trial as it pertained to these items because  [Respondent] never
raised the issue on appeal.”                                               (Emphasis in original.)    In light
of the fact that there was no appeal from finding  24(j), the
issues posed by the ICA with respect to property distribution
should not have been decided.    See Poe v. Hawaii Labor Relations
Bd.,  97 Hawai#i  528,  536,  40 P.3d  930,  938  (2002)  (“Unchallenged
findings are binding on appeal.”                                           (Citations omitted.)); Grace
Business Dev. Corp. v. Kamikawa,  92 Hawai#i  608,  612 n.3,  994
P.2d  540,  545 n.3  (2000)  (challenge to the Hawai#i Administrative
Procedures Act was not raised on appeal and therefore not
addressed); State v. Kealoha,  95 Hawai#i  365,  374 n.11,  22 P.3d
1012,  1021 n.11  (App.  2002)  (objection to a verdict form  “not
raised on appeal” and accordingly was not addressed).
IV.
In connection with Petitioner’s third ground, HFCR
Rule  68 states,  “An offer not accepted shall be deemed withdrawn
and evidence thereof is not admissible, except in a proceeding to
determine costs and attorney’s fees.”    Thus, part of Petitioner’s
offer was effectively withdrawn by operation of Rule  68 as to
those parts of the offer not accepted by Respondent.
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The purpose of HFCR Rule  68 is  “to encourage settlements  ‘more
than  10 days before a contested matrimonial trial or a contested
hearing for an order is scheduled to begin.’”    Criss v. Kunisada,
89 Hawai#i  17,  22,  968 P.2d  184,  189  (App.  1998)  (citations,
brackets, and footnotes omitted).    By entering into a stipulation
of partial settlement, the parties in effect resolved certain
items out-of-court.    Accordingly, such items were removed from
the operative scope of Rule  68 and, to that extent, such matters
became  “uncontested.”    Because uncontested, the provisions of
Rule  68 with respect to the  “not more favorable” decree provision
of the Rule would be inapplicable, along with the concomitant
judicial authority to assess attorney’s fees.    Similarly, if a
stipulation of settlement as to such items resulted not from Rule
68 exchanges, but from an agreement outside the Rule, then the
attorney’s fees provision of Rule  68 likewise would be
inoperative.
V.
Inasmuch as the award of attorney’s fees hinges on a
comparison of the offer with the decree or order finally obtained
by the offeree, the Rule does not contemplate an award of
attorney’s fees if there is no decree or order finally obtained
by the offeree with respect to a subject contained within the
offer.    Where the issue that had been the subject matter of a
Rule  68 offer has been settled pre-trial by the parties
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themselves, it is removed from dispute in the proceedings and is
thus no longer the subject of an order  “finally obtained” by the
offeree.    Thus, contrary to the underlying assumption in the
ICA’s disagreement with conclusions of law nos.  7 and  8, a
Rule  68 question of assessing attorney’s fees and costs does not
survive as to an issue settled before trial.                            “[T]he fact that
the decree or order resulted from a post offer stipulation rather
than a contested case,” slip op. at  20, then, has a bearing on
whether attorney’s fees and costs remain an issue.    We conclude,
therefore, that contrary to the ICA’s holding, the court was
correct in ruling that matters raised in an offer that were
rejected but later settled pursuant to a pre-trial stipulation
would not fall within the scope of the costs provision in
Rule  68.
This construction is supported by the purposes of the
Rule.
In  this  appeal,  we  consider the  application  of  HFCR
Rule  68.    The  “primary  purpose  of  HFCR  Rule  68  is  to
encourage  settlements  ‘more than  10  days  before  a  contested
matrimonial  trial  or  a  contested  hearing  for  an  order  is
scheduled  to  begin.’”    Wood  v.  Wood,  82  Hawai#i  539,  541,
923  P.2d  956,  958  (App.  1996)  (quoting  HFCR  Rule  68);  [c]f.
Langaman  v.  Mike  Salta  Pontiac,  Inc.,  4  Haw.  App.  57,  67
n.9,  659  P.2d  752,  758  n.9  (1983)  (“Hawai#i  Rules  of  Civil
Procedure  (HRCP)  Rule  68  (1972)  ‘encourages  settlements and
discourages  vexatious  suits and  thus  diminishes  the  burden
of  litigation.’”                                                       (Quoting  12C  Wright  &  A.  Miller, Federal
Practice  and  Procedure:    Civil  §  3001  (1973).)).
Criss,  89 Hawai#i at  22,  968 P.2d at  189  (brackets and footnotes
omitted).    Accordingly, settlement of some but not all issues is
an objective served by the Rule.    See id. at  25,  968 P.2d at  192
(“By permitting an offeror to recover attorneys fees and cost
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with respect to an offer that encompasses less than all the
contested issues, settlements are facilitated, eliminating
unnecessary expenditures of time, energy, and resources.”).
VI.
In determining that Rule  68 applied to matters also
settled by stipulation, the ICA concluded that because the court
“only implicitly decided that it would be unjust and inequitable
to order  [Respondent] to pay an additional  $14,488.36[,]” slip
op. at  22, the case would have to be remanded for the court to
render reasons for limiting the award to  $5,000.00.    HFCR Rule  68
provides that  “the offeree must pay the costs, including
reasonable attorney’s fees incurred after the making of the
offer, unless the court shall specifically determine that such
would be inequitable in accordance with the provisions of HRS
[§]  580-47[.]”                                                         (Emphasis added.)    As to those issues not settled
but tried, the court did determine that  “[o]n the basis of HFCR
Rule  68, and taking into consideration the factors set forth in
HRS  [§]  580-47,  .  .  . it would be just and equitable to order
[Respondent] to pay a portion of  [Petitioner’s] costs and
attorney’s fees in the amount of FIVE THOUSAND and NO/100 DOLLARS
($5,000.00).”      In light of this and its findings, the court did
satisfy its duty to specifically determine that payment of a sum
greater than  $5,000.00 would be inequitable and remand was not
required for this purpose.
12




***FOR PUBLICATION***
VII.
For the foregoing reasons, we reverse the ICA’s
February  27,  2002 decision and affirm the family court’s
January  27,  2000 order.
Kurt Bosshard for petitioner/
defendant-appellant, on the
writ.
13

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