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IN THE INTERMEDIATE COURT OF APPEALS OF THE STATE OF HAWAI#I ---o0o--STANDARD MANAGEMENT, INC., Plaintiff, v. BENJAMIN PAUL KEKONA, TAMAE M. KEKONA and NORTH SHORE SHUTTLE, Defendants/BENJAMIN PAUL KEKONA and TAMAE M. KEKONA, Third-Party Plaintiff-Appellees, v. PAZ F. ABASTILLAS, aka PAZ F. RICHTER, Third-Party Defendant-Appellant, and ROBERT A. SMITH and DALE MOANA GILMARTIN, Third-Party Defendants NO. 22750 APPEAL FROM THE FIRST CIRCUIT COURT (CIVIL NO. 89-3517) FEBRUARY 28, 2001 BURNS, C.J., WATANABE AND LIM, JJ. OPINION OF THE COURT BY LIM, J. Third-Party Defendant-Appellant Paz F. Abastillas aka Paz F. Richter (Abastillas) appeals the first circuit court's August 17, 1999 Final Judgment on Remand as to All Claims and All Parties, and the underlying Amended Stipulation for Dismissal with Prejudice (Amended Stipulation) of even date. On appeal, Abastillas contends that the circuit court exceeded its jurisdiction in vacating the previous Stipulation For Dismissal With Prejudice of the Third-Party Complaint (the Stipulation), filed on December 10, 1998, and amending the same -1-

immediately after vacatur.

Abastillas also argues that the

circuit court abused its discretion in granting the Third-Party Plaintiffs-Appellees, Tamae M. Kekona and Benjamin Paul Kekona (collectively, the Kekonas), relief under Hawai#i Rules of Civil Procedure (HRCP) Rule 60(b), because "they had no grounds for seeking relief under Rule 60(b)." We disagree with Abastillas'

contentions and affirm the judgment, for the following reasons.

I.

BACKGROUND.

The Kekonas met and became involved with Abastillas and attorney Robert A. Smith (Smith), Abastillas' employer and "common-law husband," in 1988. That year, Abastillas and Smith

began to assist the Kekonas in the sale of their shuttle bus business and, in 1989, the Kekonas agreed to sell their business to buyers introduced to them by Smith. Whilst Smith drafted the stock sale documents, Abastillas induced the elderly, married couple to enter into a partnership with her corporation, Standard Management, Inc. (SMI), for the purposes of bidding on and operating a tram service at Hanauma Bay. Smith, SMI's legal counsel, drafted the

partnership agreement and operating agreement for the new partnership. Almost from the moment they agreed to the

partnership with SMI, the Kekonas were plunged into a morass of

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legal and financial disputes involving Abastillas, SMI and Smith, many of which continue to this day.1 This appeal is the latest contest in the original litigation between the Kekonas and the Abastillas/Smith/SMI triad that began in 1989, and stems, in part, from this court's decision in Standard Management v. Kekona, No. 18388 (Haw. App. Nov. 25, 1997) (mem.). In 1989, SMI filed suit against the Kekonas, alleging unlawful ouster from the Hanauma Bay tram partnership. The

Kekonas counterclaimed against SMI for breach of contract and filed a third-party complaint against Abastillas and Smith that alleged, inter alia, that the Kekonas were fraudulently induced into the partnership by the couple's intentional misrepresentations regarding their business and professional expertise. In 1993, after a four-week trial, a jury rendered a special verdict in favor of the Kekonas on the complaint, the

1 For example, pending suits among Standard Management, Inc. (SMI), Paz F. Abastillas aka Paz F. Richter (Abastillas) and/or Robert A. Smith (Smith) and Tamae M. Kekona and Benjamin Paul Kekona (collectively, the Kekonas) include Kekona v. Abastillas, Civ. No. 93-3974-10, and Standard Management, Inc. and Abastillas v. Kekona, Supreme Court No. 22611, currently under consideration by this court.

The parties were also involved in a series of now-completed actions, including Abastillas v. Furuya, Civ. No. 92-0139-01, and Abastillas v. Kekona, 87 Hawai #i 446, 958 P.2d 1136 (1998).

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counterclaim and the third-party complaint.2

The jury awarded The damages

the Kekonas damages in the total amount of $703,750. included:

(1) $152,500 in special and general damages and attorneys' fees against SMI; (2) $200,000 in general damages, $25,000 in punitive damages, and $56,250 in attorneys' fees against Abastillas; and (3) $270,000 in general damages against Smith.

SMI, Abastillas and Smith appealed the Revised Judgment entered upon the jury's verdict. On November 25, 1997, we issued Standard Management, Inc. v. Kekona, No. 18388 (Haw. App. Nov. 25, 1997) (mem.), partly affirming and partly vacating the September 2, 1994 Revised Judgment. In summary, we affirmed the $152,500 in

damages and attorneys' fees awarded against SMI and the $25,000 in punitive damages awarded against Abastillas. However, we

remanded for a new trial on the issue of general damages against Abastillas for fraud,3 and for a new trial on the negligence claim against Smith. Id. at 27-28.

The jury found, in quit the partnership, that SMI agreement, that Abastillas had negligence was the legal cause

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pertinent part, that Abastillas had voluntarily had materially breached the operating defrauded the Kekonas, and that Smith's of damages sustained by the Kekonas.

3 We also vacated the portion of the Revised Judgment awarding the Kekonas attorneys' fees against Abastillas, and remanded this issue for redetermination after completion of the trial on remand. Standard Management v. Kekona , No. 18388 (Haw. App. Nov. 25, 1997) (mem.) at 2023.

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On March 18, 1998, the circuit court set the trial on remand for the week of November 30, 1998. however, the parties agreed to settle. Before trial started,

The Kekonas agreed to

accept $6,000 from Smith and $3,000 from Abastillas. To settle the negligence claim against Smith, the Kekonas filed their Third-Party Plaintiffs Kekonas' Acceptance of Third-Party Defendant Robert A. Smith's Offer of Judgment. However, in their case against Abastillas, the Kekonas agreed to enter into the Stipulation, upon receipt of the $3,000 settlement payment.4 The stipulation, in its entirety, read as follows:
COME NOW the parties hereto, by and through their respective counsel, and hereby stipulate, pursuant to Rule 41(a)(1)(B)5 of the Hawaii Rules of Civil Procedure, that the Third-Party Complaint of BENJAMIN PAUL KEKONA and TAMAE M. KEKONA against PAZ F. ABASTILLAS, a/k/a PAZ F. RICHTER, is hereby dismissed with prejudice. Counsel for all parties appearing in this action have signed this Stipulation for Dismissal With Prejudice.

(Emphases and footnote added.)

Upon receipt of the $3,000 on December 10, 1998, the Kekonas' attorney, Fred Paul Benco (Benco), signed the Stipulation For Dismissal With Prejudice of the Third-Party Complaint (the Stipulation).
5 Hawai #i Rules of Civil Procedure (HRCP) Rule 41(a)(1)(B) (1999) provides, in relevant part:

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(a)

Voluntary Dismissal: Effect Thereof.

(1) BY PLAINTIFF; BY STIPULATION. . . . an action may be dismissed by the plaintiff without order of court . . . (B) by filing a stipulation of dismissal signed by all parties who have appeared in the action. Unless otherwise stated in the . . . stipulation, the dismissal is without prejudice[.]

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The parties filed the Stipulation on December 10, 1998. The filing did not include the terms of the settlement agreement. However, the parties did read the terms of the settlement agreement into the record at a proceeding held on December 2, 1998:
[the Kekonas attorney, Fred Paul Benco (Benco)]: The third party plaintiffs will receive the sum of $3,000 from third-party defendant Abastillas on or by December 25th, 1998 in exchange for a dismissal with prejudice which will be signed by the attorneys and submitted to the Court. If the monies are not received by that time, then a judgment will enter in favor of the Kekonas against Ms. Abastillas for the $3,000.

A few weeks after the signing of the Stipulation, the Kekonas learned that Abastillas, through Smith, was claiming that the settlement encompassed the $25,000 punitive damages award we had affirmed on appeal. This was especially surprising to the

Kekonas, given their understanding that the Stipulation settled only their general damages claim against Abastillas. Hence, in

this appeal, the Kekonas maintain that it was never intended that they relinquish their $25,000 punitive damages judgment. In

contrast, Abastillas claims "that she intended just the opposite: she was willing to settle only if that claim was given up through a Rule 41 stipulation for dismissal with prejudice." On February 2, 1999, the Kekonas filed their Motion to Vacate Stipulation for Dismissal and/or for New Entry of Dismissal Nunc Pro Tunc and/or for Other Appropriate Relief (the -6-

Motion to Vacate).

They brought the motion under various In

subsections of HRCP Rule 60(b), including subsection (6). support of the motion, Benco, swore in his affidavit that
at the very outset of the December 2nd meeting in chambers, I reiterated that this settlement discussion only concerned the issue of "general damages" due to the Kekonas, and my clients did not intend to and would not broaden the discussion into a settlement of the earlier judgments. Attorney Geshell [Abastillas' trial attorney] again agreed, expressly stating that he "was hired only to try or settle this general damages claim, or what I would term a special damages claim," or words to that effect.

Further, during the hearing on the Motion to Vacate, Benco stated that
there was no discussion of the $25,000 punitive damages, nor was that part of the bargain for consideration in the Court's chambers. And, in fact, that's borne out almost conclusively by the fact that if Miss Abastillas didn't pay the $3,000 by Christmas day of '98, then the judgment for $3,000 would enter. Why not, Your Honor, a judgment for $28,000? I think that is almost conclusive of what our argument is here.

While the declaration of Abastillas' trial attorney, Richard Steven Geshell (Geshell),6 regarding the settlement discussion in chambers may be construed as a contradiction of Benco's sworn statement,7 Geshell did not dispute Benco's
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On appeal, Abastillas is represented by Smith. Geshell declared that [o]n December 2, 1998, there was no discussion with [Benco] nor with [the circuit court] about any damage amount or components of the damages in the

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statement that the $25,000 in punitive damages was never discussed, let alone made a part of the bargain. Instead, in her

memorandum opposing the Motion to Vacate, and at the hearing on the motion, Abastillas relied primarily upon the premise that the Stipulation, by dismissing the third-party complaint against her, had the legal effect of disposing of both the remanded general damages issue and the affirmed punitive damages judgment. Consequently, Abastillas opposed the Motion to Vacate on several grounds:
(1) The Court lacks jurisdiction to enforce, modify, or rescind the settlement where the case has been dismissed with prejudice; (2) Kekonas have not established any grounds for the relief sought under Hawaii Rules of Civil Procedure (HRCP) Rule 60(b)(1), (3), (5), and/or (6); (3) Kekonas' authorities are distinguishable; (4) The settlement agreement has been fully performed; (5) Kekonas cannot obtain relief under HRCP Rule 60(b)(6) where they also seek relief under HRCP Rule 60(b)(1-5); and (6) where the dismissal is final, Kekonas have not shown extraordinary circumstances preventing them from appealing the dismissal with prejudice.

Both sides filed extensive briefs on the Motion to Vacate. Both sides presented oral argument at the March 3, 1999 After reviewing the briefs and hearing

hearing on the motion.

the parties' arguments, the circuit court orally granted the

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(...continued)
settlement negotiations. The only discussion was about settling the case set for jury trial that day.

(Emphasis added.)

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motion.

The circuit court explained the rationale for its

ruling, as follows:
All right. The Court is going to use as its base for its ruling, . . . the Intermediate Court of Appeals' decision. Mr. Geshell talks about the Kekonas wanting to fragment out the issues, and the Court finds that the issues were fragmented because the Intermediate Court of Appeals had affirmed the revised judgment in all respects, other than what was remanded to the circuit court, and it was fragmented in that manner. One of the issues that was fragmented out, and the Court agrees with Mr Geshell, is that unless there are -- there is liability, there can be no punitive damages. But if one looks at the Intermediate Court of Appeals' decision, the remand for a new trial on any claim was on a claim against Mr. Smith. It was not a claim against Ms. Abastillas. And as to Ms. Abastillas the Intermediate Court of Appeals affirmed on liability, affirmed on punitive damages, but only remanded the case for the discreet (sic) issue of general damages, and that was the only issue before this Court. The punitive damages issue was affirmed and there has been a judgment as to punitive damages. Therefore, the Court finds that in answer to Mr. Gesehll's question that it's hard to know what the Kekonas were thinking, common sense as one applies it to the issue before the Court is that the only thing that the Kekonas were discussing and the only matter before this Court was the issue of general damages.

In the course of its exegesis, the circuit court "applie[d] the standard of common sense[,]" and thereupon concluded that "[i]t makes no sense for someone to give up a judgment in an appellate court of $25,000 to settle for 3. That makes no sense."

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The circuit court also addressed the matter of its jurisdiction over the motion:
And, last, the Court has not entered judgment. I was looking to see if the Court's recall of the case is correct. There's been an agreement by the parties, but there still has been no judgment entered on the issue of the settlement as to the general damages award. And this Court still retains jurisdiction in this matter to correct any mistake or any -- to make any finding so as to comport with fairness and a clear understanding between the parties.

Finally, the circuit court delineated the post-vacatur relief it was ordering:
And so the Court grants the motion to have the matter corrected to reflect that the settlement is as to the general damages issue.

On August 17, 1999, the parties filed the Amended Stipulation. In relevant part, it read:

COME NOW the parties hereto, by and through their respective counsel, and hereby stipulate, pursuant to Rule 41(a)(1)(B) of the Hawaii Rules of Civil Procedure, that the claim for "general damages" contained in the Third-Party Complaint of BENJAMIN PAUL KEKONA and TAMAE M. KEKONA against PAZ F. ABASTILLAS aka PAZ F. RICHTER, is hereby dismissed with prejudice. This Stipulation shall in no wise affect, diminish, or release the Kekonas' judgment for punitive damages of $25,000 against Third Party Defendant Paz F. Abastillas contained in that certain Judgment first filed on December 17, 1993, and said Judgment shall remain in full force and effect.

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Thereupon, the circuit court entered its Final Judgment on Remand as to all Claims and All Parties. That same day, Abastillas

filed notice of this timely appeal.8

II. A. Jurisdiction.

STANDARDS OF REVIEW.

"The existence of jurisdiction is a question of law that we review de novo under the right/wrong standard." Amantiad

v. Odum, 90 Hawai#i 152, 158, 977 P.2d 160, 166 (1999) (citations and internal quotation marks omitted). B. HRCP Rule 60(b) Motions. "An appellate court reviews a circuit court's determination of an HRCP Rule 60 motion for an abuse of discretion." omitted). Id. (citations and internal quotation marks

"Generally, to constitute an abuse [of discretion] it

must appear that the court clearly exceeded the bounds of reason or disregarded rules or principles of law or practice to the substantial detriment of a party litigant." Coyle v. Compton, 85

Hawai#i 197, 209, 940 P.2d 404, 416 (App. 1997) (citation and internal quotation marks omitted).

The question of waiver arises when we consider that Smith, on behalf of Abastillas, signed the Amended Stipulation for Dismissal With Prejudice (Amended Stipulation) that she now appeals. We also observe, however, that the circuit court's order granting the Third-Party Plaintiffs Kekonas' Motion to Vacate Stipulation for Dismissal and/or For New Entry of Dismissal Nunc Pro Tunc and/or For Other Appropriate Relief (the Motion to Vacate) ordered that the Amended Stipulation be filed in the form that Smith signed. We have no explanation why the circuit court did not simply enter the final judgment alone, as it contained all the provisions necessary to clarify and amend the Stipulation.

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III. A. Jurisdictional Issues.

DISCUSSION.

Essentially, Abastillas argues that the circuit court "had jurisdiction only to deny the motion or else vacate the stipulation, undo the settlement, and reset the case for trial." (Emphasis in the original.). She contends that "[b]y vacating

[the Stipulation] and amending it, [the circuit court] exceeded [its] jurisdiction." typesetting omitted.). (Emphasis in the original; titular We disagree.

Generally, a trial court lacks continuing jurisdiction to settle disputes arising out of a settlement agreement that produced a stipulation to dismiss the underlying action with prejudice. Amantiad, 90 Hawai#i at 159-60, 977 P.2d at 167-68;

Gilmartin v. Abastillas, 10 Haw. App. 283, 289, 869 P.2d 1346, 1349 (1994). The trial court may, however, gain jurisdiction

over such disputes through either of the following means: First, an independent action may be brought for specific performance of the settlement agreement. Second, a motion to vacate the dismissal order and reopen the original proceedings may be filed. Unless the vacatur is first granted, however, no jurisdiction would exist in the court to enter any remedial orders in the case. Amantiad, 90 Hawai#i at 159, 977 P.2d at 167 (adopting and quoting the reasoning of Gilmartin, 10 Haw. App. at 289-90, 869

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P.2d at 1349-50) (internal citations, block quote format and footnote omitted). As we reasoned in Gilmartin,

generally, the interests of judicial economy would be better served if the original trial judge, who is already familiar with the facts of the case, were allowed to resolve any controversies arising out of a settlement agreement negotiated by the parties. Id. at 295, 869 P.2d at 1352. We held, accordingly, that

if a trial court vacates a prior dismissal order, it has inherent authority to enforce the terms of a valid underlying settlement agreement, as long as the court would have had jurisdiction to enforce the agreement in an original cause of action. We thus decline to adopt a requirement that a settlement agreement be approved and incorporated into the order of dismissal, in order for the court to enforce the agreement. Id. In this connection, we noted that "[t]he authority for

filing a motion to vacate an order of dismissal [upon a stipulated dismissal] is HRCP Rule 60(b)(6), which provides, in pertinent part[, that] . . . `[o]n motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons: . . . (6) any other reason justifying relief from the operation of the judgment. made within a reasonable time[.]'" The motion shall be

Id. at 289 n.3, 869 P.2d at

1349 n.3 (internal block quote format omitted).9
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Hence, Abastillas' second point on appeal, that the Kekonas "had no grounds for seeking relief under Rule 60(b)[,]" has no merit. We therefore confine the remainder of our discussion to her first point on appeal.

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In this case, the Kekonas moved to vacate the stipulation to dismiss, instead of instituting a separate action. They based the Motion to Vacate upon various subsections of HRCP Rule 60(b), including subsection (6). Hence, under Amantiad and

Gilmartin, the circuit court had jurisdiction and the "inherent authority" to resolve the controversy over the settlement agreement. Amantiad, 90 Hawai#i at 159, 977 P.2d at 167;

Gilmartin, 10 Haw. App. at 289-90, 869 P.2d at 1349-50. Abastillas nevertheless challenges the circuit court's authority to grant relief in the form of a clarification and amendment of the stipulation. In support of her challenge,

Abastillas cites Kawamata Farms v. United Agri Products, 86

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(...continued)

By the same token, it appears that the circuit court stated an incorrect basis for exercising jurisdiction over the Motion to Vacate. The circuit court reasoned that, because it had not entered a final judgment in the case, it retained continuing jurisdiction over the case, including the motion. However, the stipulation, executed by the parties pursuant to HRCP Rule 41(a)(1)(B), does not require court approval or order. HRCP Rule 41(a)(1)(B) ("an action may be dismissed by the plaintiff without order of the court . . . by filing a stipulation of dismissal signed by all parties who have appeared in the action"); see also C. Wright, A. Miller, and M. Kane, Federal Practice and Procedure

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