Queen Emma Foundation v. Tatibouet

bNLiBHARY
FOR PUBLICATION IN WEST'S HAWAI‘I REPORTS AND PACIFIC REPORTER

IN THE INTERMEDIATE COURT OF APPEALS

oF THE sTATE oF HAwArI

---o0o--- ma
§§

THE QUEEN EMMA FoUNDATIoN, §§ W”

a HawaiH.non-profit corporation, §§ §§

Plaintiff-Appellee, v ?“

vs. kw “`

ANDRE STEPHEN TATIBOUET, and CORAL REEF DEVELOPMENl LLCF§ §
a HawaiYi limited company, §§
Defendants~Appellants, ' ;HW §§

and
JOHN DOES 1-l0; JANE DOES 1-l0; DOE ENTITIES 1-lO;
and DOE GOVERNMENTAL ENTITIES 1-lO,
Defendants

NO. 26764

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CIVIL NO. 03-1-lO54)

Ju1y 29, 2010
NAKAMURA, cH1EF JUDGE, FoLEY} and FUJIsE, JJ.

OPINION OF THE COURT BY NAKAMURA, C.J.

In this appeal, we are called upon to determine whether

(l) an otherwise moot controversy may be kept alive by a dispute

over the award of attorneys' fees and costs; and (2) whether the

underlying merits of a moot appeal must be addressed to determine
fees and costs to

(l) a dispute

whether the trial court's award of attorneys'
the "prevailing party" was proper. we hold that
over the award of attorneys' fees and costs does not prolong the
life of an otherwise moot controversy; and (2) while an appellate
court does have jurisdiction to consider whether the award of
attorneys' fees and costs was proper, the merits of the underlying
moot controversy will not be considered in determining whether the

recipient of the attorneys' fees and costs award was the

"prevailing party."

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This appeal stems from a complaint for declaratory
judgment filed in the Circuit Court of the First Circuit (circuit
court)y by Plaintiff-Appellee The Queen Emma Foundation (The
Foundation) against Defendants-Appellants Andre Stephen Tatibouet
(Tatibouet) and Coral Reef Development, LLC (Coral Reef
Development) (collectively referred to as "Defendants"). Through
its complaint, The Foundation sought a judgment "declaring that
Defendants are not entitled to convert the Coral Reef Hotel into a
condominium . . . ." The Foundation's complaint and request for
relief turned on the interpretation of a lease, referred to herein
as "the Lot 30-A Amended Lease," which covered property owned by
The Foundation on which the Coral Reef Hotel was situated. The
Foundation was the "LESSOR" under the Lot 30-A Amended Lease and
Tatibouet held the position of a "LESSEE." The circuit court
granted The Foundation's complaint for declaratory judgment and
also awarded attorneys' fees and costs in favor of The Foundation
as the prevailing party in the total amount of $534,708.73.

The Defendants appealed these decisions. Tatibouet
subsequently paid the attorneys' fees and costs award plus accrued
interest. Defendants filed an opening brief, arguing that the
circuit court erred in granting declaratory relief to The
Foundation. They also argued that the circuit court erred in
awarding The Foundation attorney's fees and costs because The
Foundation "should not be the prevailing party."

Shortly after Defendants filed their opening brief,
Tatibouet filed for bankruptcy. Tatibouet's bankruptcy filing
automatically stayed this appeal. The proceedings in this appeal
were suspended for three years while Tatibouet's bankruptcy
proceeding was being resolved. During the bankruptcy proceeding,
Tatibouet assigned and conveyed his interest in the Lot 30-A
Amended Lease to a third party. In addition, Coral Reef
Development was administratively terminated by the Department of

i/ The Honorable victoria S. Marks presided.

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Commerce and Consumer Affairs (DCCA) for failure to file annual
reports and pay required fees.

On March 5, 2008, this court ordered Tatibouet to file a
report on the status of his bankruptcy proceeding, On April 8,
2008, Tatibouet responded that he received a discharge under the
bankruptcy code in October 2007 and that a Final Decree had been
entered. Tatibouet stated that as the result of the termination
of his bankruptcy case, the automatic stay of this appeal was no
longer in effect, and he requested that proceedings in this appeal
be resumed.

The Foundation subsequently filed a motion to dismiss on
the ground that this appeal is moot. The Foundation asserts that
Tatibouet and Coral Reef Development no longer have an interest in
the Lot 30-A Amended Lease or the Coral Reef Hotel, and they thus
have no "'right' or ability to complete their leasehold
condominiumization scheme," which forms the basis of the
underlying dispute. The Foundation argues that for this court to
render a decision on the circuit court's interpretation of the Lot
30~A Amended Lease "would be the equivalent of an advisory opinion
on an abstract point of law."

In opposition, Defendants claim that this appeal is not
moot because (l) Tatibouet still has a direct financial stake in
the appeal since he seeks to vacate the award of attorneys' fees
and costs against him; and (2) Tatibouet may file a future action
against The Foundation for breach of the Lot 30-A Amended Lease.
Defendants also contend that we must address the underlying merits
of this appeal, specifically, the proper interpretation of the Lot
30-A Amended Lease, because they are attacking the award of
attorneys' fees and costs on the ground that Tatibouet, and not
The Foundation, should have been the prevailing party.

For the reasons discussed below, we conclude that: (l)
the Defendants' claims challenging the merits of the circuit
court's grant of declaratory relief are moot; (2) Tatibouet's
interest in overturning the attorneys' fees and costs award and

the possibility that he may seek to file a lawsuit for breach of

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the Lot 30-A Amended Lease do not save his claims challenging the
merits of the circuit court's grant of declaratory relief from

being moot; and (3) without our reaching the merits of the circuit
court's grant of declaratory relief, the circuit court's award of

attorneys' fees should be affirmed.

I. BACKGROUND FACTS
A.

The subject hotel, formerly known as the Coral Reef
Hotel (Hotel), is located on a lot described as Lot 30-A in
Waikiki. Lot 30~A was once part of a larger parcel described as
Lot 30. In l965, Lot 30 was owned by The Foundation's predecessor
in titleW and was leased to Waikiki Development Company (WDC).
WDC, in turn, subleased Lot 30 to a third party, and the sublease
was thereafter assigned to additional parties in separate
transactions. In 1969, the Hotel was built, and in l972,
Tatibouet and others purchased the Hotel and a portion of the
underlying leasehold of Lot 30 containing the Hotel, Lot 30 was
later subdivided into two lots, with Lot 30-A being the lot
containing the Hotel,

In September and December 1975 and February 1976, an
amended lease for Lot 30-A, the Lot 30-A Amended Lease, was
executed with the term of the lease running until 2050. The
Foundation was the "LESSOR" and Tatibouet was one of the
"SUBLESSEES" when the Lot 30~A Amended Lease was signed. Later in
1976, Tatibouet and others acquired the position of the "LESSEE"
under the Lot 30-A Amended Lease.

Article IX of the Lot 30-A Amended Lease provides in
pertinent part:

ARTIcLE ix

CONDOMINIUM DEVELOPMENT

IT IS MUTUALLY COVENANTED AND AGREED by and between the
parties hereto that LESSEE may with the written approval of

W In l965, The Foundation's predecessor in title was The Queen's
Hospital, which was later renamed The Queen's Medical Center. For purposes of
simplicity, we will use "The Foundation“ when referring to any of its
predecessors in title for Lot 30 or Lot 30-A.

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LESSOR develop the demised premises into a residential or

commercial condominium upon the following terms and
conditions:

2. Horizontal Property Regime. If LESSEE shall
decide to develop or convert the premises on Lot 30A into a
condominium development, then at LESSEE's request and
expense, LESSOR will join with LESSEE in executing a suitable
declaration submitting said premises to a Horizontal Property
Regime by Chanter 514, Hawaii Revised Statutes, as now or
hereafter amended, thereby creating condominium leasehold or
subleasehold estates in each of the units and all common
elements of the project constructed thereon. Such
declaration and all condominium documents shall be subject to
the written approval of the attorneys for LESSOR. The
schedule of rents shall be subject to approval of LESSOR.
Such condominium documents will provide for an association of
unit owners who shall at all times maintain a responsible
corporate managing agent approved by LESSOR for the
management and operation of said project and for the
collection and payment when due on behalf of the holders of
the unit subleased, all rents, taxes and other charges
thereunder.

Any proposed condominium subdivision shall be for a
period no longer than this lease and shall not be an

encumbrance upon the fee simple title.

(Emphases added.)

In 2003, Tatibouet moved forward with plans to convert
the Hotel into a condominium, and Coral Reef Development was
formed. Coral Reef Development was the proposed developer for
converting the Hotel into a condominium, and Tatibouet planned to
assign all of his interest in the Hotel to Coral Reef Development.
In March of 2003, without seeking or obtaining The Foundation's
approval for the condominium conversion, Defendants submitted a
Preliminary Public Report and a Declaration of Condominium
Property RegimeW of Coral Reef Condominium Project to the Hawaii
Real Estate Commission. On May 6, 2003, The Foundation learned of
Tatibouet's plans to convert the Hotel into a condominium through
a newspaper article. On May 10, 2003, condominium units weren

offered for sale to the public.

W Condominiums were previously referred to in the Hawaii Revised

Statutes as "horizontal property regimes," but the HawaFi Legislature changed
the terminology to "condominium property regime" in 1988. 1988 Haw. Sess.
Laws Act 65 § 2.

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On May 19, 2003, The Foundation filed its complaint for
declaratory judgment in the circuit court seeking a declaration
that Defendants were not entitled to convert the Hotel into a
condominium. The dispute between the parties largely turned on
the interpretation of Article IX of the Lot 30-A Amended Lease.

The circuit court interpreted Article IX to mean "that
[T]he Foundation would take steps to facilitate establishing a
condominium provided that the condominium would not extend beyond
the term of the lease and provided that the condominium would not
encumber [T]he Foundation's fee simple title."' The circuit court
concluded that "[u]nder current law, a condominium cannot be
created on Lot 30-A without encumbering [T]he Foundation's fee
simple title."F Accordingly, the circuit court granted The
Foundation's complaint for declaratory judgment and ordered that

Defendant's [sic] are not entitled to convert the Coral
Reef Hotel into a condominium and that all offerings,
marketing, filings and submission to the Real Estate
Commission and the general public concerning such
purported conversion are not binding upon [T]he
Foundation and are of no effect.

The Foundation subsequently filed a motion for recovery
of its attorneys' fees and costs on the grounds that: (l) The
Foundation was the prevailing party; and (2) under the terms of
the Lot 30-A Amended Lease and Hawaii Revised Statutes (HRS)

§ 607-14 (Supp. 2009), The Foundation was entitled to recover the
attorneys' fees and costs it incurred. The circuit court granted
The Foundation's motion but reduced the amount of attorney's fees
it had requested. As part of its Final Judgment, the circuit
court entered judgment in favor of The Foundation and jointly and
severally against Defendants for attorneys' fees of $489,304.5l
and costs of $45,404.22, for a total of $534,708.73. Tatibouet

9 With respect to Coral Reef Development, the circuit court further
concluded that: (l) Tatibouet was required to obtain The Foundation's approval
and/or consent to assign his interest in Lot 30-A to another entity such as
Coral Reef Development; and (2) Tatibouet had not assigned any interest in Lot
30-A to Coral Reef Development, and Coral Reef Development was not the
"LESSEE" and did not have the rights of the "LESSEE" under the Lot 30~A
Amended Lease.

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paid the judgment for attorney's fees and costs plus accrued
interest.W 3
B.

Defendants filed a notice of appeal from the circuit
court's: (l) "Final Judgment"; (2) "Findings of Fact, Conclusions
of Law and Order," which granted The Foundation's complaint for
declaratory judgment; (3) "Order Granting The Queen Emma
Foundation's Motion for Recovery of Attorney's Fees and Costs";
(4) "Order Denying Defendants' Motion to Alter or Amend the
Findings of Fact, Conclusions of Law and Order"; and 5) "Order
Denying Defendants Andre Stephen Tatibouet's and Coral Reef
Development, LLC's Motion for Summary Judgment . . ."

In their opening brief, Defendants argue that the
circuit court erred in granting The Foundation's complaint for
declaratory judgment, and they challenge numerous findings of fact
and conclusions of law issued by the circuit court in support of
its decision. Defendants also argue that the circuit court erred
in awarding attorney's fees and costs to The Foundation because
The Foundation should not have been the prevailing party. In
addition, Defendants assert that the circuit court erred in: (l)
permitting the introduction of expert testimony on questions of
law; (2) denying Defendants' motion to alter or amend the
"Findings of Fact, Conclusions of Law and Order," which granted
The Foundation's complaint for declaratory judgment; and (3)
denying Defendants' motion for summary judgment,

After Defendants filed their opening brief and before
The Foundation's answering brief was due, Tatibouet filed for
bankruptcy, which automatically stayed this appeal. As a result
of the automatic stay, this appeal lay dormant for three years.W
As part of the bankruptcy proceeding, Taitbouet assigned and

9 Tatibouet asserts that he paid the judgment for attorney's fees and
costs because he could not afford a supersedeas bond and because The
Foundation took the position that non-payment would constitute a breach of the
Lot 30-A Amended Lease.

y There is no indication that Tatibouet attempted to seek relief from
the bankruptcy stay to pursue this appeal.

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conveyed his interest in the Lot 30-A Amended Lease to a third
party. In addition, on December 7, 2007, Coral Reef Development
was administratively terminated by the DCCA for failure to file
annual reports and pay required fees. This appeal resumed after
Defendants notified this court in 2008 that a Final Decree had

been entered in Tatibouet's bankruptcy proceeding.

II. STANDARDS OF REVIEW
A. Mootness

Courts "may not decide moot questions or abstract
propositions of law." Life of the Land v. Burns, 59 Haw. 244,
250, 580 P.2d 405, 409 (l978) (citation and internal quotation
marks omitted). "It is axiomatic that mootness is an issue of
subject matter jurisdiction. Whether a court possesses subject
matter jurisdiction is a question of law reviewable de novo."
Hamilton v. Lethem, 119 Hawafi 1, 4-5, 193 P.3d 839, 842-43
(2008) (citation and internal quotation marks omitted).

B. Attorney's Fees and Costs

"The trial court's grant or denial of attorneys' fees
and costs is reviewed under the abuse of discretion standard."
Kamaka v. Goodsill Anderson Quinn & Stifel, 117 HawaiH.92, 105,
176 P.3d 91, 104 (2008) (citation, internal quotation marks, and
brackets omitted).

III. DISCUSSION
A. Mootness

We first address the argument raised by The Foundation
in its motion to dismiss this appeal and in its answering brief
that the mootness doctrine bars our consideration of Defendants'
claims.

l.

In general, "this court does not have jurisdiction to
decide abstract propositions of law or moot cases." Lathrop v.
Sakatani, 111 Hawafi 307, 312, 141 P.3d 480, 485 (2006)
(citation, internal quotation marks, and brackets omitted). "A

case is moot where the question to be determined is abstract and

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does not rest on existing facts or rights." In re ADDlication of
ThOmaS, 73 HaW. 223, 226, 832 P.2d 253, 254 (l992).

A case is moot if it has lost its character as a
present, live controversy of the kind that must exist if
courts are to avoid advisory opinions on abstract
propositions of law. The rule is one of the prudential rules
of judicial self-governance founded in concern about the
proper -- and properly limited -- role of the courts in a
democratic society. We have said the suit must remain alive
throughout the course of litigation to the moment of final
appellate disposition to escape the mootness bar.

Kona Old Hawaiian Trails Group v. Lyman, 69 Haw. 81, 87, 734 P.2d
161, 165 (1987) (citations, internal quotation marks, and brackets
omitted).

The mootness doctrine is said to encompass the
circumstances that destroy the justiciability of a suit
previously suitable for determination. Put another way, the
suit must remain alive throughout the course of litigation to
the moment of final appellate disposition. Its chief purpose
is to assure that the adversary system, once set in
operation, remains properly fueled. The doctrine seems
appropriate where events subsequent to the judgment of the
trial court have so affected the relations between the
parties that the two conditions for justiciability relevant
on appeal -- adverse interest and effective remedy -- have
been compromised.

Lathrop, 111 HawaiH.at 312-13, 141 P.3d at 485-86 (citations and
block quote format omitted).

The Foundation contends that Defendants' appeal has been
rendered moot by the transfer of Tatibouet's interest in the Lot
30-A Amended Lease and the Hotel to a third party during
Tatibouet's bankruptcy proceeding and by the administrative
termination of Coral Reef Development. In support of its motion
to dismiss on mootness grounds, The Foundation submitted the
following documents:

1. A "Notice of Payment Defaults and Other Material
Defaults" (Default Notice) filed on December 7, 2006, in
Tatibouet's bankruptcy proceeding, which stated that as the result
of Tatibouet's default on a loan agreement, "title to [the Hotel]
and [Tatibouet's] interest in the ground lease thereto shall be

conveyed" to a third party.W

F The Default Notice provided that the conveyance shall take place
"without the need of a further order" of the bankruptcy court, unless
(continued...)

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2. An "Assignment of Lease" dated December 21, 2006,
filed in the Office of the Assistant Registrar of the Land Court,
State of Hawafi, in which Tatibouet assigned and conveyed his
interest in the Lot 30-A Amended Lease to a third party.

3. A "Certificate of Administrative Termination"
issued by the DCCA, dated December 7, 2007, which states that
Coral Reef Development was administratively terminated for failure
to file annual reports and pay required fees.W

The Foundation argues that based on the events
established by these documents, "it is undisputed that
[Defendants] have no current interest whatsoever" in the Lot 30-A
Amended Lease and the Hotel. The Foundation accordingly asserts
that Defendants "no longer have any putative 'right' or ability to
complete their leasehold condominiumization scheme," In sum, The
Foundation argues that the appeal is moot because a decision by
this court on the circuit court's interpretation of the Lot 30-A
Amended Lease "would equate to an advisory opinion on an abstract
point of law."

Defendants do not dispute that Tatibouet has assigned
and conveyed his interest in the Lot 30-A Amended Lease and the
Hotel to a third-party. Nor do they dispute that Coral Reef
Development has been administratively terminated. However,
Defendants argue that the appeal is not moot because (1) Tatibouet
has a direct financial stake in the appeal since he is challenging

the circuit court's award of attorneys' fees and costs, and he is

F(...continued)
Tatibouet or the creditors committee filed a motion contesting the default and
the bankruptcy court entered an order finding that no material default had
occurred. ‘

9 Defendants acknowledge, and we agree, that "on motions related to
mootnesss, the appellate court may consider matters outside the record
. . . ." This proposition is supported by case authority. §§§, e.g.,
Anderson v. Cain, 27 Haw. 415, 419 (Haw. Terr. 1923) (concluding that facts
that do not appear on the record, but which show that an appeal has been

rendered moot, "may be proved by extrinsic evidence"); Iowa Mut. Ins. Co. v.
McCarthy, 572 N.W.2d 537, 540 n.1 (Iowa 1997); State ex rel. Nelson v. Russo,
729 N.E.2d 1181, 1182 (Ohio 2000). Defendants do not challenge the accuracy

of the documents submitted by The Foundation. we therefore consider these
documents in determining whether the claims raised by Defendants in this
appeal are moot.

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challenging the circuit court's award on the basis that The
Foundation should not have been the prevailing party; and (2)
Tatibouet may file an action against The Foundation for breach of
the Lot 30-A Amended Lease, which Tatibouet claims he cannot do
unless the circuit court's judgment granting declaratory relief is
vacated.
2.

We conclude that events occurring after the circuit
court's entry of its Final Judgment have rendered Defendants'
challenge to the circuit court's grant of declaratory relief moot.
As noted, Tatibouet does not dispute that he has transferred his
interest in the Lot 30-A Amended Lease and the Hotel and to a
third party or that Coral Reef Development has been
administratively terminated. Therefore, the controversy
underlying The Foundation's complaint for declaratory judgment and
the circuit court's grant of declaratory relief -- whether
Defendants are entitled to convert the Hotel into a condominium
under the Lot 30-A Amended Lease -- is no longer a presentj live
controversy.

Because Defendants no longer have an interest in the Lot
30-A Amended Lease, they do not have a present adverse interest
vis-a-vis The Foundation with respect to the interpretation of the
Lot 30-A Amended Lease. A decision by this court overturning the
circuit court's grant of declaratory relief on the merits would
not provide Defendants with an effective remedy regarding their
dispute with the Foundation over their entitlement under the Lot
30-A Amended Lease to convert the Hotel into a condominium. Even
if we were to adopt Defendants' interpretation of the Lot 30-A
Amended Lease, they no longer have the ability to carry out their
plans to convert the Hotel into a condominium. Thus, a decision
by this court on the merits of the circuit court's interpretation
of the Lot 30-A Amended Lease and the circuit court's grant of
declaratory relief would be an advisory opinion on abstract
propositions of law. §§§ Lathrop, 111 Hawafi at 312, 141 P.3d at
485 ("Courts will not consume time deciding abstract propositions

of law or moot cases, and have no jurisdiction to do so." (quoting

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wong v. Bd. of Regem;s, Univ. of Hawai‘i, 62 Haw. 391, 395, 616
P.2d 201, 204 (1980)).
3.

Tatibouet contends that his challenge to the circuit
court's grant of declaratory relief is not moot because he may
bring a damages claim against The Foundation for breach of the Lot
30-A Amended Lease. Tatibouet asserts that unless the circuit
court's declaratory judgment is vacated, his damages claim will be
barred by "issue preclusion" arising from the circuit court's
declaratory judgment.W We conclude that the possibility that
Tatibouet may file a damages claim is too speculative and remote
to save his challenge to the circuit court's grant of declaratory
judgment from being moot, especially since he may not have the
right to bring such a claim by virtue of his bankruptcy
proceeding.

In their opposition to The Foundation's motion to
dismiss on mootness grounds, Defendants initially asserted that
Tatibouet only assigned his interest in the Lot 30-A Amended Lease
and did not assign or transfer the damages claim to anyone else.
However, Defendants later filed an "errata" in which they advised
this court that the assertion that Tatibouet did not assign or
transfer his damages claim "may be incorrect." Defendants stated
that their review of certain documents "indicates that claims
‘relating to the Real Property' (defined as the land under the
[H]otel) may have been assigned." Defendants also stated that
they were reviewing additional documents "to determine the nature
and extent of any such assignment" and requested leave "to file a
supplemental memorandum on the effect of any such assignment on
the instant appeal." Defendants did not thereafter identify or

y As the basis for his "issue preclusion" argument, Tatibouet cites
Hawaii Revised Statutes (HRS) § 632-3 (1993), which provides:

Further relief upon judgment, Further relief based on a
declaratory judgment may be granted whenever necessary or proper,
after reasonable notice and hearing, against any adverse party
whose rights have been adjudicated by the judgment,

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provide this court with any supplemental information on this
issue.

In addition, as the result of Tatibouet's bankruptcy
filing, any damages claim that might be asserted may properly
belong to Tatibouet's bankruptcy estate. virtually all of a
debtor's assets, including causes of action that belong to the
debtor at the commencement of a bankruptcy case, vest in the
bankruptcy estate upon the filing of a bankruptcy petition. 11
U.S.C. § 541(a)(1) (2006); Turner v. COOk, 362 F.3d 1219, 1225-26
(9th Cir. 2004) (concluding that when the debtor declared
bankruptcy, all the debtor's legal or equitable interests in his
property, including causes of action, "became the property of the
bankruptcy estate and are represented by the bankruptcy trustee").

In support of its motion to dismiss, The Foundation
submitted the "Debtor's Schedules, Statement of Financial Affairs,
and Amended Mailing Matrix" (Debtor's Schedules) filed by
Tatibouet in his bankruptcy case.lW The Debtor's Schedules filed
by Tatibouet did not identify an affirmative claim or cause of
action against The Foundation for damages or breach of the
Lot 30-A Amended Lease. In response to The Foundation'sA
submissions, Defendants did not proffer evidence that the
bankruptcy trustee had abandoned any such claim or cause of
action.¥/ If Tatibouet's purported cause of action for damages

against The Foundation was not scheduled or abandoned in

iW As noted in footnote 8, supra, we may consider matters outside the

record in determining whether a claim raised on appeal has been rendered moot.

In addition, we have the discretion, which we exercise here, to take judicial
notice of documents filed in Tatibouet's bankruptcy case, §§§ Hawaii Rules
of Evidence Rule 201 (1993); Roxas v. Marcos, 89 Hawafi 91, 111 n.9, 969 P.2d
1209, 1229 n.9 (1998) (stating that "[c]ourts . . . may, in appropriate
circumstances, take notice of proceedings in other courts, both within and
without their judicial system[,] if those proceedings have a direct relation
to the matter at issue" (citation omitted) (brackets in original)); Onaka v.
Onaka, 112 Hawafi 374, 386 n.15, 146 P.3d 89, 101 n.15 (2006) (taking
judicial notice on appeal of the record in a related bankruptcy case).

59 By order dated June 12, 2008, this court denied The Foundation's
motion to supplement the record with exhibits relating to The Foundation‘s
mootness argument, but ruled that we may consider such exhibits in deciding
The Foundation's motion to dismiss on mootness grounds. we also ruled that
Defendants may submit relevant evidence responding to The Foundation's
exhibits.

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Tatibouet's bankruptcy case, then it is still property of the
bankruptcy estate, and the bankruptcy trustee may reopen
Tatibouet's bankruptcy case to administer this asset on behalf of
the creditors. 11 U.S.C. §§ 350(b) and 554 (2006); Cusano v.
Klein, 264 P.3d 936, 945-46 (9th Cir. 2001) (stating that "[i]f
[the debtor] failed properly to schedule an asset, including a
cause of action, that asset continues to belong to the bankruptcy
estate and did not revert to [the debtor]"); In re Lopez, 283 B.R.
22, 28 (B.A.P. 9th Cir. 2002) (granting a motion to reopen a case
in which the debtor failed to disclose a cause of action in her
schedules, noting that "property that is neither abandoned nor
administered remains property of the estate even after the case is
closed").

Tatibouet has not shown, in light of his bankruptcy
proceeding, that he has the right to bring a claim for damages
against The Foundation for breach of the Lot 30-A Amended Lease.
Given the speculative and remote nature of Tatibouet's purported
damages claim, the possibility that Tatibouet may seek to assert a
damages claim is insufficient to save his challenge to the circuit
court's grant of declaratory judgment from being moot.

4.

Tatibouet argues that his challenge to the circuit

court's award of attorney's fees and costs on the ground that he,

and not The Foundation, should have been the prevailing party

saves the underlying controversy over whether the Lot 30-A Amended

Lease entitled Defendants to convert the Hotel into a condominium
from being moot. We disagree.

Hawafi has not addressed the specific question of
whether a claim for attorneys' fees and costs keeps alive an
otherwise moot controversy. However, courts from other
jurisdictions that have considered this question, including the
United States Supreme Court, have concluded that a dispute over
attorney's fees and costs does not permit adjudication of an
otherwise moot controversy. See, e.g., Lewis v. Continental Bank
Corp., 494 U.S. 472, 480 (1990) (holding that an interest in
attorneys' fees is not enough to create an Article III case or

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controversy when the underlying case is moot); Center for
Biological Diversity v. Marina Point Development Co., 566 F.3d
794, 805-06 (9th Cir. 2009) (lead opinion) (citing numerous cases
in support of the proposition that when a matter becomes moot, an
appellate court cannot review the merits of the underlying dispute
to determine whether an attorneys' fees award was proper); Ott v.
Boston Edison Co., 602 N.E.2d 566, 568 (Mass. 1992) ("A potential
claim for attorneys' fees standing alone does not justify deciding
a moot case."); Dept. of Education v. Rodarte, 127 F.Supp.2d 1103,
1113-14 (D. Haw. 2000) (holding that the pending question
regarding the propriety of an attorneys' fees and costs award for
the prevailing party in an appeal from an administrative decision
did not save the underlying dispute from being moot).

we agree with these cases and conclude that Defendants'
appeal of the circuit court's award of attorneys' fees and costs
does not save the underlying controversy over whether the Lot 30-A
Amended Lease entitled Defendants to convert the Hotel into a
condominium from being moot. Accordingly, we dismiss as moot
Defendants' claims on appeal that challenge the circuit court's
grant of declaratory judgment in favor of The Foundation. For the
same reasons, we also dismiss as moot Defendants' claim on appeal
that the circuit court erred in denying their motion for summary
judgment,

B. Attorneys' Fees and Costs

The question then becomes how should we resolve
Defendants' appeal of the attorneys' fees costs award. we adopt
the approach of the courts that have concluded that "[a]lthough a
claim for attorney's fees does not preserve a case which has
otherwise become moot on appeal, . . . the question of attorney's
fees is ancillary to the underlying action and survives
independently under the Court's equitable jurisdiction."i United
States v. Ford, 650 F.2d 1141, 1144 (9th Cir. 1981); see Bishop v.
Committee on Professional Ethics and Conduct of the Iowa State
_B_a_];, 686 F.2d l278, 1290 (1982); Rodarte, 127 F.Supp.Zd at 1115-
17. where the underlying controversy has become moot, "there is

no right to review or redetermine any of the issues in the

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underlying action solely for the purpose of deciding the
attorney's fees question." §p;Q, 650 F.2d at 1144 n.1. Instead,
the question of attorney's fees and costs must be decided based on
whether the recipient of the attorney's fees and costs award can
be considered to be the prevailing party in the underlying action,
"without regard to whether we think the [trial] court's decision
on the underlying merits is correct." Bishop, 686 F.2d at 1290;
see BagbV v. Beal, 606 F.2d 411, 414-15 (3d. Cir. 1979). we have
jurisdiction, under this approach, to decide Defendants' challenge
to the circuit court's award of attorney's fees and costs,

The court in Rodarte confronted a situation analogous to
the one we face in the instant appeal. Rodarte involved an
administrative hearing decision in favor of a disabled student and
her mother (collectively, the "student") and against the HawaiH_
State Department of Education (DOE) on a claim brought by the
student under the Individuals with Disabilities in Education Act.
Rodarte, 127 F.Supp.2d at 1104-08. The DOE appealed to the
federal district court from the adverse administrative hearing
decision, and the student sought attorney's fees and costs as the

prevailing party in the administrative hearing, Id. at 1107. The

district court found that the DOE's appeal of the administrative
hearing decision was moot because the student had already received
the compensatory education ordered by the hearing officer and had
graduated from high school. ldp at 1111-12. At issue, then, was
how the mootness of the DOE's appeal affected the attorneys' fees
and costs analysis. In other words, whether the court was
required, despite the mootness of the DOE's appeal, to decide if
the student should have been the prevailing party. ;Qp at 1115.
The court noted that as a general rule, an appellee is
no longer a "prevailing party" and must return attorneys' fees
awarded when the appellee loses on the merits on appeal (i.e., "a
favorable judgment on the merits in a lower proceeding is reversed
on appeal"). ;d; However, the court concluded that it was not
required to decide the merits of the moot appeal solely for the
purpose of determining if the student should be the prevailing

party with respect to the attorneys' fees award. Id. The court

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asserted that it "can find no case stating that if an appeal is
moot, a court is nevertheless obliged to investigate the merits in
order to determine who should have been the prevailing party for
purposes of allocating attorneys' fees." ;Qp On the other hand,
the court cited several precedents supporting the view that when
an appeal is moot, the court should not inquire into the
correctness of the underlying decision, but should look to the
outcome of the litigation in determining whether a party was the
prevailing party. ;dp at 1115-16.

Based on its survey of the relevant precedents, the
court found that "it need not determine who the prevailing party
would be in the instant case had the appeal not been moot.

Instead it will simply analyze whether [the student] meets the
test for a 'prevailing party' based on the outcome of the
administrative hearing." ;Qp at 1116. The court concluded that
the student was the prevailing party in that the student succeeded
on a significant issue in the litigation which modified the DOE's
behavior in the studentls favor. lQp at 1117. The court
therefore granted the student's motion for summary judgment for,
attorney's fees and costs. ;Q4

As in Rodarte, we examine whether The Foundation was the
"prevailing party" based on the outcome of the circuit court
proceedings and without inquiring into the correctness of the
circuit court's grant of declaratory judgment on the merits. In
general, a prevailing party is a party who has "prevail{ed] on the
disputed main issue, even though not to the extent of [the
party's] original contention . . . ."' Food Pantry, Ltd. v.
Waikiki Business Plaza, Inc., 58 Haw. 606, 620, 575 P.2d 869, 879
(1978); see Kamaka, 117 Hawafi at 126, 176 P.3d at 125 (stating
that "for purposes of HRS § 607~14 [(the statute cited by The
Foundation in support of its request for attorneys' fees)], the
party in whose favor judgment was entered is the prevailing
party").

Here, based on the outcome of the circuit court
proceedings, it is clear that The Foundation was the prevailing

party. The Foundation sought a declaratory judgment, based on its

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interpretation of the Lot 30-A Amended Lease, that "Defendants are
not entitled to convert the Coral Reef Hotel into a condominium."
The purpose of the litigation was to prevent Defendants from going
forward with their plans to convert the Hotel into a condominium.
The circuit court granted The Foundation's complaint for
declaratory judgment, which effectively stopped Defendants from
continuing with their plans. viewing the outcome of the circuit
court proceedings without considering the underlying merits of the

lcircuit court's decision, we conclude that The Foundation was the

prevailing party and affirm the circuit court's award of
attorneys' fees and costs. See Rodarte, 127 F.Supp.2d at 1114-17;
Center For Biological Diversity, 566 F.3d at 805-06 (lead

opinion).¥/

lV. CONCLUSlON
For the foregoing reasons, we dismiss as moot; (1)
Defendants' claims on appeal that challenge the circuit court's
grant of declaratory judgment in favor of The Foundation; and (2)

Defendants' claim on appeal that the circuit court erred in

ly we note that in Center for Biological Diversity, 566 F.3d at 804, the
permanent injunction granted to the appellees under the Endangered Species Act
(ESA) for the protection of bald eagles became moot on appeal when the bald
eagle was taken off the endangered species list. Both the concurring and
dissenting opinions questioned whether the mootness of the appeal and the
appellate court's decision to vacate the trial court's judgment under the ESA
also required that the trial court's award of attorneys' fees to appellees as
the prevailing party on the ESA claim be vacated. The concurring opinion,
feeling bound by existing precedent, answered the question in the negative and
joined the lead opinion in upholding the award of attorneys' fees under the
ESA without considering the merits of the underlying ESA claim. ;Qp at 807-
08. The dissent, which distinguished prior precedent, answered the question
in the affirmative. ;Qp at 808-10.

Unlike in Center for Biological Diversity, the relief obtained by The
Foundation was not vitiated and undone by subsequent events. In addition, the
appellants in Center for Biological Diversity did not play a role in the case
becoming moot. Here, the case became moot because Tatibouet transferred his
interests in the Lot 30-A.Amended Lease to a third party during his bankruptcy
proceeding. See generally U.S. Bancorp Mortgage Co. v. Bonner Mall
Partnership, 513 U.S. 18, 23-29 (1994) (holding that mootness created by the
parties' settlement did not warrant vacating the lower court's judgment and
concluding that whether the party seeking relief from the judgment below
caused the mootness by voluntary action was the principal condition considered
in determining whether vacatur was appropriate). In these respects, the
circumstances presented by this case are different from those presented in
Center for Biological Diversity.

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denying their motion for summary judgment. we affirm the portion

of the circuit court's July 22,

2004,

Final Judgment which entered

judgment in favor of The Foundation and against Tatibouet and

Coral Reef Development for attorneys'

On the briefs:

Rosemary T. Fazio
Kevin w. Herring
Jill M. Hasegawa
for Plaintiff-Appellee

James T. Bickerton

K. Bartlett Durand, Jr.
Terrence M. Lee

Nadine Y. Ando

(Bickerton Lee Dang &

Sullivan)

william Meheula

(winer Meheula & Devens)
for Defendants-Appe1lants

19

fees and costs.

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