Kang v. Harrington
1978 Haw. LEXIS 230, 59 Haw. 652, 587 P.2d 285 (1978)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
Punitive damages may be awarded for fraud that is wanton, oppressive, or malicious, but the amount of the award must be based on the defendant's state of mind and conduct at the time of the fraud against the plaintiff, not on any separate misconduct, such as attempting to perpetrate a fraud on the court during litigation.
Facts:
- Lawrence S. C. Kang, through his agent and daughter Dolly Won, advertised his property at 2927 Hibiscus Place for rent.
- W. Dewey Harrington expressed interest in renting the property and proposed making improvements in exchange for a reduced rent and permission to keep dogs on the premises.
- Won orally agreed to a one-year lease at a reduced rent of $400 per month, with an option for one additional year, in exchange for Harrington building walls and performing landscaping.
- Harrington presented Won with a letter of intent he had drafted, which incorrectly listed the property address as Won's adjacent home and misstated the purpose of a $400 payment.
- Harrington then provided a typed rental agreement he had prepared, telling Won he was in a hurry and inducing her to sign it quickly without careful review.
- The rental agreement secretly included a clause granting Harrington a perpetual option to renew the lease annually at the same rate, contrary to their oral agreement.
- After taking possession, Harrington made numerous improvements beyond those agreed upon to bolster his claim to a long-term tenancy.
- Harrington later sent a letter to Won declaring his intent to exercise his option to renew for 'many, many years.'
Procedural Posture:
- Lawrence S. C. Kang filed a lawsuit against W. Dewey Harrington in the circuit court of the first circuit (a trial court).
- Kang sought reformation of the rental agreement to reflect a one-year option, as well as compensatory and punitive damages for fraud.
- Harrington filed a counterclaim seeking reformation for a fifty-five-year lease and damages for alleged assault and battery.
- Following a bench trial (trial without a jury), the trial court found in favor of Kang, holding that Harrington had committed fraud.
- The trial court reformed the rental agreement, awarded Kang $1,800 in compensatory damages and $20,000 in punitive damages, and found against Harrington on his counterclaim.
- Harrington (appellant) appealed the trial court's judgment to the Supreme Court of Hawaii.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
May punitive damages be awarded for intentional contract fraud, and if so, must the amount be based solely on the defendant's conduct toward the plaintiff rather than any subsequent misconduct during litigation?
Opinions:
Majority - Richardson, C.J.
Yes, punitive damages may be awarded for fraud where the defendant's conduct is wanton and malicious, but the amount must be based exclusively on the fraudulent conduct directed at the plaintiff. The evidence clearly and convincingly shows that Harrington engaged in a fraudulent scheme to obtain a perpetual lease by intentionally misrepresenting terms in written documents and rushing Won into signing them. This conduct was sufficiently wanton and malicious to justify an award of punitive damages for the purposes of punishment and deterrence. However, the trial court's $20,000 award was excessive because it was likely influenced by its finding that Harrington also attempted to commit a 'fraud on the court' during the trial. Punitive damages for the underlying tort cannot be based on litigation misconduct. The proper measure is the degree of malice and oppression at the time of the fraudulent act against the plaintiff; therefore, the award is reduced to $2,500 through remittitur.
Analysis:
This case clarifies the basis for calculating punitive damages in fraud claims, establishing a clear distinction between the defendant's underlying tortious conduct and subsequent litigation misconduct. It reinforces the principle that punitive damages must be tethered to the harm done to the plaintiff at the time of the act, preventing trial courts from using them to punish a defendant for 'fraud on the court.' The decision also affirms the power of an appellate court in a non-jury case to order a remittitur (a reduction in an excessive damage award) without offering the plaintiff the option of a new trial, thereby directly correcting a trial court's error in calculation.
Unlock the full brief for Kang v. Harrington