Provident Funding Associates, L.P. v. Gardner.

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                                                              Electronically Filed
                                                              Supreme Court
                                                              SCWC-XX-XXXXXXX
                                                              16-JUN-2021
                                                              08:08 AM
                                                              Dkt. 19 OP




           IN THE SUPREME COURT OF THE STATE OF HAWAIʻI

                                ---o0o---


                PROVIDENT FUNDING ASSOCIATES, L.P.,
                   Respondent/Plaintiff-Appellee,

                                    vs.

      GISELE M. L. GARDNER, Petitioner/Defendant/Cross-Claim
            Plaintiff/Cross-Claim Defendant-Appellant,

                                    and

CITIBANK (SOUTH DAKOTA) N.A., Respondent/Defendant-Appellee,

                                    and

         TRAVIS WITTMEYER; KANOA BRISTOL; BLUE WAVE
     INVESTMENT SOLUTIONS, LLC, Respondents/Defendants/
  Cross-Claim Defendants/Cross-Claim Plaintiffs-Appellees.


                            SCWC-XX-XXXXXXX

         CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
             (CAAP-XX-XXXXXXX; CIV. NO. 1CC151002313)

                              JUNE 16, 2021

RECKTENWALD, C.J., NAKAYAMA, McKENNA, WILSON, AND EDDINS, JJ.
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                 OPINION OF THE COURT BY RECKTENWALD, C.J.

                                I.    INTRODUCTION

              This case requires us to consider the binding effect

of a stipulation.        The parties to this foreclosure, after

summary judgment was entered in favor of the note holder but

before sale, entered into a stipulation in which they agreed to

postpone the foreclosure auction while they worked to pursue a

private sale.       No private sale came to pass, and the property

sold at auction for less than the parties had hoped a private

sale would yield.        They now dispute the effect the stipulation

should have had on the circuit court proceedings.

              We hold that a stipulation made during the course of

litigation – reduced to writing, agreed to by all parties, and

filed with the court – operates in many respects like a contract

and generally binds the parties to its terms.              The Circuit Court

of the First Circuit (circuit court) and Intermediate Court of

Appeals (ICA) therefore erred by failing to treat the

stipulation at issue as a binding agreement.

                                II.    BACKGROUND

A.     Circuit Court Proceedings

       1.     Dispute and Foreclosure Proceedings

              This foreclosure case concerns a property in Waialua.

In 2015, Provident Funding Associates, L.P., the note holder,




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brought a complaint for foreclosure in the circuit court 1 against

(as relevant to this appeal) Travis Wittmeyer, Kanoa Bristol,

and Blue Wave Investment Solutions, LLC (collectively, the Blue

Wave defendants), and Gisele Gardner, the record titleholder of

the property and the debtor.         Gardner and the Blue Wave

defendants are also parties to another lawsuit (Gardner

lawsuit). 2    It is by virtue of the Gardner lawsuit that Provident

Funding named the Blue Wave defendants in the complaint as

possible junior interest holders.

              After summary judgment was granted to Provident

Funding but before any foreclosure sale, Gardner found a buyer

who was willing to purchase the property for $700,000 (a price

that would satisfy the debt in full) and entered into a contract

with that buyer on April 29, 2016 (April 29, 2016 transaction).

However, the Blue Wave defendants thought the property was

considerably more valuable and hoped to find a private buyer who


      1     The Honorable Bert I. Ayabe presided until January 2017.       The
Honorable Jeannette H. Castagnetti presided thereafter.

      2     According to the parties’ representations in the record of this
case (which we offer here solely for context and do not make any suggestion
as to their accuracy), the Gardner lawsuit, which is currently pending in the
circuit court, Gardner v. Wittmeyer, Civil No. 15-1-0920-05, relates to the
same property. In 2009, Gardner contracted with the Blue Wave defendants to
convey the property. Something went wrong in the conveyance (the parties
dispute who was at fault), but the Blue Wave defendants nonetheless took
possession of the property, paid what was then due to the bank, and continued
to make monthly mortgage payments until October 2014. At that point, the
monthly mortgage payments stopped, although the parties dispute the reason.
The mortgage went into default, giving rise to the instant foreclosure
action. Meanwhile, Gardner sued the Blue Wave defendants for, among other
things, breach of contract in the Gardner lawsuit, and the Blue Wave
defendants filed a counter-claim against Gardner.

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would pay more than $700,000.

     2.    The Stipulation

           On September 16, 2016, the parties entered into the

First Stipulation to Continue Foreclosure Sale and Order

(Stipulation).     The Stipulation provided that the foreclosure

sale would be continued to October 25, 2016 while the defendants

pursued a private sale.      Pursuant to the Stipulation, Gardner

and the Blue Wave defendants agreed to try to sell the property

to a third-party buyer, but if no other buyer could be found,

they agreed to close the April 29, 2016 transaction.             In the

event neither the April 29, 2016 transaction nor a sale to a

different third-party buyer closed by October 25, 2016,

Provident Funding would proceed to a foreclosure sale.

           Specifically, the Stipulation provided in relevant

part:

                 2. Gardner, Wittmeyer, Bristol and Blue Wave will
           cooperate in a good faith effort to sell the property for
           an amount that will result in a full payoff of the loan
           owed to Provident Funding (“private sale”) and provide
           Provident Funding with a copy of all fully executed
           purchase contract(s) within 2 business days of execution
           for Provident Funding’s review and approval;

                 3. If there is no active purchase contract for the
           private sale of the property pending as of September 23,
           2016 or if a private sale is not closed on or before
           October 18, 2016 at 5:00pm, Gardner, Wittmeyer, Bristol and
           Blue Wave agree to proceed in good faith with the
           transaction presented to Provident Funding by Gardner with
           a purchase contract reference date of April 29, 2016
           (“April 29, 2016 transaction”) and cooperate to close the
           April 29, 2016 transaction promptly to the extent that the
           Buyer is willing and able to proceed with the transaction
           and Provident Funding approves the sale;



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                  4. Gardner, Wittmeyer, Bristol and Blue Wave agree
            that the Court’s Findings of Fact, Conclusions of Law and
            Order Granting Provident Funding’s Motion for Summary
            Judgment and Decree of Foreclosure, filed on July 28, 2016,
            shall remain in effect and the Commissioner shall proceed
            with the preparations for the foreclosure sale to be
            scheduled for a date on or about October 25, 2016, and the
            foreclosure sale itself, unless and until the closing of a
            private sale or the April 29, 2016 transaction resulting in
            the full payoff of Provident Funding. The Parties agree
            that the foreclosure sale may proceed at 12:00pm (noon) on
            October 25, 2016, or anytime thereafter as scheduled by the
            Commissioner, if neither a private sale nor the April 29,
            2016 transaction has closed prior to October 25, 2016 at
            12:00pm.

(Emphases added.)

            Further, the Stipulation provided that “[i]f a private

sale or the April 29, 2016 transaction is consummated, Provident

Funding will be paid in full from the sale proceeds,” Provident

Funding will be dismissed from the litigation, and “[t]he

disposition of any excess proceeds will be for the remaining

parties and the Court to determine/decide.”            All defendants

stipulated “that they will not seek to make Provident Funding a

party to or otherwise involve Provident Funding in” the Gardner

lawsuit.    The parties also agreed that “[i]f the sales proceeds

are insufficient to pay the debt owed to Provident Funding in

full, the case shall proceed without prejudice to Provident

Funding’s right to obtain a deficiency judgment and other

appropriate relief.” 3


      3     The Stipulation also provided that, with respect to the
property’s tenants, “[a]ll net rental income collected by the Commissioner
until the sale of the property is completed will be applied to the
outstanding amount owed to Provident Funding.” Gardner agreed to “assume any
tax liability associated with the Commissioner’s collection of rent” while
                                                            (continued . . .)

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             The Stipulation was filed with the court, which signed

the Stipulation “approved and so ordered.”            (Capitalization

altered.)

      3.     The Motion to Compel

             On November 23, 2016, 4 Gardner filed a “Motion to

Compel and for Sanctions” (Motion).           She represented that the

Blue Wave defendants had “block[ed]” the April 29, 2016

transaction in contravention of the Stipulation.              Thus, Gardner

moved the court to compel the Blue Wave defendants to, among

other things, take all necessary steps to transfer the real

property to the April 29, 2016 transaction buyer, and asked for

sanctions against the Blue Wave defendants.

             Gardner presented the following version of events. 5

She claimed that she notified the Blue Wave defendants of the

April 29, 2016 buyer in May 2016 - a transaction of which


the Blue Wave defendants agreed to “promptly pay the arrearages owed to the
utility company, turnover all leases, keys and security deposits to the
Commissioner and cooperate in good faith with the Commissioner’s further
requests[.]” The Blue Wave defendants also agreed “to take
full[ ]responsibility for any claims made by the tenants for unreimbursed
security deposits.” If a private sale, the April 29, 2016 transaction, or a
foreclosure sale did not result in sufficient funds to “satisfy the claims of
the tenants,” the defendants agreed to “promptly pay into Court all amounts
claimed by the tenants to be owed by the landlord[.]”

      4     While the Stipulation allowed the foreclosure sale to proceed on
October 25, 2016, Gardner represented that “[o]n October 24, 2016, the
foreclosure sale was continued until November 29, 2016 to provide additional
time for the [p]arties to close the April 29, 2016 transaction or a second
transaction[.]”

      5     We provide the parties’ representations about what occurred after
the Stipulation only for background and make no suggestion about the accuracy
of their factual claims.

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Provident Funding approved - and requested “access and

cooperation to sell the [m]ortgaged [p]roperty,” which the Blue

Wave defendants refused.       After the parties entered into the

Stipulation, “on or about October 12, 2016, a Purchase

Contract . . . was fully executed between Gardner, the [Blue

Wave] [d]efendants, and Brian Rose,” wherein Rose, a buyer found

by the Blue Wave defendants, agreed to purchase the property for

$789,000 ($89,000 more than the April 29, 2016 transaction sale

price) (Rose contract).      However, Provident Funding refused to

allow additional time to close the Rose contract, and instead,

“in consequence of [the Blue Wave defendants’] lack of

cooperation regarding rent, failure to pay outstanding utility

bills, and the failure to open an escrow by the October 18, 2016

deadline, the Parties[’] obligation to close the April 29, 2016

transaction . . . was triggered.”         Thus, Provident Funding -

over objection by the Blue Wave defendants - asked for the

foreclosure sale to be continued for thirty days in order for

the April 29, 2016 transaction to close.

           Between October 20, 2016 and October 26, 2016, the

Blue Wave defendants asked several times to postpone the

foreclosure sale in order to close the Rose contract.             Provident

Funding refused, taking the position that at that point,

Paragraph 3 of the Stipulation required the parties to cooperate

in closing the April 29, 2016 transaction; they nonetheless

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“stated their willingness to accept the Rose [c]ontract if it

closed prior to the April 29, 2016 transaction[.]”            Upon

requests by Provident Funding and Gardner for “tangible proof of

progress” on the Rose contract, the Blue Wave defendants

represented on November 2, 2016 that Rose would not proceed

unless given forty-five days to close.          On November 17, 2016,

Gardner “explained that closing the April 29, 2016 transaction

required the [Blue Wave] [d]efendants[’] cooperation,” to which

the Blue Wave defendants replied that the foreclosure auction

date should not be extended because Rose intended to bid

$750,000 at auction.      From these exchanges (which occurred via

email, of which copies were attached to the motion as exhibits),

Gardner concluded that “the [Blue Wave defendants’] failure to

respond and the tenor of the email suggests that no cooperation

is forthcoming.”     She further represented that the April 29,

2016 buyer remained ready, willing, and able to close.

Accordingly, she sought a court order compelling the Blue Wave

defendants to proceed with the April 29, 2016 transaction, in

addition to sanctions against them.

     4.    Provident Funding’s Position Statement

           Provident Funding submitted a “Position Statement”

regarding the Motion on November 23, 2016.          In it, Provident

Funding represented that they intended to proceed with the

November 29, 2016 foreclosure but remained willing to accept the

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proceeds from the April 29, 2016 transaction “in satisfaction of

the debt” so long as those proceeds were tendered no later than

December 14, 2016.     It was Provident Funding’s position that

“[p]er Paragraph 3” of the Stipulation, “under the present

circumstances,” the Blue Wave defendants agreed to “proceed in

good faith with” the April 29, 2016 transaction.            Provident

Funding noted that if the foreclosure action were not dismissed,

as agreed in the Stipulation, “due to the lack of cooperation by

the [Blue Wave defendants],” Gardner should “bear the expense of

moving the court for an order dismissing the case and . . . the

[Blue Wave defendants] should be ordered to reimburse Provident

Funding” for any costs incurred by Provident Funding “as a

result of their failure to honor their obligations under the

Stipulation.”

     5.    The Blue Wave Defendants’ Memorandum in Opposition

           In their memorandum in opposition (filed after the

foreclosure auction proceeded on November 29, 2016, and the

property was sold to Provident Funding for $447,040), the Blue

Wave defendants characterized the post-Stipulation events as

follows.   They alleged that they received the $789,000 offer

that became the Rose contract in late September.            On

September 29, 2016, the Rose contract “was signed by Mr. Rose as

Buyer and Blue Wave and Gardner as Sellers.”           The next day,

“Blue Wave and Gardner signed an Exclusive Right-To-Sell Listing

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Contract” authorizing a particular realtor “to sell or exchange”

the property.    In early October, the Blue Wave defendants

communicated to Provident Funding that Rose was waiting to

proceed on the sale pending their approval; on October 12,

Provident Funding told the parties that it “would approve of the

Rose [c]ontract, but subject to maintaining the right, under the

First Stipulation, to move forward with the foreclosure[] sale

on October 25, 2016 at noon if the Rose [c]ontract ha[d] not

closed before then.”      The Blue Wave defendants replied that Rose

needed more time to close.       They attempted to find out from Rose

how much time he needed, at which point the Blue Wave defendants

learned that “the Rose [c]ontract could not move forward until

the other escrow” associated with the April 29, 2016 transaction

closed.   They asked Gardner to close the other escrow, but

“Gardner’s counsel refused[.]”

           After communicating “the escrow situation” to the

parties, “[o]n October 19, 2016, Provident’s counsel, citing the

terms of the First Stipulation, said that Provident would not

give the Rose [c]ontract additional time to close and that

Provident expected the parties to proceed to close the

[April 29, 2016 transaction].”        Provident Funding denied a

request by both defendants for a 30-day extension to close the

Rose contract, but two days later asked the Commissioner to

continue the foreclosure for thirty days for the April 29, 2016

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transaction to close.      The Blue Wave defendants objected,

arguing that Provident Funding should have allowed “a reasonable

extension” for the Rose contract to close if they were willing

to do so for the April 29, 2016 transaction.           By October 26,

2016, Rose had made it clear to the Blue Wave defendants he

wanted to proceed but could not close unless given forty-five

days; he also represented to the Blue Wave defendants that at

auction, “he would likely bid at least $750[,000] for the

Property.”    On October 26, 2016, the Blue Wave defendants asked

for an extension to allow the Rose contract to close, which

Provident Funding denied two days later.          The Blue Wave

defendants reiterated that Rose needed “assurance that he would

be given a reasonable time (45 days) to close” on November 2,

2016.   On November 17, 2016, “Blue Wave’s counsel sent to the

parties an email objecting to any further extension of the

foreclosure auction for the purpose of closing the [April 29,

2016 transaction].”

           The Blue Wave defendants argued that in fact,

Provident Funding and Gardner “did not comply with the terms of

the First Stipulation, and it is unreasonable for Gardner to now

claim that the Blue Wave [d]efendants are not complying with

such First Stipulation,” and that they did not act in bad faith.

Gardner and Provident Funding did not “cooperate[ ] in good

faith with the Rose [c]ontract,” and “[i]t is unreasonable for

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Gardner to refuse to cooperate in good faith with the Rose

[c]ontract, and then claim that the Blue Wave [d]efendants are

not cooperating with the [April 29, 2016 transaction].”

             After a hearing, the court orally denied the Motion:

                 Okay. Okay. Well, this is a foreclosure court, and
           normally unless all the parties agree to a private sale, we
           normally agree to proceed with the foreclosure sale. And
           but the court after the confirmation still has the -- still
           takes a look to see whether or not the price obtained at
           any confirmation is fair and reasonable so that’s something
           that would be left for the court to determine at a later
           date.
                 So with that, you know, it doesn’t seem like the
           parties have any agreement for private sale here. The
           court will be denying this motion here today, and the court
           asks [the Blue Wave defendants’ counsel] to prepare the
           order for that.

(Emphasis added.)

     6.    Confirmation of Sale

           Provident Funding moved to confirm the sale

thereafter.    At the hearing on the motion to confirm sale,

bidding was reopened, which resulted in a high bid of $635,000

from Rose.    But Gardner, against whom deficiency was to be

entered, nonetheless asked the court to:

           exercise your discretion. And to the extent that [ ]
           requires you to set th[e circuit court’s earlier order
           denying the motion to compel and for sanctions] aside, I
           would, because the equities here, the fairness, is that my
           client is being subjected to this deficiency judgment. It
           wasn’t her fault. She had an agreement by the Court and by
           all the parties, and she complied with that. And it would
           have resulted in zero deficiency. And it’s not because my
           client did anything to stop that stipulation from going
           forward. And I think, as [Provident Funding] pointed out
           in [its] brief, it’s because the [Blue Wave defendants]
           refused to adhere to that stipulation.

           The court granted Provident Funding’s motion,


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confirming the $635,000 sale to Rose, and declined Gardner’s

request to set aside the deficiency judgment “or any portion of

[the court’s] order denying the motion to compel.”               It noted

that the dispute between Gardner and the Blue Wave defendants

should be pursued elsewhere and that “nothing . . . would

preclude you from seeking whatever damages you believe you[]

would be entitled to[.]”

B.     ICA Proceedings

              Gardner appealed, challenging (1) the circuit court’s

conclusion that there was no agreement for a private sale, (2)

the circuit court’s conclusion that the Stipulation was not

enforceable and that the Blue Wave defendants had not breached

it, and (3) the circuit court’s denial of the Motion. 6

              The ICA affirmed the circuit court in a Summary

Disposition Order (SDO).          It first held that “[t]he Circuit

Court’s finding [that] there was no agreement for a private sale

was not clearly erroneous.”          It explained that the Stipulation

must be interpreted using “contract law principles,” and “[t]o



      6     Before the Blue Wave defendants filed their answering brief at
the ICA, Gardner filed a motion for partial dismissal and a stipulation
between herself and Provident Funding, which asserted that none of the issues
on appeal pertained to Provident Funding and that both parties agreed for
Provident Funding to be dismissed. The Blue Wave defendants opposed
dismissing Provident Funding, as they alleged they were neither informed that
a dismissal was being pursued nor told of the terms of the stipulated
dismissal, and that partial dismissals were not contemplated by the Hawaiʻi
Rules of Appellate Procedure. The ICA granted the motion to dismiss, and
Provident Funding was not involved in the appeal thereafter. The dismissal
of Provident Funding is not at issue before this court.

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be enforceable, a contract must be certain and definite as to

its essential terms.”        (Quoting Boteilho v. Boteilho, 58 Haw.

40, 42, 564 P.2d 144, 146 (1977).)           While “[t]he intent of the

parties is a question of fact,” whether the contract is

ambiguous is a question of law, and “[a]mbiguity in the terms of

the document raises questions regarding the parties’ intent to

agree.”     (Citing Found Int’l Inc. v. E.T. Ige Constr., Inc., 102

Hawaiʻi 487, 497, 78 P.3d 23, 33 (2003); 1 Corbin, Contracts

§ 4.10 (2019).)

             The ICA found ambiguity in the word “cooperate” as

used in the Stipulation: “The word cooperate has two

definitions; one definition requires collaboration, while

another requires compliance with another’s directives.”

(Citation omitted.)        Because of this ambiguity, the ICA turned

to parol evidence in order to “explain the circumstances

surrounding the execution of the contract[.]”             (Quoting Hokama

v. Relinc Corp., 57 Haw. 470, 474, 559 P.2d 279, 282 (1977).)

Applying the rule, the ICA described what the parties

represented on the record after entering into the Stipulation:

             At the December 20, 2016 hearing,[ 7] the three parties’
             counsel provided argument regarding the intent behind the
             Stipulation. Gardner’s counsel argued the Stipulation
             arose after attempts to settle the related civil case,
             pointing to a hearing where “it was strongly pointed out
             that a joint sale would be a way to resolve this.” [The
             Blue Wave defendants’] counsel told the court that his
             clients “continued to propose to proceed on a mutual basis

      7     This hearing pertained to Gardner’s Motion and occurred nearly
three months after the Stipulation was entered.

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           with a mutually acceptable realtor” to accomplish such a
           sale. Provident’s attorney maintained that the Stipulation
           was drafted by Provident’s counsel to provide the bank with
           some assurance that the parties would work to settle their
           “dysfunction” as an alternative to the foreclosure sale but
           gave them a deadline so the bank “would not be waiting
           indefinitely.”

(Alterations omitted.)

           Accordingly, “[t]he parties argue on appeal that the

Stipulation was meant to be a stipulation[,] but each cite

different purposes.”      The ICA concluded that the Stipulation

“lacked written terms” stating the essential elements of a

settlement agreement, so it could not be construed as such.

Likewise, “[t]he Circuit Court . . . considered and rejected the

notion that the parties had an agreement for sale of land,” and

consistent with that conclusion, the Stipulation also lacked the

essential terms for a contract of that type (for instance,

“identification of the parties, a description of the property

sold, the price, [and] the time and manner of payment”).

(Quoting In re Application of Sing Chong Co., Ltd., 1 Haw. App.

236, 239, 617 P.2d 578, 581 (1980).)

           The ICA reasoned that “[a]n agreement that leaves an

essential element ‘to be settled by further negotiation . . . is

merely an agreement to agree and is not a valid and binding

contract.’”    (Quoting Carson v. Saito, 53 Haw. 178, 181, 489

P.2d 636, 638 (1971).)      “Given the essential terms the parties

had left to work out regarding the sale of the property, the


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Circuit Court was not clearly erroneous in finding lack of

agreement on the sale. . . .          Where agreement cannot be

ascertained from terms in the agreement or implied in law, there

is no binding contract.”          In light of this conclusion, the ICA

did not consider whether the Blue Wave defendants breached the

Stipulation.

              Finally, the ICA determined that the circuit court did

not abuse its discretion by denying Gardner’s motion for

sanctions.       The ICA construed Gardner’s brief as alleging “that

[the Blue Wave defendants] and attorneys should be sanctioned

for their representation[] that a ‘potential buyer’ would bid

(1) over $700,000 at auction and (2) at least $750,000 at

auction, bids that ultimately failed to materialize.”                Because

those bidders were under no obligation to bid and indeed, the

prospect of higher bids “helped Gardner because they were the

basis for re-opening the public sale,” such representations did

not constitute a basis for sanctions.

C.     Supreme Court Proceedings

              Gardner presents three questions in her application

for certiorari: (1) whether the ICA erred by affirming the

circuit court’s conclusions that the parties had no agreement

for a private sale, (2) whether the ICA erred by “fail[ing] to

consider whether [the Blue Wave defendants] breached the

Stipulation,” and (3) whether the ICA erred by concluding the

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circuit court “did not abuse its discretion regarding Gardner’s

motion for sanctions.”         Gardner’s application asks, among other

things: “If parties and their attorneys can now argue that

stipulations entered in the court’s record and approved by the

court are not enforceable because the terms are not deemed to be

a contract, then what value is a stipulation?”

                           III. STANDARDS OF REVIEW

A.     Interpretation of a Stipulation

              A stipulation is reviewed using contract law

principles.       See Restatement (Second) of Contracts § 94 (2020).

“The construction and legal effect to be given a contract is a

question of law freely reviewable by an appellate court.”

Balogh v. Balogh, 134 Hawaiʻi 29, 37, 332 P.3d 631, 639 (2014)

(citation, quotation marks, and brackets omitted); Found. Int’l,

102 Hawaiʻi at 497, 78 P.3d at 33 (“In the absence of any

ambiguity, a question of construction arising upon the face of

the instrument is for the court to decide.” (citation omitted)).

B.     Denial of Sanctions

              The decision to impose sanctions is within a circuit

court’s discretion.         Fujimoto v. Au, 95 Hawaiʻi 116, 137, 19 P.3d

699, 720 (2001).        A court abuses its discretion if it “clearly

exceeded the bounds of reason or disregarded rules or principles

of law or practice to the substantial detriment of a party

litigant.”       OneWest Bank, F.S.B. v. Ass’n of Owners of Kumulani

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at Uplands at Mauna Kea, 146 Hawaiʻi 105, 111, 456 P.3d 178, 184

(2020) (citation omitted).

                               IV.   DISCUSSION

             The circuit court’s denial of sanctions 8 seemed to be

based on its determination that the parties did not “have any

agreement for private sale.”         The ICA likewise determined that

there was “no binding contract” in this case.             Of course,

sanctions cannot be imposed for violating an agreement that does

not exist.      But the Stipulation was indeed a binding agreement,

albeit not one for private sale, that should have been given due

effect.

             “Any matter that involves the individual rights or

obligations among the parties in an action or proceeding in

court may properly be made the subject of a stipulation between

them[.]”     83 C.J.S. Stipulations § 24 (2020).          Parties have

leeway to bind themselves in a stipulation, and such agreements




      8     Before filing her Opening Brief, Gardner moved first to stay the
judgment of the circuit court confirming sale. The ICA denied the motion,
explaining that Gardner was required to first file a motion for a stay in the
circuit court or otherwise explain why doing so would be “impracticable”
pursuant to Hawaiʻi Rules of Appellate Procedure Rule 8. Thus, the
foreclosure sale has long since happened and was not stayed, and the
confirmation of the sale is not at issue. In light of this backdrop, to the
extent that Gardner challenges the circuit court’s denial of her request to
compel the Blue Wave defendants to transfer the property to the buyer
involved in the April 29, 2016 transaction, that issue is moot. We agree
with the Blue Wave defendants that, as they asserted in their response
opposing Gardner’s application for writ of certiorari, “the only matter
remaining before [this court] is the ICA’s decision affirming the Circuit
Court’s Order Denying Sanctions.”


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will be broadly enforced:

           Parties by their stipulations may in many ways make the law
           for any legal proceeding to which they are parties, which
           not only binds them, but which the courts are bound to
           enforce. They may stipulate away statutory, and even
           constitutional rights. They may stipulate for shorter
           limitations of time for bringing actions for the breach of
           contracts than are prescribed by the statutes, such
           limitations being frequently found in insurance policies.
           They may stipulate that the decision of a court shall be
           final, and thus waive the right of appeal; and all such
           stipulations not unreasonable, not against good morals or
           sound public policy, have been and will be enforced; and,
           generally, all stipulations made by parties for the
           government of their conduct or the control of their rights
           in the trial of a cause or the conduct of a litigation are
           enforced by the courts.

Okuhara v. Broida, 51 Haw. 253, 256–57, 456 P.2d 228, 230–31

(1969) (citation omitted) (emphases added).

           In short, then, “parties ordinarily are bound by the

terms of their stipulations[.]”        Gakiya v. Hallmark Props.,

Inc., 68 Haw. 550, 555, 722 P.2d 460, 464 (1986); Yoneji v.

Yoneji, 137 Hawaiʻi 299, 315, 370 P.3d 704, 720 (App. 2016) (“A

trial court is bound to follow the procedures set forth in a

stipulation, unless there was a finding of manifest

injustice.”); see also Moore v. Richard W. Farms, Inc., 437

S.E.2d 529, 531 (N.C. Ct. App. 1993) (“Once a stipulation is

made, a party is bound by it[.]”); Nishman v. De Marco, 76

A.D.2d 360, 368 (N.Y. App. Div. 1980) (“The judicial policy in

favor of the enforcement of stipulations . . . has found

widespread application.”).

           Stipulations are interpreted by applying principles of

contract law.    73 Am. Jur. 2d Stipulations § 6 (2020) (“The

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rules of contract interpretation apply to stipulations.”); see

Burlington Ditch Reservoir & Land Co. v. Metro Wastewater

Reclamation Dist., 256 P.3d 645, 676 (Colo. 2011) (“Stipulations

are contracts, binding upon their signatory parties, and

interpreted under contract law principles.”); Czumak v. N.H.

Div. of Developmental Servs., 923 A.2d 208, 213 (N.H. 2007) (“A

stipulated agreement is contractual in nature and, therefore, is

governed by contract rules.”); Nishman, 76 A.D.2d at 366 (“A

stipulation is a contract between parties, and as such is

governed by general principles for its interpretation and

effect[.]”).    Unlike contracts, however, they generally need not

be supported by consideration to be enforceable.            Lillard Pipe &

Supply, Inc. v. Bailey, 387 P.2d 118, 122 (Okla. 1963)

(“Although stipulations are unlike ordinary contracts in that no

consideration or mutuality is required, they are to be construed

like other contracts between parties.”); 73 Am. Jur. 2d

Stipulations § 1 (2020) (“While a stipulation has been described

as a contract, some of their incidents do not inhere in ordinary

contracts.    Thus, for example, no consideration is necessary to

the validity of a stipulation, and no mutuality is required.”

(footnotes omitted)).

           The ICA determined that the “lack of essential terms”

in the Stipulation to create either a settlement agreement or a

contract for the sale of land rendered it so uncertain as to be

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unenforceable.     While it is true that a contract indeed may fail

for lack of definiteness, such a construction is disfavored, and

the Stipulation here survives that inquiry.           “To be enforceable,

a contract must be certain and definite as to its essential

terms.”   Boteilho, 58 Haw. at 42, 564 P.2d at 146; see also

Honolulu Waterfront Ltd. P’ship v. Aloha Tower Dev. Corp., 692

F. Supp. 1230, 1236 (D. Haw. 1988) (recognizing that under

Hawaiʻi law, contracts may be too indefinite to be enforceable)

(citing Sing Chong, 1 Haw. App. at 239, 617 P.2d at 581).                “The

terms of a contract are reasonably certain if they provide a

basis for determining the existence of a breach and for giving

an appropriate remedy.”      Almeida v. Almeida, 4 Haw. App. 513,

519, 669 P.2d 174, 179 (App. 1983) (quoting Restatement (Second)

of Contracts § 33 (1981)).       However, “the law leans against the

destruction of contracts for uncertainty.          Courts favor the

determination that an agreement is sufficiently definite.                We

will, if possible, so construe the agreement so as to carry into

effect the intention of the parties.”         Sing Chong, 1 Haw. App.

at 239, 617 P.2d at 581 (citation omitted); see also Hi-Pac,

Ltd. v. Avoset Corp., 26 F. Supp. 2d 1230, 1235 (D. Haw. 1997).

           The ICA misapplied this doctrine when it attempted to

map the essential terms of a settlement agreement or of a

contract for sale of land onto the Stipulation.           That the

Stipulation is neither does not end the inquiry.            Instead, the

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ICA should have avoided “the destruction of contracts for

uncertainty” and “construe[d] the agreement [so] as to carry

into effect the intention of the parties” as embodied by the

agreement if possible. Sing Chong, 1 Haw. App. at 239, 617 P.2d

at 581.

           Here, an enforceable construction of the Stipulation

is possible.    The Stipulation bound the parties to use good

faith efforts to either close a private sale or close the

April 29, 2016 transaction by the agreed-upon deadline.             Per

Paragraph 3 of the Stipulation, “If there is no active purchase

contract for the private sale of the property pending as of

September 23, 2016, or if a private sale is not closed on or

before October 18, 2016,” the parties “agree[d] to proceed in

good faith” and to “cooperate to close the April 29, 2016

transaction.”    Thus, the Stipulation provided, as relevant here,

the following terms: (1) All defendants would “cooperate in a

good faith effort to sell the property” to a third-party buyer;

(2) If no private sale closed before October 18, 2016, the

parties would “proceed in good faith with” and “cooperate to

close the April 29, 2016 transaction”; (3) During this period,

Provident Funding would not seek a foreclosure sale; and (4) If

neither a third-party contract nor the April 29, 2016

transaction closed, a foreclosure sale would proceed.             These

terms are sufficiently definite because they “provide a basis

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for determining the existence of a breach and for giving an

appropriate remedy.”      Restatement (Second) of Contracts § 33

(1981).   Gardner or the Blue Wave defendants would have breached

if either one failed to “cooperate in a good faith effort” to

find a third-party buyer or, in the event no private sale closed

by October 18, 2016, if either one failed to “cooperate to

close” the April 29, 2016 transaction.

           Even if there were some ambiguity in the Stipulation,

we disagree with the ICA that an ambiguity in a contractual term

casts doubt on whether the parties intended to be bound at all.

To the contrary, in the face of an ambiguity, “[t]he court’s

objective is to ascertain and effectuate the intention of the

parties as manifested by the contract in its entirety.”

Hawaiian Ass’n of Seventh-Day Adventists v. Wong, 130 Hawaiʻi 36,

45, 305 P.3d 452, 461 (2013) (quotation marks and citation

omitted) (emphasis added).       Indeed, although the parties later

in the proceedings offered different perspectives on why they

entered into the Stipulation, the purposes presented by the

parties – while relevant to resolving ambiguity – are irrelevant

to the objective inquiry over whether the parties intended to be

bound at all.    Earl M. Jorgensen Co. v. Mark Constr., Inc., 56

Haw. 466, 470, 540 P.2d 978, 982 (1975) (“The existence of

mutual assent or intent to accept is determined by an objective

standard.”).    That test is whether the parties’ “words or acts

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. . . under a standard of reasonableness . . . manifested an

objective intention to agree.”         Id.   Even if the parties had

argued that they did not enter the Stipulation with the intent

to form a binding agreement, 9 the fact that they signed the

Stipulation and filed it with the court leaves a reasonable

observer no doubt that the parties mutually assented to be bound

by the Stipulation’s terms.

            We therefore must look to the instrument itself to

discern whether its terms are clear, and although our goal is to

effectuate the parties’ intent, we must glean that intent from

the Stipulation itself.       83 C.J.S. Stipulations § 46 (2020)

(“The primary rule is that the court must, if possible,

ascertain and give effect to the intent of the parties. . . .

An appellate court analyzes the language of a stipulation to

determine the parties’ intentions and ends its inquiry if the

language is clear.” (footnotes omitted)).           “It is well settled

that courts should not draw inferences from a contract regarding

the parties’ intent when the contract is definite and

unambiguous.”     State Farm Fire & Cas. Co. v. Pac. Rent-All,

Inc., 90 Hawaiʻi 315, 324, 978 P.2d 753, 762 (1999) (citing

Hanagami v. China Airlines, Ltd., 67 Haw. 357, 364, 688 P.2d



      9     No party argued as much, and indeed, the Blue Wave defendants’
memorandum in opposition to the Motion and their answering brief at the ICA
claimed that it was Gardner and Provident Funding who breached – an argument
predicated on the Stipulation being binding.

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1139, 1144 (1984)).      While the parties disagreed ex post about

the Stipulation’s meaning and effect, this disagreement “does

not render clear language ambiguous.”         State Farm, 90 Hawaiʻi at

324, 978 P.2d at 762.      Instead, “[a]s a general rule, the court

will look no further than the four corners of the contract to

determine whether an ambiguity exists.”          Hawaiian Ass’n of

Seventh-Day Adventists, 130 Hawaiʻi at 45, 305 P.3d at 461.

           We disagree with the ICA that the Stipulation is

ambiguous.    “Contract terms are interpreted according to their

plain, ordinary, and accepted sense in common speech.”             Id.    “A

contract is ambiguous when its terms are reasonably susceptible

to more than one meaning.”       Id.    The ICA found ambiguity in the

term “cooperate,” which it concluded could be reasonably

construed to either require “collaboration” or “compliance with

another’s directives.”      To “cooperate” means “to act or work

with another or others.”       Cooperate, Merriam-Webster.com

Dictionary, 275 (11th ed. 2009), https://perma.cc/X9BJ-ZUJR.

The other dictionary cited by the ICA, Macmillan, likewise

defines cooperate as: “to work with other people to achieve a

result that is good for everyone involved.”           Cooperate,

Macmillan Dictionary Online, https://perma.cc/5UXP-SP3S.

Black’s Law Dictionary similarly defines “cooperation agreement”

as “any contract by which the parties bind themselves to work

jointly towards some mutually beneficial ends.”           Cooperation

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agreement, Black’s Law Dictionary (11th ed. 2019) (emphasis

added).   In essence, then, to cooperate means to work together.

           The second definition in Macmillan does pertain to, as

the ICA put it, “compliance with another’s directives”: “to do

what someone asks you to do, especially by providing them with

information.”    Macmillan Dictionary Online,

https://perma.cc/5UXP-SP3S.       However, this definition does not

fit within the context of the Stipulation, which requires the

parties to cooperate - implicitly, with each other.            See Found.

Int’l, 102 Hawaiʻi at 496–97, 78 P.3d at 32–33 (“[T]he test [of

ambiguity] lies not necessarily in the presence of particular

ambiguous words or phrases but rather in the purport of the

document itself, whether or not particular words or phrases in

themselves be uncertain or doubtful in meaning.” (emphasis

added)); Cherokee Metro. Dist. v. Upper Black Squirrel Creek

Designated Ground Water Mgmt. Dist., 247 P.3d 567, 573 (Colo.

2011) (“To determine whether there is ambiguity [in a

stipulation], courts must examine the instrument’s language and

construe it in harmony with the plain and generally accepted

meaning of the words employed.”).         The Stipulation does not

require the Blue Wave defendants to cooperate with Gardner (or

vice versa), nor does it contemplate who would be giving the

directives if that were what “cooperate” meant.           Thus, the term

“cooperate” as used in the agreement is not “reasonably

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susceptible” to the ICA’s other suggested definition.              Hawaiian

Ass’n of Seventh-Day Adventists, 130 Hawaiʻi at 45, 305 P.3d at

461.

            Accordingly, the commonly-understood meaning of

cooperate - to work together - applies, and we need not look

beyond the Stipulation itself because the intentions of the

parties are clear from the instrument.           When the Stipulation

required the parties to “cooperate to close the April 29, 2016

transaction,” it bound the parties to work together to close the

April 29, 2016 transaction once that provision was triggered

(which would occur if no private sale closed before October 18,

2016).    Said differently, once no private sale closed by

October 18, 2016, the parties were obliged to work together to

close the April 29, 2016 transaction.          To be sure, the

Stipulation was not an agreement for the sale of the property –

it did not purport to transfer title to one of the signatories –

nor was it a settlement – it did not relinquish any party’s

claims in the lawsuit.       It was, however, an agreement with

discernible and enforceable terms, which “not only binds [the

parties], but which the courts are bound to enforce.”              Okuhara,

51 Haw. at 256, 456 P.2d at 230.

            Importantly, however, this rule is subject to

exceptions.     We noted in Gakiya that “certain stipulations [may]

be set aside or modified in order to prevent manifest

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injustice.”    68 Haw. at 555, 722 P.2d at 464 (determining that

“the prevention of manifest injustice required . . . a departure

[from the stipulation] in this case” because enforcing the

stipulation would have left a party who had suffered “serious

financial injury” “with virtually no source of relief”); see

also 83 C.J.S. Stipulations § 1 (2020) (“Valid stipulations

entered into freely and fairly should not be lightly set aside,”

but may be “when their enforcement would result in serious harm

to one of the parties and the other party would not be

prejudiced by their being set aside.” (footnote omitted)).               In

addition, “the parties’ stipulation as to a question of law is

not binding on the court[.]”       Hawaiian Ass’n of Seventh-Day

Adventists, 130 Hawaiʻi at 46, 305 P.3d at 462.

           Moreover, we recognize that the Stipulation was made

in the course of a mortgage foreclosure proceeding, which is

“equitable in nature and is thus governed by the rules of

equity.”   Santiago v. Tanaka, 137 Hawaiʻi 137, 157, 366 P.3d 612,

632 (2016) (quoting Beneficial Haw., Inc. v. Kida, 96 Hawaiʻi

289, 312, 30 P.3d 895, 918 (2001)).         “Courts of equity have the

power to mold their decrees to conserve the equities of the

parties under the circumstances of the case.”           Peak Cap. Grp.,

LLC v. Perez, 141 Hawaiʻi 160, 179, 407 P.3d 116, 135 (2017)

(citation omitted).      “In general, stipulations are not to be

lightly set aside.”      In re Lenox, 902 F.2d 737, 739 (9th Cir.

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1990).    In an equitable foreclosure proceeding, a trial court

should enforce the terms of a stipulation unless doing so would

be inequitable.      Wilson v. Witt, 952 P.2d 214, 216 (Wyo. 1998)

(“[A court’s authority to alter or nullify a contract] does not

extend so far as to authorize a court of equity to disregard and

set aside a valid stipulation of the parties upon the

performance of which their rights are made to depend in the

absence of some equitable basis.” (emphasis added) (citation

omitted)).

            Although trial courts generally have wide latitude to

deny sanctions, here, the record is devoid of any other basis

for which the sanctions motion was denied besides the erroneous

conclusion that the Stipulation was not binding.             The circuit

court therefore erred, and we remand this case for further

proceedings.

            This decision neither opines on whether sanctions

would or would not be appropriate on remand, nor suggests anyone

necessarily breached the Stipulation.          Indeed, it may well be

the case that sanctions are inappropriate and that all parties

complied with the Stipulation’s terms.           We write today solely to

clarify that agreements made during the course of litigation,

reduced to writing, signed by all parties, and given the

imprimatur of the court must generally be treated as binding.

“In essence, a stipulation is a contract, or at least akin to

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one, and is entitled to all the sanctity of a conventional

contract.”    83 C.J.S. Stipulations § 1 (2020) (footnotes

omitted).    In addition to the well-established principles of law

undergirding this holding, sound policy reasons support it as

well.   The stipulation in this case represented a mutual

agreement to pursue a sale that presumably would leave all

parties better off, potentially avoiding a costly judicial

process and resolving the litigation amicably.           Agreement

between adversarial parties on issues during the litigation

makes the litigation process smoother and less costly for all.

But if stipulations are not given binding effect, then parties

will be less likely to enter into them for fear that they will

later be rendered toothless.       In short, parties must be able to

rely on the terms of an agreement and arrange their affairs in

accordance therewith, and accordingly, absent a sufficient

reason to set them aside, stipulations are binding on those who

agree to them.

                             V.    CONCLUSION

            For the foregoing reasons, the ICA’s January 3, 2020

judgment on appeal and the circuit court’s May 5, 2017 judgment

are vacated in part, with respect to the circuit court’s

January 6, 2017 Order Denying Sanctions, but are otherwise




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affirmed.    The case is remanded to the circuit court for

proceedings consistent with this opinion.

Glen T. Hale                              /s/ Mark E. Recktenwald
for petitioner
                                          /s/ Paula A. Nakayama
Matthew M. Matsunaga and
Derek R. Kobayashi                        /s/ Sabrina S. McKenna
for respondent
                                          /s/ Michael D. Wilson

                                          /s/ Todd W. Eddins




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