HAWAII LAW DIGEST REVISER Carlsmith Ball LLP 1001 Bishop Street ASB Tower, Suite 2200 Honolulu, Hawaii 96813 Telephone: 808-523-2500 Fax: 808-523-0842 Email: [email protected] Website: http://www.carlsmith.com

Reviser Profile

The law firm of Carlsmith Ball LLP was established in 1857 in Hawaii. The firm currently has 101 (as of 9/15/06) attorneys in eight offices located throughout Hawaii, in Guam, Saipan and Los Angeles. We practice in the areas of Admiralty & Maritime, Banking & Finance, Bankruptcy and Workouts, Corporate and Business, Civil & Commercial Litigation, Energy, Environmental, Hospitality, Real Property, Tax & Estate Planning, Labor & Employment Law, and Technology. Our firm assists businesses in solving problems or concerns that arise in the course of business operations. The attorneys in this firm concentrate primarily in business law and have extensive experience with commercial activities in the Pacific Region. Our clientele includes businesses from the construction, health care, retail, real estate, transportation, maritime, media, agricultural, education, tourism, hospitality, insurance, entertainment, and finance industries, among others. Our understanding of the Pacific Region, including extensive foreign language capabilities, allows us to offer a unique combination of technical skills and practical experience to serve legal and business needs. Our extensive experience and long-established working relationships with regulators in our jurisdictions allows us to provide cost-effective representation for our clients.

HAWAII LAW DIGEST

(The following is a list of all Categories and Topics, including cross-references, covered in this Digest.)

Category/Topic Page Category/Topic Page INTRODUCTION STAY OF EXECUTION ...... 17 GOVERNMENT AND LEGAL SYSTEM ...... 1 SUBMISSION OF CONTROVERSY ...... 17 HOLIDAYS ...... 1 VENUE ...... 17 OFFICE HOURS AND TIME ZONE ...... 1 WITNESSES ...... 18 BUSINESS ORGANIZATIONS COURTS AND LEGISLATURE AGENCY ...... 1 COURTS ...... 18 ASSOCIATIONS ...... 1 LEGISLATURE ...... 18 CORPORATIONS ...... 1 REPORTS ...... 18 JOINT STOCK COMPANIES ...... 4 STATUTES ...... 18 LIMITED LIABILITY COMPANY ...... 4 UNIFORM LAWS ...... 19 LIMITED LIABILITY PARTNERSHIP ...... 4 CRIMINAL LAW PARTNERSHIPS ...... 4 BAIL ...... 19 BUSINESS REGULATION AND COMMERCE CRIMINAL LAW ...... 19 BANKS AND BANKING ...... 5 DEBTOR AND CREDITOR BILLS AND NOTES ...... 7 ACCOUNTS RECEIVABLE ...... 19 BILLS OF SALE ...... 7 ASSIGNMENTS ...... 19 BROKERS ...... 7 ATTACHMENT ...... 20 BULK SALES ...... 7 CONSUMER CREDIT ...... 20 CARRIERS ...... 7 CREDITORS’ SUITS ...... 20 COMMERCIAL CODE ...... 7 EXECUTIONS ...... 20 CONDITIONAL SALES ...... 8 EXEMPTIONS ...... 20 CONSIGNMENTS ...... 8 FORECLOSURE ...... 20 CONSUMER PROTECTION ...... 8 FRAUDULENT SALES AND CONVEYANCES ...... 20 CONTRACTS ...... 9 GARNISHMENT ...... 21 FACTORS...... 9 HOMESTEADS ...... 21 FRANCHISES ...... 9 JUDGMENT NOTES ...... 21 FRAUDS, STATUTE OF ...... 9 LEVY ...... 21 INFORMATION TECHNOLOGY, INTERNET AND NEW MEDIA ..... 9 LIENS ...... 21 INTEREST ...... 9 MECHANICS’ LIENS ...... 22 LICENSES, BUSINESS AND PROFESSIONAL ...... 10 PLEDGES ...... 22 MONOPOLIES, RESTRAINT OF TRADE AND COMPETITION ...... 10 RECEIVERS ...... 22 NEGOTIABLE INSTRUMENTS ...... 10 REDEMPTION ...... 22 RESTRAINT OF TRADE ...... 10 SUPPLEMENTARY PROCEEDINGS ...... 22 SALES ...... 10 TRUSTEE PROCESS ...... 22 SECURITIES ...... 10 USURY ...... 22 DISPUTE RESOLUTION STATUTE OF FRAUDS ...... 11 ALTERNATIVE DISPUTE RESOLUTION ...... 22 TOBACCO PRODUCTS ...... 11 ARBITRATION AND AWARD ...... 22 TRUST RECEIPT SECURITY ...... 11 DOCUMENTS AND RECORDS WAREHOUSEMEN ...... 11 ACKNOWLEDGMENTS ...... 23 CITIZENSHIP AFFIDAVITS ...... 23 ALIENS ...... 11 NOTARIES PUBLIC ...... 23 CIVIL ACTIONS AND PROCEDURE RECORDS ...... 24 ACCORD AND SATISFACTION ...... 12 SEALS ...... 24 ACTIONS ...... 12 TORRENS ACT ...... 24 APPEAL AND ERROR ...... 12 VITAL STATISTICS ...... 24 BONDS ...... 13 EMPLOYMENT CERTIORARI ...... 13 EMPLOYER AND EMPLOYEE ...... 24 CHARITABLE IMMUNITY ...... 13 LABOR RELATIONS ...... 24 COMMISSIONS TO TAKE TESTIMONY ...... 13 WORKERS’ COMPENSATION LAW ...... 26 COSTS ...... 13 ENVIRONMENT DAMAGES ...... 13 ENVIRONMENTAL REGULATION ...... 26 DECLARATORY JUDGMENTS ...... 14 WATERLAW...... 27 DEPOSITIONS AND DISCOVERY ...... 14 WILDLIFE AND ENDANGERED SPECIES ...... 27 EQUITY ...... 14 ESTATES AND TRUSTS EVIDENCE ...... 14 ADMINISTRATION ...... 27 INJUNCTIONS ...... 15 ADVANCEMENTS ...... 27 JUDGMENTS ...... 15 ALLOWANCES ...... 27 LIMITATION OF ACTIONS ...... 15 CLAIMS ...... 27 PARTITION ...... 16 DEATH...... 27 PLEADING ...... 16 DECEDENTS ESTATES ...... 27 PRACTICE ...... 16 DESCENT AND DISTRIBUTION ...... 27 PROCESS ...... 16 ELECTION ...... 27 REPLEVIN ...... 17 ESTATES...... 28 SEQUESTRATION ...... 17 EXECUTORS AND ADMINISTRATORS ...... 28 SERVICE ...... 17 FIDUCIARIES ...... 28 HAWAII LAW DIGEST

Category/Topic Page Category/Topic Page INTESTACY ...... 28 MORTGAGES OF REAL PROPERTY ...... 35 LIVING WILLS ...... 28 PROPERTY PROOF OF CLAIMS ...... 28 ABSENTEES ...... 37 TRUSTS ...... 28 ADVERSE POSSESSION ...... 37 WILLS ...... 28 CONDOMINIUMS ...... 37 FAMILY CONVEYANCES ...... 37 ADOPTION ...... 28 CURTESY ...... 37 ALIMONY ...... 29 DEEDS ...... 38 COMMUNITY PROPERTY ...... 29 DEEDS OF TRUST ...... 38 DISSOLUTION OF MARRIAGE ...... 29 DOWER ...... 38 DIVORCE ...... 29 ESCHEAT ...... 38 DOMESTIC VIOLENCE ...... 30 HORIZONTAL PROPERTY REGIME ...... 38 GUARDIAN AND WARD ...... 30 LANDLORD AND TENANT ...... 38 HUSBAND AND WIFE ...... 30 PERPETUITIES ...... 39 INFANTS ...... 31 PERSONAL PROPERTY ...... 39 MARRIAGE ...... 31 POWERS OF ATTORNEY ...... 40 MARRIED WOMEN ...... 31 NAMES ...... 31 REAL PROPERTY ...... 40 RECIPROCAL BENEFICIARY ...... 31 TRUST DEEDS ...... 42 HEALTH TAXATION CONTROLLED SUBSTANCES ...... 31 ADMINISTRATION ...... 42 FOOD, DRUGS, DEVICES AND COSMETICS ...... 31 ALCOHOL, BEVERAGES AND TOBACCO TAXES ...... 42 HEALTH INSURANCE BENEFITS ...... 31 BUSINESS TAXES ...... 42 LICENSURES AND CERTIFICATION ...... 32 EMPLOYMENT TAXES ...... 42 MEDICAL USE OF MARIJUANA ...... 32 ESTATETAX...... 42 PATIENT’S BILL OF RIGHTS ...... 32 GASOLINE AND SPECIAL FUELS TAXES ...... 42 SMOKING REGULATION ...... 32 GENERATION SKIPPING TAX ...... 42 INSURANCE GIFT TAX ...... 42 INSURANCE COMPANIES ...... 32 INCOME TAX ...... 42 SURETY AND GUARANTY COMPANIES ...... 33 INHERITANCE TAX ...... 43 INTELLECTUAL PROPERTY PROPERTY TAXES ...... 44 TRADEMARKS, SERVICE MARKS, AND TRADENAMES ...... 34 SALES AND USE TAXES ...... 44 TRADE SECRETS ...... 34 STAMP AND SEAL TAXES ...... 45 LEGAL PROFESSION ATTORNEYS AND COUNSELORS ...... 34 TAX LIENS ...... 45 MINERAL, WATER AND FISHING RIGHTS TRANSPORTATION FISHING ...... 34 HIGHWAYS ...... 45 MINES AND MINERALS ...... 35 MOTOR VEHICLES ...... 45 WATER...... 35 FORMS MORTGAGES COVERSHEET ...... 47 CHATTEL MORTGAGES ...... 35 SATISFACTION OF JUDGMENT ...... 48 MORTGAGES OF PERSONAL PROPERTY ...... 35 COMMERCIAL CODE ...... 49 HAWAII LAW DIGEST

Revised for 2007 edition by CARLSMITH BALL LLP, of Honolulu. (Citations, unless otherwise indicated, refer to chapters and sections of Hawaii Revised Statutes. Recent legislation is referred to by the year of the legislation and the act number (e.g. 1999, Act …). SS indicates Special Session. For abbreviations of various court rules, see category Civil Actions and Procedure, topic Practice, subhead Rules. Parallel citations to the Pacific Reporter begin with 44 Haw. Act 111 enacted in 1979 established Intermediate Appellate Court. See category Courts and Legislature, topic Courts.)

Note: 2006 legislation includes session laws through Act 318 passed by legislature and signed by Governor through July 11, 2006. Legislature meets annually.

Financial institutions are regulated by Code of Financial Institutions (c. 412) and are INTRODUCTION subject to separate standards. See category Business Regulation and Commerce, topic GOVERNMENT AND LEGAL SYSTEM: Banks and Banking. The State of Hawaii is a constituent state of the United States of America. For further Hawaii Business Corporation Act.—See c. 414. discussion of the U.S. federal system, see Introduction to the Federal Government of the General Supervision.—Director of Department of Commerce and Consumer Affairs United States at the beginning of this volume. A great many laws are promulgated by of Hawaii, hereafter called ‘‘Director’’, 1010 Richards St., Honolulu, HI 96813. (414-6). the federal government of the United States and are not reflected in the topics below. See Purposes.—Any corporation incorporated under this chapter has purpose of engaging the Introduction to this volume for references to the federal law topics covered. in any lawful business unless more limited purpose is set forth in articles of incorpo- Like all but one of the United States, Hawaii has a common law legal system, with ration. Corporation engaging in business that is subject to regulation under another roots in English common law. For information on the courts and legislature of Hawaii, Hawaii statute may incorporate under this chapter only if permitted by, and subject to see category Courts and Legislature. all limitations of, other statute. (414-41). Purposes of nonprofit corporation discussed in Common Law.—The Common Law of England, as ascertained by English and Ameri- 414D-51. can decisions, is the common law of Hawaii, except as modified by U.S. Constitution Registered Office and Agent.—Each corporation shall continuously maintain in Ha- or laws, the Hawaii Constitution, Hawaii laws, judicial precedent and usage. (1-1). waii registered office that may be same as any of its places of business and registered agent. (414-61). HOLIDAYS: Name.—Substantially similar to §4.01 of Revised Model Business Corporation Act Jan. 1, 3d Mon. in Jan., 3d Mon. in Feb., Mar. 26, Good Friday, last Mon. in May, (1984), hereafter called “RMBCA”. Name must contain word “corporation”, “incorpo- June 11, July 4, 3d Fri. in Aug., 1st Mon. in Sept., all election days except primary and rated”, “limited”, abbreviation “corp.”, “inc.”, or “ltd.” Name must not contain language special election days, Nov. 11, 4th Thurs. in Nov., Dec. 25, any day so proclaimed by stating or implying that corporation is organized for purpose other than that permitted Governor or President. (8-1). If holiday falls on Sun., it should be observed on following by §414-41 and its articles of incorporation. Name must not be same as or substantially Mon.; if holiday falls on Sat., it is observed on preceding Fri. (8-2). identical to: (1) Name of any entity registered or authorized to transact business or Banking holidays may be proclaimed by Governor when public emergency exists. conduct affairs under laws of Hawaii; (2) name exclusive right to which is, at time, (8-3) and it seems to Governor to be in public interest. reserved in Hawaii; (3) fictitious name adopted by foreign corporation authorized to transact business in Hawaii because its real name is unavailable; and (4) any trade name, OFFICE HOURS AND TIME ZONE: trademark, or service mark registered in Hawaii. (414-51). Administrative relief is avail- able against entities who have registered or who are using name that is substantially Hawaii is in the Hawaii (GMT −10:00) Time Zone. Hawaii does not switch to identical to, or confusingly similar to, any domestic corporation in good standing or ‘‘daylight savings time’’ in the summer. Rather, Hawaii maintains ‘‘standard time’’ all foreign corporation authorized to do business in Hawaii. (414-53). year round. Office hours are generally from 8 a.m. to 4:30 p.m. Reserved Name.—Person may reserve exclusive use of corporate name by delivering application to Director for filing. (414-53). Term of corporate existence may be perpetual unless limited period of duration stated BUSINESS ORGANIZATIONS in its articles of incorporation. (414-42). AGENCY: Incorporators.—One or more individual(s) may act as incorporator(s) by signing and filing, with Director, articles of incorporation. (414-31). Common law rules apply generally. See also Uniform Probate Code. (c. 560). Articles of Incorporation, hereafter ‘‘articles’’, shall set forth: (1) Corporation’s ASSOCIATIONS: name; (2) number of shares corporation is authorized to issue; (3) mailing address of corporation’s initial principal office, street address of corporation’s initial registered office No general statute relating to duties and liabilities of unincorporated associations. and name of its initial registered agent at its initial registered office; and (4) name and Service of process on associations, as well as effect of judgments involving associations, address of each incorporator. (414-32[a]). See 414-32(b) for additional, optional provi- discussed in 634-30. sions. Agricultural Associations.—Authorized under c. 421. Agricultural association has Filing of Articles.—All articles must be typewritten or printed in English language. authority to perform only such acts necessary or proper to accomplish purposes set forth Corporate name need not be in English if written in English letters of Arabic or Roman in its activity and which are not repugnant to law. (421-9[a]). Voluntary dissolution must numerals. Articles must be certified and executed: (1) By chairperson of board of di- be approved by at least two-thirds of voting power at duly called meeting held for rectors of domestic or foreign corporation, its president, or another of its officer; (2) if purpose of dissolution. (421-21). General corporation law no longer applicable to merger directors have not been selected or corporation has not been formed, by incorporator; or and consolidation of agricultural associations. Replaced by procedures for adopting plan (3) if corporation is in hands of receiver, trustee, or other court-appointed fiduciary, by of merger and consolidation of agricultural associations in 1993. (421-21.6). that fiduciary. Person executing articles shall sign it and state beneath or opposite that Condominium Associations.—See category Property, topic Real Property, subhead person’s signature person’s name and capacity in which person signs. Articles must be Condominium. delivered to Director for filing and must be accompanied by correct filing fee, and any penalty required. (414-11). Director shall file delivered articles if they satisfy require- Consumer Cooperative Associations.—Authorized under c. 421C. Voluntary disso- ments of §414-11. Director files articles by stamping or otherwise endorsing document lution under 421-21 applies to consumer cooperative associations. (421C-30). including date and time of receipt. After filing articles, Director shall deliver document Cooperative Housing Corporations.—Authorized under c. 421I. Hawaii Business copy to domestic or foreign corporation or its representative. (414-16). Document ac- Corporation Act applies. (c. 414). cepted for filing is effective at time of filing on date it is filed, as evidenced by Director’s date and time endorsement on original document. (414-14). Building and Loan Associations and Savings and Loan Associations.—Savings and loan associations are regulated under Art. 7 of Code of Financial Institutions. (412:7-100 Incorporation Tax or Fee.—(414-13). to 7-408). Filing Fees.—Following fees shall be paid to Director upon filing of corporate docu- Insurance Guaranty Association.—See category Insurance, topic Insurance Compa- ments: (1) Articles of incorporation, $100; (2) articles of amendment, $25; (3) restated nies. articles of incorporation, $25; (4) articles of conversion or merger, $100; (5) articles of merger (subsidiary corporation), $50; (6) articles of dissolution, $25; (7) annual report Professional Corporations.—See c. 415A. See topic Corporations. of domestic and foreign corporations organized for profit, $25; (8) agent’s statement of change of registered office, $25 for each affected domestic corporation or foreign cor- CORPORATIONS: poration in excess of 200; (9) any other statement, report, certificate, application, or other Note.—Hawaii Business Corporation Act incorporates Revised Model Business Cor- corporate document, except annual report of domestic or foreign corporation, $25; (10) porations Act of 1984. (See Uniform and Model Acts section.) Provisions apply to all application for certificate of authority, $100; (11) application for certificate for with- domestic corporations in existence on July 1, 2001 incorporated under any general statute drawal, $25; (12) reservation of corporate name, $10; (13) transfer of reservation of of Hawaii providing for incorporation of corporations for profit if power to amend or corporate name, $10; (14) good standing certificate, $5; (15) special handling fee for repeal statute under which corporation was incorporated was reserved. (414-481). For- review of corporation documents, excluding articles of conversion or merger, $25; (16) eign corporations authorized to transact business in Hawaii on July 1, 2001 are subject special handling fee for review of articles of conversion or merger, $75; (17) special to Hawaii Business Corporation Act, but are not required to obtain new certificate of handling fee for certificates issued by department, $10 per certificate; and (18) special authority to transact business under Hawaii Business Corporation Act. (414-482). handling fee for certification of documents, $10. (414-13). Director shall adjust fees Applicability of certain provisions depends upon incorporation status before July 1, assessed under this section, as necessary from time to time, through rules adopted under 1987. c. 91. (414-13). Director shall charge and collect: (1) For furnishing certified copy of any

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–1 BUSINESS ORGANIZATIONS MARTINDALE-HUBBELL LAW DIGEST - 2007

CORPORATIONS . . . continued Stockholders.—Shareholders’ preemptive rights substantially same as §6.30 of document, instrument, or paper relating to corporation, $10 for certificate and affixing RMBCA except does not affect validity of any action taken prior to Apr. 21, 1953 by seal thereto; and (2) at time of any service of process on Director as agent for service any corporation. (414-101). of process of corporation, $10, which may be recovered as taxable costs by party to suit Shareholder’s Right to Elect Directors.—§8.04 of RMBCA adopted. (414-194). or action causing service to be made if party prevails in suit or action. (414-13). Voting.—§7.28(a) of RMBCA adopted. (414-149[a]). Subsections (b) through (d) of Filing Requirements.—Director may prescribe, and furnish on request, forms for: (1) §7.28 are replaced with following: “If, not less than forty-eight hours prior to the time Application for certificate of good standing; (2) foreign corporation’s application for fixed for any annual meeting, any shareholder or shareholders deliver to any officer of certificate of authority to transact business in Hawaii; (3) foreign corporation’s appli- the corporation, a request that the election of directors to be elected at the meeting be cation for certificate of withdrawal; and (4) annual report. If Director so requires, use of by cumulative voting, then the directors to be elected at the meeting shall be chosen as these forms is mandatory. (414-12). Director’s duty to file documents under 414-16 is follows: (1) Each shareholder present in person or represented by proxy at the meeting ministerial and does not affect validity or invalidity of document, relate to correctness shall have a number of votes equal to the number of shares of capital stock owned by or incorrectness of information contained in document, and create presumption that the shareholder multiplied by the number of directors to be elected at the meeting; (2) document is valid or invalid or that information contained in document is correct or each shareholder shall be entitled to cumulate the votes of the shareholder and to give incorrect. (414-16). all of the votes among any or all of the nominees; and (3) the nominees receiving the highest number of votes on the foregoing basis, up to the total number of directors to Correcting Filed Document.—Domestic or foreign corporation may correct docu- be elected at the meeting, shall be successful nominees. The right to have directors ment filed by Director if document contains incorrect statement or was defectively elected by cumulative voting as provided in this subsection shall exist notwithstanding executed, attested, sealed, verified, or acknowledged. Document is corrected by preparing that provision therefor is not included in the articles of incorporation or bylaws; provided articles of correction and delivering articles of correction to Director for filing. Articles that this right may be restricted, qualified, or eliminated by a provision of the articles of correction are effective on effective date of document they correct except as to persons of incorporation or bylaws of any corporation having a class of equity securities reg- relying on uncorrected document and adversely affected by correction. As to those istered pursuant to the Securities Exchange Act of 1934, as amended, which are neither persons, articles of correction are effective when filed. (414-15). listed on a national securities exchange or traded over-the-counter on the National Market License to do Business.—Corporate existence begins when articles of incorporation of the National Association of Securities Dealers, Inc. Automated Quotation system. This are filed. Director’s filing of articles of incorporation is conclusive proof that incorpo- section shall not prevent the filling of vacancies in the board of directors, which va- rators satisfied all conditions precedent to incorporation except in proceeding by State of cancies may be filled in a manner that may be provided in the articles of incorporation Hawaii to cancel or revoke incorporation or involuntarily dissolve corporation. (414-33). or bylaws.” (414-149[b]). No other document evidencing right to do business required for domestic corporations. Proxies.—§7.22 of RMBCA substantially adopted except for addition to subsection (b) Gross income tax license required as condition precedent to doing business if corporation which provides that shareholders may authorize another person to act as proxy for has gross income on which tax imposed. (237-9). See category Taxation, topic Sales and shareholder by executing written authorization, or by electronically transmitting autho- Use Taxes, subhead General Excise Tax. rization to proxy holder. (414-143). Foreign corporation may not do business in Hawaii until it obtains certificate of Voting Agreements and Trusts.—§§7.30 to 7.31 of RMBCA adopted. (414-161, 414- authority from Director. (414-431). Foreign corporation may apply for certificate of 162). authority to transact business in Hawaii by delivering application to Director for filing. Inspection of Books and Records.—Corporations required to keep accurate and com- (414-433). plete books and records. Corporation also must keep and maintain at its principal offices, Organization.—If initial directors are named in articles of incorporation, initial di- minutes of shareholders’ and directors’ meetings. Such books and records must include rectors shall hold organizational meeting at call of majority of directors to complete accounts of corporation’s assets, liabilities, receipts, disbursements, gains, and losses. organization of corporation. If initial directors are not named in articles, incorporator or Minutes of aforementioned meetings must reflect time and place of each meeting if any, incorporators shall hold organizational meeting at call of majority of incorporators to whether it is special or regular, whether notice was given, and if so, how, names of those elect: (1) Directors and complete organization of corporation; or (2) board of directors present at directors’ meetings, number of shares present at each shareholders’ meeting, who shall complete organization of corporation. Actions required or permitted to be taken and proceedings at each meeting. Board of directors of each corporation required to keep by incorporators at organizational meeting may be taken without meeting if action taken book for registering names of persons who are or will become shareholders, showing is evidenced by one or more written consents describing action taken and signed by each number of shares held by them, and time they became shareholders. Such book must be incorporator. (414-35). open at all reasonable times for inspection by shareholders. Person having charge of such book must provide certified transcript of anything contained in that book to any share- Paid in Capital Requirements.—No provision as to minimum of capital which must holder, provided shareholder pays reasonable charge. (414-470). be paid in on organization or before commencing business. Amendment of Certificates or Articles.—Similar to RMBCA §§10.01-10.03. (414- Stockholders’ Actions.—Shareholder may not commence or maintain derivative pro- 281 to 414-283). However, corporation’s board of directors is not authorized, without ceeding unless shareholder was shareholder of corporation at time of act complained of shareholder action, to: (1) Extend duration of corporation if it was incorporated at time or became shareholder through transfer by operation of law from one who was share- when limited duration was required by law; (2) change each issued and unissued au- holder at that time and fairly and adequately represents interests of corporation in thorized share of outstanding class into greater number of whole shares if corporation enforcing right of corporation. (414-172). Before bringing derivative proceeding, share- has only shares of that class outstanding; and (3) change corporate name by substituting holder must wait until 90 days have expired after making written demand upon corpo- word “corporation”, “incorporated”, “company”, “limited”, or their abbreviations for ration to take suitable action unless shareholder has earlier been notified that demand has similar word or abbreviation in name, or by adding, deleting, or changing geographical been rejected by corporation or unless irreparable injury would result to corporation by attribution for name. (414-282). waiting for expiration of the 90 day period. (414-173). On termination of derivative With respect to corporations incorporated on or after July 1, 1987, any amendment to proceeding, court may: (1) Order corporation to pay plaintiff’s reasonable fees and articles must be adopted at meeting where shareholders entitled to vote thereon shall vote expenses (including counsel fees) incurred in proceeding if it finds that proceeding has on proposed amendment. Proposed amendment will be adopted upon receiving affirma- resulted in substantial benefit to corporation; (2) order plaintiff to pay any defendant’s tive vote of holders of majority shares entitled to vote, unless any class of shares is reasonable expenses (including counsel fees) incurred in defending proceeding if it finds entitled to vote as class, in which event proposed amendment will be adopted upon that proceeding was commenced or maintained without reasonable cause or for improper receiving affirmative vote of majority of shareholders of each class of shares entitled to purpose; or (3) order party to pay opposing party’s reasonable expenses (including vote as a class and of the total shares entitled to vote thereon. (414-283). counsel fees) incurred because of pleading, motion, or other paper, if it finds that Further, for corporations incorporated before July 1, 1987, vote of shareholders entitled pleading, motion, or other paper was not well grounded in fact, after reasonable inquiry, to vote on proposed amendment will be taken at meeting. Proposed amendment will be or warranted by existing law or good faith argument for extension, modification, or adopted upon receiving affirmative vote of 2/3 of shares entitled to vote thereon. Articles reversal of existing law and was interposed for improper purpose, such as to harass or of incorporation may be amended by such vote to provide for lesser proportion of shares, cause unnecessary delay or needless increase in cost of litigation. (414-177). or any class or series thereof, than provided in preceding sentence, in which case articles Shareholders’ Meetings.—§§7.01 and 7.02 of RMBCA adopted. (414-121, 414-122). of incorporation shall control, provided that lesser proportion shall not be less than that §7.03 of RMBCA substantially adopted except “The circuit court” replaces phrase be- required for corporations incorporated on or after July 1, 1987. (414-283). ginning with “The [name or describe]” and ending with “its registered office)”. (414- Voting on amendments by voting groups same as RMBCA §10.04. (414-284). 123). §§7.04 through 7.06 of RMBCA substantially adopted except “chapter” replaces Articles of amendment to be delivered to and filed by department director. (414-11). “Act” throughout. (414-124 through 414-126). Effect of Amendment.—Same as RMBCA §10.09. Voting Trusts.—See subhead Stockholders, supra. Increase or Decrease of Authorized Capital Stock.—See supra, subhead Amend- Directors.—§8.01 of RMBCA substantially adopted except “Section 414-163” re- ment of Certificates or Articles. places “subsection (c)” in subsection (a), and subsection (c) has been deleted. (414-191). Bylaws.—§2.06 of RMBCA adopted. (414-36). §§8.02 through 8.08 of RMBCA adopted. (414-192 through 414-198). §8.09 of RMBCA Stock.—§6.01 of RMBCA adopted. (414-71). §6.02 of RMBCA adopted, except add substantially adopted except “The circuit court” replaces phrase beginning with “The “Upon filing of the articles of amendment or resolution by the department director, it [name or describe]” and ending with “its registered office)”. (414-199). §§8.10 and 8.11 shall constitute an amendment of the articles of incorporation.” to end of section. (414- of RMBCA adopted. (414-200, 414-201). 72). §§6.03 and 6.04 of RMBCA adopted. (414-73, 414-74). Directors’ Meetings.— Stock Certificates.—§§6.25 and 6.26 of RMBCA adopted. (414-86, 414-87). Quorum.—§8.24 of RMBCA adopted. (414-215). Committees.—§8.25 of RMBCA adopted. (414-216). Issuance of Stock.—§6.21 of RMBCA adopted. (414-82). Meetings.—§8.20 of RMBCA adopted. (414-211). Transfer of Stock.—§6.27 of RMBCA adopted. (414-88). Powers and Duties of Directors.—See subhead Directors, supra. Uniform Fiduciaries Act adopted in 1945. (c. 556). §189-3, Revised Laws of Hawaii Liabilities of Directors.—Corporation may eliminate or limit personal liability of its 1955, pertaining to Uniform Fiduciaries Act repealed by adoption of Uniform Commer- directors in any action brought by shareholders or corporation for monetary damages cial Code. (490:10-102[1]). See category Business Regulation and Commerce, topic against any director of corporation for any action taken or any failure to take action. Commercial Code. (414-222[a]). Corporation may not eliminate or limit personal liability of director for: (1) Stock Transfer Tax.—None adopted. Amount of financial benefit received by director to which director is not entitled; (2)

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–2 HAWAII LAW DIGEST BUSINESS ORGANIZATIONS

CORPORATIONS . . . continued restricted or denied by articles, bylaws, or resolutions. (414-313). 414-313 also includes intentional infliction of harm on corporation or shareholders; (3) violation of §414-233; provisions regarding termination and amendment of plan of merger and time of effec- or (4) intentional violation of criminal law. (414-222[b]). Director who votes for or tiveness of merger or share exchange. (414-313). §11.04 of RMBCA adopted with assents to distribution made in violation of §414-111 or articles of incorporation is additional provisions regarding contents of Articles of Merger. (414-314). §11.05 of personally liable to corporation for amount of distribution that exceeds what would have RMBCA adopted with substitution of “department director” for “secretary of state”, been distributed without violation, provided that proceeding is commenced within two revisions regarding contents of articles of merger or share exchange, revisions regarding years after date on which effect of distribution was measured and director did not comply time of effectiveness of articles of merger, and new provisions regarding articles of with §414-221. (414-223). merger acting as amendment of corporation’s articles of incorporation and articles of Officers.—§§8.40 through 8.42 of RMBCA adopted. (414-231 through 414-233). dissolution or application for certificate of withdrawal for non-surviving corporation in §8.43 of RMBCA substantially adopted, except subsection (b) provides that removal of certain circumstances. (414-315). §11.06 of RMBCA amended to provide for service of officer is without prejudice to contract rights. (414-234). §8.44 of RMBCA adopted. process on surviving entity if such entity fails to appoint or maintain agent. (414-316). (414-235). §11.07 of RMBCA not adopted. (2002, Act 41, §26 repealed 414-317). Liabilities of Officers.—See subhead Indemnification of Directors and Officers, infra. Control Share Acquisitions.—Applies to Hawaii corporation with at least 100 share- Indemnification of Directors and Officers.—§§8.50 thru 8.56 of RMBCA adopted holders. (414E-1). ‘‘Control share acquisition’’ means acquisition of shares resulting in with substantial changes. (414-241, 414-427). beneficial ownership by acquiring person of new range of voting power of 10% or more. Principal Office.—No statutory provision except that it must be provided for in annual (414E-2[c][4]). Person proposing control share acquisition must provide information report to Director. (414-472). required in 414E-2(c). Within five days of receiving statement, special meeting of share- holders must be called to vote on proposed acquisition. (414E-2[d]). Control share Resident Agent.—Each corporation must maintain continuously in Hawaii registered acquisition may be consummated only if (1) holders of majority of voting power of all agent who may be: (1) Individual who resides in Hawaii and whose business office is shares not beneficially owned by acquiring party approve acquisition, and (2) acquisition identical with registered office; (2) domestic entity authorized to transact business or is carried out within 180 days of shareholder approval. (§414E-2[e]). If control shares conduct affairs in Hawaii whose business office is identical with registered office; or (3) are acquired without shareholder approval, acquiring person is denied voting rights for foreign entity authorized to transact business or conduct affairs in Hawaii whose business one year after acquisition, and company has option to redeem stock. (414E-2[b]). office is identical with registered office. (414-61). Any designation or change of registered office or registered agent must be made pursuant to provisions in §414-62. Tender Offers.—Governed by c. 417E. Applies only to target companies organized General Powers of Corporation.—§3.02 of RMBCA adopted. (414-42). under Hawaii law or with at least 20% of equity securities beneficially held by Hawaii residents. (417E-1). Tender (take-over) offer defined as offer to acquire equity security Dividends.—§6.23 of RMBCA adopted. (414-84). of target company where offeror would be beneficial owner of more than 10% of any Unclaimed Dividends.—See category Property, topic Absentees, subhead Escheat. class of outstanding equity securities of target company, or beneficial ownership of equity Sale or Transfer of Corporate Assets.—§12.01 of RMBCA adopted. (414-331). securities by offeror would increase by more than 5%. (417E-1). No person shall make §12.02 of RMBCA adopted in part except subsection (e) replaced with subsections (e) tender offer or acquire equity securities unless registration statement is filed with secu- and (f) as follows: “(e) With respect to the corporations incorporated on or after July 1, rities commissioner. (417E-2). Filing fee: $250. (417E-7). Defines fraudulent and de- 1987, at the meeting the shareholders may authorize the sale, lease, exchange or other ceptive practices (417E-4), and imposes limitations on offerors (417E-5). Acquisitions disposition and may fix, any or all of the terms and conditions thereof and the consid- made within two years of tender offer must be made on terms substantially equivalent eration to be received by the corporation therefor. The authorization shall require the to earlier offer. (417E-5[g]). affirmative vote of the holders of a majority of the shares of the corporation entitled to See category Environment, topic Environmental Regulation, subhead Environmental vote thereon, unless any class of shares is entitled to vote thereon as a class, in which Disclosure. event the authorization shall require the affirmative vote of the holders of a majority of Dissolution.—§§14.01 through 14.40 of RMBCA substantially adopted with following the shares of each class of shares entitled to vote as a class thereon and of the total shares changes. (414-381 through 414-421). Substitute “department director” for “secretary of entitled to vote thereon. (f) With respect to corporations incorporated before July 1, 1987, state” throughout. §14.02 of RMBCA amended to provide that with respect to corpo- at the meeting the shareholders may authorize the sale, lease, exchange, or other dis- rations incorporated on or after July 1, 1987, vote of shareholders shall be taken on position and may fix, or may authorize the board of directors to fix, any or all of the resolution to dissolve corporation at shareholders’ meeting. Resolution shall be adopted terms and conditions therefor. The authorization shall require the affirmative vote of the upon receiving affirmative vote of holders of majority of shares of corporation entitled holders of 3/4 of the shares of the corporation entitled to vote as a class thereon and of to vote thereon as class, in which event resolution shall be adopted upon receiving the total shares entitled to vote thereon. The articles of incorporation may be amended affirmative vote of holders of majority of shares of each class of shares entitled to vote by the vote set forth in the preceding sentence to provide for a lesser proportion of shares, as class and of total shares entitled to vote. With respect to corporations incorporated or of any class or series thereof, than is provided in the preceding sentence, in which before July 1, 1987, vote of shareholders shall be taken on resolution to dissolve case the articles of incorporation shall control; provided that the lesser proportion shall corporation at shareholders’ meeting. Resolution shall be adopted upon receiving affir- not be less than the proportion set forth in subsection (e).” (414-332). mative vote of holders of 3/4 of shares of corporation entitled to vote, unless any class Books and Records.—Corporation required to keep accurate and complete books and of shares is entitled to vote as class, in which event resolution shall be adopted upon records of account. Minutes of shareholders’ and board of directors’ meetings are to be receiving affirmative vote of holders of 3/4 of shares of each class of shares entitled to maintained at its principal offices. Books of account must include accounts of assets, vote. (414-382). §14.20 of RMBCA amended to provide that Director may commence liabilities, receipts, disbursements, gains and losses. Minutes of meetings must show time dissolution proceeding if: (1) Corporation has failed to file its annual report for period and place of each meeting, whether regular or special, if notice was given and how, of two consecutive years; (2) corporation procured its articles of incorporation through names of directors and shareholders present, and proceedings. Board of directors must fraud; (3) corporation has continued to exceed or abuse authority conferred upon it by maintain register of all shareholders, showing number of shares owned and when they law; or (4) corporation fails to file statement of change in name or business address of became owners of shares. Book must be available for inspection by shareholders. Cer- its agent. (414-401). §14.21 of RMBCA is amended to provide that Director shall serve tified transcript is to be provided to shareholder who pays for its preparation. (414-470). notice to corporation by mailing notice to corporation’s last known address appearing in Reports.—Corporation required to file annual report with Director that sets forth: (1) records of Director. Additionally, parties of interest may petition court of competent Name of corporation and state or country under whose law it is incorporated; (2) mailing jurisdiction to appoint trustee to settle affairs of any corporation administratively dis- address of principal office, address of its registered office in this state and name of its solved. (414-402). Also, corporation whose articles of incorporation have expired shall registered agent at its registered office in Hawaii; (3) names and business addresses of cease to exist by operation of law. (414-402). §14.22(a) of RMBCA is amended to require its directors and officers; and (4) brief description of nature of its business. Domestic that application for reinstatement must contain all reports due and unfiled and contain corporations shall also provide total number of authorized shares and total number of payment of all delinquent fees and penalties. §14.22(b) is amended to provide that within issued and outstanding shares. applicable reinstatement period, should name of corporation, or name substantially iden- Between Jan. 1, 2002 and through Dec. 31, 2002, filing of annual reports voluntary. tical thereto be registered or reserved by another corporation, partnership, limited liability Effective Jan. 1, 2003, if date of incorporation or registration is between: (a) Jan. 1 and company, or limited liability partnership, or should name or name substantially identical Mar. 31, report shall be filed on or before Mar. 31 of each year, reflecting state of affairs thereto be registered as trade name, trademark, or service mark, then reinstatement shall as of Jan. 1; (b) Apr. 1 and June 30, report shall be filed on or before June 30 of each be allowed only upon registration of new name by involuntarily dissolved corporation year, reflecting state of affairs as of Apr. 1; (c) July 1 and Sept. 30, report shall be filed pursuant to amendment provisions provided by statute. (414-403). §14.30 of RMBCA is on or before Sept. 30 of each year, reflecting state of affairs as of July 1; (d) Oct. 1 and amended to provide circuit court with power to dissolve corporation. (414-411). §14.31 Dec. 31, report shall be filed on or before Dec. 31, reflecting state of affairs as of Oct. of RMBCA amended by making circuit court venue for dissolution proceedings and 1. If domestic or foreign corporation is incorporated or registered in same year annual adding subsection (d) which provides that within ten days after commencement of report is due, such corporation will not be required to file report for that year. (414-472). proceeding pursuant to §414-411(c) against corporation that has no shares listed on Merger and Consolidation.—§11.01 of RMBCA substantially adopted with revisions national securities exchange or regularly traded in market maintained by one or more to account for mergers involving foreign corporations and contents of plan of mergers. members of national or affiliated securities association, corporation must send to all (414-311). §11.02 substantially adopted with revisions to account for mergers involving shareholders, other than petitioner, notice stating that shareholders are entitled to avoid foreign corporations. (414-312). §11.03 adopted in part with following changes. For dissolution of corporation by electing to purchase petitioner’s shares pursuant to §414- corporations incorporated on or after July 1, 1987, vote of shareholders shall be taken 415. (414-412). §14.40 of RMBCA amended to provide that assets of dissolved corpo- on any plan of merger. Plan shall be approved upon receiving affirmative vote of holders ration that should be transferred to creditor, claimant, or shareholder of corporation who of majority of each class of shares entitled to vote as class and of total shares entitled cannot be found or is not competent to receive them shall be reduced to cash and to vote. Any class of shares of any such corporation shall be entitled to vote as class if deposited with Director for disposition in accordance with c. 523A. (414-421). plan contains provision that, if contained in proposed amendment to articles of incor- Insolvency and Receivers.—See subhead Dissolution, supra. poration, would entitle that class of shares to vote as class and, in case of exchange, if class is included in exchange. With respect to corporations incorporated before July 1, Close Corporations.—No special statutory provisions. However, those owner-em- 1987, at such meeting, vote of shareholders shall be taken on proposed plan. Plan shall ployees of family-owned private corporations owning 50% of stock shares issued by be approved upon receiving affirmative vote of holders of 3/4 of all issued and out- corporation, or more, may exempt themselves from unemployment compensation pay- standing shares of stock having voting power even though their right to vote is otherwise ments and benefits. (383-7[20]).

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–3 BUSINESS ORGANIZATIONS MARTINDALE-HUBBELL LAW DIGEST - 2007

CORPORATIONS . . . continued Powers.—Limited liability company has same powers as individual to carry on its Appraisal.—§13.30 of RMBCA substantially adopted. Subsection (b) amended to business. (428-111). provide that proceeding shall commence in circuit court. Name must contain words ‘‘limited liability company’’ or abbreviation ‘‘L.L.C.’’, Foreign Corporations.—§§15.01 through 15.32 of RMBCA substantially adopted. ‘‘LLC’’. (428-105). ‘‘Limited’’ may be abbreviated as ‘‘Ltd.’’ and ‘‘company’’ may be Significant changes include following. Any reference to “secretary of state” shall be abbreviated as ‘‘Co.’’ (428-105). Name must not be identical or substantially similar to deleted, with “department director” inserted. §15.02(c) of RMBCA amended to provide name of any Hawaii partnership, limited partnership, limited liability partnership, cor- that foreign corporation that transacts business in Hawaii without certificate of authority poration, or limited liability company. (428-105). Person may reserve name through filing shall be liable for years or parts thereof during which it transacted business in Hawaii application with director. (428-106). Administrative relief is available against other en- without certificate of authority, in amount equal to all fees that would have been imposed tities who have registered or are using name that is substantially identical or confusingly upon corporation had it duly applied for and received certificate of authority to transact similar to LLC. (428-105.5). business in Hawaii, plus all penalties imposed for failure to pay fees. (414-432). §15.04 Articles of Organization.—Required information of articles are set out in 428-203 of RMBCA not adopted. §414-434 provides that whenever name of foreign corporation and rules of amending and restating articles of organization are found in 428-204.5. authorized to transact business in Hawaii is changed by amendment of its articles of incorporation, within 60 days after amendment becomes effective, it shall deliver to Filing Articles of Organization.—Articles must be filed in medium permitted by Director certificate evidencing name change. (414-434). §15.06 of RMBCA amended to director and delivered to office of director. (428-206). provide that foreign corporation may use fictitious name to transact business in Hawaii Registered Office and Registered Agent.—Limited liability companies authorized to if its real name is unavailable and it delivers to Director for filing copy of certificate of do business in Hawaii must designate and continuously maintain in Hawaii office and registration of trade name by that foreign corporation under which foreign corporation agent for service of process. (428-107). Agent must be individual resident of Hawaii, will transact business in Hawaii. Such fictitious name may not be same as, or substan- domestic corporation, or another limited liability company. (428-107). tially identical to, any other entity or holder of reserved or registered name. (414-436). Management.—In member-managed limited liability company each member has Provisions of this chapter regarding rights and privileges, limitations, restrictions, li- equal rights in management of business and most matters relating to company’s business abilities and duties of foreign corporations shall apply to foreign corporations that are will be decided by majority of members. (428-404). In manager-managed limited liability duly authorized to transact business in Hawaii prior to effective date of this chapter. company, manager or managers have exclusive rights to manage and conduct company’s (414-441). §15.20 of RMBCA amended with addition of subsection (d) which provides business and any matter relating to business shall be decided by majority of managers. that after filing of application of withdrawal, Director shall issue certificate of withdrawal (428-404). effective as of date of filing of application, at which point authority of foreign corporation Dissolution and winding up of limited liability company’s business occurs when event to transact business in Hawaii shall cease. (414-451). Service of process requirements for specified in operating agreement occurs, when specified number of members consent, foreign corporations. (414-440). event that makes it unlawful for company to carry on business, or upon judicial decree Taxation of Corporate Property.—See category Taxation, topic Property Taxes, set out in 428-801(4), or judicial determination that it is equitable to wind up company’s subhead Real and Personal Property Taxable. business. (428-801). Taxation of Corporate Stock.—No special tax. Conversion of Business Entities.—Domestic LLC may adopt plan of conversion Franchise Tax.—No franchise tax adopted, pursuant to RMBCA. pursuant to 428-902.5(c) and convert into foreign LLC or any other entity but limited Professional Corporations.—Model Professional Corporation Act with certain to requirements of 428-902.5(a). Articles of conversion are required to be executed. amendments has been adopted effective July 1, 1987. (c. 415A). Hawaii Revised Statutes (428-902.6). (HRS) amended by adding new chapter entitled, ‘‘Hawaii Professional Corporation Act’’. Filing fees.—Specified in 428-1301. Provisions of Hawaii Revised Business Corporation Act, c. 414, apply to professional corporations, domestic or foreign, except to extent such provisions inconsistent with c. LIMITED LIABILITY PARTNERSHIP: 415A. (415A-27). C. 416 repealed in its entirety. Under prior law, professional corpo- See topic Partnerships. rations governed by and subject to c. 416, except where such provisions were in conflict with or inconsistent with provisions found specifically in part VIII of c. 416. Significant PARTNERSHIPS: variations from Model Professional Corporation Supplement (1984), hereafter ‘‘MPCS’’, Uniform Partnership Act has been replaced by Revised Uniform Partnership Act. include: (1) Any reference to ‘‘Secretary of State’’ to be changed to refer to Director of (425-101 to 145). Department of Commerce and Consumer Affairs, hereafter called, ‘‘Director’’; (2) all references to Business Corporation Act should be read to refer to Hawaii Revised Formation.—Partnership is association of two or more people carrying on as co- Business Corporation Act, c. 414; (3) in §20 of MPCS, delete subsections (a)(2) and owners business for profit formed under §425-109, predecessor law, or comparable law (a)(3). (415A-9); (4) add provision to §22 of MPCS to effect that nothing (contained of another jurisdiction. (425-101). herein) prohibits transfer of shares of professional corporation by operation of law or Name.—Partnerships must register and file annual statement with director. (425-1). court decree. Plus, add conditions under which shareholder may transfer shares to re- Registration statement must contain partnership’s name. (425-1). Partnership’s name vocable living or inter vivos trust. (415A-9); (5) unlike §10(b) of MPCS, offer to personal shall not be substantially identical to another partnership, limited partnership, limited representative must be accompanied by balance sheet of not more than 12 months prior liability partnership, corporation, or limited liability company registered to do business to making of offer; (6) in §11 of MPCS, alternative (d) adopted. Also, minimum amount in Hawaii. (425-6). Administrative relief is available if another entity has substantially of professional responsibility security for professional corporation may be established for similar name. (425-196). each profession by appropriate licensing authority (415A-11); (7) §13 of MPCS adopted, Rights and Liabilities of Partners Amongst Themselves.—Each partner is agent of except for bracketed material (415A-13); (8) §14 of MPCS adopted. Plus, at least one partnership for purpose of its business. (425-112). Partnership is liable for loss or injury director must be Hawaii resident (415A-14); (9) add 415A-14.5 to 14.8; (10) 415A-18 caused to person, or for penalty incurred, as result of wrongful act or omission, or other replaced §42 of MPCS regarding involuntary dissolution and reinstatement; (11) actionable conduct, of partner acting in ordinary course of business of partnership or with 415A-19 to 21 which corresponds to §§50 to 52 of MPCS repealed; (12) 415A-23 which authority of partnership. (425-116). All partners are liable jointly and severally for all corresponds to §61 of MPCS repealed; (13) add provision to §65 of MPCS to effect that obligations of partnership unless otherwise agreed by claimant or provided by law with failure or refusal to answer interrogatories is class C felony; plus delete reference to fines few exceptions. (425-117). being imposed. (415A-25); (14) 415A-26 which corresponds to §§60, 63, 64 of MPCS Dissociation, Dissolution, and Winding Up of Partnership.—Partner is dissociated repealed; (15) in §28 of MPCS, add to subsection (c) that nothing in c. 415A affects from partnership upon occurrence of certain events. (425-130). Partner has power to validity of any professional corporation’s action or validity of any provision of articles dissociate at any time, rightfully or wrongfully, by express will pursuant to 425-130(1). of incorporation or bylaws adopted prior to July 1, 1987 (415A-28); (16) §74 of MPCS (425-131). Events causing dissolution and winding up of partnership business are de- not adopted; (17) registered office and registered agent requirements apply. (See 415A- scribed in 425-138. Partnership continues after dissolution only for purpose of winding 27.) up its business. Partnership is terminated when winding up of its business is completed. Model Nonprofit Corporation Act (2d edition) c. 415B repealed. New Hawaii Non- (425-139). In winding up partnership’s business, assets of partnership are applied to profit Corporations Act adopted, consistent with Model Nonprofit Corporations Act. discharge its obligations to creditors. Any surplus is applied to pay in cash net amount (414D-1 to 414D-324). Attorney general given expanded oversight over public benefit distributable to partners in accordance with their right to distribution. (425-144). corporations. (2004, Act 171). Administration of Partnership Property.—Absent agreement to contrary, partners Conversion of Nonprofit Organization to For-Profit Corporation.—Covered by c. share equally in profits of partnership, even if they contribute unequally to capital or 432C. services. (80 Haw. 274, 909 P.2d 602). JOINT STOCK COMPANIES: Limited Partnership.—Uniform Limited Partnership Act has been adopted, amended in part. (425D-101 to 1109). Hawaii version of Act is substantially similar to Uniform See topic Corporations. Act, with following material differences: (1) 425D-203(b) provides for extension of term Professional Associations (or Corporations).—See topics Associations, subhead Pro- of expired partnership if partners take action to amend certificate to reflect extension fessional Corporations; Corporations, subhead Professional Corporations. within two years of such expiration; (2) 425D-203.5 requires every limited partnership to file annual statement, or face cancellation of partnership’s registration under 425D- LIMITED LIABILITY COMPANY: 203.6; (3) 425D-906.5 requires every foreign limited partnership to file annual statement, Limited liability companies are governed by c. 428. or face cancellation of partnership’s registration under 425D-906.6 between Jan. 1, 2002 General Supervision.—Director of Department of Commerce and Consumer Affairs through Dec. 31, 2002, filing of statements are voluntary; after Jan. 1, 2003, if date of of Hawaii, hereinafter referred to as ‘‘Director’’, 1010 Richards St., Honolulu, HI 96813. registration in Hawaii is between: (a) Jan. 1 and Mar. 31, statement shall be filed on or before Mar. 31 of each year, reflecting state of affairs as of Jan. 1; (b) Apr. 1 and June Formation.—One or more persons may organize limited liability company consisting 30, statement shall be filed on or before June 30 of each year, reflecting state of affairs of one or more members by delivering articles of organization to office of director. as of Apr. 1; (c) July 1 and Sept. 30, statement shall be filed on or before Sept. 30 of (428-202[a]). There must be registered office and registered agent in Hawaii. (428-107). each year, reflecting state of affairs as of July 1; (d) Oct. 1 and Dec. 31, statement shall Purposes.—Limited liability company may be organized for any lawful purpose, be filed on or before Dec. 31 of each year, reflecting state of affairs as of Oct. 1 subject to any law of Hawaii governing or regulating business. (428-111). (425D-906.5); (4) 425D-1108 provides for personal liability, jointly and severally, of all

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–4 HAWAII LAW DIGEST BUSINESS REGULATION AND COMMERCE

PARTNERSHIPS . . . continued Affairs, and approved by Governor. (412:2-100). Commissioner shall examine each general partners who fail to comply with provisions of Act; (5) there must be registered financial institution in state at least once every two years. (412:2-200). Commissioner has office. (425D-104). power to grant emergency application to prevent insolvency or failure of existing in- Excise tax on partnerships, see category Taxation, topic Sales and Use Taxes, subhead stitution. (412:2-110). Commissioner may subpoena persons or require production of General Excise Tax. See also category Intellectual Property, topic Trademarks and Trade- documents deemed material to investigation. (412:2-111). names. Classification of Financial Institutions.—Code recognizes and regulates following Fees for Recording.—Following fees shall be paid to director upon filing of general types of financial institutions: (1) Banks; (2) savings banks; (3) savings and loan asso- partnership documents: (1) Partnership registration statement, $25; (2) partnership change ciations; (4) trust companies; (5) depository and non-depository financial services loan of name statement, $10; (3) partnership dissolution statement, $10; (4) foreign general companies; (6) credit unions; (7) foreign and intra-Pacific financial institutions; and (8) partnership registration statement, $25; (5) statement of change, $10; (6) application for financial institution holding companies. certificate of withdrawal, $5; (7) statement of correction, $10; (8) reservation of name, Organization of banks, savings banks, savings and loan associations, trust companies, $10; (9) transfer of reservation of name, $10; (10) annual statement for domestic or and depository financial services loan companies is regulated by Art. 3, Part II of Code. foreign general partnership, $10; (11) good standing certificate, $5; (12) articles of (412:3-200). Application for Commissioner’s preliminary approval to organize such conversion or merger, $100; (13) any other statement, certificate, or other document for institutions is required. Applicants must be three or more individuals (three of whom domestic or foreign general partnership, $10; (14) special handling fee for review of any must be Hawaii residents) or company that seeks to be financial institution holding general partnership document, $25; (15) special handling fee for certificates issued by company. (412:3-201). Financial institutions organized by holding companies subject to director, $10 per certificate; (16) special handling fee for certification of documents, $10; different requirements than individuals. (412:3-202). After receiving preliminary ap- (17) special handling fee for review of articles of conversion or merger, $75; and (18) proval, ‘‘applicant in organization’’ takes all steps necessary to complete organization and agent’s statement of change of address, $10 for each affected foreign general partnership; file application for charter or license. (412:3-206). Articles of incorporation and bylaws provided that if more than 200 simultaneous filings are made, fee shall be reduced to $1 must be filed within 60 days of receiving preliminary approval. (412:3-208). for each affected foreign general partnership. Director shall charge and collect: (1) For Every existing bank, savings bank, savings and loan association, trust company, and furnishing certified copy of any document, instrument, or paper relating to general depository financial services loan company, and all applicants seeking to organize such partnership, $10 for certificate and affixing seal thereto; and (2) at time of any service institutions prior to filing application for charter, shall have paid-in capital and surplus of process on director as agent for service of process of general partnership, $10, which of not less than $5,000,000 for banks, $3,000,000 for savings banks, $2,000,000 for amount may be recovered as taxable costs by party to suit or action causing service to savings and loan associations, $1,500,000 for trust companies, and $1,000,000 for de- be made if party prevails in suit or action. pository financial services loan companies. (412:3-209). Limited Liability Partnerships.—Effective July 1, 2000, subpart titled “Limited Commissioner must give written approval before applicant solicits subscriptions for Liability Partnerships” added to part 4 of c. 425 to bring Hawaii law into greater capital stock of financial institution. (412:3-210). Proposed financial institution has one conformity with Revised Uniform Partnership Act. Hawaii Limited Liability Partnership year from date of incorporation to complete organization and obtain charter or license Act (425-151 to 180) repealed and replaced with new 425-151 to 425-173. Partnership from Commissioner. (412:3-211). may become limited liability partnership if it: (1) Obtains partnership’s approval of terms Organization of non-depository financial services loan companies regulated by Art. 3, and conditions upon which it shall become limited liability partnership; (2) files regis- Part III (412:3-300 to 306) of Code. Application to Commissioner required to form tration statement with Director of Commerce and Consumer Affairs under part I of c. 425 non-depository financial services loan company. (412:3-301). Except to extent that pro- either before or simultaneously with filing of statement of qualification; and (3) is in good visions of Code are inconsistent, all other procedures for organization of non-depository standing pursuant to part I of c. 425. (425-152). Partnership is required to file statement financial services loan company are same as those under general corporation law. (412:3- of qualification that establishes it has satisfied all conditions precedent to qualification 401). Every non-depository financial services loan company organized under Hawaii law as limited liability partnership; status of partnership as limited liability partnership is must at all times have paid-in capital and surplus of not less than $500,000. (412:3-306). effective upon filing of statement of qualification. (425-152). Name of limited liability All financial services loan companies licensed and actively engaged in business in state partnership must end with “Registered Limited Liability Partnership”, “Limited Liability as of July 1, 1993, may continue to maintain minimum capital and surplus required Partnership”, “R.L.L.P.”, “L.L.P.”, “RLLP”, or “LLP”. (425-151). Every limited liability before effective date of Code. However, new minimum amounts will be required should partnership and foreign limited liability partnership registered to do business in Hawaii there be subsequent acquisition. (412:1-103). must file annual report in office of director. (425-163). Foreign limited liability part- Management and directors of financial institutions are regulated by Art. 3, Part I of nership must register under part I of c. 425, and file statement of foreign qualification Code. (412:3-100 to 115). With exception of non-depository financial services loan with director prior to transacting business in Hawaii, and submit certificate of good companies board of directors of every financial institution shall at all times consist of standing from state in which partnership was formed; provided that certificate shall be at least five directors, of whom at least three shall be residents of state at time of their dated not earlier than 60 days prior to filing of application for such statement. If election, and at all times while holding office. With exception of non-depository financial certificate is in foreign language, translation attested to under oath by translator must services loan companies, board of directors of financial institution that is wholly-owned accompany certificate. Foreign limited liability partnership will not be denied statement subsidiary of holding company incorporated in another state shall consist of at least five of foreign qualification by reason of any difference between law under which partnership directors, of whom at least one shall be Hawaii resident at time of election and while was formed and law of Hawaii. Law under which foreign limited liability partnership was on board. (412:3-104). No residency requirements for directors of non-depository fi- formed shall govern relations among partners, between partners and partnership, and nancial services loan companies. liability of partners for obligations of partnership. (425-156). All entities that were limited Chief executive officer of every Hawaii financial institution, with exception of non- liability partnerships registered under law effective before July 1, 2000 shall be converted depository financial services loan companies, shall be resident of state. (412:3-106). into and deemed partnerships that have registered under part I of c. 425 and filed required Management of Stock Institutions.—Management of stock financial institutions is statement of qualification of limited liability partnership. (425-173). regulated by Art. 3, Part IV (412:3-400 to 403) and, to extent that provisions are not Foreign LLPs must register with DCCA before conducting business in Hawaii. (425- inconsistent, general corporation law under c. 415 (412:3-401). Mutual savings and loan 156). Organization, internal affairs and liability of foreign LLPs governed by laws of associations cannot issue capital stock. (412:7-401). respective home state. (425-157). Banks are regulated by Art. 5 of Code. (412:5-100 to 407). General and traditional Out-of-State Partnerships.—Upon filing registration statement as required in 425-1, powers of banks, such as power to make loans, and extend credit, and engage in those partnership formed pursuant to laws of any other jurisdiction shall be subject to same aspects of commerce traditional to banking are set forth in Part II. (412:5-200 to 206). privilege and disabilities as Hawaii partnership, provided that partnership’s purpose is not Investment and lending standards are described in Part III. (412:5-300 to 306). Loans to repugnant to Hawaii law. (425-3). insiders have certain restrictions, mirroring Federal Deposit Insurance Act, and Federal Conversion of Business Entities.—Corporations, partnerships, LLPs and LLCs may Reserve Act. (412:5-303). Intra-Pacific banks are regulated by Part IV. (412:5-400 to adopt plan of conversion and convert to another entity form if board of directors and 407). shareholders approve plan of conversion, conversion is permissible and complies with Banks organized in Hawaii may transact business of insurance upon receiving written laws of state or county in which entity was incorporated, each shareholder owns equity approval from Commissioner. (412:5-205.5). New bank insurance powers will be phased interest, shareholders are not personally liable for liabilities of converted entity, unless in between 1996 and 2003. Prior to June 1, 2000, bank cannot underwrite insurance nor consented and shareholder consent and converted entity is incorporated, formed, or directly sell insurance except through subsidiary or affiliate. From June 1, 2000, banks organized as part of or pursuant to plan of conversion. (415A-16.5). may begin selling insurance at 25% of their Hawaii branches. This percentage will increase by 25% per year. After May 31, 2003, banks will be allowed to sell insurance at all their Hawaii branches. (412:5-205.6) Commissioner directed to adopt rules to prevent bank engaged in insurance activities BUSINESS REGULATION AND from draining assets to detriment of insurance operations, and adopt rules to obtain COMMERCE diverted assets from bank in case of insolvency of insurance operations. (431:13-104). Savings banks are regulated by Art. 6 of Code. (412:6-100 to 307). Savings banks are BANKS AND BANKING: recognized as entities that are distinguishable from commercial banks and savings and No corporation, partnership, or individual may transact banking business except by loans. (412:6-100 to 101). General powers of savings bank are set forth in Part II. means of corporation duly authorized for such purpose. (412:5-100 to 101). (412:6-200 to 204). Lending and investments are subject to requirements in Part III Capital access program to be established by department of business economic de- (412:6-300 to 307). velopment and tourism to assist participating financial institutions in making loans to Savings and loan associations are regulated by Art. 7 of Code. (412:7-100 to 408). businesses and nonprofit organizations that face barriers in accessing capital. Under Powers exercised by savings and loans are described in Part II. (412:7-200 to 204). capital access program, participating financial institution and eligible borrower pay up- Powers granted by Federal law are recognized, as well as membership in federal home front fee which is placed into reserve account. State matches fees with deposit into same loan bank. (412:7-201 to 202). Lending and investments are subject to requirements in account. Account is to be used as source of money financial institution may receive as Part III. (412:7-300 to 307). Mutual savings and loan associations are recognized, and reimbursement for losses attributable to loans in program. (211D). are regulated by Part IV. (412:7-400 to 408). Mutual savings and loan associations cannot Commissioner.—Supervision of all financial institutions is by Commissioner of Fi- issue capital stock. (412:7-401). nancial Institutions. Commissioner is appointed by Director of Commerce and Consumer Unclaimed Deposits.—See category Property, topic Absentees, subhead Escheat.

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–5 BUSINESS REGULATION AND COMMERCE MARTINDALE-HUBBELL LAW DIGEST - 2007

BANKS AND BANKING . . . continued to 301). Act authorizes banking activity and operations under state licenses issued by Collections.—Uniform Commercial Code adopted. See topic Commercial Code. Commissioner, consistent with federal International Banking Act, Banking Holding Com- Trust companies are regulated by Art. 8 of Code. (412:8-100 to 403). One cannot pany Act, Federal Deposit Insurance Act, and Interstate Banking and Branching Effi- engage in business of trust company unless incorporated in state and chartered under Art. ciency Act. (412:13-100). 8 specifically for that purpose, or through trust division of bank pursuant to Art. 5. Commissioner will approve, examine, and regulate foreign banking operations in (412:8-102). Hawaii. (412:13-100, 200). Foreign banks must procure license to establish and operate General powers of trust company are described in Part II. (412:8-200 to 204). In Hawaii state branch or Hawaii state agency. Application for license must be submitted addition to its general powers trust company also has fiduciary powers (412:8-201), and to Commissioner and include same information required by Board of Governors of agency powers (412:8-202). Federal Reserve System for application to establish branch or agency in U.S., nonre- Investment of trust company assets are subject to standards set forth in Part III. fundable application fee of $9,000 or greater amount to be established by Commissioner (412:8-300 to 302). Generally, investment standards from banks have been adopted. by rule pursuant to c. 91, identification of agent for purpose of receipt of service of (412:8-301). process, and other information required by Commissioner. (412:13-202). Investment of fiduciary assets are subject to standards set forth in Part IV. (412:8-400 Each foreign bank licensed to establish and maintain Hawaii state branch or Hawaii to 403). state agency shall keep on deposit $500,000 or any greater amount, as determined by Commissioner, with unaffiliated Hawaii banks selected by foreign bank and approved in Financial services loan companies both depository and non-depository, are regulated writing by Commissioner. (412:13-213). by Art. 9. (412:9-100 to 500). Depository financial services loan company is loan company that is authorized to accept deposits under Code, and is insured by Federal Financial institution holding companies are generally regulated by Art. 11 of Code. Deposit Insurance Corporation (FDIC). (412:9-100). Non-depository financial services (412:11-100 to 106). Defined as holding company which controls Hawaii financial in- loan company is loan company that is not authorized to accept deposits. (412:9-100). stitution or which controls another financial institution holding company. (412:1-109). General powers of financial services loan company are set forth in Part II. (412:9-200 Following persons do not constitute holding company: (1) Registered dealer that acts as to 202). underwriter in public offering of voting securities of financial institution or financial Loans and extensions of credit are subject to standards in Part III. (412:9-300 to 309). institution holding company; (2) person who acts as proxy for sole purpose of voting at Financial services loan company may charge interest on loans on precomputed basis or meeting of security holders of financial institution or holding company; (3) person who simple interest basis. (412:9-301). Interest rates charged for loans are subject to limi- gains control of financial institution by devise or descent; and (4) pledgee of voting tations. (412:9-302). Total amount of fees, charges, and expenses on consumer loans security of financial institution or holding company who does not have right to vote such secured by interest in real property shall not exceed 1% of principal amount of loan. security. (412:1-109). (412:9-304[5]). Open-end consumer loans are allowed subject to special restrictions. Registration of financial institution holding company with Commissioner, and annual (412:9-305). Penalties are set forth for charging excessive interest. (412:9-303). reporting is required. (412:11-101). Commissioner has power to make periodic exami- General rules regulating depository financial services loan companies are set forth in nations of financial institution holding companies. (412:11-102). Part IV. (412:9-400 to 410). Non-depository financial services loan companies are subject Branch banks may be opened or closed subject to certain restrictions. (412:3-503 to to restrictions. (412:9-500). 509). Hawaii financial institutions may maintain branch outside of state subject to certain Non-depository financial services loan companies are not required to be incorporated restrictions. (412:3-509). Branch bank is separate office for purpose of stop payment in state. (412:9-101). Non-depository financial services loan companies not incorporated orders. (490:4-107). Opening new branch, or relocating is subject to approval of Com- in Hawaii required to maintain books and records of Hawaii business at principal office missioner. (412:3-503). in state. (412:3-111). Commissioner may approve certain records to be maintained out- Acquisitions and Other Transactions.—Uniform standards for acquisitions, conver- side state. Failure to provide Commissioner books and records upon request may lead sions, mergers, consolidations, assumptions, and voluntary dissolutions of financial in- to fine. (412:3-111). stitutions are regulated by Art. 3, Part VI. (412:3-600 to 618). All of above transactions Credit unions are regulated by Art. 10 of Code. (412:10-100 to 808). Defined as are subject to approval of Commissioner. (412:3-601, 603). Certain transactions require cooperative, nonprofit organization, chartered under Code for purpose of promoting thrift coordination with Department of Commerce and Consumer Affairs under c. 415. (412:3- among its members, creating source of credit at fair and reasonable rate of interest, and 606 to 609). providing opportunity for its members to use and control their own money to improve Deposits in financial institutions are regulated by Art. 4 (412:4-100 to 112) of Code. their economic and social conditions. (412:10-100). Credit union membership is subject No bank, savings bank, savings and loan association, and depository financial services to certain standards. (412:10-109). Any proposed change to credit union’s field of mem- loan company which is Hawaii financial institution must accept deposits unless deposits bership requires prior written approval of Commissioner. (412:10-109). are insured by Federal Deposit Insurance Corporation (FDIC), or if credit union, insured Powers of credit unions are set forth in Part II. (412:10-200 to 204). Powers granted by National Credit Union Administration. (412:4-104). Minors may withdraw deposits in credit union by federal law are recognized. (412:10-201). Credit union may invest its their own name. (412:4-107). Financial institution may refuse to pay any check if, in funds up to 1% of its own capital in service organizations which provide services good faith, it has reason to believe that person indorsing instrument was intoxicated at supporting routine operations of credit union. (412:10-202). Credit union may also time of signing it. (412:4-110). purchase or sell eligible obligations of its members. (412:10-203). Financial institutions required to provide written statements on check holding policies All credit union accounts are governed by Part III. (412:10-300 to 310). Loans, when checking account is opened or there is change in bank policy. (490:4-215). including interest rates, are subject to standards in Part IV. (412:10-400 to 413). Re- Subject to restrictions, financial institution may open accounts in name of person as quirements for investments and permissible investments are generally treated under Part trustee or representative for one or more persons. (412:4-106). V. (412:10-500 to 503). Other member services are governed by Part VII. (412:10-700 to 704). Uniform Common Trust Fund Act not adopted. Trust companies are regulated by Corporate credit unions are regulated by Part VIII. (412:10-800 to 808). Art. 8 of Code. (412:8-100 to 403). Foreign Banks.—Defined as person (a) organized and authorized to conduct business Financial Institutions—Enforcement Actions.—Commissioner of Financial Institu- under laws of its jurisdiction of origin but not Hawaii law, (b) whose operations are tions is granted power to implement enforcement actions if necessary to discontinue any principally in Hawaii, (c) in business of accepting deposits or making loans or engaging violation of law or any unsafe or unsound practice. (412:2-300). Enforcement actions in trust business. (412:1-109). Foreign financial institutions are allowed to conduct include: (1) Cease and desist orders (412:2-302 to 305); (2) removal of any institution- business only as allowed under Hawaii law except nothing shall restrict foreign insti- affiliated party (412:2-306, 307); (3) suspension of institution-affiliated party (412:2-308); tution’s distribution of cash through automatic teller machines (ATMs), operation as and (4) suspension or revocation of financial institution’s charter or license (412:2-311, mortgage broker in state, or operation as real estate collection servicing agent. (412:3- 312). Commissioner shall notify financial institution to correct capital and surplus im- 502). pairment when appropriate. (412:2-314). Intra-pacific banks may engage in business in Hawaii and are regulated by Art. 5, Part Commissioner may also assess administrative penalties against financial institution or IV (412:5-400 to 407) of Code. Intra-pacific banks allowed to engage in business in any institution-affiliated party. Penalties of not more than $1,000 per day assessed for Hawaii include banks from Guam, American Samoa, Federated States of Micronesia, material violation of: (1) Statute or rule that provides for penalty; (2) order issued by Republic of Palau, Commonwealth of Northern Marianas, and Republic of Marshall Commissioner; (3) condition imposed by Commissioner in connection with grant of any Islands, as long as local economy is based on U.S. dollar. (412:5-400). application or other request; and (4) any written agreement between financial institution Interstate Branching and Bank Mergers.—Interstate branching by both Hawaii state and Commissioner. Penalties of not more than $5,000 per day assessed for financial banks and out-of-state banks allowed. (412:12-100 to 110). Prior interstate and inter- institution that violates any of above acts, or engages in unsafe or unsound practice, or national banking section of Art. 5A (412:5A, Part III) repealed. With prior approval of breaches any fiduciary duty to financial institution, and such violation(s) are part of Commissioner, Hawaii state banks may establish and operate branches in states other pattern of misconduct, causes or will likely cause loss to institution, or result in pecuniary than Hawaii. (412:12-102). Interstate branches of Hawaii banks in other states will be gain to any one individual. Financial institution or institution-affiliated party may be fined able to conduct all activities authorized by host state except to extent activities are not more than $100,000 for each day of violation if institution or individual knowingly expressly prohibited by laws of Hawaii. (412:12-107). violates (1) to (4), supra, knowingly engages in any unsound practice, knowingly Out-of-state banks may establish interstate branches through merger, provided that breaches fiduciary duty to institution, or knowingly or recklessly causes substantial loss acquired Hawaii state bank must have been in continuous operation for at least five years to institution or substantial pecuniary gain by reason of violation of Code to such party on date of acquisition. (412:12-104). Out-of-state bank that will be resulting bank fol- or third person. Maximum administrative fine for person other than financial institution lowing interstate merger with Hawaii state bank must file with Commissioner copy of is $500,000. Maximum fine for financial institution is lesser of $1,000,000 or 1% of interstate merger application submitted to responsible federal bank supervisory agency institution’s total assets. (412:2-609). Commissioner may modify, compromise, or sus- along with nonrefundable filing fee of $9,000 or greater amount to be established by pend any administrative penalty. When assessing administrative fine, Commissioner may Commissioner pursuant to c. 91. (412:12-104). Out-of-state banks may create de novo consider financial resources and good faith of institution or individual charged, gravity interstate branch or acquire interstate branch. (412:12-104). Commissioner may waive of violation, history of previous violations, imposition of federal penalties, and other federal statewide concentration limits. (412:12-106). Hawaii branches of out-of-state matters as justice may require. (412:2-610). state banks will be able to conduct any activities that are authorized for Hawaii state Insolvency.—Commissioner may appoint conservator or receiver to take control of chartered banks under c. 412, Art. 5. (412:12-107). financial institution if it is insolvent, or has failed to correct capital deficiency, not able Hawaii International Banking Act.—Foreign banks will be permitted to establish to meet demands of its depositors, is in any unsafe or unsound condition, has or is likely branches and agencies in Hawaii under Hawaii International Banking Act. (412:13-100 to incur losses significantly affecting capital which is not likely to be replaced except by

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–6 HAWAII LAW DIGEST BUSINESS REGULATION AND COMMERCE

BANKS AND BANKING . . . continued by him of option for purpose of evading licensing statute (467-1; -7); managing agents federal assistance, or has violated laws, rules or regulations or cease and desist order of of condominium projects (514A-95); sales or acquisition agents for time share project Commissioner. (412:2-400). Commissioner, and with Commissioner’s approval, any duly (514E-2.5). appointed conservator may, subject to limitations, reorganize Hawaii financial institution. Real Estate Brokers.—Real Estate Commission has authority to grant licenses to real (412:2-410). Commissioner has power to determine that financial institution is failing estate brokers and real estate salesmen and to make, amend and repeal rules and regu- one. If Commissioner’s determination is contested, matter is put before circuit court for lations which, when approved by Governor and published, have force and effect of law. closed hearing. (412:2-501). Once financial institution is deemed to be failing financial Commission is also authorized to revoke or suspend any license pursuant to such rules institution, Commissioner has power to solicit applications to merge with failing financial and regulations. (467-4). Notice and hearing required prior to refusal to grant license for institution or with its holding company, to purchase all or part of assets, assume all or causes enumerated in 467-14. (467-15). Denial or refusal of license subject to appeal to part of liabilities of failing financial institution, or purchase all of capital stock of failing Real Estate Commission within 60 days of date of denial or refusal. Appeal to circuit financial institution. (412:2-502). Commissioner has power to waive statewide concen- court may only be taken from Real Estate Commission’s final order (91-13.1). Minimum tration limits if waiver is deemed necessary to institution. (412:2-505). education requirements in real estate principles must be met to obtain salesman’s license Uniform Commercial Code adopted. See topic Commercial Code. and broker’s license. (467-8). Written examination on real property law and law of Stop Payment Orders.—See 490:4-303, 403. agency must also be passed. (467-8). Must possess reputation for competency, honesty, truthfulness, financial integrity, and fair dealing. (467-8). Prerequisites to take written Forged or Altered Instruments.—See 490:4-207, 401, 406. exam: over age of majority; satisfactory completion of commission-approved real estate Agreements to Extend Credit.—See topic Frauds, Statute of. course, U.S. citizen or alien authorized to work in U.S. (467-9.5). Ten hours of continuing Stale Checks.—Bank not obligated to customer having checking account to pay education required during two year period prior to renewal. (467-11.5). If not satisfied, check, other than certified check, presented more than six months after date. (490:4-404). license put on inactive status until requirement is met. (467-11.5). Real estate brokers Escheat of Inactive Accounts.—Uniform Unclaimed Property Act. (c. 523A). subject to discriminatory financial practices law. (515-5). Recovery fund set up by Commission from which person who is damaged by an act, Bank Tax.—Franchise tax is imposed on all banks, building and loan associations and representation, transaction or conduct of licensed broker may be compensated. Action other financial corporations, measured by their taxable income with various changes and upon grounds of fraud, misrepresentation or deceit must be brought within two years adjustments, at rate of 7.92%. (241-2 to 4). Special provisions apply for computation of from time cause of action accrued, and Commission must be notified of action in writing. taxes due from financial institution for initial and subsequent year of doing business and Maximum recovery $25,000; maximum liability to fund of any one licensee, $50,000. for taxes due upon merger, acquisition, consolidation, or termination of business. (241- (467-16 to 25). ‘‘Damages sustained’’ does not include punitive damages but is limited 1.5). In general, franchise tax applies in lieu of corporate income tax (c. 235) and general to compensatory damages. (76 Haw. 39, 868 P.2d 457). excise tax (c. 237); however, certain provisions of income tax laws not inconsistent with franchise tax also apply (241-6). Limited general excise tax exemption for financial Uniform Land Sales Practices Act enacted. (c. 484). institutions. (237-24.8). Capital goods excise credit is available with respect to franchise Uniform Commercial Code adopted. (c. 490). See topic Commercial Code. tax as well as income tax after Dec. 31, 1987. (241-4.5). Energy conservation tax credit available to banks. (241-4.6). Low-income housing tax credit is available with respect BULK SALES: to franchise tax. (241-4.7). See topic Commercial Code; category Debtor and Creditor, topic Fraudulent Sales and Conveyances. BILLS AND NOTES: Uniform Commercial Code adopted. See topic Commercial Code (Alternative B CARRIERS: adopted in 490:4-106[b]). Public Utilities Commission has charge of general supervision. (c. 269, 271, 271G). Judgment notes are not recognized. Commission approval required for public utilities rules which govern independent power Attorneys’ Fees.—Except for planned community associations, attorney fee clauses producers and rules regarding recovery of costs and profits from nonutility generators by are enforceable up to 25% of judgment amount. (607-14). No limitation for planned public utility. (269-16.2). community associations. (607-14). Maximum of 25% of unpaid principal is allowed to Uniform Commercial Code adopted. (c. 490). See topic Commercial Code. collection agencies. (443B-9). Rates.—Rates of common carriers must be just and reasonable and must not be Usury.—See topic Interest. unjustly discriminatory. (269-16; 271-20, 271G-16). Bills of Lading.—See topic Carriers. Limiting Liability.—Any limitation of liability by common carriers transporting prop- BILLS OF SALE: erty between points in Hawaii is unlawful and void, except with regard to water carriers, baggage carried on passenger trains or boats, and property subject to rate schedule See category Debtor and Creditor, topic Fraudulent Sales and Conveyances. established by carriers expressly authorized by public utilities commission. Carriers may Blue Sky Law.—See topic Securities. not require claims to be filed in less than four months, and actions in less than two years. (269-23). BROKERS: Bills of Lading.—See topic Commercial Code. Mortgage Brokers.—Person who for compensation makes, negotiates, acquires or Liens.—U.C.C. provision governs. (490:7-307). offers to make, negotiate or acquire mortgage loan is required to be licensed as mortgage broker. (454-1, 3). In general, financial institutions, trust companies and pension trusts Nonresident Shipping Lines.—Process may be served by personal service, certified are exempted, as well as person acting for own investment without intent to resell, or registered mail or if defendant cannot be found in state then by publication as provided institutional investor purchasing for its portfolio, for subsequent resale to other institu- in 634-36. (634-34). tional investors, or for placement into pools or packaging these into mortgage-backed Surcharge Assessment in Emergency Situations.—Statewide rate increase surcharge securities, lawyer or real estate broker rendering such services incidentally to his practice, may be applied for by any affected utility, (i) that sustains damage to its facilities due and foreign lenders. (454-2). to state-declared emergency, (ii) that incurs costs for restoration and repair of facilities Mortgage brokers regulated by Mortgage Commissioner, presently Director of De- and (iii) that as result of damage and repairs, may need rate increase of more than 15% partment of Commerce and Consumer Affairs. (454-1). To be licensed, individual must in damaged service territory. Surcharge outside damaged service territory is limited to be at least 18 years of age, and legal entity must be licensed to do business in State. 15% increase. (269-16.3). Broker must post bond of $15,000. Application is made to Commissioner on forms Telephone Service.—Existing telecommunications provider must show PUC cause provided to show experience, financial integrity and competency. Denial of license is why alternative provider should not be granted license in area state has determined has subject to administrative review. Annual license fee is $100 for broker and $25 for less than adequate service. (269-16.9). PUC may consider transferring subsidies to solicitor. Licensed mortgage broker must maintain principal place of business in State. alternative provider. (269-16.91). (454-3). Each telecommunications carrier upon request must provide services or information to License may be suspended for making false promises, misrepresentation, failing to entities seeking to provide intrastate telecommunications. (269-34). deliver money in accordance with agreement or to account for property of others coming to broker or to place funds of others in trust or escrow account within reasonable time. Interisland Air Carrier Regulation.—Statutory scheme established to regulate in- License may be revoked by Commissioner for material misstatement in application, terisland air carriers to extent permissible under Constitution and laws of U.S. (261C-1). negligence or incompetence in performing act for which license is required, or more than one suspension. (454-4). COMMERCIAL CODE: Commissioner has power to investigate licensees, inspect their books and records and Uniform Commercial Code has been adopted in Hawaii effective Jan. 1, 1967. (c. 490). initiate actions enjoining violations or acts in furtherance of violation of statute. (454-5). (Code reproduced infra, Uniform and Model Acts section.) Commissioner may adopt regulations, including maximum fees, commissions and Variations not reported in other topics: charges. (454-6, -7). Mortgage broker and mortgage solicitors (unlicensed individuals who perform any of functions of mortgage broker) must comply with all of provisions Article 1.—Revised Art. 1 adopted, effective July 2, 2004. (490:1-101 to 310). of Real Estate Settlement Procedures Act, Truth in Lending Act and Equal Credit Article 2.—Right of action or defense arising out of a retail installment sale which Opportunity Act in any transaction with borrower. Written mortgage loan commitment buyer has against seller may not be cut off by assignment, and seller’s assignee has letters issued by mortgage brokers or mortgage solicitors and accepted by borrower must recourse against seller, (476-19). §2-318: 1966 Official Optional Amendment Alternative be honored if borrower satisfies all of commitment conditions in timely manner. (454- C enacted. §2-702: 1966 Official Amendment not enacted. Conforming amendments (for 3.1). revised Art. 1) adopted, effective July 2, 2004. (490:2-202). Conforming amendments (for Licenses.—Following persons require real estate broker’s license: Any person who for revised Art. 7) adopted, effective July 2, 2004. (490:2-103 to 705). compensation sells, offers to sell, buys, offers to buy, negotiates purchase, sale or ex- Article 2A.—Leases of Goods. Adopted effective Jan. 1, 1992. (490:2A-101 to 532). change of real estate or lists or solicits for prospective purchasers or who leases or offers Conforming amendments (for revised Art. 1) adopted, effective July 2, 2004. (490:2A- to lease or rents or offers to rent any real estate or improvements thereon or who secures, 501 to 528). Conforming amendments (for revised Art. 7) adopted, effective July 2, 2004. receives, takes or accepts or sells, offers to sell any option on real estate without exercise (490:2A-103 to 526).

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–7 BUSINESS REGULATION AND COMMERCE MARTINDALE-HUBBELL LAW DIGEST - 2007

COMMERCIAL CODE . . . continued Enforcement.—Attorney General has jurisdiction to enforce criminal provisions and Article 3.—Revised Art. 3 adopted, effective Jan. 1, 1992. (490:3-101 to 605). Action Attorney General and Director of Office have power to enforce civil provisions. Director for treble damages for dishonored checks reenacted July 1, 1992. (490:3-506). Procedures may secure restitution to complainants. (480-20). for claims involving lost, destroyed or stolen cashier’s checks, teller’s checks, and Gasoline Dealers.—Regulated in c. 486H. Director of Department of Agriculture must certified checks enacted. (490:3-312). Conforming amendments (for revised Art. 1) promulgate rules requiring that if gasoline is sold by liter then price per U.S. gallon must adopted, effective July 2, 2004. (490:3-103). also be posted. (486-52.5). Wholesale and retail gasoline price caps suspended. (2006, Article 4.—Conforming amendments (to revised Art. 3) adopted, effective Jan. 1, Act 78). 1992. (490:4-101 to 504). Conforming amendments (for revised Art. 7) adopted, effective Gift Certificates.—Regulated in 481B-13. Issuer must honor gift certificate for at least July 2, 2004. (490:4-104 to 210). two years from date of issuance. Expiration date, if any, must be printed on face of Article 4A.—Funds Transfers. Adopted, effective Jan. 1, 1992. (490:4A-101 to 507). certificate. Conforming amendments (for revised Art. 1) adopted, effective July 2, 2004. (490:4A- Going Out of Business Sales.—Regulated in c. 481D. 105 to 204). Hawaii Made Products.—No product may be labeled ‘‘Made in Hawaii’’ unless 51% Article 5.—Letters of Credit. 1995 Revisions to Art. 5 adopted, effective July 1, 1996. of its wholesale value has been added by manufacture, assembly, or fabrication within (1996, Act 39). Revised Art. 5 applies only to letters of credit issued on or after July 1, state. (486-119). No product or jewelry made from seashells to use “Niihau” in de- 1996. Letters of credit issued prior to July 1, 1996, are governed by statutes in force at scription unless product is 100% comprised of harvested seashells from island of Niihau time of issuance, including repealed Art. 5. (1996, Act 39, §11). Conforming amendments and manufactured entirely within State. Items consisting of at least 80% Niihau shells (for revised Art. 1) adopted, effective July 2, 2004. (490:5-103). may be described, labeled, or identified using term “contains” followed by nearest whole Article 6.—Repealed. (1998, Act 209, §3). number representing percentage of Niihau shells contained, followed by term “% Niihau Article 7.—§7-209: 1966 Official Amendment not enacted. Revised Art. 7 adopted, shells”. (486-118.5). No milk product shall be labeled ‘‘Island Fresh’’ unless 90% pro- including procedures for electronic forms of title, effective July 2, 2004. (490:7-101 to duced in Hawaii. If 90% produced in Hawaii, it must be so labeled. (486-120). Labeling 702). and packaging requirements including, but not limited to, Kona coffee and Hawaii-grown macadamia nuts restricted by 486-101 to 123. Article 8.—Adopts 1994 revisions proposed by National Conference of Commission- ers on Uniform State Laws. (1997, Act 33, §2). Hotels.—Regulated in c. 486K. Article 9.—Effective July 1, 2001, adopts Revised Article 9 proposed by National Health Clubs.—Regulated in c. 486N. Every health club contract may be cancelled Conference of Commissioners on Uniform State Laws. 9-109: Exemptions from Article by buyer within five business days after date buyer signs contract. (486N-6). No contract for bond issuances and other government transactions, and workers’ compensation and shall exceed 36 months. No contract shall contain automatic renewal provision. (486N-8). structured settlement payments added. Conforming amendments (for revised Art. 7) Payment of contracts in excess of one year shall be by installment. (486N-8.5). adopted, effective July 2, 2004. (490:9-102 to 601). Inter-Island Air Carriers.—Regulated in c. 261C. Article 10.—Adopted effective Jan. 1, 1967. Koa Wood.—Items represented to be “koa” wood must contain acacia koa wood. Article 11.—Adopted effective July 1, 1979. (486-119.5). Labeling and Packaging.—All labels of consumer goods must conform to Federal 1972 Official Amendments.—Adopted. Fair Packaging and Labeling Act. (328-19.1). No commodity may be packaged to conceal 1973 Official Amendment.—Not adopted. quantity. (486-113). Nor may words that exaggerate quantity such as ‘‘giant’’ or ‘‘jumbo’’ 1977 Official Amendments.—Adopted. be used. (486-111). Agricultural products must be packaged so that unexposed portion Uniform Fiduciaries Act adopted in 1945. (c. 556). §189-3, Revised Laws of Hawaii as good as exposed. (147-5). 1955, pertaining to Uniform Fiduciaries Act repealed by adoption of Uniform Commer- Landlord-tenant relationship covered by Residential Landlord-Tenant Code. (c. 521). cial Code. (490:10-102[1]). Security deposits must be returned, or itemized notice of retention furnished, within 14 days after termination of rental agreement. Treble damages may be awarded for wrongful Filing Fees.—See category Documents and Records, topic Records, subhead Filing and willful retention of security deposit. (521-44). Under Uniform Commercial Code. Lemon Law.—Manufacturer or authorized dealer of motor vehicles must make any Forms.—See Part VI, Uniform and Model Acts, Commercial Code Amendments for repairs as are necessary to conform vehicle to express warranties, notwithstanding fact National Forms. that such repairs are made after expiration of term of such warranty. If vehicle cannot See also topics: Banks and Banking, Bills and Notes, Brokers, Carriers, Contracts, be made to conform to such warranties, manufacturer must replace vehicle or refund Factors, Frauds, Statute of, Sales, Securities, Warehousemen; categories Business Or- purchase price. Consumer must report defects, in writing, within term of express war- ganizations, topic Corporations; Civil Actions and Procedure, topic Limitation of Actions; ranty, two years of delivery, or first 24,000 miles of operation, whichever occurs first. Debtor and Creditor, topics Assignments, Fraudulent Sales and Conveyances, Liens, Law applies to ‘‘demonstrator’’ models but not to mopeds, motorcycles, scooters, or Pledges; Documents and Records, topics Records, Seals; Mortgages, topic Chattel Mort- off-road vehicles. (481I-2, 3). Remedies for failure to correct defects or replacement of gages. vehicle or refund of purchase price less reasonable offset for consumer’s use of vehicle. (481I-3). CONDITIONAL SALES: Mail order buying clubs may not send goods without first providing an order form. See topic Sales. Goods sent other than as specifically ordered by purchaser deemed unconditional gifts. (481B-1.5). CONSIGNMENTS: Money Transmitters.—Regulated in c. 489D. (2006 Act 153). Uniform Commercial Code adopted. See topic Commercial Code, Arts. 7 and 9. Motor Vehicle Rental Industry.—Regulated in c. 437D. Each rental agreement shall CONSUMER PROTECTION: disclose, in plain language, that collision damage waiver is optional and that lessee’s personal insurance may provide sufficient coverage. (437D-5). Lessors of rented vehicles Office of Consumer Protection created to coordinate consumer laws, promote con- are prohibited from paying or receiving commissions for selling collision damage waiv- sumer education, recommend new legislation, promulgate rules defining unfair or de- ers. (437D-8.5). Rental motor vehicles must display decal informing lessee of seat belt, ceptive trade practices, investigate violations of consumer laws and rules, and bring civil child passenger restraint, and drunk driving laws. (437D-13). Taxes and license and actions against violators. (487-5). registration fees may be passed on to lessee. (437D-8.4). Agricultural Products.—Seal of Quality Program established. (148-61). Plain language required in all written agreements entered into on or after July 1, 1981, Automobiles.—Dealers and salesmen licensed and practices regulated. (c. 437). Motor for: (1) Consumer transactions where sales agreement is for personal, family or house- vehicle repairmen regulated. (c. 437B). Used motor vehicle sales regulated. (c. 481J). hold purposes in amount less than $25,000 or (2) residential lease agreements for term Vehicle protection product warrantors regulated. (c. 481R). not exceeding five years. Creditor, seller or lessor in violation is liable for actual damages Collection agencies must be registered (443B-3), unless they qualify as exempt out- sustained by suing party, plus $50 penalty. Liability limited to $10,000 in class action. of-state collection agencies (443B-3.5), and are prohibited from using harassing, abusive, Right to sue in class action suspended on any written agreement executed before July threatening, or coercive collection techniques (443B-15, 16). Collecting without regis- 1, 1986. (487A-1). tration and furnishing of deceptive forms that could create belief in debtor that person Exempted from plain language requirements are: (1) Wills or trusts other than land who furnished forms is collection agency is prohibited. (c. 443B). Collection agency trusts created under Land Trust Act, (2) any document, not itself written agreement disclosure requirements consistent with federal standards. (443B-18). subject to this law, by virtue of document being referred to or incorporated within written agreement subject to this chapter, provided that document has independent purpose, (3) Credit Cards.—Regulated in 478-11.5. legal description of real property, or (4) words or phrases or form of agreement required, Credit Sales.—Assignment shall not cut off any rights of action or defense arising out authorized, or approved by state or federal law, rule, regulation, governmental agency, of credit sale which buyer has against seller. Any assignee shall be subject to buyer’s or instrumentality. (487A-1). defenses as if assignee is seller. (476-19). Precious Metals.—Sale, manufacture, importation, or exportation of falsely marked Credit Service (Repair) Organizations.—Regulated in 481B-12. gold or silver articles is prohibited. (482D-2). Discrimination in Public Accommodations.—Regulated in c. 489. Promotions by ‘‘endless chain’’ schemes prohibited. (480-3.3). Door-to-Door Sales.—Regulated in c. 481C. Buyer may cancel any door-to-door sale Retail Installment Sales.—Regulated by c. 476. Form and content of every credit sale during period of three business days from date of sale; failure to inform buyer of right contract specified in 476-3 and 476-4. Buyer has right to refinance ‘‘balloon payment’’ of cancellation, at time of sale, or failure to supply buyer with prescribed ‘‘Notice of without penalty, with terms of such refinancing no less favorable to buyer than terms of Cancellation’’ form (see topic Sales), constitutes deceptive trade practice and subjects original sale, if principal balance of original loan less than $10,000. (476-5). Buyer who seller to fine of at least $500 and not more than $2,500. (481C-2, 481C-4). Other has not received good ordered has right to cancel contract and receive immediate refund deceptive trade practices in door-to-door sales (defined in 481C-2) are subject to same until copy of signed contract delivered to buyer (476-7), except in case of catalog mail fine. Door-to-door sales of hearing aids prohibited. (451A-14). order sale (476-11). Provision in contract by which seller may arbitrarily accelerate

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–8 HAWAII LAW DIGEST BUSINESS REGULATION AND COMMERCE

CONSUMER PROTECTION . . . continued (6) attempt to obtain consent from rightful owner to register, traffic in, or use domain payments unenforceable. (476-14). Finance charges regulated by 476-28. Advertising name. (481 B-24). Good faith is exception. (481 B-23). Penalties may include injunctive credit sales regulated by 476-29. relief, equitable relief, compensatory damages, punitive damages, costs and reasonable Telemarketing.—Regulated by c. 481P. attorney’s fees. (481 B-25). Claimant may elect in lieu of compensatory and punitive damages, statutory damages of at least $1,000 or threefold actual damages, whichever Travel Agencies. —Regulated in c. 468L. Registration required. (468L-2). Must main- is greater, plus reasonable attorney’s fees and costs. (481 B-25). tain records for at least two years. (468L-5.5). Violation of law or rule relating to client trust account is prima facie fraud. (486L-5.6). Fine for violations up to $1,000 for each Regulation of Computer Crimes.—Amends Offenses Against Property Rights (c. violation. (468L-5.6). Consumer rights specified. (468L-7). Prohibited Acts specified. 708) to include crimes involving computers (708-890 to 895.7). Computer crimes include (468L-7.5). computer fraud, computer damage, use of computer in other crimes and unauthorized computer access. (708-891 to 893). Computer fraud includes unauthorized use of com- Unsolicited Goods.—Sending unsolicited goods prohibited, and goods so sent deemed puter to defraud another out of property valued at more than $300 within one year’s time, unconditional gifts. (481B-1). or unauthorized use of computer to obtain information. (708-891). Computer damage is Usury.—See topic Interest. defined as: (a) knowingly transmitting program, information, code or command which Uniform Commercial Code adopted (c. 490); see topic Commercial Code. causes unauthorized damage to computer, computer system or computer network; or (b) Employment Agencies.—Employment agency must obtain license and must be knowingly accessing computer, computer system or computer network which causes bonded. (c. 373). unauthorized damages. (708-892). Damages must be in amount of at least $5,000, physical injury to person, threat to public health or safety, or impairment of adminis- Uniform Deceptive Trade Practices Act adopted. (c. 481A). See topic Sales. tration of justice. (708-892). Use of computer in commission of another crime involves intentionally or knowingly using computer to commit following crimes: (a) custodial CONTRACTS: interference, (b) sexual assault, (c) promote child abuse, (d) promote prostitution, and (e) Married person may make contracts, oral and written, sealed and unsealed, with his promote child pornography. (708-893). Unauthorized computer access includes inten- or her spouse, or any other person, in same manner as if he or she were sole. (572-22). tionally and knowingly accessing computer, computer system or computer network with- Common law applies. out authorization and obtaining information used for financial gain or in furtherance of See also topic Consumer Protection; categories Documents and Records, topic Seals; another crime. (708-895.5). Property obtained or used in relating to computer crime may Family, topic Infants. be forfeited subject to requirements of c. 712A. (708-894). Statute of limitations for Uniform Commercial Code adopted. (c. 490). See topic Commercial Code. felony computer crimes is five years. (701-108). Extortion statute includes threats to computer, computer system or computer network. (707-764). FACTORS: INTEREST: Goods or effects of a defendant in the hands of agent or factor may be attached by garnishment proceedings. No other statutory provision. If no express written contract fixing different rate of interest, legal rate is 10% per year for following non-state obligations: (a) Money due on bonds, bills, promissory notes, or License Requirements.—Goods or effects if defendant in hands of agent or factor other instruments in writing, or money lent, after it becomes due; (b) money due on may be attached by garnishment proceedings. No other statutory provisions. settlement of accounts, from day on which balance is ascertained; (c) money received Uniform Commercial Code adopted. (c. 490). See topic Commercial Code. to use of another, from date of demand made; and (d) money upon open account after 60 days from date of last item or transaction. (478-2). For state obligations, interest is FRANCHISES: allowed at prime rate each quarter up to 10% per year. (478-2). Seller of franchise must present prospective franchisee with offering circular at least Judgments.—Interest at 10% a year allowed on any judgment in civil suit. (478-3). seven days prior to sale of franchise as well as comply with other notice and related Credit Unions.—State chartered credit unions may charge on loans interest rate not provisions. (482E-3). See also generally Franchise Investment Law. (c. 482E). exceeding 18% per year on unpaid balance of loan. State commissioner of financial $250 fee for filing or amending offering circular. (482E-11). Circular must be renewed institutions may raise interest rate ceiling to exceed 18% per year for periods restricted annually. (482E-3[d]). Fee for renewal: $250. (482E-11). to 18 months, when determined necessary for safety and soundness of credit unions. (412:10-403). FRAUDS, STATUTE OF: Financial services loan companies may collect advance on loans at maximum rate No action shall be brought: (1) To charge personal representative upon special promise 1 to answer damages out of his own estate; (2) to charge any person upon any special of advance interest of 14% a year for first 18 months, plus 10 ⁄2% for next 12 months, promise to answer for debt, default or misdoings of another; (3) to charge any person plus 7% a year for next 12 months, and 4% a year for last six months. (412:9-302[b][1]). upon any agreement made in consideration of marriage; (4) upon any contract for sale Maximum term of precomputed loan where preceding rates are charged will be 48 of lands or any interest therein; (5) upon any agreement not to be performed within one months. If term of precomputed loan exceeds 48 months, financial services loan company year; (6) to charge any person on any agreement authorizing or employing agent to may charge, contract for, and receive ‘‘finance charge’’ in any form or forms at ‘‘annual purchase or sell real estate for compensation or commission; (7) to charge estate of percentage rate’’ not to exceed 24% a year, together with any other charges that are deceased person upon agreement which by its terms is not to be performed during excluded or excludable from determination of finance charge under Truth in Lending Act. lifetime of promisor, or, in case of agreements made prior to July 1, 1977, agreement (412:9-302[b][1]). to devise or bequeath any property, or to make provision for person by will; or (8) to As alternative to advance interest, financial services loan company may receive simple charge financial institution upon agreement to lend money or extend credit of more than interest computed at rate not exceeding 24% a year on principal balance remaining $50,000, unless promise, contract or agreement, or some memorandum thereof shall be unpaid under contract whether interest rate under contract is fixed or variable rate. in writing, and signed by person to be charged, or by some person thereunto by him in (412:9-302[b][2]). Upon maturity of loan, rate of interest on unpaid principal balance of writing lawfully authorized. (656-1). Consideration need not be in writing, but may be loan shall be 24% a year, unless lesser rate is specified in contract as after-maturity proved by any other legal evidence. (656-2). No action may be brought for represen- interest rate. (412:9-302[c]). tations as to another’s credit or character unless such representations are in writing and If greater rate of interest than permitted by c. 412 is contracted for, contract not void. signed by party to be charged or by someone authorized to sign. (656-3). If interest has been paid, judgment on such contract will be for principal less interest paid. (412:9-303). Contracts of Sale.—Notwithstanding statute, contract for sale of land executed by Late charges on consumer loans cannot exceed 5% of delinquent installment. Late agent of owner in his own name as vendor and by vendee in person may be enforced charges cannot be assessed on consumer loan after acceleration of maturity of contract by specific performance by owner against vendee. (34 Haw. 651). or be collected more than once for same delinquent installment. (412:9-304[1]). Part performance of an oral contract to convey real property has been held enforce- Insurance companies may not charge interest in excess of 8% per annum on life able notwithstanding statute of frauds. (4 Haw. 593). Where plaintiff’s reliance was such insurance policy loans. (431:10D-102). that injustice could only be avoided by enforcement of oral contract, contract enforceable notwithstanding statute of frauds. (66 Haw. 451, 666 P.2d 582). Oral contract to make Usury.—Rate of 1% per month or 12% per annum permitted with respect to any will and its part performance must be established by clear and convincing evidence to ‘‘consumer credit’’ transaction (credit extended to natural person primarily for personal, take contract out of ambit of statute of frauds. (58 Haw. 4, 563 P.2d 391). family, or household purpose, in which principal amount does not exceed $250,000 or is secured by borrower’s principal residence) except credit card agreement, and any Uniform Commercial Code adopted. See topic Commercial Code. ‘‘home business loan’’ (credit transaction in which principal amount does not exceed $250,000, which is not consumer credit transaction, and which is secured by mortgagor’s INFORMATION TECHNOLOGY, INTERNET AND NEW MEDIA: principal dwelling), unless creditor is financial institution regulated under c. 412 (other Regulation of E-Commerce.—Private party may sue those who register, traffic in, or than trust company or credit union), in which case rate of 2% per month or 24% per use domain name identical or confusingly similar to distinctive mark registered and used annum permitted. Rate of 11⁄2% per month or 18% per annum permitted with respect to in Hawaii, or any person who in bad faith registers domain name which consists of or credit card agreement. (478-4). Compound interest prohibited on consumer credit trans- is substantially and confusingly similar to name of living person without consent. (481B- actions and on credit card agreements. (478-7). Usury laws applicable only to consumer 22). Persons liable are domain name registrant or registrant’s authorized licensee. (481B- credit transactions, home business loans, and credit card agreements. (478-5). Mortgages 22). Burden of proof on claimant to prove bad faith intent and factors to consider, among secured by FHA, VA, Small Business Act, or Small Business Investment Act are exempt. others, include, without limitation: (1) defendant’s prior use of domain name in con- (478-8[a]). Also exempt are indebtedness secured by first mortgage lien on real property, nection with bona fide offering of goods or services; (2) defendant’s bona fide noncom- consumer credit agreements of sale made after May 30, 1980, indebtedness secured by mercial or fair use of mark in site accessible under domain name; (3) intent to divert users purchase-money junior mortgage lien on real property incurred after June 18, 1982, any from mark’s online location to site accessible under domain name and likelihood of transaction for sale of goods or services by seller in business of selling such goods or confusion of source, sponsorship, affiliation or endorsement of site; (4) defendant’s services, if transaction is subject to c. 476 or maximum interest rate does not exceed 18% willingness to assign, transfer, or sell domain name for financial gain without having used per year, and loans made by employee benefit plan. (478-8[b], [c]). domain name in bona fide offering of goods or services, or prior conduct indicating Upon extension at maturity or renegotiation of any consumer credit agreement of sale pattern of such conduct; (5) acquisition of other domain names defendant knew were made after July 1, 1985, maximum rate of interest charged thereafter shall not be more identical or confusingly similar to other distinctive marks or names of living persons; and than greater rate of interest payable under agreement of sale immediately prior to such

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–9 BUSINESS REGULATION AND COMMERCE MARTINDALE-HUBBELL LAW DIGEST - 2007

INTEREST . . . continued NEGOTIABLE INSTRUMENTS: maturity or renegotiation or four percentage points above highest weekly average yield See topic Bills and Notes. on U.S. Treasury Securities adjusted to constant maturity of three years. (478-8). Penalty for violation of usury laws: creditor shall recover principal only; debtor shall RESTRAINT OF TRADE: recover costs; creditor fined not more than $250, or imprisoned not more than one year, or both. (478-5, 6). See topic Monopolies, Restraint of Trade and Competition. 12 U.S.C. §§3501(a)(1), 3521-24 (1982) (Title V, Part A, §501[a][1] and Part B of Depository Institutions Deregulation and Monetary Control Act of 1980) declared in- SALES: applicable in Hawaii. (478-9). Uniform Vendor and Purchaser Risk Act has been adopted. (c. 508). LICENSES, BUSINESS AND PROFESSIONAL: Uniform Commercial Code adopted. (c. 490). See topic Commercial Code. About 50 occupations are licensed, with varying fees. (c. 436B to 471). Any person Conditional Sales.—Uniform Act was repealed and new provisions entitled Retail engaging in business regulated under Professional and Vocational Licensing Act (c. Installment Sales Act were adopted, effective Jan. 1, 1962, name later changed to Credit 436B) without necessary license may receive citation and be subject to civil and criminal Sales Act in 1984. (c. 476). Applies to any agreement for payment of purchase price of sanctions (436B-27). goods other than primarily for business, commercial or agricultural purpose, in four or Travel industry is heavily regulated. (c. 468L). more installments, not including down payment. (476-1). Every such contract must be Even after granting license, state may exercise police powers and place additional in writing with certain information, signed by parties, and copy must be immediately regulations on license holder. (82 Haw. 329, 922 P.2d 942). delivered to buyer. (476-3, 7). Credit seller in credit sale contract which provides for extension of closed credit primarily for personal, family, or household purposes is Liquor Licenses.—Granting, renewal or transfer of liquor licenses is prohibited unless required to disclose following: amount financed, which is principal less any prepaid applicant or both parties to transfer certify that they owe no delinquent taxes, penalties finance charge; written itemization of amount financed or statement on buyer’s right to or interest. (281-45). Licensing authority may allow licensee to place license on inactive receive such written itemization together with space for buyer to indicate if such is status. (2006, Act 49). desired; finance charge; total payments; and total sale price. (476-4). Prior to delivery of Counties may restrict or deny liquor licenses to establishments within 500 feet of such copy or delivery of goods, buyer may cancel contract. (476-7). Contract is unen- school or playground. (281-39.5). Liquor commission will deny licenses if 40% of forceable if incomplete in any necessary respect when signed. When contract is com- registered voters or owners and lessees, within 500 feet of premises for which license pleted after signing, it is enforceable. (476-10). If sale is ‘‘door-to-door’’ buyer must be is asked, protest grant of license. (281-39.5). supplied with prescribed ‘‘Notice of Cancellation’’ form which buyer may use to cancel Licenses and restrictions for brewpubs and tour and cruise vessels. (281-31). sale within three business days of date contract was signed. (481C-2). Failure to furnish Transfer of licenses. (281-41). completed form to buyer in door-to-door sale constitutes deceptive trade practice Public hearing notices for liquor license applications must be sent to at least two-thirds (481C-2) and subjects seller to fine of at least $500 and not more than $2,500. (481C-4). of residential units located within 500 feet of prospective licensee. (281-57). Other deceptive trade practices in door-to-door sales (defined 481C-2) are subject to same Direct wine shipper permit allows wineries to ship wine to Hawaii residents. (2006, fine. Insurance charges and attorney’s or collector’s charges are regulated. Delinquency Act 227). and collection charge may not exceed $50 or 5% of each delinquent installment plus Motor Vehicle Licenses.—See category Transportation, topic Motor Vehicles. certain costs and fees. (476-9). Where additional sales have been consolidated into one Collection Agencies.—Governed by c. 443B. C. 443A repealed. Each collection contract, payments are to be applied to purchases first made, and security interests agency must file and maintain with Director of Department of Commerce and Consumer terminate as each purchase becomes paid in full. (476-24). If any balloon payment for Affairs (‘‘Director’’) $25,000 bond for first office and $15,000 for each additional office. personal purchases is more than two times average of earlier payments, buyer has right Bond must be conditioned that collection agency must faithfully account and pay within to refinance without penalty, and if principal balance of original loan is less than $10,000, 30 days after calendar month net proceeds due on all collections made during calendar refinancing terms must be no less favorable to buyer than original terms except that: (1) month. Bond must also be conditioned that collection agency will comply with c. 443B Payment schedule can be modified to amortize total amount refinanced over period of and any other applicable laws. (443B-5). refinancing, which cannot be less than original term; and (2) no scheduled payment can be greater than amount of average scheduled payment under original contract. (476-5). MONOPOLIES, RESTRAINT OF TRADE AND COMPETITION: Provisions are made for deferral payments and interest. (476-6). Catalog mail order sales regulated in 476-11. Body of contract of credit sale must be at least 8 point in size and Federal statutes substantially incorporated into Hawaii law: Sherman Act §1 (480- headings must be boldface and at least 10 point in size. Contract must contain title 4[a]), §2 (480-9); Clayton Act §3 (480-5), §7 (480-7), §§8, 10 (480-8); FTC Act §5(a)(1) ‘‘CREDIT SALE CONTRACT’’ and term substantially similar to: ‘‘NOTICE TO THE (480-2). Construction of statutes according to judicial interpretation of similar federal BUYER: Do not sign this contract before you read it. When you sign this contract, you statutes. (480-3). Lawsuits by indirect purchasers allowed. (480-3). Statutes construed are entitled to a copy of it that is filled in, in every necessary respect. You should keep liberally. (80 Haw. 54; 905 P.2d 29). Protection provided by antitrust statutes is intended it. This contract is covered by Hawaii’s credit sale law, and you have the rights of a buyer for individual consumers rather than businesses. (480-2). Contracts in restraint of trade, under that law. You also may have rights under other state and federal laws.’’ (476-3). price fixing of commodities, and monopolies are prohibited. (480-4). Exclusive dealing, Buyer’s rights may not be cut off by assignment. (476-19). Casual sales are excluded tying agreements, mergers, acquisitions, and holdings of stock, interest or membership from coverage. (476-1). of other persons illegal if they may substantially lessen competition or tend to create monopoly. (480-5, 7). No person may refuse to deal with another to induce acts pro- Consumer Protection.—See topic Consumer Protection. hibited by c. 480. (480-6). No person may be director of two or more competing entities Bulk Sales.—See topic Commercial Code. if elimination of competition by agreement between them would violate c. 480. (480- Product Liability.—Borrower from buyer may recover from retail seller (198 F.Supp. 8[a]). No person may be director of two or more entities if any has net worth of more 78 which discusses Hawaii law on privity. Aff’d, 304 F.2d 149). Manufacturer liable for than $100,000 or if all have total net worth of more than $300,000, where effect of dangerous defective product. (52 Haw. 71, 470 P.2d 240). Discussions of strict products merger might substantially lessen competition or tend to create monopoly. (480-8[b]). liability, proximate cause, precautions and safeguards, and occasional seller exception. Labor organizations are exempt from c. 480 under 480-10. Certain cooperative organi- (66 Haw. 237, 659 P.2d 734; 65 Haw. 447; 654 P.2d 343). zations, insurance transactions and approved mergers of federally regulated companies are also exempt from c. 480. (480-11). Retail Credit Sales.—See subhead Conditional Sales, supra. Remedies.—State and private party may sue for injunctive relief (480-13, 15), or for Sales of franchises must be reported and are substantially regulated. (482E-1 to 12). treble damages (480-13 to 14). Awards in private actions are greater of $1,000 or treble Sales of Motor Vehicles.—See category Transportation, topic Motor Vehicles. damages, attorneys fees, and costs. (480-13). Attorney general has broad investigative powers. (480-18). Certain violations are felonies; fine up to $100,000 and up to three Sale of Surplus Goods.—Governed by c. 481, Part II. years in prison or both for individuals; fine up to $1,000,000 for firms. (480-16). Contracts of Sales.—See topics Frauds, Statute of, Commercial Code, Consumer Violations of cease and desist orders punishable by maximum fine of $10,000. (480- Protection. 15.1). International Sale of Goods.—See Part V this volume, Selected Conventions. Unfair Trade Practices.—FTC Act §5(a)(1) enacted as 480-2 (violation can bring private suits for treble damages). Practice is ‘‘unfair’’ when it is immoral, unethical, SECURITIES: oppressive, unscrupulous, or substantially injurious to consumers. (84 Haw. 162, 931 P.2d 604). Unlawful for any person, with intent to destroy competition of any regular dealer Uniform Securities Act (modified) adopted. (c. 485). 2002 Uniform Securities Act in commodity, to discriminate between different sections or communities, by selling such adopted effective July 1, 2008. (2006, Act 229). commodity at lower rate in one section or community than in another. Schemes of special Supervision.—Administration of c. 485 is vested in Commissioner of Securities rebates, collateral contracts or devices whereby discrimination is effected are forbidden. (‘‘Commissioner’’) to be appointed by Director of Commerce and Consumer Affairs (481-1). Sales at less than cost are forbidden, except: (1) Closing out sales; (2) sales of (‘‘Director’’). Commissioner shall hold office at will of Director. (485-2). Commissioner damaged goods after public notice; (3) sales by officer of court; (4) sales in endeavor may adopt, amend, or repeal rules necessary to carry out purposes of this chapter. in good faith to meet legal prices of competitor in same trade area; (5) sales by gov- (485-2). ernment agency, post exchange or ships’ service store. (481-3, 6). Injunctive relief may Regulatory Powers of Supervising Authority.—Commissioner has broad powers be obtained and treble damages may be recovered. (481-10). Civil penalties under 480-2 similar to those set forth in Uniform Securities Act (pre-1985 version), hereafter ‘‘USA’’, up to $10,000 per violation. Each day counted as separate violation and penalties here- including power to: (1) Issue stop orders against any registration under certain circum- under cumulative to all other remedies or penalties. (480-3.1). Class actions by private stances (485-13); (2) refuse, revoke or suspend registration of any applicant or registrant persons permitted. (480-13.3). or limit or impose conditions on securities activities applicant or registrant may conduct Contracts in violation of c. 480 and 481-1 to 481-7 are void. (480-12; 481-9). under certain circumstances (485-15); (3) inspect dealers’ and investment advisers’ Revised Uniform Deceptive Trade Practices Act adopted. (c. 481A). See Part VI of this records (485-16); (4) require escrow arrangements for certain securities (485-18); (5) volume; see also topic Consumer Protection. issue cease and desist orders to enforce compliance with c. 485 (485-18.7); and (6) bring Resale Price Agreements.—See category Intellectual Property, topic Trademarks and suit for injunctive relief (485-19). Commissioner’s powers expanded to: (1) Suspend, Tradenames. complete, or rescind all securities contracts; (2) assess administrative penalty up to

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–10 HAWAII LAW DIGEST CITIZENSHIP

SECURITIES . . . continued Penalties provided in this section are cumulative to remedies or penalties available under $100,000; and (3) seek civil penalty of $100,000 per violation. Enforcement tools for all other laws of this state. Each day that violation of 480-2 occurs shall be separate securities violations and fraud strengthened. (485-18.7, 20.5). violation. (480-3.1). Prerequisites to Sales or Offerings.—It is unlawful for any person to sell or offer to Uniform Fiduciaries Act adopted in 1945. (c. 556). §189-3, Revised Laws of Hawaii sell any security except of a class exempt under 485-4 or unless sold or offered in a 1955, pertaining to Uniform Fiduciaries Act repealed by adoption of Uniform Commer- transaction exempt under 485-6 or unless it is federal covered security, unless such cial Code. (490:10-102[1]). security has been registered by notification or qualification in accordance with c. 485. Uniform Securities Ownership by Minors Act has not been adopted. (485-8). Securities to Which Act Applicable.—Substantially similar to USA; definition of Uniform Commercial Code adopted. (c. 490). See topic Commercial Code. security includes variable annuity contracts. (485-1). However, under certain circum- stances, no issuer, dealer or salesman shall be required to be registered in order to qualify STATUTE OF FRAUDS: to sell variable annuities. (485-14.5). See topic Frauds, Statute of. Exempt Securities.—§402(a) of USA adopted via 485-4 with following significant differences: (1) §402(a)(7)(D) of USA includes Canada or any Canadian province; (2) TOBACCO PRODUCTS: §402(a)(8) of USA names specific exchanges while 485-4(8) refers to ‘‘any exchange Reports to Attorney General.—Any tobacco product manufacturer selling cigarettes registered or exempted under the Securities Exchange Act of 1934, as amended’’; (3) to consumers within state shall file report with attorney general setting forth its name and 485-4(12) exempts any option on commodity futures contract subject to regulation under trade name, address of its principal place of business, memorandum of copy of invoice Commodity Exchange Act; (4) 485-4(13) exempts any cooperative association member- covering each and every shipment of cigarettes made during previous calendar quarter ship stock, membership certificates or shares, or membership capital, pursuant to into state, and other information as may be required by attorney general. Tobacco product 421C-36 or c. 421; (5) 485-4(14) exempts any security, except securities issued by manufacturer that is signatory to settlement agreement entered into on Nov. 23, 1998 by open-end management companies or unit investment trusts, for which registration state- state and leading U.S. tobacco product manufacturer may file copies of reports tobacco ment has been filed under Securities Act of 1933, provided that no sale shall be made product manufacturer submits to department of taxation in lieu of required report. In- until registration statement becomes effective; and (6) 485-4(15) exempts any variable formation which tends to identify customers of tobacco product manufacturers, terms of annuity contract which is investment contract prepared by life insurance company de- sale and non-aggregated sales volume data are excluded from disclosure. (486P-2). signed to offer continuous income through participation in mutual fund portfolio or Penalty.—Attorney general is empowered to bring civil action against any tobacco variable annuity contract based upon separate account which is registered as management manufacturer that fails to file required reports. (486P-3). investment company with Securities and Exchange Commission (‘‘SEC’’); and (7) 485- 4(16) exempts any security appearing on list of OTC and foreign securities approved for TRUST RECEIPT SECURITY: margin by Board of Governors of Federal Reserve System, or any warrant or right to purchase such security. See category Debtor and Creditor, topic Pledges. Furthermore, 15 securities are exempt from §§485-A, 485-8 and 485-25(a)(7). These Uniform Commercial Code adopted. See topic Commercial Code. include: (1) Any isolated nonissuer transaction, whether through dealer or not; (2) any nonissuer distribution of outstanding security if manual of Hawaiian securities or any WAREHOUSEMEN: other recognized securities manual contains names of issuer’s officers and directors, Uniform Commercial Code adopted. (c. 490). See topic Commercial Code. balance sheet of issuer, and profit and loss statement for either fiscal year preceding that See category Debtor and Creditor, topic Liens. date or most recent year of fiscal operations; (3) any nonissuer transaction effected by or through registered dealer pursuant to unsolicited order or offer to buy. Exempt Transactions.—§402(b) of USA adopted via 485-6. Significant variations CITIZENSHIP include: (1) 485-6(9) designates 25 people as ceiling, not ten people as in §402(b)(9) of USA, and does not grant power to withdraw or further condition this exemption or to ALIENS: alter number of offerees permitted; (2) 485-6(10) designates 25 people as ceiling, not ten Property.—Aliens are not eligible for residential leases of public land. (171-74). people as in §402(b)(10) of USA, and does not include §402(b)(10)(C) of USA; (3) Declarant aliens with five years residence in state may acquire land from Board of Land 485-6(11) does not include §402(b)(11)(B); (4) 485-6(13) exempts any offer or sale by and Natural Resources. (206-9). Aliens may obtain land through private persons. or through licensed real estate broker or salesman of security issued on or after July 1, 1961 by Hawaii corporation, holder of which is entitled to occupy house or apartment Occupational Restrictions.—Aliens cannot be commissioned or warrant officers of owned or leased by corporation, but subject to 485-7; (5) 485-6(14) exempts any offer Army or Air National Guard. (121-14). See subhead State, County and Municipal Officers or sale by or through licensed real estate broker or salesman of rental management and Employees, infra; also category Employment, topic Labor Relations, subhead Public contract relating to apartment rental program in condominium project 485-6(14) exempts Employees. any offer or sale by or through licensed real estate broker or salesperson of rental State, County and Municipal Officers and Employees.—Elective officers must be management contract relating to apartment rental program in condominium project, with U.S. citizens and Hawaii residents for three years preceding assumption of office. (78- or without offer of sale of apartment in condominium project; (6) 485-6(15) exempts any 1[a]). Appointed officers, if second deputies to department heads or higher level, must transaction not involving public offering within meaning of §4(2) of Securities Act of be U.S. citizens and Hawaii residents for one year preceding appointment; if lower level 1933; (7) 485-6(18) exempts any transaction exempt under Rule 701, 17 C.F.R. must be citizens, nationals or permanent residents of U.S. and residents of Hawaii at time §230.701, under Securities Act of 1933; (8) 485-6(19) exempts any offer or sale of of appointment (if nationals or permanent residents, must diligently seek citizenship upon securities made in compliance with Rule 505 of Regulation D, 17 C.F.R. §230.505, under becoming eligible). (78-1[b]). Other employees (except certain persons recruited by Securities Act of 1933; and (9) 485-6(20) exempts any transaction that Commissioner University of Hawaii) must be citizens, nationals or permanent residents of U.S. and exempts by rule adopted pursuant to c. 91, that: (a) Furthers compatibility with exemp- residents of Hawaii at time of application for employment. (78-1[c]-[f]). U.S. citizenship tions under Securities Act of 1933 and state uniformity, or (b) Commissioner finds required for positions involving state and national security. (78-1[e]). registration is not necessary or appropriate for protection of investors. Other Restrictions.—Aliens may not vote. (11-15[a][6]). Aliens disqualified from jury Uniform Transfer-On-Death Security Registration Act provides that individuals service. (612-4[a][1]). Aliens are not eligible for real estate broker licensing examination may designate non-testamentary beneficiary for transfer of registered securities. (c. 539). unless authorized to work in U.S. (467-9.5[1]). Aliens, except permanent residents or Registration of Offerers.—Offerers must be registered in Hawaii. (See category aliens otherwise lawfully present at time services performed, are not eligible for benefits Business Organizations, topic Corporations.) under Employment Security Law. (383-29[d]). Registration of Securities.—Securities may be registered by notification or by quali- Firearms, Hunting and Fishing.—Accredited foreign officials and aliens commis- fication. Manifold differences between c. 485 and USA. Hawaii statutes should be sioned as state law enforcement officers may obtain permit for firearms from chiefs of consulted. See: 485-8 as to general registration requirements, 485-9 as to registration by police, provided that any commissioned law enforcement officer who is alien shall notification, and 485-10 as to registration by qualification. No registration by coordi- transfer ownership of firearm within 48 hours after termination of employment from law nation discussed. enforcement agency. (134-2). Other aliens may obtain 90 day permits after procuring Registration of Dealers.—Dealers, salespersons, investment advisors and investment either valid Hawaii hunting license, written documentation indicating person has been advisor representatives must register with Commissioner under and meet requirements set invited to shoot on private land, or written notification from firing range or target forth in 485-14. shooting business indicating person will actually engage in such activities. (134-3). Brokers and Agents.—Same as subhead Registration of Dealers, supra. Aliens employed by U.S. or state may carry firearms when performance of duty (in- cluding going to and from their respective places of duty) requires. (134-11). Aliens not Bonds.—Upon approval of registration as dealer by Commissioner, $5,000 bond must lawfully admitted to U.S. may not engage in taking marine life for commercial purposes be filed running to state. (485-14[e]). in waters of State. (189-5). Advertisements.—All advertising matter must be filed with Commissioner’s office Miscellaneous.—Aliens whose government accords similar right to Hawaii citizens unless previously exempted by Commissioner’s rule or order. (485-25[a][7]). may bring claim against state. (661-4). Permanent resident aliens who have resided in Liabilities.—Violator of any provision of c. 485 shall be guilty of felony and shall state for three years eligible for farm loans. (155-10[2]). In order to obtain workmen’s forfeit to state any property acquired or enterprise operated in violation of c. 485. compensation benefits, alien dependents not residing in U.S. must maintain annual proof (485-21). Violators of c. 485 are also subject to civil penalties. (485-20.5). of dependency. (386-42[c]). Official in charge of institutions confining alien may release Tender Offers.—See category Business Organizations, topic Corporations, subhead him for return to his native land conditioned upon his remaining away from state. Tender Offers. (336-5). Director of Health will arrange for deportation of all alien public charges in state Subdivision Offerings.—Uniform Land Sales Practices Act adopted. (c. 484). hospitals. (336-1). Alien may serve as personal representative of probate estate if alien submits to jurisdiction of Hawaii courts. (560:3-602; Hawaii Probate Rule 87). Personal Franchising.—See topic Franchises. tax cannot be assessed against nonresident. Nonresident’s property cannot be taxed unless Pyramid Sales, Etc.—Operation of endless chain scheme unlawful (480-3.3), and it has actual situs within jurisdiction. However, any tangible personal property situated punishable by fine of not less than $500 nor more than $10,000 per violation. (480-3.1). within jurisdiction may be taxed irrespective of owner’s residence. (4 Haw. 172).

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–11 CIVIL ACTIONS AND PROCEDURE MARTINDALE-HUBBELL LAW DIGEST - 2007

Other: common law applies. (3) Criminal injury compensation awards expire with death CIVIL ACTIONS AND PROCEDURE of claimant. (351-67). ACCORD AND SATISFACTION: Abatement.—Death of plaintiff or defendant does not cause an action to abate. Dis- Generally, common law rules govern. Uniform Commercial Code adopted. See cat- solution of a corporation does not cause an action to abate. (634-61). HRCP do not limit egory Business Regulation and Commerce, topic Commercial Code. time within which court may order substitution but motion must be submitted within 120 days of date death is suggested upon record. (HRCP 25[a]). Compromise.— Apprenticeship disputes may be settled by Director of Labor and Industrial Relations. Limitation of.—See topic Limitation of Actions. (372-5[7]). Small Claims.—See category Courts and Legislature, topic Courts. Attorney must have client’s written authority to compromise. (605-7). Termination of Actions.—No specific statute. Marriage settlements valid. (572-29). Paternity proceedings may be compromised upon pretrial recommendation. (584-13). Prohibited Actions.—No specific statute. Statutory remedies are merely cumulative Probate claims may be compromised by personal representative of estate (560:3-813) and do not abolish common law remedies unless so declared in express terms or by or by appointed guardian of property (560:5-424). necessary remedy. (67 Haw. 252, 686 P.2d 12). Tax claims may be compromised by director of taxation with governor’s consent, Administration.—See category Estates and Trusts, topic Executors and Administra- where tax exceeds $50,000, and without governor’s consent, where tax is $50,000 or less, tors. exclusive of penalties or interest (eff. 6/4/03). (231-3[10]). Against State.—Based on state statute, executive department regulation, express or Tort claims against state may be compromised by attorney general. Compromise of implied contracts, or as referred by legislature (661-1); see topic Damages. claims exceeding $10,000 will be paid only after funds are specifically appropriated by legislature. (662-11). Direct Actions Against Insurer.—See category Transportation, topic Motor Vehicles, Unemployment compensation disputes may be compromised by Department of Labor subhead Direct Actions Against Insurer. and Industrial Relations, but if referred to attorney general, then only with his consent. (383-75). APPEAL AND ERROR: Workmens’ compensation claims may be compromised by Director of Labor and Hawaii Rules of Appellate Procedure (HRAP) adopted effective June 1, 1984. Govern Industrial Relations. (386-78). procedures in appeals to Supreme Court and intermediate appellate court from circuit, Pleading.—Accord and satisfaction must be pleaded affirmatively. (HRCP 8[c]). district, family, land, and tax appeal courts, and from orders of administrative agencies. (HRAP 1). HRAP have force of law (Haw. Const. Art. VI, §7; 602-11) and supersede ACTIONS: prior rules. HRAP generally parallel Federal Rules of Appellate Procedure and Rule numbers generally correspond. In an extension for time to file notice of appeal, if cause Civil actions in circuit courts, Hawaii’s courts of general jurisdiction, closely follow of delay is beyond movant’s control, motion may be granted on showing of good cause. federal rules as am’d, and rule numbers generally correspond. See topic Practice. Com- If cause is within control of movant, motion may be granted only on showing of ments in this topic refer to civil actions in circuit courts to which Hawaii Rules of Civil excusable neglect. (80 Haw. 345, 910 P.2d 116.) Procedure (HRCP) apply, unless otherwise indicated. HRCP do not apply to probate (c. Supreme Court has adopted Hawaii Appellate Conference Program Rules (eff. 3/15/95) 560); guardianship (c. 551); ex parte re: accounts of guardians and trustees (c. 554); to provide alternative means of resolving civil appeals by providing neutral place and family court; applications to circuit court re: arbitration; writ to inferior court (603- process to resolve issues in pending cases or to resolve in toto. All civil appeals are 21.7[b]). Consult relevant statute for instances when rules do not apply in following: land included except: (1) Petitions for extraordinary relief; (2) habeas corpus petitions; (3) court (c. 501); eminent domain (c. 101); quiet title (c. 669); quo warranto (c. 659); petitions of incarcerated petitioner; (4) post-conviction proceedings of criminals under escheat (c. 665); forfeiture of property for violation of statute; quarantine (c. 325); HRAP 40; (5) pro se appeals, and (6) questions of law reserved to Supreme Court. commitment hearings (cc. 333, 334); tax collection; voter registration, elections; col- Participation mandatory for cases selected by court. Conferences will be conducted by lective bargaining (cc. 89, 380); land/water rights (c. 664). Abuse of discretion to dismiss neutral mediator selected by parties or appointed by court from among retired or semi- case for want of prosecution when plaintiff failed to institute selection of trial date under retired judges and counsel. Mediators will attempt to achieve consensus on each issue. Rules of the Circuit Courts of the State of Hawaii RCCH 12(c); HRCP. (10 Haw. App. 388, 876 P.2d 1335). See topic Practice. Appeal Bond.—Any court may require bond to ensure payment of costs on appeal. (HRAP 7). Equity.—See subhead Forms of Action, infra. Appeals.— Forms of Action.—There is one form of action, ‘‘civil action.’’ (HRCP 1). There is Appeals may be allowed by circuit court from interlocutory judgments, orders or no action in equity as distinguished from law, but equitable relief (injunction, specific decrees, wherever court deems it advisable for speedy termination of litigation. (641-1). performance, etc.) is granted in proper cases. Intermediate Court of Appeals.—Final judgments, orders and decrees of circuit and Conditions Precedent.—(a) All tort cases are automatically in court annexed arbi- district courts are appealable as of right to intermediate appellate court, subject to c. 602. tration program unless plaintiff certifies case value exceeds $150,000. Sanctions for (641-1). Intermediate appellate court has jurisdiction, subject to transfer to Hawaii Su- attempting to remove case from program without good cause. Judicial Arbitration Com- preme Court (602-58) or review on application for writ of certiorari (602-59), to hear and mission has discretion to accept. (Hawaii Arbitration Rules, 1/9/90 [HAR]). Circuit judge determine appeals allowed by law and to make or issue any order or writ necessary to from each circuit is appointed by Chief Justice to be Arbitration Judge. Arbitration Judge aid jurisdiction (602-57, am’d Haw. Sess. Laws Act 145). may impose sanctions, including costs, expert fees, and reasonable attorney’s fees, for Hawaii Supreme Court has jurisdiction to hear questions properly brought before it by failure to participate in arbitration hearing in meaningful manner. (HAR 28, RCCH, application for writ certiorari following decision by Intermediate Court of Appeals (602- Exhibit A). (b) Contractor Repair Act. (672E). (c) Medical Claims Conciliation Panel. 59, am’d 2006 Haw. Sess. Laws Act 149) or by application for transfer (602-58, am’d Submission of medical torts claims to panel is mandatory prior to bringing case in court. 2006 Haw. Sess. Laws Act 93). Statute is tolled until 60 days after decision. (671-18). Panel issues advisory opinion of Applications for writ of certiorari must be made within 90 days of judgment by liability and damages. (671-15). Settlement is voluntary; nothing from panel hearings or intermediate appellate court; acceptance or rejection of application is discretionary upon findings may be used in subsequent litigation. (671-16). Parties may elect to bypass court Supreme Court. (602-59, am’d 2006 Haw. Sess. Laws Act 149). See also topic Certiorari. annexed arbitration program. (671-16.5). (d) Uniform Arbitration Act. Agreement to Applications for transfer to Supreme Court shall be granted when case involves issues submit to arbitration is valid, enforceable, and irrevocable except on ground that exists of fundamental public importance, invalidation of amendment to state constitution, state at law or equity for revocation of contract. (658A). Court shall order parties to arbitrate statute, county ordinance or agency rule or sentence of life imprisonment without pos- unless it finds there is no enforceable agreement to arbitrate. Under certain circumstances, sibility of parole. (602-58, am’d 2006 Haw. Sess. Laws Act 93). Applications for transfer court may consolidate multiple arbitrations which arise in substantial part from same to Supreme Court may be granted when case involves question of first impression or transaction or series of related transactions. Arbitrator may issue subpoenas, permit there are inconsistencies in decisions of appellate or Supreme Court. (602-58, am’d 2006 discovery, resolve discovery disputes, issue protective orders, award punitive or other Haw. Sess. Laws Act 93). Denial of application to transfer does not prejudice later exemplary relief. application for writ of certiorari. (602-58, am’d 2006 Haw. Sess. Laws Act 93). Commencement.—Filing complaint. (HRCP 3). See also category Courts and Legislature, topic Courts. Parties.—(HRCP 17-25). Administrative Agencies.—Person aggrieved may have judicial review of final decision in contested case or of preliminary ruling where necessary for adequate relief (91-14[a]) Necessary Parties.—(HRCP 19). by instituting proceedings in circuit court within 30 days after ruling or service of Permissive Parties.—(HRCP 20). decision, in accordance with HRCP (91-14[b]; HRCP 72) except where direct appeal to Class Actions.—(HRCP 23). Supreme Court authorized by statute (91-14[b]). Written notice of hearing of employment Misjoinder.—Not ground for dismissal. (HRCP 21). security appeal must be sent first class, non-registered, noncertified mail to claimant’s last known address. (383-38). See also, topic Judgments, subhead Declaratory Judgments. Intervention.—(HRCP 24). Arbitration.—Once there is final order confirming arbitration award, Hawaii Supreme Interpleader.—(HRCP 22). Court has jurisdiction to review order denying motion to vacate award. Appeal from Third Party Practice.—(HRCP 14). confirmation of award is restricted to grounds set forth in timely motion to vacate, modify Joinder of Causes of Action.—(HRCP 18). Joinder of claims is permissive. or correct award. (2006 WL 1484211). Splitting Causes of Action.—Common law governs res judicata. Consolidated Cases.—Judgment or order in consolidated case, disposing of fewer Consolidation of Actions.—(HRCP 42[a]). than all claims among all parties, is not appealable in absence of 54(b) certification. (109 Hawaii 8, 122 P.3d 803). Severance of Actions.—(HRCP 42[b]). Stay of Proceedings.—In civil matters no execution shall issue upon judgment nor Stay of Proceedings.—No statute governs pending actions before judgment. shall proceedings be taken for enforcement until expiration of ten days after entry. Upon Abatement and Revival.— good cause shown, court may allow execution or other appropriate action within ten day Survival of Actions.—(1) Tort: Right of action survives death of tortfeasor. (663-4). period. Stay of proceedings may be obtained in discretion of court or where appeal is Cause of action in tort arising out of wrongful act, neglect, or default survives death of taken, appellant may give supersedeas bond. (641-3). Circuit judge’s order for counsel’s person injured except in actions for defamation and malicious prosecution. (663-7). (2) fee, suit money, temporary alimony, or similar provisional remedy will not be stayed

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–12 HAWAII LAW DIGEST CIVIL ACTIONS AND PROCEDURE

APPEAL AND ERROR . . . continued Courts have power to require either party, upon application, to give security for costs. from execution if appellee deposits sufficient indemnity bond (641-3), upon approval by (607-3.5). court (HRAP 8; HRCP 62[d]). In criminal matters filing notice of appeal or giving oral Rule allowing award of costs after rejection of offer of settlement applies to favorable notice of intent to appeal at time of sentence may operate as stay, in court’s discretion, defense verdicts as well as verdicts favorable to plaintiffs. (HRAP 68, 110 Hawaii 204, subject to conditions stated by court. (641-14). 130 P.3d 1069). Extent of Review.— Unlike its federal counterpart, statutory list of allowable costs is not exclusive list. By Circuit Court.—Where review or redetermination in circuit court is allowed by (607-9). Court has discretion to determine what is reasonable. (89 Hawaii 292, 972 P.2d statute, person adversely affected by decision of district or government agency may 295). appeal in accordance with HRCP 72. Judgment creditors may recover attorney’s fees, costs and expenses from judgment From Contested Cases From Administrative Agencies.—Review of contested cases debtors. (607-14.7). from administrative agencies is confined to record unless trial de novo allowed by law $50 fee assessed when cases remanded from circuit court back to district court after (91-14[f]), but review under 91-14 does not preclude other lawful modes of judicial demand for jury trial requiring case’s transfer to circuit court waived. (607-5[c][22]). review (91-14[a]). $200 fee for demand for jury trial. (607-5[c]21). From Arbitration Awards.—Uniform Arbitration Act Court may only modify, correct Frivolous Claims.—Vexatious litigant (as defined in 634J-1) may be required to post or vacate arbitration award on grounds specified in arbitration statute. (658A-23 and security or obtain permission of court prior to filing new litigation. (c. 634J-2). 658A-24). By Supreme Court and Intermediate Appellate Court.— DAMAGES: (a) From District Courts.—Review of questions of law or of mixed law and fact (602-5) confined to record (641-2). Findings of fact may not be set aside unless clearly Counsel may make formula arguments for damages in personal injury cases. (635-52). erroneous. (HRCP 52[a]; 59 Haw. 491, 583 P.2d 971). Ad damnum clauses prohibited in personal injury or wrongful death pleadings and (b) From Circuit Court.—Review of questions of law or mixed law and fact (602-5) amendment to such pleadings. (663-1.3). Statute affects amount of recovery for lost confined to record (641-2). Findings of fact by circuit court may not be set aside unless earnings and noneconomic damages (663-8.3; 8.5; 8.7); and abolishes claims for serious clearly erroneous. (HRCP 52[a]). infliction of emotional distress arising solely from property damage unless distress results in physical injury or mental illness. (663-8.9). Hawaii recognizes: (1) Parents’ right to Character of Hearing.— recover for wrongful death of viable fetus (745 F.Supp. 1573); (2) cause of action for In Circuit Court.—Where law permits trial by jury, trial is by court unless jury child’s loss of consortium due to parent’s nonfatal injury (781 F.Supp. 1487); and (3) demanded in accordance with HRCP 38. (HRCP 72[g]). dependents’ claims for pecuniary injuries (75 Haw. 544, 867 P.2d 220). Hawaii does not In Supreme Court and Intermediate Appellate Court.—Limited to record. (641-2). Full require family members to be present or sustain physical injury as prerequisite to bring- court must hear oral argument unless dispensed with in court’s discretion. (602-10). ing cause of action for negligent infliction of severe emotional distress (77 Haw. 2, 881 Judgment or Order on Appeal.—Supreme Court (602-5[6]), intermediate appellate P.2d 489), unless plaintiff is trying to bring independent rather than derivative NIED court (602-57), and circuit courts (603-21.9) may render all judgments or orders and do claim under Hawaii’s No-Fault Law, 431:10C (108 Hawaii 380, 120 P.3d 1115). Hawaii all acts necessary to carry their powers into effect. allows for judgment of punitive damages against estate of deceased tortfeasor. (104 Haw. Lower courts may not vacate, amend, and later reenter their own judgments merely 241, 87 P.3d 910). to render late-filed appeal timely. (79 Haw. 26, 897 P.2d 953). See also category Estates and Trusts, topic Death, subhead Action for Death. Appeals from Family Courts provided for by 571-54 and governed by c. 602. Legal Immunity.—Charitable immunity is uncertain. (31 Haw. 740). No immunity in favor records regarding certain juvenile offenders are open to public inspection unless other- of municipal corporations. (41 Haw. 527). Providers of shelter and substance to indigents wise decreed by family court judge. (571-84.6). in connection with project sponsored by nonprofit corporations are exempt from civil Appeals from Land Court provided for by 501-63 and governed by c. 602. liability. (663-10.6). Volunteers to nonprofit or governmental entities have qualified immunity. (662D-2). BONDS: Immunity is granted to charitable, religious or nonprofit organizations that donate pharmaceuticals or supplies to needy. (328C-2). Hawaii closely follows Federal Rules of Civil Procedure on bonds submitted in civil Immunity is granted to health care providers who report blood test results to police. actions. (663-1.9). Sureties.—Personal sureties required to justify, but not corporations organized and Immunity is granted to insurance commissioner and employees. (431:3-414). authorized as sureties. (78-20). Compensation is limited to one-time only fee of 5% to Immunity is granted to any law enforcement officer acting in good faith in any action 15%, but not less than $50. (804-62). arising in connection with enforcement of valid foreign protective order or foreign Enforcement.—Surety liability enforceable on motion without necessity of indepen- protective order that appears authentic on its face. (586-25). dent action. (HRCP 65.1). See also topic Actions, subhead Conditions Precedent. Comparative Negligence Rule.—Contributory negligence does not bar recovery if CERTIORARI: such negligence was not greater than negligence of person, (or in case of more than one Jurisdiction.—Generally, HRAP 31. Supreme Court may accept appeal from inter- person, aggregate negligence of such persons), against whom recovery sought; damages mediate appellate court decision by application for writ (602-59[a]) filed within 90 days are diminished in proportion attributable to injured claimant. (663-31). Uniform Com- after filing of decision. (602-59[c], am’d 2006 Haw. Sess. Laws Act 149). parative Fault Act not adopted. Grounds.—Grave errors of law or fact or obvious inconsistencies with decisions by Uniform Contribution Among Tortfeasors Act adopted by statute (663-11 to 13; Supreme Court, federal courts or intermediate appellate court. (602-59[b]). Court will 663-16 to 17) except that joint and several liability not abolished in some circumstances. accept no motion for reconsideration of acceptance or rejection. (HRAP 31[b][7]). Exceptions listed at 663-10.9. Release given in good faith discharges party to whom Proceedings.—Deadline for filing petition is 90 days after filing of intermediate given for any contribution to any other joint tortfeasor or co-obligor. Court determination appellate court decision. (602-59[c], am’d 2006 Haw. Sess. Laws Act 149). If not that settlement was in good faith shall bar any further claims against settling party except accepted within 30 days after filing, petition rejected. (602-59[c], am’d 2006 Haw. Sess. those based on written indemnity agreement (663-15.5) (effective for non-contract Laws Act 149). If writ issued, case transmitted to Supreme Court, supplemental briefs claims; effective for contract claims made on or after Jan. 1, 2002). and oral argument allowed only upon request by Supreme Court. (602-59[d]; HRAP Civil Defense.—State, political subdivisions, and persons engaged in civil defense per 31[b][4]). c. 128 are not liable, except for willful misconduct, death, injury, or damages. Although Review.—No statute covers scope of review. recovery may not be had against state for damage sustained from operation of vehicle during civil defense emergency, injured persons may seek recovery against insurers if CHARITABLE IMMUNITY: policies under 41D-8 cover such risks. (128-18). Recovery of fair market value or fair rental value is allowed for requisitioned property, but prospective profits and punitive or See topic Damages. other damages are not. (128-23). Persons voluntarily and without compensation permit- ting their property to be used to shelter others during actual, impending, or practice attack COMMISSIONS TO TAKE TESTIMONY: are not liable for negligent death, injury, or damage. (128-19). See topic Depositions and Discovery. Assumption of Risk.—Owners/operators of recreational activities are not liable for injuries to patrons from inherent risks if patrons voluntarily sign written waiver. (663- COSTS: 1.54). Costs and fees are prescribed by statute. (c. 607). Awards of costs against state are Owners/operators of recreational activities do not have duty to specifically safeguard prohibited unless “authorized by law.” (HRAP 39). Under 607-24, “costs” mean amounts against inherent risks of activities, but do have duty not to increase risks above those paid to clerk prior to litigation while “actual disbursements” means amounts paid after inherent to activity. (110 Hawaii 367, 133 P.3d 796). litigation, of which states are not immune from paying. (110 Hawaii 269, 132 P.3d 378). Primary assumption of risk is discrete and complete defense where defendant’s injury- Increased court fees are effective July 1, 1998, as described below. (607-5). causing conduct is inherent risk of activity to which plaintiff voluntarily participates and Civil court costs are $200 for civil complaints; $100 for probate cases, guardianship is not intentional or reckless. (110 Hawaii 367, 133 P.3d 796). cases, and trust actions; and other fees are prescribed by schedule. (607-5b). Family court Owner of land generally owes no duty of care to keep premises safe for use by others costs are $100. (607-5b). District court costs are $100 for regular claims (607-4) and $35 for recreational purposes, or to give any warning of dangerous conditions. (520-3). State for small claims (633-29). Supreme Court costs are $100 (607-5) for filing appeal, other as landowner has duty to warn of “extremely dangerous” conditions only in ocean waters fees prescribed by schedule (607-6). Appeals to intermediate appellate court shall be filed adjacent to public beach parks. (1996 Haw. Sess. Laws Act 190, 109 Hawaii 198, 124 with Supreme Court at same cost. (607-6). U.S. District Court costs are $60, other fees P.3d 943). Duty arises for non-occupier of land only if: (1) Affirmative action was taken prescribed by schedule. to induce plaintiff to engage in harmful conduct on land; and (2) false appearance of Court may charge additional Indigent Legal Services Surcharge. (c. 607). safety was created and relied upon by plaintiff. (58 Haw. 502, 573 P.2d 107). Judges have discretionary power to waive prepayment of costs or remit costs, where Persons injured on school grounds using school facilities assume risk of liability. in special or extraordinary cases cost of suit is onerous. (607-3). (302A-1148.5).

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–13 CIVIL ACTIONS AND PROCEDURE MARTINDALE-HUBBELL LAW DIGEST - 2007

DAMAGES . . . continued signs and design placement of them have been approved by Board of Land and Natural Hotel keepers liable for personal property losses of guests under certain circumstances Resources. Neither state or county has duty to warn of natural conditions on unimproved and up to certain limits. (c. 486K). Hotel keepers may be held liable to guests for injury public lands (663-…; 2003, Act 82 §2, effective July 1, 2003 and repealed effective June or loss on account of hazardous beach conditions only when caused by hotel keeper’s 30, 2008). failure to warn and when hazardous condition not known to or would not have been State and county do have duty to warn of “extremely dangerous” natural ocean known to reasonably prudent guest. Hotel keeper owes no duty to non-guest for beach conditions, but only for those waters adjacent to public beach parks. (1996 Haw. Sess. conditions not created by hotel. (486K-5.5). Signs warning of dangerous current are Laws Act 190, 109 Hawaii 198, 124 P.3d 943). presumed to be legally adequate warning of dangerous condition. (663-10.5). Informed Consent.—Physicians have obligation to obtain informed consent of pa- DECLARATORY JUDGMENTS: tients prior to administering diagnostic, therapeutic, and treatment procedures. Rendering See topic Judgments. of professional medical services without informed consent is tort. (671-1[2]). Information provided must include: (1) Condition to be treated; (2) description of proposed treatment DEPOSITIONS AND DISCOVERY: or procedure; (3) intended and anticipated results; (4) recognized alternative treatments or procedures, including non-treatment; (5) recognized serious possible risks, compli- Hawaii generally follows Federal Rules, including revisions based on 2000 Amend- cations, and anticipated benefits involved in proposed treatment or procedure, as well as ments. See topic Practice. recognized alternative forms of treatment, including non-treatment. (671-3; 98 Haw. 470, Within State for Use Within State.—Generally, HRCP 30. Perpetuation of testimony 50 P.3d 946). of witness before action may be obtained by verified petition to Circuit Court or by civil Aircraft.—Uniform Aeronautics Act adopted (as modified). (c. 263). Owners and action. (624-41; HRCP 27 [a][1]; HRCP 27 [a][4] and [c]). Peer review activities of lessees of aircraft operated for commercial purposes are absolutely liable, jointly and Health Maintenance Organizations, Preferred Provider Organizations and Preferred Pro- severally, for injuries caused on land or water by ascent, descent, or flights, or objects vider Networks are protected from discovery. (624-25.5). falling therefrom unless injury caused in whole or part by negligence of person injured. Outside of State for Use Within State.—Evidence of witnesses living in another state Injured person has lien on aircraft causing damage. (263-5). may be obtained on application to any court of record. (624-24.5). Commission issues Condemnation.—Haw. Const. Art. I, §20 on just compensation includes property to officer (usually notary public) who is to take deposition, under oath, either on oral damaged as well as property taken for public use. In fixing value of compensation, deposition or written interrogatories as set forth in commission. property will be assessed with improvements unless separately owned, in which case Compelling Attendance of Witnesses Within State.—Resident of state may be com- assessment and compensation will be separate. Severance damages accrue to portion of pelled to give his deposition only in county wherein he resides or is employed or parcel not condemned, but only to extent in excess of special benefit of proposed transacts his business in person. Nonresident subpoenaed within state may be compelled improvement. In condemnation for widening or realigning existing roads, special benefits to give his deposition only in county wherein he is served with subpoena. Residents and will be considered only as offset against severance damages and not against value of nonresidents may be compelled to give depositions at such other convenient place as portion taken. (101-23). fixed by order of court. (HRCP 45[d]). Circuit court may also compel witness within state Alcoholic Beverages.—Any person 21 years or older who sells, furnishes or provides to give his deposition upon commission to take testimony within state which has been alcoholic beverages to person under age of 21 years or owns, occupies, or controls issued by court of another state. (624-27). premises on which alcoholic beverages are consumed by any person under 21 years of Depositions to Be Used in Foreign Jurisdictions.—Testimony of witness and pro- age, who knows of alcohol consumption by any person under 21 years of age, and who duction of books and papers within state to be used in action outside of state may be could reasonably have prevented such consumption shall be liable for all injuries or taken when commission to take such testimony has been issued from foreign court, and damages caused by such person under 21 years of age. (663A). notice has been given to take such testimony pursuant to laws of foreign jurisdiction. On Cybersquatting Act.—Provides for civil action to recover against persons who, in bad presentation of verified petition, local court orders issuance of subpoena to witness to faith, register domain names on Internet. (4818-22). Treble damages and attorneys’ fees appear before commissioner named in commission at time and place specified in sub- available. (4818-25). poena. If such witness fails to obey subpoena or refuses to testify, or to produce books or papers pursuant to subpoena or to subscribe to his deposition, court shall, if it is False Claims Act.—Provides for qui tam (action to recover) actions to recover against determined that contempt has been committed, prescribe punishment as in case of persons who submit fraudulent claims for payment by state. (661-21 to 661-29). Quitam recalcitrant witness in court of record in territory and make other additional orders as (action to recover) actions to recover against persons who submit fraudulent claims for would be proper in such case. (624-27). Officer or commissioner before whom witness payment by county. (46-171). appears, takes down his testimony in writing and annexes thereto copies of all books and No-Fault Insurance.—See category Transportation, topic Motor Vehicles. papers produced and then certifies to correctness of statements and testimony and trans- Attorneys’ Fees.—May be recoverable as damages where wrongful act of defendant mits it to court in which action is pending. (624-28). has involved plaintiff in litigation with others or placed him in such relation with others Uniform Foreign Depositions Act has not been adopted. as to make it necessary to incur expenses to protect his interest. (57 Haw. 102, 551 P.2d Examination of Witnesses.—Rules of Court allow broad use prior to trial under rules 171). May be recoverable as sanction against opposing party for abusive litigation relating to discovery. See topic Practice. practices upon showing of bad faith. (85 Haw. 238, 942 P.2d 502). Assumpsit statute (607-14); civil actions (607-14.5); tort actions (607-15.5); taxing costs on appeal (607- EQUITY: 16); promissory notes (607-14). See topic Actions. Drug Dealers.—Providing civil remedies for damages to persons in community in- jured as result of illegal drug use. Parents, employers, insurers, persons in utero at time of drug use, and government entities have standing to sue. Recovered drug users also EVIDENCE: have standing but are subject to Hawaii’s comparative negligence regime (to recover, Hawaii Rules of Evidence (HRE) parallel Federal Rules of Evidence (FRE) with some users responsibility may not be greater than dealers). Drug dealers are liable under distinctions. See topic Depositions and Discovery; and subhead Witnesses, infra. Hawaii’s modified market theory of product liability, which holds that plaintiff must Witnesses.—See HRE, Art. VI, Rules 601-616. (c. 626). Parties and interested persons prove dealer provided at least one product to plaintiff’s area during period when plaintiff may testify. Every person generally competent to be witness where he has personal obtained product. Dealers are presumed to have provided 100% of product supplied to knowledge of matter. HRE modeled after FRE. Impeachment by evidence of conviction plaintiff’s area unless they can prove otherwise. Dealers may implead additional dealers. of crime differs markedly from FRE 609. (HRE 609). HRE 609 places greater restrictions (663E1-13). Hawaii has adopted Model Drug Dealer Liability Act (modified). than FRE609 on use of conviction to impeach. Sovereign Immunity.—State has waived immunity from torts of its employees and is Privileged Communications.—See HRE Art. V, Rules 501-513. (c. 626). HRE recog- liable therefor to the same extent as a private individual but is not liable for interest prior nize lawyer-client privilege, physician-patient privilege, psychologist-client privilege, to judgment nor for punitive damages. (662-2). Attorney General may compromise or spousal privilege, political vote privilege, clergyman privilege, trade secret privilege, settle claims cognizable under c. 662. (662-11). Attorney General may also defend civil privilege against self-incrimination, informer privilege and victim-counselor privilege actions brought against health care providers under contract with Department of Public (defined, 505.5). Safety for acts or omissions within contract’s scope of work. (662-16). Comptroller may Physician/Patient and Psychologist/Patient Privilege.—There is no such privilege if compromise or settle tort claims involving state owned vehicles. (41D-3). District and services of physician or psychologist were sought to enable anyone to commit what client circuits courts have jurisdiction and actions must be commenced within two years. knew or reasonably should have known to be tort or crime; or to communication, (662-3, -4). Court may, with consent of all parties, order jury trial. (662-5). Court costs effecting client’s intent to commit tortious or criminal act that physician or psychologist and attorneys’ fees may be allowed to prevailing party. (662-9, 12). reasonably believes is likely to lead to death or substantial bodily harm. (HRE 504[d][5] State has also waived immunity for breach of trust or fiduciary duty relating to and [6]). management and disposition of funds of Hawaiian home lands trust and native Hawaiian Husband and wife may testify against each other, but cannot be compelled to testify public trust. (673-1). Two-year statute of limitation tolled until July 1, 1990. (673-10). against each other in criminal case. Court costs and attorneys’ fees may be awarded to prevailing party. (673-5). Communications or Transactions with Persons Since Deceased or Incompetent.— Sovereign immunity may not be invoked by State if suit against State is for prospective Everybody is competent to be witness. (HRE 601). In wrongful death actions, statement injunctive relief and State fails to carry its burden of proving that State treasury will be by deceased, offered against plaintiff in action for wrongful death of that deceased, is not directly impacted. (110 Hawaii 338, 133 P.3d 767). excluded by hearsay rule. (HRE 803[a][3]). Statement made by declarant under belief of Joint and several liability is generally abolished against state entities, unless claim impending death is not excluded by hearsay rule if declarant is unavailable as witness. relates to maintenance and design of highways. (663-10.5, am’d 2006 Haw. Sess. Laws (HRE 804[b][2]). Act 112). Self-incrimination.—Privilege recognized against self-incrimination to extent granted Any decision by State officials or entities regarding selection or application of flex- by state (Haw. Const., Art. 1, §10) or federal constitution (U.S. Const. amend. V; HRE ibility in highway design does not give rise to cause of action. (264-20, am’d 2006 Haw. 509). Sess. Laws Act 70). Compelling Attendance.—See topic Depositions and Discovery. Public land liability signs warning of dangerous natural conditions on improved public Victim/Witness Bill of Rights.—Relating to rights of victims and witnesses in criminal lands are conclusively presumed to be legally adequate warnings if state or county posts proceedings. (c. 801D).

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–14 HAWAII LAW DIGEST CIVIL ACTIONS AND PROCEDURE

EVIDENCE . . . continued and notice of acceptance together with proof of service thereof and thereupon clerk will Authenticity.—Extrinsic evidence of authenticity as condition precedent to admissi- enter judgment. If final judgment obtained by offeree is not more favorable than offer, bility is not required for certified records of regularly conducted activity. (HRE 902 [c. offeree must pay costs incurred after making of offer. (HRCP 68). 626-1]). Docketing.—Filing with clerk of judgment, signed by judge, constitutes entry of Hearsay.—If declarant is unavailable as witness, hearsay rule does not bar admission judgment. No judgment effective until entry. (HRCP 58). of statement offered against party that has proved unavailability of declarant as witness. (HRE 902 [c. 626-1]). Vacation or Modification.— Motion for new trial must be served within ten days after entry of judgment. (HRCP INJUNCTIONS: Rule 59[b]). Affidavits must be served if motion is based on affidavits. (HRCP Rule 59[c]). Court may order new trial on its own initiative within ten days after entry of Hawaii closely follows the Federal Rules. See topic Practice. judgment. (HRCP Rule 59[d]). Both grant or denial of motion is within court’s discretion. Many statutes provide their own injunctive remedies. Check individual topic or statute (57 Haw. 378, 557 P.2d 788). New trial proper where issue not answered (4 Haw. 81), consulted. or where successful party tampered with jury (24 Haw. 193). Misconduct of opposing Jurisdiction.—Circuit courts have jurisdiction to issue temporary and permanent in- counsel is not ground for new trial unless party had objected to that conduct and brought junctions. (603-21.5; 128-29). Injunction pending appeal is writ that appellate court may it to court’s attention. (7 Haw. App. 136, 748 P.2d 816). New trial based on newly issue as necessary or appropriate in aid of its appellate jurisdiction. (602-5; HRCP Rule discovered evidence can be granted if evidence (1) is previously undiscovered even with 62[g]). due diligence, (2) is admissible and credible, and (3) is of such nature as will probably Prerequisites.—No temporary restraining order granted without written or oral notice change outcome. (5 Haw. App. 628, 706 P.2d 1311). to adverse party or that party’s attorney unless irreparable damage will result and Motion to alter or amend judgment must be served within ten days after entry of applicant’s attorney certifies what efforts, if any, have been made to give notice and why judgment. (HRCP 59[e]). no notice should be required. (HRCP Rule 65[b]). No preliminary injunction issued Grounds for relief from judgment or order: (1) Mistake, inadvertence, surprise, or without notice to adverse party. (HRCP Rule 65[a]). excusable neglect; (2) newly discovered evidence which by due diligence could not have Procedure.—Every temporary restraining order granted without notice shall be in- been discovered in time to move for new trial; (3) fraud, misrepresentation or other dorsed with date and hour of issuance; shall be filed forthwith in clerk’s office and misconduct of adverse party; (4) judgment is void; (5) judgment has been satisfied, entered of record; shall define injury and state why it is irreparable and why order was released, or discharged; or (6) any other reason justifying relief. (HRCP 60[b]). granted without notice; and shall expire by its terms within such time after entry, not to Judgment Liens.—Any money judgment or decree of a state court or U.S. District exceed ten days, as court fixes, unless within time so fixed order, for good cause shown, Court for District of Hawaii shall be a lien upon real property when certified copy thereof is extended for like period or unless party against whom order is directed consents that is recorded in bureau of conveyances. (636-3). Such liens do not continue beyond time it may be extended for longer period. Reasons for extension shall be entered of record. period that underlying judgment, order or decree is in force. (636-3, am’d 2006 Haw. In case temporary restraining order is granted without notice, motion for preliminary Sess. Laws Act 155). Any claim of nonconsensual common law lien against private party injunction shall be set down for hearing at earliest possible time and shall take prece- filed with land court and bureau of conveyances must be accompanied by certified order dence over all matters except older matters of same character; when motion comes on from court of competent jurisdiction authorizing filing of lien to be valid. (507D-5). for hearing, party who obtained temporary restraining order shall proceed with appli- Circuit court judgments quieting title to real property to be recorded. (669-8). When cation for preliminary injunction and, if that party does not do so, court shall dissolve obligor for child support becomes delinquent through judicial or administrative process, temporary restraining order. On two days’ notice to party who obtained temporary lien arises on his/her real and personal property. (576D-10.5). restraining order, without notice or on such shorter notice to that party as court may Revival.—Death of plaintiff or defendant or dissolution of corporate plaintiff or de- prescribe, adverse party may appear and move its dissolution or modification and, in that fendant shall not cause action to abate, but it may be continued upon substitution of event, court shall proceed to hear and determine such motion as expeditiously as ends proper parties. (634-61). Motion for substitution may be made by any party or by of justice require. (HRCP Rule 65[b]). successors or representatives of deceased party. (HRCP 25[a]). Defamation action does Bond.—Court, on granting temporary restraining order or preliminary injunction or at not survive death of defendant. (1 Haw. App. 517, 620 P.2d 771). any time thereafter, may require security or impose such other equitable terms as it deems Assignment.—Judgments are transferable by written assignment. (634-1). Partial as- proper. No such security shall be required of state or county, or officer or agency of state signment of judgment not allowed unless with assent from judgment debtor and such or county. (HRCP Rule 65[c]; Rule 65.1). partial assignment does not change legal title to judgment. (27 Haw. 642). Temporary Injunction.—Test for temporary injunctive relief is three-fold: (1) Satisfaction.—When judgment is fully paid, creditor or his attorney shall execute, Whether plaintiff is likely to prevail on merits; (2) whether balance of irreparable damage acknowledge, and deliver to debtor satisfaction thereof. Every satisfaction shall contain favors issuance of temporary injunction, and (3) whether public interest supports granting reference to book and page or document number of registration of original judgment. injunction. (59 Haw. 156, 577 P.2d 1116). (636-3). JUDGMENTS: Form: Satisfaction of Judgment.—See end of this Digest. Hawaii closely follows the Federal Rules. See topic Practice. Actions.—No action after ten years from date judgment or decree rendered. (657-5). Extension may be granted with notice and filing of non-hearing motion. (657-5). In any Judgments by Confession.—Confession of judgment prohibited in certain instances. action brought on prior judgment, if complaint fails to credit prior payments on judgment, 373-11(9), relating to employment agencies; 425E-405, relating to powers of general defendant entitled to offset against true balance due on judgment amount double amount partners; 476-15, relating to credit sales; 481C-2, relating to door-to-door sales; 521-34, of any such credit in addition to any other penalties by law unless plaintiff shows relating to residential rental agreements. existence or amount of bona fide dispute or good faith mistake. (636-5). Judgment by Consent.—Final judgment entered before complaint has been filed in Foreign Judgments.—Valid judgments of another state are entitled to full faith and monopoly/restraint of trade action is prima facie evidence in any action brought by credit in Hawaii. (7 Haw. App. 238, 752 P.2d 106). Copy of any exemplified foreign another party under c. 480; excepted are consent judgments entered into before state files judgment may be filed in office of court clerk. Clerk shall treat foreign judgment in same complaint. (480-22; see HRCP 81[b][12]). manner as judgment of court of this State. Judgment so filed has same effect and is Judgment on Pleadings.—(HRCP 12[c]). subject to same effect and is subject to same procedures, defenses, and proceedings for Child Support Judgments.—There is presumption that child support judgments are reopening, vacating, or staying as judgment of court of this State. (636C-3). discharged on child’s 33rd birthday. (657-5.5). Uniform Enforcement of Foreign Judgments Act adopted in Hawaii. (c. 636C). Summary Judgments.—(HRCP 56). Absent local rule to contrary, party need not Copy of exemplified foreign judgment filed in office of clerk of appropriate court with affirmatively oppose motion for summary judgment that fails to show that prima facie: $100 filing fee and affidavit setting forth name and last known post office address of (1) Facts foreclose genuine issues of material fact; (2) moving party is entitled to judgment debtor and judgment creditor will have same effect as judgment of court of this judgment as matter of law. (110 Hawaii 1, 129 P.3d 504). Failure to oppose motion for state. summary judgment does not constitute waiver of right to appeal court’s ruling on motion. Post-Judgment Interest.—If judgment for money is affirmed on appeal, interest will (110 Hawaii 1, 129 P.3d 504). generally accrue from date of original judgment. (HRAP 37). More specific statute Declaratory Judgments.—In case of actual controversy or imminent and inevitable allowing for interest from date of judgment on appeal prevails over general appellate rule. litigation, antagonistic claims may be adjudicated by circuit court even though general (662-8, 110 Hawaii 269, 132 P.3d 378). common law remedy or equitable, extraordinary legal, or other such remedy may be available. Exception to this where statute provides special form of remedy for specific LIMITATION OF ACTIONS: type of case such that statutory remedy must be followed. Declaratory judgment will not Actions must be brought within the following periods after the respective causes of be permitted in tax controversies or in cases of divorce or annulment. (632-1). Interested action accrue: person may obtain judicial declaration of validity of administrative agency rule by action against agency in circuit court in which petitioner resides or has principal place of No Time Limit.—Prosecution for murder. (701-108[1]). business. (91-7). Twenty Years.—To recover possession of real property. (657-31). Default Judgments.—When party fails to plead or defend, clerk may enter default Ten Years.—To recover on judgment of court of record. (657-5). judgment for sum certain and costs; court may enter in all other instances. (HRCP 55). Six Years.—For recovery of debt founded on contract, obligation, or liability, except Upon application for judgment by default: (1) If taking of evidence is required or ordered on judgment of domestic court of record; excepting further that actions for recovery of and matter is one which would have been tried before jury had there been no default, any debt founded upon any contract, obligation, or liability made pursuant to c. 577A court in its discretion may order trial without jury; (2) if defendant served by publication shall be governed by c. 577A relating to legal capacity of minors regarding medical care; has not appeared, court shall require proof to be made of allegations in complaint. on judgments or decrees of foreign courts of record and domestic nonrecord courts; for (636-15). taking, detaining, or injuring any goods or chattels, including replevin; personal actions Offer of Judgment.—At any time more than ten days before trial begins, party may of any nature whatsoever not specifically covered by laws of state (657-1) (judicially serve upon adverse party offer to allow judgment to be taken against him with costs then construed to include legal malpractice); on contract for compensation for loss, damage, accrued. If offer is accepted within ten days after service, either party may then file offer deprivation of land, estate, or interest therein caused by fraud, error, omission, mistake,

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–15 CIVIL ACTIONS AND PROCEDURE MARTINDALE-HUBBELL LAW DIGEST - 2007

LIMITATION OF ACTIONS . . . continued Pleading.—Statute of limitations must be specially pleaded. (22 Haw. 655). Defense or misdescription in certificate of title to registered land or entry of memorandum of statute of limitation is personal privilege which party may exercise or waive; court covering registered land (501-217); prosecution for Class A felony (701-108[2][b]). cannot exercise privilege for party. (22 Haw. 721). Five Years.—To prove will, computed from testator’s death. (560:3-108). PARTITION: Four Years.—For breach of contract for sale of goods (490:2-725); for recovery of debt founded on contract, obligation, or liability arising in foreign jurisdiction, or on Jurisdiction and Venue.—Circuit courts have jurisdiction. (603-21.7). judgments or decrees rendered in foreign nonrecord courts (657-6); to collect delinquent Proceedings.—All persons interested must be made parties to suit. (668-2). contribution to unemployment compensation fund, computed from last day of last month Partition in Kind or Sale.—Where partition in kind impracticable or greatly preju- of quarter when due (383-71); actions under antitrust act (480-24); actions under Drug dicial, judge may order sale of premises and divide proceeds. (668-7). Dealer Liability Act (tolled during pendency of criminal investigation). (663E-11). Three Years.—Determination of paternity, computed from birth of child (584-6); PLEADING: prosecution for any felony other than Class A (701-108[2][c]). Offenses involving fraud HRCP, substantially identical to FRCP, took effect on June 14, 1954. Rules have force or breach of fiduciary within three years after discovery of offense, but no more than six and effect of law. (Haw. Const. Art. V, §6). Hawaii Rules govern only the procedure in years from expiration of normal limitation period. (701-108[3][a]). the circuit courts in all suits of civil nature, whether at law or in equity, except those set Two Years.—For libel or slander (657-4); for compensation of damages to person or forth in HRCP 81. (HRCP 1). Distinction between law and equity has been abolished and property (657-7); for personal injury or damage to property resulting from improvements the common law system of pleading no longer prevails. See topic Practice. Hawaii to real property (657-8); for wrongful death (663-3); to annul marriage for physical Probate Rules adopted Mar. 1, 1995 give procedure before Circuit Courts in all probate, incapacity (580-28); for tort action against State of Hawaii (662-4) (judicially construed guardianship of property, trust, legal representation for no fault benefits, and determi- to include tort action against counties); for action against state founded on contract, state nation of death proceedings. statute, regulation of state executive department, or any contract and all claims referred Affirmative Defenses.—(HRCP 8[c]). Defense is not affirmative if it merely negates to courts by legislature (661-5); for parking tickets or misdemeanor (701-108[2][d]); for element of plaintiff’s prima facie case and is therefore not waived by failure to plead it action under horizontal property regime statute (514A-50); for recoveries authorized by as such in defendant’s answer. (109 Hawaii 198, 124 P.3d 943). federal statute which does not specify period in which suit must be brought (657-11). Proof of Claims.—Treated under Uniform Enforcement of Foreign Judgments Act, c. Causes of action for negligent injury to person or property accrue when injured party 636C. ‘‘Foreign judgment’’ includes any judgment, decree, or order of court of U.S. or knew or in exercise of reasonable care should have discovered that an actionable wrong of other court entitled to full faith and credit. Copy of exemplified foreign judgment must has been committed. (50 Haw. 150, 433 P.2d 220; 50 Haw. 397, 441 P.2d 636). be filed in office of clerk of appropriate Hawaii court. Judgment will have same effect Medical Malpractice.—Suits must be brought within two years after injured discovers and is subject to same procedures, defenses, and proceedings as judgment of court of injury or through reasonable diligence should have discovered injury, but not more than Hawaii. (636C-3). At time of filing, judgment creditor or creditor’s lawyer must file with six years after date of alleged act. (657-7.3). Filing claim with medical claim conciliation clerk of court affidavit including name and last known addresses of judgment debtor and panel tolls statute of limitations until 60 days after decision by panel is mailed, but tolling judgment creditor. Clerk must mail notice of filing to debtor and must note mailing in or alternative dispute resolution process cannot exceed 12 months. (671-18). docket. Judgment creditor may mail notice of filing to debtor and may file proof of One Year.—To contest land registration decree (501-71); prosecution for petty mis- mailing with clerk. Failure by clerk to mail notice of filing will not affect enforcement demeanor (701-108[2][e]); to recover gifts received by legislator or legislative employee if proof of mailing by creditor has been filed. (636C-4). Cost of filing foreign judgment in violation of state code of ethics (84-19). is $100. Fees for docketing, transcription, or other enforcement proceedings will be provided by law for judgments of court of Hawaii. (636C-6). Right of judgment creditor Six Months.—Claims against counties. (46-72). to bring action to enforce judgment is independent of this chapter. Four Months.—Claims against decedent’s estate which arose before death of decedent Note: New Hawaii Probate Rules took effect on Mar. 1, 1995. Hawaii Probate Rules (statute of limitations is 18 months if notice to creditor not given) (560:3-803); claims govern procedure in state circuit courts for all Probate, Guardianship of Property, Trust, against decedent’s estate which arose at or after death of decedent (including claims Determination of Death, and No Fault Legal Representative Proceedings. As of Mar. 1, which are absolute, contingent, liquidated, or unliquidated, founded in tort or contract) 1995, RCCH no longer apply to cases within categories mentioned above, unless RCCH (560:3-803). are specifically incorporated by reference in Hawaii Probate Rules. Ninety Days.—Claims against employer under Whistle Blowers’ Protection Act. Small Claims.—See category Courts and Legislature, topic Courts. Uniform Commercial Code adopted. See category Business Regulation and Com- PRACTICE: merce, topic Commercial Code. Rules.—Hawaii Court Rules cited herein as follows: Hawaii Rules of Civil Procedure New Actions.—Claim asserted after statute of limitations has run will not be barred (HRCP); Hawaii Rules of Penal Procedure (HRPP); Hawaii Rules of Evidence (c. 626) if it arose out of timely pleaded factual situation. (HRCP 15[c], 52 Haw. 563, 481 P.2d (HRE); Hawaii Rules of Appellate Procedure (HRAP); Rules of the Supreme Court of 310). the State of Hawaii (RSCH); Rules of the Intermediate Court of Appeals of the State of Foreign Causes of Action.—Action barred by laws of place where cause of action Hawaii (RICAH); Rules of the Tax Appeals Court of the State of Hawaii (RTACH); Rules arose cannot be maintained, except in favor of a resident of Hawaii who has held the of the Circuit Courts of the State of Hawaii (RCCH); Hawaii Probate Rules (HPR); claim since it accrued. (657-9). District Court Rules of Civil Procedure (DCRCP); Rules of the District Courts of the Disabilities of Plaintiff.—Persons who are insane, imprisoned under a sentence less State of Hawaii (RDCH); Hawaii Family Court Rules (HFCR); Rules of the Land Court than life, or minors when a cause of action accrued to them may, after disability is (HLCR). removed, bring an action within period specified for such action under c. 657 pertaining Common law system in force, except as altered by statute, Hawaiian judicial precedent to limitation of actions. or Hawaiian usage. (1-1). Distinction between law and equity abolished. Rules of court closely follow Federal Rules of Civil Procedure as amended. Note that rule making Death of Plaintiff.—Statute of limitation which was running on cause of action power of Supreme Court is constitutionally derived (Haw. Const. Art. V, §6); any belonging to decedent, which was not barred as of date of death, will not bar action less legislation in area of process, practice, procedure and appeals may be superseded by new than four months after death. (560:3-109). court rules or by amendments to existing rules. (See, e.g., category Legal Profession, Actions by or on Behalf of State.—No statute of limitations can bar any action by topic Attorneys and Counselors.) Right to jury trial attaches if: (1) Maximum authorized or on behalf of state and its agencies, unless state is specifically designated in those term of imprisonment exceeds six months; or (2) for individuals, maximum authorized statutes as subject to limitation period. (657-1.5). monetary penalty exceeds $5,000. When organization is charged, maximum authorized penalty may be higher before jury trial right attaches. (77 Haw. 162, 883 P.2d 83). Absence, Concealment or Disability of Defendant.—If a cause of action accrues against a person who is absent from state or leaves after its accrual (657-18), or if suit Jury Verdicts.—Verdict sufficient if at least 5⁄6 of jurors agree. (635-20). Parties may on an accrued cause of action is stayed by injunction (657-19), period of absence or time stipulate that jury shall consist of any number less than 12 or that verdict or finding of injunction is effective is not deemed any part of time limited for commencement of an stated majority of jurors shall be taken as verdict or finding of jury. (HRCP 48). action. Direct Actions Against Insurer.—See category Transportation, topic Motor Vehicles, If a wrongdoer fraudulently conceals a cause of action from knowledge of person subhead Direct Actions Against Insurer. entitled to it, action may be commenced within six years after cause of action is Small Claims.—See category Courts and Legislature, topic Courts. discovered. (657-20). See also topics Actions, Appeal and Error, Depositions and Discovery, Injunctions, Death of Defendant.—If wrongdoer dies before wrongful death or survival action is Judgments, Pleading, Process; category Debtor and Creditor, topics Attachment, Execu- brought against him, suit against his legal representative must be brought within two tions, Garnishment. years after date of plaintiff’s injury or death. (663-6). Interruption of Statutory Period.—No statutory provision allows for circumstance, PROCESS: occurring before statutory period has run, to change date from which statute runs. Civil action commenced by filing complaint with court. Hawaii closely follows Federal Rules, HRCP 3, 4. See topic Practice. Revival of Barred Claims.—To remove bar of statute for debt, it is necessary to show either unconditional promise to pay debt, clear and unqualified acknowledgment of debt General Requisites.—HRCP 7-10 set out general requisites of complaint. from which promise to pay is to be implied, or conditional promise to pay and fulfillment By Whom Issued.—Upon filing of complaint, clerk of court will issue summons. of condition. (23 Haw. 696). Effect of new promise is to revive remedy upon original Plaintiff shall deliver it for service to person authorized to serve process. At request of obligation and to start statute of limitations anew. (57 Haw. 429, 558 P.2d 479). Burden plaintiff, separate or additional summons will be issued against any defendants. (HRCP is on plaintiff to prove, by preponderance of evidence, promise sufficient to revive debt 4[a]). otherwise barred by statute of limitations. (11 Haw. 706). Who May Serve.—Within state, service of process issued by court of record must be Contractual Limitations.—Parties to contract of sale may prescribe limitation period made by sheriff or deputy, by other person specially appointed by court, investigator not less than one year but may not extend it beyond four years. (490:2-725). Parties to appointed by director of Commerce and Consumer Affairs, or by any person at least 18 other contracts may stipulate time for action if reasonable. (23 Haw. 160). years old who is not party to suit. Within particular county, chief of police or chief’s

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PROCESS . . . continued denced by affidavit showing that required papers were sent by registered or certified mail, authorized subordinate may serve. (634-21; HRCP 4). Service of process may be made and by receipt signed by defendant. (634-24). When personal service is made out of state, by parties themselves in small claims matters. (633-28[a][1]). Service of process outside return of court officer, or affidavit of any other person authorized or appointed by court of state, see subhead Long Arm Statute, infra. will evidence service. (634-24). Personal Service on Individual.—Summons and complaint served together. Service Nonresident Motorist.—See category Transportation, topic Motor Vehicles. may be made by delivering copy of summons and complaint to individual personally, or if party cannot be found, by leaving copies at home with some person of suitable age REPLEVIN: and discretion who resides there, or by delivering copies to agent authorized by ap- Proceedings.—Plaintiff in replevin may procure immediate delivery of property by pointment or law to receive service of process. (HRCP 4[d][1]). filing with complaint affidavit alleging that he is entitled to possession of property, that Personal Service on Infant.—Service of process made by delivering copy of sum- property is unlawfully detained, that it has not been taken for taxes or under execution mons and complaint personally to: (A) Guardian of infant’s property, or if service cannot (or if so seized that it is exempt) and giving value and description. (654-1). Plaintiff must be made to guardian, then as provided by court order; or (B) infant, if infant is at least furnish bond to defendant in amount and with sureties approved by court. (654-2). 16 years old. (HRCP 4[d][2]). Property will then be seized by sheriff and delivered to plaintiff pending trial. (654-3). Personal Service on Incompetent Person.—Service of process made by delivering Repossession.—On filing redelivery bond by defendant property will be returned to copy of summons and complaint to: (A) Guardian of person’s property, or if living in him pending trial. (654-5). institution, then to director, or if service cannot be made to either, then as provided by Claims by Third Persons.—Person not plaintiff or defendant may procure delivery court order, and (B) unless court otherwise orders, also to incompetent person. (HRCP of property by complying with provisions applicable to plaintiff. (654-5). 4[d][2]). Judgment or Order.—Judgment determines party entitled to possession and damages Personal Service on Partnership.—Service made by delivery of copy of summons may be awarded for detention of property. (654-7). and complaint to officer, managing or general agent, or to any other agent authorized by appointment or law to receive service of process and, when appropriate by statute, by Interpleader.—See category Debtor and Creditor, topic Executions. mailing copy to defendant. (HRCP 4[d][3]). No statutory provision expressly addressing service of process upon partnership. See subhead Personal Service on Association, infra. SEQUESTRATION: Personal Service on Domestic Corporation.—Service of process may be made upon No general statutory provision. Circuit judge may sequester property of spouse against registered agent, officer, or director of corporation found within jurisdiction of court, whom decree of divorce or annulment has been rendered to provide maintenance for wife officer, or board; or if none listed above can be found, then upon manager or superin- and children. (580-12; HFCR 70). tendent of corporation or any person found in charge of property, business, or office of For seizure of person or property to secure satisfaction of judgment, see HRCP 64. corporation within jurisdiction. If no officer, director, manager, superintendent, or other Hawaii law provides for sequestration of real property. Notice must be given in person in charge of property, business, or office or corporation can be found within newspaper suitable for advertising judicial proceedings, and premise must be posted by Hawaii, service may be made upon corporation by registered or certified mail, return officer serving writ. (634-29). receipt requested, addressed to secretary of corporation at its principal office. (415-64). In actions of desertion and willful neglect, court may order sequestration from third See subhead Personal Service on Partnership, supra. parties of money for support of spouse or child. (575-2). Personal Service on Association.—When two or more persons associate and act SERVICE: under common name, including labor or employer organizations, they may sue or be sued in common name and service of process may be made on officer, trustee, or agent of See topic Process. association, or if none can be found, upon one or more members. (634-30; HRCP 4[d][3]). Where association or its members are nonresidents, transaction of business STAY OF EXECUTION: within state subjects nonresident association and its members to state jurisdiction. Service See topic Appeal and Error; also category Debtor and Creditor, topic Executions. may be made by registered mail to association at last known address and by filing affidavit with court or state agency where action is pending. Filing deemed service 20 SUBMISSION OF CONTROVERSY: days after filing. (634-35 to 36). See subheads Personal Service on Partnership, supra and Any bona fide controversy may be submitted to the Supreme Court for decision upon Personal Service Outside State, infra. agreed statement of facts. Case may be assigned to either Supreme Court or Intermediate Personal Service on Joint Stock Company.—No statutory provision expressly ad- Appellate Court; or assigning judge may require submission to lower court, subject to dressing service of process on joint stock company. See subhead Personal Service on subsequent appeal. (HRAP 14). See topic Appeal and Error. Partnership, supra. VENUE: Personal Service on Foreign Corporation.—Generally same statutory provision gov- erning service on domestic corporations controls foreign corporations. Where foreign Except as noted, actions involving title or possession of real property must be brought corporation has not complied with law relating to registration, service may be made by in judicial circuit in which property is located, and other actions must be brought in registered or certified mail, return receipt requested, addressed to secretary of corporation judicial circuit in which claim for relief arose or where majority of defendants reside. at principal office. (415-14). See subhead Personal Service on Domestic Corporation, (603-36; 666-6). supra. Against Insurer Under Policy.—Venue is in judicial circuit in which aggrieved Personal Service Outside State.—Any person who personally, or through agent person resides or has his principal place of business if purchaser purchased policy within transacts any business within Hawaii or commits any tortious act within state (judicially state. (431:10-241). construed as injury occurring within state as proximate consequence of tortious conduct Change of Venue.—In circuit court, if court, after hearing, determines that fair and in another state) (56 Haw. 306, 536 P.2d 568) or owns, uses, or possesses real property impartial trial cannot be had, or it is more fair and equitable to parties to change venue in Hawaii or contracts to insure any person, property, or risk within state may be or all parties consent, venue may be changed as court orders. Court must, if venue is personally served by service of certified copy of complaint out of Hawaii by authorized improper, either transfer it to court with proper venue or dismiss case. (603-37, 37.5). process server in state where service is made. (634-35, 36). Changes of venue in District Court may be ordered if, upon hearing, court determines Service by Mail.—See subheads Personal Service on Domestic Corporation, Personal that it will be more fair and equitable to parties to change venue or if all parties consent. Service on Association, Personal Service on Foreign Corporation, supra and Long Arm (604-7.3). If venue is improper, court must transfer case or dismiss it. (604-7.4). Statute, infra. District Court.—Venue is in district in which majority of defendants reside or claim Substituted Service.—In cases where writ of attachment is issued, if it appears by for relief arose. (604-7). affidavit or otherwise to judge’s satisfaction that defendant in attachment was never Forum Non Conveniens.—Generally applies only where court has both subject matter resident of state, or has left state, or that defendant has secreted so that process cannot and personal jurisdiction and venue is proper. Therefore forum non conveniens is not be personally served, judge may order service by publication or by registered or certified defense of “improper venue” within meaning of 12(h)(1) and is not waived by failure mail, return receipt requested. If defendant does not appear at trial, court may proceed to raise it in pleadings. (109 Hawaii 137, 123 P.3d 1232). For doctrine to apply, alter- to hearing and judgment, and may issue execution upon attached property. (634-27). native forum must exist; requires that all defendants be amenable to service of process Service by publication may be made if defendant is unknown or does not reside in foreign forum. (109 Hawaii 137, 123 P.3d 1232). within Hawaii or, after due diligence, service cannot be made within Hawaii. Above facts Paternity.—Venue is in county in which child, mother or putative father resides or is must appear by affidavit to satisfaction of court that service cannot be provided as found or in which child is born, or if father is deceased, where his estate was or may specified in subheads Personal Service Outside of State, supra and Long Arm Statute, be probated. (584-8). infra. Publication must be made in at least one newspaper published in Hawaii and Penalty or Forfeiture.—Venue is in judicial circuit in which penalty or forfeiture having general circulation in circuit in which action or proceeding has been instituted for occurred. (603-36). period of not less than once each week for four successive weeks. Last publication must not be less than 21 days before date fixed for trial. (634-23). Probate.—Venue is in judicial circuit in which decedent had his domicile or owned real property at his death, or, if nondomicillary, in judicial circuit in which any property Long Arm Statute.—See subhead Personal Service Outside State, supra. Statute also was located at death. (560:3-201). If proceedings are commenced in more than one court, allows for service of summons sent by certified, registered, or express mail, postage court where proceedings were first brought hears matter of venue. Other courts hold in prepaid, return receipt requested. If defendant cannot be found to serve or mail summons, abeyance until question of venue is decided. (560:1-303). and facts appear by affidavit or otherwise to satisfaction of court, service by publication is permitted. (634-36). See subhead Service by Publication, supra. Restraint of Trade, Monopolies.—Venue is in circuit in which defendant resides or engages in business or has agent. (480-21). Proof of Service.—In cases where service is made by officer of court, police, sheriff, or appointed investigator, record of service must be endorsed upon back of process in Small Claims.—Venue is in circuit in which claim arises or majority of defendants form specified by statute. When service is made by any person specially appointed by reside or in which all defendants may be served. (633-27[b]). court, person must make affidavit of service. (634-22). Proof of service must be made State Ferry System.—Venue is in first judicial circuit or circuit in which aggrieved to court promptly. (HRCP 4[g]). When service is made by mail, service must be evi- person resides. (268-15).

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VENUE . . . continued provided in 604-7.3 and 604-7.4; district courts are courts of record (604-17) from which Trusts.—Venue is in place of registration for registered trusts; for unregistered trusts appeal may be had to Supreme Court or intermediate appellate court, subject to reas- venue is in any place trust could have been registered (principal place of administration, signment provisions set out in subsections 602-5(8) and 602-5(9) (641-1[a]). District or if only land is in trust, place where land is located). (560:7-202, 7-101). court judges are appointed by Chief Justice of Supreme Court with approval of Senate. Unauthorized Practice of Law.—Venue is in circuit in which alleged violation oc- Small Claims Division of District Court.—Small claims procedure may be elected curred. (605-15). where matter in controversy does not exceed $3,500 as well as cases involving landlord- tenant disagreements where equitable relief can be granted for orders to repair, replace, Writs to Courts, Quo Warranto.—Venue is in circuit in which occasion for relief refund, reform and rescind. (633-27). Small Claims Division retains jurisdiction, how- arose. (603-36). ever, if counterclaim is asserted placing amount in controversy beyond $3,500 limit. See also category Courts and Legislature, topic Courts. Class actions are prohibited. (633-27[d]). Actions in small claims division must be brought in circuit where majority of defendants reside or claim arose or may be brought WITNESSES: in any circuit in which all defendants can be served if service on all cannot be made See topic Evidence, subhead Witnesses. where venue would normally be proper. (633-27[b]). Service is by registered mail, certified mail with return receipt showing delivery within circuit, or as otherwise pro- vided by law or rule of district court; with approval of court, any person may appear on COURTS AND LEGISLATURE behalf of another; there is no appeal from small claims division. (633-28). Service may be made by parties themselves. (633-28). Fee for issuing summons, and copies, trial, COURTS: judgment and satisfaction, as prescribed by statute or rule of court; court may waive costs United States District Court.—Clerk’s office: 300 Ala Moana Blvd., Rm C-338, upon suitable showing; but if costs not paid despite ability to do so, court may deny right Honolulu, Hawaii 96850. to file new case while costs unpaid and deny right to proceed in pending case. (633-29). Fee of $150 for costs is required when action is commenced. If counterclaim exceeds $3,500 but is under district court limit ($20,000), jurisdiction is Court sits at Honolulu. retained. (604-5). Where jury trial is of right and demand is made, case shall be trans- Supreme Court of Hawaii.—Supreme Court of Hawaii consists of five judges ap- ferred to circuit court and tried under procedure for jury trials. (633-31). Trials may be pointed by Governor for a term of ten years and confirmed by State Senate. (Haw. Const. conducted as justice requires and judge is not bound by rules of evidence, whether Art. V1, §§2-3). statutory or not, except provisions relating to privileged communications. (633-32). Jurisdiction.—Supreme Court has appellate jurisdiction of all cases reduced to judg- Award of costs in discretion of court. (633-34). ment from inferior courts in state, and it has original jurisdiction to issue prerogative Small Claims Courts.—See subhead District Courts, catchline Small Claims Division writs, and such other writs as may be necessary for execution of its appellate jurisdiction. of District Court, supra. Fee of $100, or motion to proceed in forma pauperis, is required when appeal is filed. Court sits at Honolulu. LEGISLATURE: Intermediate Appellate Court.—Intermediate appellate court (IAC) panel shall con- Meets annually on third Wed. each Jan. limited to a period of 60 working days, which sist of chief judge and five associate judges. (602-51). IAC judges appointed by Governor may be extended for not more than 15 days if approved by two-thirds of membership for term of ten years and confirmed by State Senate. (Art. VI, §3). of each House or if extended by Governor. Special sessions, not to exceed 30 working Jurisdiction.—Intermediate appellate court has jurisdiction, subject to transfer to Ha- days, may be called on vote of two-thirds of members of each House. Governor may call waii Supreme Court (602-58) or review on application for writ of certiorari (602-59), to special sessions of both Houses or of Senate alone. Each regular session shall be recessed hear and determine appeals allowed by law and to make or issue any order or writ for not less than five days at some period between 20th and 40th days of regular session, necessary to aid jurisdiction (602-57, am’d Haw. Sess. Laws Act 145). as determined by concurrent resolution. (Haw. Const., Art. III, §10). All cases addressed to jurisdiction of Supreme Court or intermediate appellate court Initiative and referendum not adopted. shall be filed with Supreme Court as provided by rule of court. (602-5[8]; 607-6). Lobbying and lobbyists defined. (97-1). Court sits at Honolulu. Lobbyists must register with state ethics commission within five days of becoming Circuit Courts.—There are four circuit courts, numbered 1st, 2d, 3d and 5th. (603-1). lobbyist. (97-2). Renewal of registration required biennially within ten days of opening In first circuit (Island of Oahu and all other islands not mentioned), there are 25 judges. of each odd-numbered year’s legislative regular session. (97-2.5). (603-3). Effective July 1, 2002, second circuit (islands of Maui, Molokai, Lanai, Kahoolawe, and Molokini) shall consist of four judges, third circuit (island of Hawaii) REPORTS: shall consist of four judges and fifth circuit (islands of Kauai and Niihau) shall consist Reports of decisions of Supreme Court and intermediate appellate court are published of two judges. (603-4). Judges are appointed by Governor for term of ten years and biennially. Decisions beginning with 44 Hawaii also appear in Pacific Reporter. Reports confirmed by State Senate. (Haw. Const. Art. VI, §3). of intermediate appellate court’s decisions begin May 1980 and also appear in Pacific Jurisdiction.—Circuit courts have jurisdiction over state law criminal offenses com- Reporter. Four volumes of reports of U.S. District Court of Hawaii have been published; mitted within their respective circuits; actions for penalties and forfeitures; civil actions; but none since 1918. Current decisions appear in Federal Supplement. probate; nonjury cases listed in §§603-21.6, 603-21.7 and 603-21.8 (603-21.5); appeals Digest of all Hawaii cases (state and federal) from 1846-date is published. from district court where allowed by statute and from agencies. $5,000 minimum amount Unofficial Reports.—There is Shepard’s Citator of Hawaii Reports and Hawaii Ap- necessary for jury trial of civil controversy. (604-5[b]). Violations of municipal ordi- pellate Reports. nances tried without jury. (51 Haw. 612, 466 P.2d 422). Circuit and district courts share jurisdiction over misdemeanors. They also share jurisdiction over civil cases involving STATUTES: less than $20,000 but greater than $10,000 when tried without jury. (604-5[a]). Family courts, district courts and circuit courts share concurrent jurisdiction for certain criminal Latest official compilation is Hawaii Revised Statutes, 1993 Replacement Volume. offenses involving family members. (604-8[b]). Subsequent statutes and amendments will be published in cumulative pocket part supple- One of judges of 1st circuit court is annually assigned as judge of Land Court, which ments. has jurisdiction to register title to land anywhere in state. (501-2). Uniform Acts promulgated by National Conference of Commissioners on Uniform Each of judicial circuits has district family court. Each circuit has family court di- State Laws which have been adopted are: Aeronautics (c. 263) (1923); Acknowledgment vision. (Senior Judge of family court of circuit may appoint referees in matters of (502-41 to 101) (1909); Anatomical Gift (327-1 to 14) (1987); Arbitration (2001, Act neglected minors, adoptions, custody, crimes, medical treatment, consent to marriage, 265; effective July 1, 2002); Child Custody Jurisdiction (c. 583) (1973); Commercial employment, enlistment, termination of parental rights, etc., over which family court has Code (c. 490) (1967); Common Trust Fund (412:8-402) (1947); Contribution among exclusive original jurisdiction.) (c.571). Tortfeasers (663-11 to 17) (1941); Controlled Substances (c. 329) (1990); Criminal Night Court.—First Circuit has night court that handles nonjury domestic abuse cases Extradition (c. 832) (1941); Custodial Trust (c. 554B) (1989); Deceptive Trade Practices and prostitution related cases. (c. 481A) (1966); Disclaimer of Property Interests Act (2000); Disposition of Community Tax Appeals Court has powers of a circuit court. Court has jurisdiction to hear all Property Rights at Death (510-21 to 30) (1973); Division of Income for Tax Purposes matters relating to assessment, levying and collection of property taxes. (c. 232). (235-21 to 39) (1967); Durable Power of Attorney (c. 551D) (1989); Electronic Trans- District Courts.—District court is established in each of judicial circuits of state with actions (c. 498E) (2000); Enforcement of Foreign Judgments (c. 636C) (1964); Estate at least one full-time district judge appointed for each circuit; sessions are held as deemed Tax Apportionment (c. 236A) (1964); Fiduciaries (c. 556) (1945); Foreign-Money Claims necessary by respective district judges (604-1); civil jurisdiction extends to claims of up (c. 658B) (1990); Fraudulent Transfer (c. 651C) (1985); Guardianship and Protective to $20,000 and is exclusive up to $10,000 for actions triable without jury or where right Proceedings (2004, Act 161); Information Practices (c. 92F) (1988); Interstate Family to jury trial is waived. (604-5[a]). District Court has concurrent jurisdiction with Small Support (c. 576B) (1997); Joint Obligations (c. 483) (1941); Jury Selection and Service Claims Division of District Court hearing any security deposit dispute between landlord (612-1 to 27) (1970); Land Sales Practices (c. 484) (1967); Limited Liability Company and tenant in residential landlord-tenant relationship. Transfer to circuit court may be had (c. 428) (1995); Management of Institutional Funds (c. 517D) (1972); Parentage (c. 584) if party has right to jury trial and makes timely demand and amount in controversy (1973); Partnership (425-101 to 143) (1914); Premarital Agreement (c. 572D) (1987); exceeds $5,000. (604-5[b]). District courts have power to enjoin and temporarily restrain Principal and Income Act (2000); Probate Code (c. 560) (1977); Prudent Investor (c. harassment. (604-10.5; 604-7). District courts share concurrent jurisdiction with circuit 554C) (1997); Rendition of Accused Persons (c. 833) (1971); Residential Landlord and courts over violations of ordinances and misdemeanors under state law. However district Tenant (c. 521) (1972); Rules of Evidence (626-1 to 3) (1974); Securities (c. 485) (1956); courts may not try real actions, nor actions wherein title to real property is in question, Simultaneous Death (c. 534A) (1993); State Administrative Procedure (c. 91) (1961); nor actions for libel, slander, defamation of character, malicious prosecution, false im- Status of Convicted Persons (c. 831) (1969); Statutory Rule Against Perpetuities (c. 525) prisonment, breach of promise of marriage, or seduction, nor may they appoint referees (1992); Testamentary Additions to Trusts (560:2-511) (1991; repealed effective Jan. 1, in any cause (604-5[d]); jurisdiction may be had in ejectment proceedings where title to 1997); To Secure Attendance of Witnesses From Without a State in Criminal Proceedings real estate is not in question (604-6); 604-7 sets out specific powers of district courts, (c. 836) (1936); Trade Secrets (c. 482B) (1989); Transfer-On-Death Security Registration including power to subpoena witnesses from any part of state and compel production of (c. 539) (1998); Transfers to Minors (c. 553A) (1985); Trustees Powers (c. 554A) (1985); books, papers, documents or tangible things and issue garnishee summons throughout Unclaimed Property (c. 523A) (1981); Vendor and Purchaser Risk (508-1) (1941). State; proper venue is generally determined according to residence of majority of de- Uniform Commercial Code enacted, effective Jan. 1, 1967. See category Business fendants or where claim for relief arose (604-7[d]); but venue may be changed as Regulation and Commerce, topic Commercial Code.

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STATUTES . . . continued safety and welfare of victim. (801D-4). Upon request of sexually assaulted victim, For text of Uniform Acts falling within the scope of the Martindale-Hubbell Law defendant is required to be tested for human immunodeficiency virus (HIV). (325-16.5). Digests see Uniform and Model Acts section. Criminal Forfeitures.—Relating to forfeiture of property used in commission of UNIFORM LAWS: crimes. Law enforcement officer may seize: (1) Personal property on probable cause; (2) real property pursuant to warrant following pre-seizure hearing in circuit court. Property For list of Uniform Acts in force in this state see topic Statutes. For text of Uniform forfeited to state may, among other things, be sold at public sale. (c. 712A). State has Acts within the scope of the Martindale-Hubbell Law Digests see Uniform and Model burden of showing that property is subject to forfeiture. Court is allowed to limit scope Acts section. of forfeiture where it is grossly disproportionate to owner’s conduct. (712A-5.5). Holder of immediate reversionary interest has first opportunity to acquire remaining leasehold CRIMINAL LAW interest and improvements on property before sale to public. (712A-16). Registration of Sex Offenders.—Convicted Sex Offenders are required to register BAIL: with attorney general and chief of police of county where sex offender resides. (846E-2). See topic Criminal Law. Sex offender must report to county chief of police every five years to have new pho- tograph taken. (846E-2). Relevant information will be released upon request to public, CRIMINAL LAW: law enforcement, and government agencies conducting background checks. (846E-3). Relevant information includes name, aliases, and other identifying information, current There are no common law crimes in Hawaii. All punishable offenses are defined by and future addresses and telephone numbers, current and future employers, current and statute. (1-1). New penal code enacted in 1972. (cc. 701-712). future educational institutions with which sex offender is affiliated as faculty member, Hate Crimes.—Defendant may be subjected to extended term of punishment if: (1) employee, or student, year, make, model, color, and license number of all vehicles owned Defendant is convicted of crime under cc. 707, 708, or 711, and (2) defendant inten- or operated by sex offender, summary of criminal offenses against minors and sexually tionally selected victim, or in case of property, property that was object of crime, because violent offenses, past or current psychological treatment, U.S. citizenship, and any other of hostility toward actual or perceived race, religion, disability, ethnicity, national origin, identifying information. (846E-2). State required to petition court for order permitting gender identity or expression, or sexual orientation of any person. (706-662). release of sex offender’s relevant information to public. Burden of proof on state to show Computer Crimes.—Criminal penalties for computer fraud, computer damage, and that sex offender is required to register. Criteria provided where duration of release of unauthorized computer access. (cc. 708-890). Criminal penalty for threat to cause damage information shall be for life of sex offender. (846E-3). Sex offenders who are not to computer system. (707-764[1]). Criminal penalty for electronic enticement of child. registered with designated law enforcement agency must respond to address verification (707-757). Forfeiture of property used in computer crimes. (708-894). Jurisdiction over form by mail every 90 days. (846E-5). persons who commit computer crimes by using computer in another jurisdiction to access Medical use of marijuana, in accordance with c. 329, does not violate c. 712. Person computer in Hawaii. (708-895). Five year statute of limitations. using medical marijuana under c. 329 shall not be subject to arrest, search or seizure. Environmental Crimes.—Criminal penalties for knowing abandonment of hazardous (329-125). No physician shall be subject to arrest for prescribing medical marijuana to waste or used oil. (342J-9). patient with debilitating medical condition. (329-126). Hawaii Rules of Evidence are codified. (c. 626.1). Tort Liability of Criminals.—See category Civil Actions and Procedure, topic Dam- Hawaii Rules of Criminal Procedure are codified. (cc. 801-853). ages, subhead Drug Dealers. Death Penalty.—None. Indictment, Information or Complaint.—In all offenses against laws of Hawaii, accused shall be arraigned and prosecuted upon written information, complaint, or in- DEBTOR AND CREDITOR dictment by grand jury as soon as expedient. (806-6). Certain Class B and Class C felony ACCOUNTS RECEIVABLE: charges may be instituted by written information establishing probable cause that crime was committed by accused. (c. 806). In felony cases charged by complaint or indictment, See topic Assignments. defendant shall be furnished copy of charging document before arraignment. In felony Uniform Commercial Code adopted. cases charged by written information, defendant shall be furnished copy of information and attached exhibits at initial court appearance. (c. 806-C). ASSIGNMENTS: Bail.—All criminal offenses bailable except where defendant poses serious risk of Uniform Commercial Code adopted. (c. 490). See category Business Regulation and flight, obstruction of justice, or danger to any person or community. Serious risk pre- Commerce, topic Commercial Code. Otherwise, common law applies except as noted sumed where defendant: (1) Is charged with crime punishable by life imprisonment, (2) below. has been convicted of violent crime within last ten years, or (3) is on bail, probation, Assignability.—Following are not assignable under state law: Rights under state and or parole from felony charge for violent crime. (804-3). Certain mandatory conditions for county employees’ retirement system (pensions, annuities, returns of contributions, op- bail exist. (804-4, 7.1-7.4). Amount and conditions of bail discretionary with judge. tional and death benefits, etc.) (88-91); public assistance payments and compensation to (804-5, 7.1, 9). Probable cause determination made by district court judge within 48 blind and disabled persons (346-33); workmen’s compensation claims (386-57[a]); tem- hours of arrest based on affidavits of arresting officer. Defendant provided copy of porary disability insurance (392-29). Employees may assign wage and hour claims affidavits and attachments at commencement of hearing. (Hawaii Rules of Penal Pro- (387-12[c], 388-11[b]) to Director of Labor and Industrial Relations for any action cedure, Rule 5[a]). necessary for collection, including suit. Interstate Compact for the Supervision of Adult Offenders in effect. (353B). Insurance.—Assignability of insurance policies is governed by policy terms. If ben- Uniform Act on Status of Convicted Persons in effect. (831-1 to 7). eficiary of insurance policy may be changed by sole request of insured, assignment by insured alone may be delivered to insurer, whether pledgee or assignee, and insurer may Uniform Act to Secure the Attendance of Witnesses from Without a State in deal with assignee as owner or pledgee according to terms of assignment until it has Criminal Proceedings in effect. (836-1 to 6). received contrary notice in writing at its home office. (431:10-228). Every insurer must Uniform Criminal Extradition Act, Revised in effect. (832-1 to 27). pay dividends to assignee of record under written assignment (431:10-229), but that Uniform Rendition of Accused Persons Act in effect. (833-1 to 6). provision does not apply to group life insurance, group annuities, group disability in- National Crime Prevention and Privacy Compact in effect. (846, 2006, Act 83). surance, or any policy specifying to whom dividend is to be paid. (Ibid.). Insured party may assign all or part of incidents of ownership conferred by policy. (431:10D-215). Compensation for victims of criminal acts may be paid by state upon application by Debts of state may be assigned if first approved by comptroller (or, in case of Uni- injured person or his personal representative to Criminal Injuries Compensation Com- versity of Hawaii and department of education, by their respective chief financial officers) mission within 18 months after date of injury, death or property damage. Victims eligible who shall draw warrant payable to assignee. (40-58). for compensation are: (1) Persons who are injured or killed by act or omission within Debts to State.—Contractors who contract with state or its subdivision and who have state; (2) residents of state who are injured or killed by act or omission in another state; outstanding taxes due to either State or Internal Revenue Service will have their progress (3) residents of state who are injured or killed by act of terrorism outside U.S.; or (4) payments assigned to either State or Internal Revenue Service to satisfy tax liability. relatives of victim of mass casualty, witnesses of mass casualty, or individuals engaged (103-53). Any officer or employee of any governmental agency who intentionally or in business or educational activities at scene of mass casualty. (351-31). 18-month period knowingly violates this provision shall be fined, imprisoned, or both. (Ibid). may be extended upon showing of good cause. (351-62[a]). Maximum award limited to $10,000; in case where medical expenses exceed $10,000, maximum award limited to Limited Partnership.—See category Business Organizations, topic Partnerships, sub- lesser of $20,000 or amount of expenses. (351-62[b]). Compensation extends to pecu- head Limited Partnership. niary losses or expenses sustained of relatives or persons responsible for victim; eligible Instruments Transferring Title.—Commercial Code or common law governs. expenses are those incurred during treatment for injury sustained (351-62.5) including Filing.—See category Business Regulation and Commerce, topic Commercial Code. expenses incurred for mental health service in case of mass casualty incident (351-33). Requires payment of restitution to victim or family members of victim as precondition Recording.—See categories Business Regulation and Commerce, topic Commercial for release on parole of imprisoned person if person has ability to make complete or Code; Documents and Records, topic Records. partial restitution. (801D-4). Notice.—Commercial Code or common law governs. Criminal Injuries Compensation Commission will be funded in part by fees imposed by court on every convicted defendant who is able to pay. (351-62.6, 2005, Act 144). Effect.—Commercial Code or common law governs. Victims of crime may request court to enforce criminal restitution against convicted Assignment of Wages.—Not valid unless in writing. (388-6; 11). See generally sub- defendant in same manner as in civil judgment. (706-646). head Assignability, supra. Employment agencies may not receive assignment of wages Organized Crime.—(c. 842). unless approved by Director of Labor and Industrial Relations. (373-11[9]). Victim/Witness Bill of Rights.—Relating to rights of victims and witnesses in crimi- Credit Sales.—Assignment shall not cut off any rights of action or defense arising out nal proceedings. (c. 801D). Upon request by victims of domestic violence, defendant’s of credit sale which buyer has against seller. Any assignee shall be subject to buyer’s probation officer allowed to disclose information, i.e. location of defendant, relating to defenses as if assignee is seller. (476-19).

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ATTACHMENT: of execution or other writ to enforce final order, judgment, or decree of circuit court is Actions in Which Allowed.—Attachment of either real or personal property not available against property of person writ was issued against in whatever circuit property exempt from execution may issue in any action on an express or implied contract, is situated. (651-39). including actions by nonresident or foreign corporation except in action against state or Exemptions.—See topic Exemptions. when garnishment is authorized under c. 652. (651-2). Time for Issuance.—Executions issue at any time during life of judgment. (651-31). Courts Which May Issue Writ.—Circuit and district courts may issue writ, except Stay.—Where there is no appeal, judge of court of record may stay execution for that district judge may not have writ served in circuit outside one in which that district equitable reasons upon defendant giving bond and security for payment with costs up to is situated nor may judge issue writ for attachment of real property. (651-1). stay. (651-40). In Whose Favor Writ May Issue.—Plaintiff in action, including nonresident or Lien.—No statutory provision for lien of execution before levy. foreign corporation, may have property attached. (651-2). Levy.—Levy is made by officer taking property into possession. (651-42). Officer shall Against Whom Writ May Issue.—Property of defendant, or any one or more of make inventory of property levied thereon. (651-42). Security (see category Business several defendants, may be attached, but not that of state or political subdivision. (651-2). Regulation and Commerce, topic Commercial Code) is levied on by actual seizure Claims on Which Writ May Issue.—Before writ will issue, plaintiff, or someone on thereof. (651-47). plaintiff’s behalf, must file affidavit with clerk that defendant is indebted to plaintiff, Return.—All executions and alias executions are returnable within 60 days from date. specifying amount of debt over and above just credits and offsets, and that action is not (651-34). Officer is to pay proceeds sufficient to satisfy judgment, if possible after prosecuted to defraud, hinder, or delay any of defendant’s creditors. (651-3). No statute deducting his costs, expenses, and commissions, to plaintiff or his attorney. (651-44). or case in Hawaii as to whether creditor may attach on unmatured or contingent claim. Priorities.—Officer is to give priority according to order of time writs were received Grounds.—No statutory restriction. by him. (651-41). Proceedings to Obtain.—At time of commencing action or any time afterward but Claims of Third Persons.—Only defendant’s interest is sold. Sale of property not before judgment, plaintiff may have defendant’s property attached by applying to court belonging to defendant subjects officer to suit by purchaser deprived by real owner. in which action pending, upon filing required affidavit (see subhead Claims on Which (651-49). Pledged stock is sold subject to obligations secured. (651-47). Interpleader is Writ May Issue, supra), filing bond and additional security as required (see subhead provided for where conflicting claims are asserted to personal property seized on ex- Attachment Bond, infra) (651-4, 5), and upon approval of court (651-7). Writ is directed ecution. (634-11; 12). to any police officer. (Ibid.) Sale.—Officer must advertise sale for 30 days by posting notice in three conspicuous Attachment Bond.—Plaintiff must file bond in double amount of claim, but not less places in district where property is situated, and if on Oahu, by publication in Honolulu than $50 in district court or $300 in any other court, together with affidavit of sureties newspaper at least three times. (651-43). Unless judgment, interests and costs, and fees (see category Civil Actions and Procedure, topic Bonds). Bond is not required of state, and disbursements of officer are paid, officer will, on appointed day sell to highest bidder. municipalities, their officers or agents. (651-4). On plaintiff’s motion, court may reduce (651-44). For cause, he may postpone sale, giving notice of adjournment. (651-45). bond to one and one-half times value of property of defendant proposed to be attached Officer shall execute and deliver to purchaser whatever certificates of purchase or con- for claims exceeding $50,000 (651-4); or on defendant’s motion require additional veyance are necessary. (651-46). Officer may decline to levy or sell unless person security (651-5). beneficially interested tenders sufficient bond of indemnity. (651-51). Levy.—Police officer is to levy on sufficient property, giving preference to clearer title Supplementary Proceedings.—Judgment creditor may apply to court rendering judg- (651-7, 8), 20% greater in value than plaintiff’s claim (651-8). ment for order that judgment debtor, or anyone having knowledge, be examined and for Real property attached by filing in bureau of conveyances true copy of writ with production of documents concerning property of debtor and debts owing to him. (636-4). officer’s certificate that officer has attached real estate or defendant’s interest in it, and Such then may be executed upon in due course. describing land with convenient certainty. (651-9[1]). Personal property capable of manual delivery is attached by taking it into custody. EXEMPTIONS: (651-9[2]). Exemptions.—Real property located in State of Hawaii owned by person with fair A security (see category Business Regulation and Commerce, topic Commercial Code) market value of $20,000 or less, real property owned by head of family or by individual is attached by actual seizure thereof. (651-9[3]). 65 years of age or older with fair market value of $30,000 or less (651-92), and large Court may allow compensation to police officer. (651-8). Court may appoint receiver number of specified articles of personal property, in some instances limited as to value (compensation to be out of that of police officer). (651-14). (651-121) are exempt from attachment, execution, distress and forced sale of every nature Indemnity.—Police officer may require indemnification. (651-10). and description (c. 651). Requirements of 651-9 are strictly construed. (81 Haw. 270, 916 P.2d 680). Proceeds of sale of exempt property are exempt to same extent allowed in 651-92 Lien.—No statutory provision. for six months from date of their receipt. (651-96). Priorities.—Several attachments are executed in order received by police officer. Debts Against Which Real Property Exemptions Not Allowed.—Mechanic’s liens, (651-11). Leases, mortgages, sales, devises, etc. after attachment are void in law as mortgage or other security instrument liens, tax or improvement district liens, and liens against plaintiff in such cases. (51 Haw. 164, 454 P.2d 116). recorded prior to acquisition of interest in and commencement of residence. (651-92). Release of Property.—Writ is discharged if action is discontinued, dismissed, or if Debts Against Which Personal Property Exemptions Not Allowed.—Judgments for judgment is for defendant (651-16), by defendant filing a bond approved by officer price of property, security instrument liens, taxes, fines or debts due state. (651-122). having attachment or by clerk after return (651-17), or upon defendant’s motion if writ Waiver of Exemption.—If judgment debtors were fully aware of their exemption right improperly issued (651-18). Order of discharge on real property is to be recorded in same in circuit court, then subsequent failure to assert such right in court amounts to waiver. manner as writ and expenses of attachment must be paid by plaintiff. (651-19). (61 Haw. 590, 607 P.2d 411). Sale.—Police officer may sell perishable property. If in interest of parties, court may, Necessity and Manner of Claiming Exemption.—Claimant has right to select such after hearing, order sale of property. Sales are in same manner as execution. (651-13). property as is exempt and to advise levying officer. Levying officer shall demand in Return.—Return is to be within same time as is allowed for return of summons. writing that defendant make such selection and failing such selection by defendant, Return is to be accompanied with full inventory of property attached and certificate of officer’s selection on defendant’s behalf is conclusive. (651-61). proceedings indorsed on writ. (651-15). Earnings.—Wages and other compensation for personal services due debtor for per- Examination.—If on plaintiff’s affidavit or on return of writ it appears that attachable sonal services rendered during 31 days before date of proceeding exempt. (651-121). See property cannot be found, court may require attendance of defendant to give relevant topic Garnishment. information on oath. (651-12). Homestead Exemption.—See topic Homesteads. Third Party Claims.—No statutory provision. Surviving spouse or reciprocal beneficiary of decedent domiciled in this state entitled Vacation or Modification.—See subhead Release of Property, supra. to value in kind from estate not exceeding $10,000 in excess of any security interests therein in household furniture, automobiles, furnishings, appliances, and personal effects. CONSUMER CREDIT: If no surviving spouse or reciprocal beneficiary, children jointly entitled to such property. (560:2-403). Uniform Commercial Credit Code provisions adopted with modifications regarding option to accelerate at will, unconscionability, and limitation on power of parties to Life insurance, endowment and annuity proceeds and cash values are exempt, except choose applicable law. (490:2A-109; 490:2A-108 and 490:2A-106, respectively). as to premiums paid in fraud of creditors. (431:10-232). State pensions, retirement system benefits and unemployment relief benefits are ex- CREDITORS’ SUITS: empt. (653-3, 88-91 and 383-163, respectively). No special statutes. They may be maintained as civil actions following general rules Other pensions, annuities, retirement or disability allowance, or other benefits ac- of pleading. cruing under retirement plans qualified under Internal Revenue Code shall be exempt, Creditor who has obtained judgment may apply to court for order that judgment debtor except as to claims arising under qualified domestic relations orders and as to contri- or anyone having knowledge be examined and for production of documents concerning butions to certain retirement plans (i.e., IRAs, but not ERISA or 401k plans) made within property of debtor and debts owing to him. (636-4). three years before filing of bankruptcy or initiation of civil action against debtor. (651- 124). Exception for ERISA and 401k plans under 651-124 has been determined to be EXECUTIONS: preempted by federal law. (90 Haw. 345, 978 P.2d 783). Hawaii closely follows Federal Rules of Civil Procedure. See topic Garnishment; category Civil Actions and Procedure, topic Practice. FORECLOSURE: Kinds of Execution.—Execution and alias executions upon any judgment or decree See category Mortgages, topic Mortgages of Real Property. of court of record, or judge thereof may be issued for payment of money. (651-31). Circuit court out of which execution was issued and is returned wholly or partially FRAUDULENT SALES AND CONVEYANCES: unsatisfied may issue alias execution to same circuit or some other circuit. (651-38). Writ Uniform Fraudulent Transfer Act adopted. (c. 651C).

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FRAUDULENT SALES AND CONVEYANCES . . . continued Debts or Liabilities Against Which Exemption Not Available.—No exemption for Fraudulent Conveyance.—Due process provides transferee from judgment debtor prior existing lien of property, mechanic’s lien, lien created by security instrument, opportunity to contest claim of fraudulent conveyance. (76 Haw. 32, 868 P.2d 450). federal or state tax lien, county or state district improvement lien. (651-92[b]). Uniform Commercial Code adopted. See category Business Regulation and Com- Proceeds of Sale.—Priority of distribution of sale proceeds: Exemption amount to merce, topic Commercial Code. property owners, attorneys’ fees and costs of sale, satisfaction of underlying lien, and Fraud in sale of U.S. surplus goods declared unfair trade practice. (481-21). subsequent liens, remainder to property owner. (651-95). Exempt proceeds protected for Seller must report sale to Tax Commissioner within ten days, and purchaser must six months. (651-96). withhold payment of price until he receives certificate that taxes are fully paid. (237-43). Rights of Surviving Spouse and Family.—Surviving spouse or reciprocal beneficiary The law imposes no duty on the purchaser to see to the application of the purchase of decedent domiciled in this state entitled to homestead allowance of $15,000. If no price to payment of the seller’s debts. surviving spouse or reciprocal beneficiary, minor and dependant children are entitled to Uniform Deceptive Trade Practices Act adopted. (c. 481A). See category Business equal shares of allowance. (560:2-402). Regulation and Commerce, topic Consumer Protection. See also categories Family, topic Husband and Wife; Property, topics Curtesy, Deeds, Remedies.—Subject to limitations enumerated in 651C-8, creditors may obtain fol- Dower, Real Property. lowing: avoidance of transfer or obligation to extent necessary to satisfy creditor’s claim, attachment or other provisional remedy against asset transferred or other property of JUDGMENT NOTES: transferee in accordance with c. 651, with injunction against further disposition by either Not recognized. or both debtor or transferee of asset transferred or of other property, appointment of receiver to take charge of asset transferred or of other property of transferee, and/or any LEVY: other relief circumstances require. (651C-7). If creditor obtains judgment against debtor, creditor may levy execution on asset See topics Attachment, Executions. transferred or its proceeds. (651C-7). LIENS: Bulk Sales.—Uniform Commercial Code Bulk Sales provisions repealed in 1998. (1998, Act 209). Persons who have liens on property entrusted to their care for value of their services include: Warehousemen (507-62); common carriers (271-18); laundrymen (507-13); ani- GARNISHMENT: mal caretakers (507-1); innkeepers (486K-2); auto repairmen (437B-20). Foreclosure in each case is by sale after publication of notice. (c. 507). Uniform Creditor, in action against his debtor, may include attorneys, agents, factors, or trustees Commercial Code adopted in Hawaii. (c. 490). See category Business Regulation and possessing property of debtor, persons indebted to debtor, and persons holding debtor’s Commerce, topic Commercial Code. money for safekeeping as garnishee. Employers can be reached in certain cases. (652-1). Physicians, surgeons, dentists and hospitals rendering services to injured persons have Employee may not be suspended or discharged solely on ground employer was sum- a lien for their charges on judgment recovered for such injuries. (507-4). moned as garnishee for employee’s debt. (378-32). Persons making improvements, repairs or alterations upon personal property have a Property Which May Be Reached.—(a) Before judgment: (1) Goods and effects of lien thereon for their work, labor and material. Foreclosure is by suit as in case of debtor in possession of garnishee; (2) debts due to debtor by garnishee; (3) moneys of mechanics’ liens. (507-18, 19). But if lien does not exceed $150, lienholder may sell debtor in garnishee’s possession for safekeeping. (b) After judgment: wages in amount personal property under certain conditions. (507-23). of 5% of first $100 per month, 10% of next $100, and 20% of excess is to be withheld Bailees may sell personal property when a lien has attached for 60 days and is from debtor until judgment is paid. Wages may be garnished before judgment on order unsatisfied. Four weeks notice by publication necessary. (507-5). of court. (652-1). Department of Human Services may require lien on real property interests (346-29.5) Security in lieu of garnishment may be posted by debtor before judgment. (652-1). or estate of recipient of public assistance (346-37). Jurisdiction.—Circuit courts and district courts may order garnishment in actions Enforcement is by proceeding in pertinent circuit court by service of summons as in between persons in debtor-creditor relationship. (652-15). Summons and direction are other cases. There is no priority among lienors who have properly filed; all intervene or sufficient notice to enable plaintiff to bring action to trial unless defendant is inhabitant, are consolidated for trial and share pro rata, except laborers’ claims up to $300 which has office, or was at some time resident of state, in which case copy must be personally have priority to that extent. (507-46, 47). served on him or left at his last usual abode. (652-1). If defendant lives outside district Equitable Liens.—Equitable lien not judicially recognized until judgment rendered where process is issued, service may also be made by certified or registered mail. declaring existence. (75 Haw. 480, 866 P.2d 951). (652-2.5). Mechanics’ Liens.—Mechanics or material men have a lien, for agreed price of labor Proceedings to Obtain.—Before judgment, creditor may apply for garnishee process or material furnished, on both building and land. (c. 507, Part II). to issue. Court may grant application, after hearing with notice to debtor, if probable Unreasonable extension of credit to contractor by supplier is defense to lien. (507-49). validity of creditor’s claim shown and it appears that property in possession of garnishee Application for lien and notice of claim of lien must be filed with clerk of circuit court not exempt from execution. Garnishee process may issue on verified ex parte motion if within 45 days after completion, and suit to perfect and foreclose lien must be begun reasonable likelihood exists that debtor is not resident, is about to leave jurisdiction or within three months after lien attaches; notice of completion must be published by owner has fraudulently concealed or disposed of property. (652-1.5). After judgment, creditor or contractor twice, seven days apart, and date of filing of affidavit of publication by may summon garnishee to make full disclosure or, if action brought in district court, may, newspaper with clerk of pertinent circuit court constitutes ‘‘date of completion’’; in ten days after judgment, file certified copy of judgment and affidavit of amount due with absence of such publication and filing of affidavit, ‘‘date of completion’’ is one year after employer. (652-1). substantial physical completion. (507-43). Mortgages recorded prior to commencement Answer of Garnishee.—Garnishee, on or before return day, may file return under oath of construction operations enjoy priority. Subsequent mortgages enjoy priority to extent containing full disclosure. Copy must be served on plaintiff or his attorney on or before that proceeds are used for construction, if mortgage recites that loan has been made in return day. (652-1). whole or in part to pay for improvements. (507-46). Practice.—After being served, garnishee must secure money or property concerned in Where the improvement is to property under lease or agreement of sale, the interest his hands to pay whatever judgment plaintiff recovers. (652-1). Garnishee may defend of the fee owner is subject to the lien if the lease, contract of sale, etc. (507-42). principal. (652-2). After judgment in favor of plaintiff, garnishee fund is liable. Plaintiff Discharge of Lien.—Owner, lessee, principal contractor or intermediate subcontractor is entitled to an order including garnishee fund in execution. If garnishee does not pay may discharge lien by filing with circuit court of county in which property is located or officer’s demand, garnishee is liable for judgment. However, garnishee may deduct all with land court (if registered land is affected) cash or bond for twice amount of claim his demands against defendant, whether or not due. (652-2). As to debts not due until under lien. (507-45). some time in future, judgment is a lien on debt until due and payable. (652-10). Court, Attachment Lien.—See topic Attachment. on consent of plaintiff or motion of defendant or garnishee, may release that portion of Attorney’s Lien.—See category Legal Profession, topic Attorneys and Counselors. garnishee fund which is excessive. (652-1). Garnishee will not be liable to anyone for nonpayment where in good faith he believes garnishment is involved. (652-2). Child Support Enforcement Lien.—See category Family, topics Divorce and Infants. Adverse Claims.—Property or moneys may be paid into court on its order, less Collateral Security.—See topic Pledges. reasonable attorneys’ fees and costs allowed by court, and garnishee will be discharged. Execution Lien.—See topic Executions. Or, garnishee may apply for an interpleader order. (652-9). Judgment Lien.—See category Civil Actions and Procedure, topic Judgments. Judgment.—See subhead Practice, supra. Landlord’s Lien.—See category Property, topic Landlord and Tenant. Earnings.—See subhead Property Which May Be Reached, supra. Liens on Exempt Property.—See topic Exemptions. State, county and municipal wages, etc. may be garnished as provided in c. 653 and Liens on Homestead.—See topic Homesteads. c. 78. Exempt from garnishment are: unemployment relief benefits (383-163), state pen- Real Estate Mortgage Lien.—See category Mortgages, topic Mortgages of Real sions (653-3) and retirement system benefits (88-91), and proceeds and cash values of Property. life insurance, endowment and annuity contracts (431:10-232). Tax Lien.—See category Taxation, topic Property Taxes, subhead Lien. Public Works.—Contractor must give satisfactory bond conditioned for faithful per- HOMESTEADS: formance of contract and prompt payment for all labor and materials furnished to him Limitation of Value.—Real property consisting of one piece of land located in State and used in the work. Such bond must be for 100% of contract price. Bond inures to of Hawaii not to exceed one acre and dwellings thereon are exempt from levy and sale benefit of any person entitled to file claim for labor or materials, and all such persons on execution as follows: (1) Such property of value not exceeding $30,000 owned by have a right of action on such bond. (103D-324). head of family or person 65 or older; (2) such property of value not exceeding $20,000 Redemption.—There is no right of redemption of property sold under foreclosure of owned by any other person. (651-92). a lien, except in case of a tax lien. See category Taxation, topic Property Taxes, subhead Limitation on Area.—None. Redemption.

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LIENS . . . continued Effect is same as in civil action and may be enforced accordingly. (658A-25). Condominiums.—Rights of persons holding liens involving condominiums are regu- Appeal may be taken. (658A-28). lated in detail. (514A-90). See category Civil Actions and Procedure, topic Judgments, Enforcement.—Motion to vacate must be made within 90 days after movant receives subhead Judgment Liens. notice of award or of modified or corrected award. (658A-23). Confirming Award. MECHANICS’ LIENS: —Party may make motion for order confirming award after it receives notice of award. (658A-22). See topic Liens. Vacating Award.—Upon application, court may vacate award if it was procured by corruption, fraud or undue means; if arbitrator was partial or corrupt; if arbitrator wrong- PLEDGES: fully refused to hear material evidence, failed to postpone hearings upon sufficient cause Governed by c. 486M (pawnbrokers and secondhand dealers). Minimum retention 15 shown, committed acts prejudicial to party, exceeded his powers, there was no agreement calendar days in counties with population of less than 300,000 and 30 calendar days in to arbitrate, or party’s rights were substantially prejudiced by improper notice of initiation counties with population of 300,000 or more. (486M-4). Pawnbrokers may not accept of arbitration. (658A-23). motor vehicles, boats, homes or allow customer’s pawn account to exceed $10,000. Modifying or Correcting Award.—Motion to modify or correct award must be made (445-134.13). within 90 days after movant receives notice of award or of modified or corrected award. Any goods not redeemed within last holding period may be forfeited and become Grounds for modification generally restricted to math errors and errors in form of award. property of pawnbroker. (445-134.15). Holding period means time period not less than (658A-24). 30-days after maturity date. (445-131). Mandatory Arbitration.— Uniform Commercial Code adopted. (c. 490). See category Business Regulation and Lease Rents—Mining Lease.—Person in possession of land for which mining lease is Commerce, topic Commercial Code. auctioned by Board of Land and Natural Resources may require that damage and lease rent be determined by arbitration. (182-3[b]). RECEIVERS: Residential Leases.—Rents to be renegotiated under lease of two acres or less and Receivers may be appointed under certain circumstances in attachment (651-14) and having term of at least 20 years must be submitted to Housing and Community Devel- divorce (580-13) cases. opment Corporation of Hawaii for arbitration if parties cannot agree on renegotiated rent. (519-2). Rents being renegotiated under subleases issued by housing corporation (co- REDEMPTION: operative) must be submitted to arbitration by Housing and Community Development See topic Liens; categories Mortgages, topic Mortgages of Real Property; Taxation, Corporation of Hawaii if parties fail to reach agreement. (519-3). Effective July 1, 2006, topic Taxes. HRS c. 514A is repealed. (2005, Act 93 and 2004, Act 164). Under Act 164, parts of replacement statute relating to definitions and general provisions, applicability and man- SUPPLEMENTARY PROCEEDINGS: agement were enacted. Under Act 93, parts of replacement statute relating to creation, termination and alteration of condominium, protection of condominium purchasers and See topic Executions. amendments to Act 164 were enacted. Whenever any lease or sublease provides for periodic renegotiation of lease rent, association of apartment owners shall represent TRUSTEE PROCESS: apartment owners in arbitration. (2004, Act 164, §514B-162; 514A repealed). Rent See topic Garnishment. renegotiation subject to mandatory arbitration. (516D-12). Motor Vehicle Insurance.—Dispute relating to motor vehicle insurance policy may be USURY: submitted to arbitration by claimant or insurer by written request filed with clerk of See category Business Regulation and Commerce, topic Interest. circuit court. (431:10C-213). Arbitrator is appointed by administrative judge of circuit court. Proceedings are governed by c. 658A. Award may be appealed to circuit court. Collection of any arbitration award is limited to applicable liability policy limit. Arbi- DISPUTE RESOLUTION tration award is not binding on under insured motorist claim. (431:10C-213.5). Inde- pendent medical examinations should be performed by provider agreed upon by parties. ALTERNATIVE DISPUTE RESOLUTION: If agreement cannot be reached, selection may be submitted to arbitration. (431:10C- See topic Arbitration and Award. 308.5[e][2]). Effective July 1, 2006, HRS c. 514A is repealed. (2005, Act 93 and 2004, Act 164). Mandatory ADR.—At court’s discretion, or upon motion, parties may be ordered to Under Act 164, parts of replacement statute relating to definitions and general provisions, participate in ADR process subject to conditions imposed by court. (Rules of the Circuit applicability and management were enacted. Under Act 93, parts of replacement statute Courts of the State of Hawaii [RCCH] 12.2, effective 1/1/97). Court is not authorized relating to creation, termination and alteration of condominium, protection of condo- to order binding arbitration or deprive party of right to trial. Parties must confer in person minium purchasers and amendments to Act 164 were enacted. regarding ADR options, and must state in pretrial statement ADR process to which they Condominiums.—Dispute between condominium apartment owners or between owners have agreed or identify objecting party and reasons for objection. (RCCH 12[b][6]; [7]). and condominium association, its board of directors or managing agent may be submitted Pretrial statement must be filed within eight months after filing of complaint if no to arbitration by either party. (2004, Act 164, §514B-162). Award is enforceable by circuit extension granted by court. (RCCH 12[b]). Additionally, ADR options will be discussed court but is subject to trial de novo. (2004, Act 164, §514B-163). Subject matter must at status conference conducted by Civil Admin. Judge. (RCCH 12[c][i]). In complex relate to interpretation, application or enforcement of c. 514A or project declaration, cases, Judge may establish meeting deadlines for meeting with Judiciary Center for ADR. bylaws or house rules. (2004, Act 164, §514B-162). Following matters are excluded from (RCCH 12[k][3][i][A]). mandatory arbitration: Dispute involving real estate commissioner, mortgagee, developer, Judiciary Center for ADR.—Center established within judiciary to facilitate mediation, contractor or subcontractor of project, actions seeking equitable injunctive relief involv- neutral fact-finding and negotiated consensus-building. Focus is on reducing costs of ing threatened property damage or health or safety of persons, collection of assessments, litigation over public issues, allocation of resources. (c. 613). Evidence relating to personal injury claims, claims in excess of $2,500 if insurance coverage would be mediation is inadmissible except as it pertains to criminal acts or fraud. (626-1; HRE invalidated, or claims determined by court to be unsuitable for arbitration. (2004, Act 408). 164, §514B-162). Mediation is required of certain condominium disputes related to association of apartment owners’ declaration, bylaws, or house rules, or state law if ARBITRATION AND AWARD: requested by owner or association. Courts may consider party’s refusal to mediate when HRS c. 658A which adopts Revised Uniform Arbitration Act (“RUAA”) governs awarding costs and attorneys’ fees. (2004, Act 164, §514B-161). See also category Civil agreement to arbitrate made on or after July 1, 2002. After June 30, 2004, c. 658A Actions and Procedure, topic Actions, subhead Conditions Precedent. At request of any governs agreement to arbitrate whenever made. C. 658A governs agreement to arbitrate party, any dispute concerning one or more stockholders and limited equity housing made before July 1, 2002 if all parties to agreement or to arbitration so agree. If such corporation, its board of directors, managing agent or one or more other stockholders parties do not so agree, agreement to arbitrate made before July 1, 2002, shall be relating to interpretation or application of HRS §421H-6 or corporation’s charter of governed by law specified in agreement to arbitrate, or if none is specified, by c. 658. incorporation, bylaws, or administrative rules in accordance with its bylaws shall be Agreement contained in record to submit to arbitration any existing or subsequent submitted to arbitration. Arbitration should be conducted, unless otherwise agreed by controversy arising between parties to agreement is valid, enforceable, and irrevocable. parties, in accordance with HRS c. 658A and condominium property regime rules on In contract containing arbitration clause, where dispute arises from general allegations arbitration of disputes of American Arbitration Association, provided that where any of fraud in inducement, contract still subject to arbitration. Unless there is claim made arbitration rule conflicts with c. 658A, c. 658A prevails. (421H-6). that there was fraud in inducement of arbitration clause, clause is valid and binding as Tort Cases.—All tort cases with probable jury award less than $150,000 filed in circuit remedy for general claim of fraud in inducement of contract as a whole. (81 Haw. 1, 911 court are subject to determination under court-annexed mandatory arbitration program. P.2d 721-decided under prior law). If party makes motion to order arbitration, court on (601-20, HAR 6). HAR govern procedures and requirements for exemption and inclusion just terms shall stay any court proceeding involving claim alleged to be subject to in program. arbitration pending outcome of arbitration. (658A-7; 81 Haw. 193, 914 P.2d 1386-decided under prior law). Powers of Arbitrators.—Arbitrator may issue subpoena for attendance of witness and for production records and other evidence and may administer oaths. Upon request of Forms and Requisites of Submission.— party or witness, arbitrator may permit depositions. Arbitrator may permit such discovery Naming Arbitrators.—If no method is provided or there is lapse in naming arbitrator, as is appropriate in circumstances. Arbitrator can take action against any party failing to then on application by either party, circuit court will name arbitrator or arbitrators. comply with discovery procedures as in State Civil Court. (658A-17). (658A-11). If all interested parties agree or upon request of one party if that party gives notice Compelling Compliance.—Party aggrieved may apply to circuit court for order that and other parties have reasonable opportunity to respond, arbitrator may decide request arbitration proceed according to agreement. (658A-7). for summary disposition of issue or claim. (658A-15). Judgment on Award.—Agreement to arbitrate providing for arbitration in this state Arbitrator may award punitive damages, reasonable attorneys’ fees, and any other just confers exclusive jurisdiction on court to enter judgment on award. (658A-26). and appropriate remedies, even if could not be granted in court. (658A-21). Entry.—Upon granting order confirming, vacating without directing rehearing, modi- Power of arbitrator may be expanded or limited by parties through waiver of certain fying or correcting award, court shall enter judgment in confirming therewith. (658A-25). provisions of c. 658A. (658A-4).

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ARBITRATION AND AWARD . . . continued as his (or her) (or their) free act and deed. (Signature, title and seal of officer). (502- Rescission.—Neither contract nor submission is revocable except on grounds at law 41[1]). or in equity for revocation of any contract. (658A-6). Stay of Other Suit.—If applicant is not in default, circuit court will, on application, (2) Person not known to offıcer. Use same form up to ‘‘A B’’ and continue as follows: stay trial of any action on issue referable to arbitration until after arbitration. (658A-7). ‘‘satisfactorily proved to me to be the person described in and who executed the within instrument, by the oath of C D, a credible witness for that purpose, to me known and International Business.—Hawaii International Arbitration, Mediation, and Concilia- by me duly sworn, and he, (or she) A B, acknowledged that he (or she) executed the same tion Act adopted to encourage use of arbitration to resolve disputes arising out of freely and voluntarily for the uses and purposes therein set forth’’. (502-43). international relationships and to maximize private autonomy over such proceedings. (c. 658D). (3) Acknowledgment by attorney in fact. Use same form up to ‘‘foregoing instrument’’ Contested Cases.—Agency may encourage parties to contested case hearing to par- and continue as follows: ‘‘in behalf of C D and acknowledged that he (or she) executed ticipate in mediation prior to hearing subject to conditions imposed by agency. (91-8.5). the same the free act and deed of said C.D.’’ (502-41[2]). (4) Corporation or partnership. ‘‘(Caption) On this ...... dayof ...... ,20....,before me appeared A B, to me personally known, who, being by DOCUMENTS AND RECORDS me duly sworn (or affirmed), did say that he (or she) is the president (or other officer ACKNOWLEDGMENTS: or agent of the corporation or partnership) of (describing the corporation or partnership) and that the instrument was signed and sealed in behalf of the corporation (or partnership) To entitle any conveyance or other instrument to be recorded, it must be acknowl- by authority of its board of directors (partners or trustees), and said A B acknowledged edged. (502-41). the instrument to be the free act and deed of the corporation (or partnership).’’ (502- Within State.—Acknowledgments may be taken before registrar of conveyances, his 41[3]). deputy, judge of court of record, or notaries public. (502-50). (5) Corporation acknowledging by individual as its attorney. ‘‘(Caption) On this Outside State But Within U.S.—Acknowledgment of instrument executed in another ...... dayof...... ,20....,before me personally appeared A B, to me per- jurisdiction of U.S. for recording or to be read in evidence in Hawaii may be made before sonally known, who being by me duly sworn (or affirmed) did say that he (or she) is any officer of such jurisdiction who is there authorized to take acknowledgments, and the attorney in fact of C D (here name the corporation) duly appointed under power of certificate is sufficient if in form which would entitle instrument to be recorded in attorney dated the ...... dayof...... ,20....,recorded in book ...... ,at jurisdiction where acknowledged or in form provided by Hawaii statutes (see subhead page ...../asdocument no ...... ;andthat the foregoing instrument was executed Forms, infra). For reading into evidence, burden of proving due execution of instrument in the name and behalf of saidCDbyABasitsattorney in fact; and said A B is on person relying thereon. (502-45). Burden can be met by attaching to acknowl- acknowledged said instrument to be the free act and deed of C D.’’ (502-41[4]). edgment certificate of Secretary of State where acknowledging officer resides, under seal In case enabling power of attorney has not been recorded, omit reference to its place of, or certificate of clerk of court of record where officer resides or where he took of record and insert in lieu thereof the words ‘‘which said power of attorney is now in acknowledgment or certificate of executive officer or clerk of court of record of depen- full force and effect.’’ (502-41[4]). dency of U.S., stating that officer who took acknowledgment was, at time of taking, duly authorized to take acknowledgments in jurisdiction, that certifying officer is well ac- (6) Corporation acknowledging by another corporation as its attorney. ‘‘(Caption) On quainted with handwriting of officer taking acknowledgment and that he believes sig- this ...... dayof...... ,20....,before me personally appeared A B, to me nature to acknowledgment is genuine. (502-46). personally known, who being by me duly sworn (or affirmed), did say that he (or she) Outside U.S.—Acknowledgment of instrument executed outside U.S. may be made is the president (or other officer or agent of the corporation or joint stock company acting by: (1) Any officer now authorized by laws of Hawaii; (2) any officer of U.S. diplomatic as attorney) of C D (here name the corporation or joint stock company acting as attorney) service, certified under his seal of office; and (3) any person authorized by law of his and that saidCDistheattorney in fact of E F (here name the corporation or joint stock country to take acknowledgments, when accompanied by certificate of his authority and company in whose behalf the attorney is acting) duly appointed under power of attorney that acknowledgment complies with laws of his country. Such certificate may be made dated the ...... dayof...... ,20....,recorded in book ...... atpage by diplomatic or consular officer of U.S. or by diplomatic or consular officer of such ...... /asdocument no ...... ;that the foregoing instrument was executed in the foreign country resident in Hawaii. (502-47[a]). name and behalf ofEFbytheCDasitsattorney in fact; that said instrument was so Officers of U. S. Armed Forces.—Acknowledgments of persons outside U.S. or in executed byCDbyauthority of its board of directors; and A B acknowledged the Armed Forces may be taken by officers of U.S. Armed Forces so authorized by Congress instrument to be the free act and deed of said E F.’’ (502-41[5]). to exercise powers of notary public. (502-47[b]). In case the enabling power of attorney has not been recorded, omit reference to its place of record and insert in lieu thereof the words ‘‘which power of attorney is now in General Requirements as to Taking.—See subhead Forms, infra. (502-48). full force and effect.’’ (502-41[5]). Fee for taking acknowledgment is $5 for each party and $2.50 per signature for each duplicate original. (456-17). AFFIDAVITS: General Requirements of Certificate.—Notary’s signature, typed or printed name of notary, and date of expiration of notary’s commission must be noted. Seal of notary must Generally, notaries public may administer oaths. (456-13). Fee is $5 for administration be affixed by engraved seal of office or rubber stamp facsimile. (456-3). of oath, including certificate of oath; $2.50 for affixing certificate of oath. (456-17). No Changes, erasures or interlineations in the instrument acknowledged must be ini- statute governs affidavits, as such, executed outside state. See topic Acknowledgments. tialed by the notary. Such initialing is prima facie evidence of extent of the interlinea- General Requirements as to Administration.—No statute governs affidavits as such. tions, etc., and of fact that they were made prior to acknowledgment of the instrument, As matter of practice, they can be recorded (see topic Acknowledgments), but will not but does not preclude proof to the contrary. (502-61). be read in evidence if objected to. Married women acknowledge in the same manner as other persons. (502-44). General Requirements of Jurat.—Every notary public has seal of office which Attorneys in Fact.—See subhead Forms, infra. includes name, words, ‘‘notary public’’ and ‘‘State of Hawaii’’. (456-3). Corporations.—See subhead Forms, infra. Form Foreign Acknowledgments.—See subheads Within Another U.S. Jurisdiction; Outside State of Hawaii ) U.S., supra. ) City and County of Honolulu ) ss: Effect of Acknowledgment.—Duly acknowledged instrument is entitled to be re- (or County of ...... ) corded (502-41; 47; 50) and is admissible in evidence without further proof (502-47; 81). Comes now ...... ,being duly sworn, on oath deposes and says: Proof by Subscribing Witness.—As substitute for acknowledgment, instrument may ...... be recorded on proof of execution by subscribing witness (e.g., notary public) or of Further, affiant says not. handwriting of execution person and subscribing witness before judge of circuit court...... (502-50). Subscribed and sworn to before me Alternative to Acknowledgment or Proof.—When any instrument required to be this ....dayof...... ,20... acknowledged or proved has been executed by person then permanently or temporarily (seal) ...... resident at some place where acknowledgment or proof cannot be made, such instrument Notary Public, ...... Judicial Circuit, may be declared acceptable for recordation by order of judge issued upon such testimony State of Hawaii. and evidence as are sufficient in judgment of judge to establish genuineness and au- My commission expires: ...... thenticity. (502-47[c]). Alternatives to Sworn Affidavits.—No statute governs alternatives to sworn affida- Authentication of certificate of notary in Hawaii for use elsewhere is by certificate vits, as such. In Circuit Court, in lieu of affidavit, unsworn declaration may be made by of clerk of circuit court of judicial circuit in which he is commissioned (456-4). Fee for person, in writing, subscribed as true under penalty of law, and dated, in substantially filing copy of commission and for each certificate of authentication shall be specified by following form: “I, (name of person), do declare under penalty of law that the foregoing Supreme Court. (456-9). As to authentication of certificate taken elsewhere for use in is true and correct. Dated: (date),” (followed by signature of declarant). (RCCH 7[g]). Hawaii, see subhead Within Another U.S. Jurisdiction, supra. Forms.—Acknowledgments must be in substantially following forms: NOTARIES PUBLIC: Forms Qualification.—Appointee must be resident of state, possess qualifications required of (1) Natural person acting in own right. State of Hawaii, County of ...... ,ss.On public officers, and be at least 18 years old. Oath for faithful discharge of duties must this ...... dayof...... ,20....,before me personally appeared A B (or A B be taken; oath must be filed in department of attorney general. (456-2). Each notary and C D), to me known to be the person (or persons) described in and who executed public must execute at own expense official surety bond in sum of $1,000 in Circuit the foregoing instrument, and acknowledged that he (or she) (or they) executed the same Court. (456-5).

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–23 DOCUMENTS AND RECORDS MARTINDALE-HUBBELL LAW DIGEST - 2007

NOTARIES PUBLIC . . . continued Torrens Act.—Land Court registration is provided for by c. 501. Documents pur- Authentication.—All appointed and commissioned notaries public must file literal or porting to convey or affect land registered with Land Court are not effective as con- photostatic copy of person’s commission, impression of person’s seal, and specimen of veyance and do not bind land until registered in Office of Assistant Registrar of Land person’s official signature with clerk of Circuit Court in which notary resides. Notary Court in Honolulu. (501-101). See category Property, topic Deeds. may file above documents with clerk of any other Circuit Court. (456-4). Notary public Transfer of Decedent’s Title.—Uniform Probate Code, but not 1975 or 1977 Official must authenticate all official acts with seal, signature, typed or printed name, and dec- Amendments, adopted (c. 560), effective July 1, 1977. Certified copy of order of dis- laration of date of expiration of commission. (456-3). See topic Acknowledgments. tribution must be recorded in bureau of conveyances or for registered land, filed with Seal.—Notary must constantly keep engraved seal of office or rubber stamp facsimile office and Assistant Registrar of Land Court. with notary’s name, words ‘‘notary public’’ and ‘‘State of Hawaii’’. Notary public must Filing Under Uniform Commercial Code is with Office of the Registrar of Con- authenticate all official acts, attestations, certificates, and instruments with seal. Upon veyances, Bureau of Conveyances, 1151 Punchbowl Street, Honolulu, Hawaii 96813. resignation, death, expiration of term without reappointment, or removal from or aban- (490:9-501). Filing fees are listed in 502-25 unless provided for by rules adopted by donment to office, notary public must immediately deliver seal to attorney general. Department of Land and Natural Resources, pursuant to c. 91. (456-3). Requisites of Filing Under Uniform Commercial Code.—Financing statement is Powers and duties of notaries are those usually appertaining to office. Notary shall sufficient only if it: (1) Provides name of debtor; (2) provides name of secured party or record at length all acts, protests, depositions, and other things noted or done in official representative of secured party; and (3) indicates collateral covered by financing state- capacity. (456-15). Notary may sign for person physically unable to sign document, under ment. Financing statement that covers as-extracted collateral or timber to be cut or certain conditions. (456-19). Powers and duties of notaries in government service are collateral goods which are or are to become fixtures must additionally: (1) Indicate that provided for in 456-18. it covers this type of collateral; (2) indicate that it is to be filed for record in real property Territorial Extent of Powers.—Official character and acts of any notary will be records; (3) provide description of real property to which collateral is related; and (4) certified by clerk of any court in which such notary has filed commission, seal, and if debtor does not have interest of record in real property, provide name of record owner. signature. (456-4). (490:9-502). Any instrument relating to security investments filed under Uniform Com- mercial Code must refer to book and page or document number where original financing Expiration of Commission.—Notaries public serve four year terms from date of statement is filed or state that original instrument is unrecorded. (502-33). See category commission, unless sooner removed by attorney general for cause after hearing. (456-1). Business Regulation and Commerce, topic Commercial Code. Notary must add to stamped, embossed, or impressed seal notary’s official signature, typed or printed name of notary and statement showing date of expiration of commission. Vital Statistics.—Report of births, deaths, and marriages must be filed with Office of (456-3). Health Statistics Monitoring, Dept. of Health, State of Hawaii, P.O. Box 3378, Honolulu, Hawaii 96801, Attn. Vital Records. (c. 338). Fee of $10 is charged for first certified copy Fees for notarial acts vary from $2.50 to $5. (456-17). of each document requested, additional reports of same document requested at same time Commissioners of Deeds.—No statutory provision. are $4. (338-14.5). Officers of U.S. Armed Forces.—No statutory provision. SEALS: RECORDS: Seals in Hawaii are mere matters of form which never partake of essence and sub- Registrar of Bureau of Conveyances in Department of Land and Natural Resources of stance of agreement and are not necessary to validity of mortgages, deeds or bonds. (40 State of Hawaii at Honolulu, Hawaii, has charge of records related to property. (502-1; Haw. 92). 11). Registrar of Conveyances is assistant registrar of Land Court of State of Hawaii for Notary public shall constantly keep engraved seal of office or rubber stamp facsimile land registered under Torrens system. (501-9). Department of land and natural resources seal. Notary public shall authenticate notary’s official acts, attestations, certificates and may adopt rules pursuant to c. 91 relating to bureau of conveyances and to repeal and instruments therewith. (456-3). establish fees. (c. 502-4). Uniform Commercial Code adopted. (c. 490). See category Business Regulation and Judgments filed and recorded in land court or bureau of conveyances must contain Commerce, topic Commercial Code. social security number, general excise taxpayer identification number, or federal em- Corporate Seals.—Regulated by 414-42(2). ployer identification number of person against whom judgment is rendered. (501-151). Deeds, mortgages, bills of sale, chattel mortgages, leases for more than one year, and Effect of Seal.—Seal on writing evidencing contract for sale of goods or offer to buy the like must be recorded in office of Registrar of Conveyances in Honolulu, in order or sell goods does not constitute sealed instrument. (490:2-203). to constitute notice to bona fide purchasers. (502-83). They must be acknowledged or proved to be entitled to record. (c. 502). See category Property, topic Deeds. TORRENS ACT: See topic Records; category Property, topic Deeds. Uniform Commercial Code adopted. (c. 490). See category Business Regulation and Commerce, topic Commercial Code. VITAL STATISTICS: Uniform Information Practices Act adopted with significant variations. (c. 92F). See topic Records. Recordable Instruments.—Every conveyance or instrument acknowledged or proved or certified may be recorded (502-81), including deeds, mortgages, leases, powers of attorney, bills of sale, assignments, grants of easements, maps or plats (if special re- EMPLOYMENT quirements of 502-17 are met), financing statements, affidavits, judgments, lien notices, notice of lis pendens, etc. EMPLOYER AND EMPLOYEE: Effect of Not Recording.—All deeds, leases for more than one year, mortgages of any See topic Labor Relations. interest in real estate, or of other conveyances of real estate within the state not recorded are void as against any subsequent purchaser, lessee, or mortgagee, in good faith and for LABOR RELATIONS: a valuable consideration, not having actual notice of the conveyance of the same real Department of Labor and Industrial Relations administers all matters relating to estate or any portion thereof or interest therein, whose conveyance is first duly recorded. employment law enforcement (c. 371), including unemployment compensation (cc. 383 (502-83). and 385), wages and hours of labor (c. 387), payment of wages and other compensation Place of Recording.—Recording of instruments affecting real property, including (c. 388), child labor (c. 390), workers’ compensation (c. 386), temporary disability filing of instruments affecting land registered under Torrens Act, are recorded or filed at insurance (c. 392), prepaid health care (c. 393), manpower development and training (c. Office of the Assistant Registrar of the Land Court of the State of Hawaii, 1151 Punch- 394), receipt of funds from self-insured employers, and determination of amount of bowl Street, Rm. 122, Honolulu, Hawaii 96813; mailing address: P.O. Box 2867, Ho- special compensation fund assessment (386-154); and apprenticeship system (c. 372). nolulu, Hawaii 96803. Department authorized to enter into reciprocal agreements with other states re collection of wage claims. (388-12). 1 × Requisites of Recording.—Recording of document larger than 8 ⁄2 11 inches may Act relating to occupational safety and health adopted. (c. 396). be refused. Top 31⁄2 inches of first page of each document must be reserved for recording information. Following 1 inch shall be reserved for information showing to whom Wages and Hours of Labor.—Minimum wages and maximum hour provisions in document should be returned beginning 11⁄2 inches from left margin, and not exceeding effect since 1941; minimum wages $6.25 per hour. (387-2). Minimum wage will increase 31⁄2 inches per line. First page shall include, if possible, all names of grantors and all to $6.75 per hour on Jan. 2, 2006, and to $7.25 per hour on Jan. 1, 2007. (387-2). Upon names and addresses of grantees, type of document, and tax map key number. When Director’s certification, full-time students, student-learners and disabled persons may be grantee is corporation or partnership, document must contain state where entity is reg- paid below minimum wage. (387-9). Overtime at 11⁄2 times employer’s regular rate must istered and entity’s address. (502-31). Marital status and address of grantee must be be paid after 40 hours. (387-3[a]). All service charges for food and beverage services shown. (502-34). All names in instrument shall be typewritten, stamped or legibly printed must be distributed to employees unless otherwise disclosed. (481B-14). Wage and hour by hand or by some other mechanical or electrical printing method beneath all signatures. law does not apply to employees with guaranteed compensation of $2,000 per month or (501-108[c]; 502-31). Any instrument affecting mortgage, lien or lease must refer to book more; other exemptions similar to federal law. (387-1). Overtime provisions do not apply and page or document number where original mortgage, lien or lease is recorded. (506-4, to employees of air carriers, provided that any overtime hours are result of voluntary 502-33). agreement between employees to exchange work time or days off. (387-3[g]). Employer prohibited from making certain deductions from compensation. (388-6). Employers who Fees.—Fixed by 502-25 unless otherwise provided by rules adopted by Department fail to pay wages as required by Hawaii Payment of Wages Law must pay wages due of Land and Natural Resources, pursuant to c. 91. Fees for Torrens documents are fixed plus sum equal to amount of unpaid wages and interest at rate of 6% per year from date by 501-218 unless otherwise provided by rules adopted by Department of Land and wages were due. (388-10). Wages and hours of persons employed by contractors on Natural Resources, pursuant to c. 91. public works regulated. (c. 104). Violations and penalties strengthened. (104-24). De- Tax Lien.—Recordation by Department of Taxation with Bureau of Conveyances of partment of Labor and Industrial Relations not required to pay employer’s attorney’s fees certificate setting forth taxpayer’s name, address, and taxes due shall be sufficient to and costs in wage enforcement cases. (387-12). Contractor’s failure to include prevailing create lien on land registered in land court. (231-33). wage provision in public works project not defense for noncompliance. (104-2[f]).

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–24 HAWAII LAW DIGEST EMPLOYMENT

LABOR RELATIONS . . . continued restrictions. (84-18). Furloughed state and county employees retain benefits and privi- Occupational Safety and Health (c. 396).—Administered by Department of Labor leges. (121-43). Provides bonus to qualifying state and county retirees. (88-11). and Industrial Relations. (396-4). Penalties. (396-10). Definition of serious and willful Substitute teachers of Department of Education shall constitute appropriate bargaining violations. (396-3). unit. (89-6, 89-11). Prohibits retaliation for filing complaints. (396-8). Fees to be established for issuance Public employees shall be terminated if convicted of felony for conduct related to of permits, licenses, certificates. (396-5.1). public employee’s duties. (78-1, 831-2). OSHA appeals transferred to Hawaii Labor Relations Board. (396-3). Paid leave up to 30 days to perform disaster relief for American Red Cross. (78-235). Employment-at-will is rule unless employment contract specifies definite period of Labor Disputes.—Unlawful to picket residence or dwelling place. (379A-1). Use of time or employment relationship is covered by collective bargaining agreement. (703 strikebreakers comprehensively regulated. (c. 379). Little Norris-La Guardia Act in effect. F.Supp. 863). Public policy exception. (100 Haw. 149, 58 P.3d 1196). Implied-in-fact (380-4). Stringent law passed in 1949 to curb and control strikes, lockouts, stoppages and contract exception. (68 Haw. 594, 724 P.2d 110). slowdowns in stevedoring industry. (c. 382). Labor disputes involving public utilities regulated in c. 381. Employers not covered by NLRA prohibited from permanently Child Labor.—Employment of children ages 14-18 outside school hours permitted in replacing strikers or giving preference to applicants willing to work during strike. (377- any gainful occupation with certain exceptions; employment of children under 14 very 6). Collective bargaining in public employment regulated in c. 89. limited; hours of work for children under 16 restricted. (390-2). Certificates of employ- ment and age required from Department. (390-3). Prohibition on minors under 18 from Labor Unions are recognized. Hawaii has no ‘‘right to work’’ law, and Employment working in adult entertainment. (390-2[a]). Relations Act has been adopted, defining relative rights of employers and employees, providing for election and certification of collective bargaining representative, specifying Employment Practices.—Employers who, in good faith, provide candid information what are unfair labor practices and how they should be prevented and controlled; little about former employees to prospective employers, have qualified immunity from civil National Labor Relations Act in effect. (c. 377). liability for disclosure. (663-1.95). Employer may make post-offer inquiries about ap- plicant’s conviction record (provided conviction is less than ten years old) if inquiry is Discrimination in Employment.—Civil Rights Commission established to enforce rationally related to duties and responsibilities of position. (378-2.5). Employer can employment and housing antidiscrimination laws, and to be fully effective as of Jan. consider ten year period of applicant’s conviction record, exclusive of period of incar- 1991. (c. 368). Discrimination in employment based on race, sex, age, religion, color, ceration. (378-2.5). Schools may consider criminal convictions in evaluating applicant’s ancestry, disability, known relationship with disabled person, marital status, sexual ori- suitability to working near children. (378-3[8]). Financial institution may discharge or entation, arrest or court record not having rational relationship to job prohibited (378-2); refuse to hire person convicted of crime involving dishonesty. (378-3[9]). Body fluid or discrimination in compensation and other terms and conditions of employment also tissue testing for HIV infection may not be done without prior written consent of subject prohibited (378-2, 387-4). Discrimination against lactating employee who breastfeeds or to be tested. Exceptions for anatomical gifts and research when anonymity is ensured. expresses milk during meal period or other break period at workplace required by law Also exceptions for purposes of diagnosis or treatment, or for protection of health care or collective bargaining agreement prohibited. Hawaii Civil Rights Commission required workers, when person is unable to give consent. (325-16). Discrimination in employment to compile and publish data on breastfeeding discrimination in workplace. (378-10.2). due to genetic information prohibited. (378-1). Employee may file civil action for sexual harassment or sexual assault in employment. Employer of 50 or more employees must grant up to 30 days leave to employee who (378-3). Employee may bring civil action of intentional infliction of emotional distress is victim or parent of victim of domestic or sexual violence. Employer of less than 50 and invasion of privacy in addition to claim for sexual harassment or sexual assault. employees must grant up to 5 days. (378-72). (378-3[10]). Compensatory and punitive damages are available remedies in employment Employers prohibited from discriminating on basis of gender by paying wages to discrimination cases. (85 Haw. 7, 936 P.2d 643). Laws placing age limits on state and employee at rate less than rate at which employer pays wages to employee of opposite county employees have been repealed. (378-3). Employee may not be suspended or sex for equal work, except if difference in wages based on seniority system, merit system, discharged solely on ground employer was summoned as garnishee for employee’s debt system that measures earnings by quantity or quality of production bona fide occupational or because of work injury compensable under workers’ compensation law. (378-32). qualification, or other permissible factor. (378-2, 3). Unlawful to require lie detector test as condition of employment and to discriminate against persons who refuse to submit thereto. (378-26.5). Unemployment Compensation.—Provisions adopted to conform to federal law. (c. 383). Almost all employees covered, exceptions enumerated in 383-7; companies that Prepaid Health Care Law enacted requiring employer to provide coverage for every only employ family members who own at least 50% of corporation shares exempt employee paid monthly wages of 86.67 times minimum hourly wage or more (393-11) (383-7[20]); master and servant relationship not required, see statutory test for coverage under qualified prepaid health care plan (393-7); see statute for exemptions (393-3, -4, (383-6). After one week waiting period, eligible for benefits if able to and available for -5, -17, -22). Coverage must commence after four consecutive weeks employment and work. (383-29[a]). Individual eligible for benefits based on prior benefit year must have continue three months after employee not able to work due to disability. (393-14, -15). received wages equal to five times weekly benefit amount. (383-29). Alien receiving Employer must pay one-half of premium, with balance paid by employee to extent not benefits must have been lawfully present for purposes of performing work in U.S. greater than 1.5% of wages. (393-13). Different prepaid health care plan and cost al- (383-29[d]). Disqualification from eligibility if terminated voluntarily, discharged for location may be established through collective bargaining. (393-13). Policies must pro- misconduct, failed to apply for work, participated in labor dispute and unemployment is vide coverage for contraceptive services and supplies, except where contrary to religious due to stoppage of work, and other reasons. (383-30). Employee seeking unemployment employer’s tenets (431:10A-116.6; -116.7); mammogram screening for women age 40 benefits for constructive discharge has burden of showing voluntary termination of and over, and for women with history of breast cancer upon recommendation of physician employment was with ‘‘good cause’’, as defined in statute. (81 Haw. 84, 912 P.2d 581; (431:10A-116); hospice care (431:10A-119); medical foods and low-protein modified 383-30[3][A]). Benefits paid weekly in amount calculated by formula up to maximum food products for treatment of inborn error of metabolism (431:10A-120); and outpatient of 2⁄3 of statewide average weekly wage determined annually by department. (383-22). diabetes self-management training, education, equipment, and supplies. (431:10A-121). Benefits limited to 26 weeks (383-24); may be extended 13 weeks by Governor upon All health insurance policies, contracts, plans and agreements, including workers’ com- occurrence of disaster (c. 385). Dislocated worker allowance available to supplement pensation coverage, must provide coverage and equitable reimbursement for services unemployment compensation for unemployed due to plant closure or layoff. (394B-10). provided by advanced practice registered nurses. (431:10A-116[6]). Exemption for 25 or Experience record of predecessor employer may be transferred to successor company, less repealed by 2000, Act 243. New criteria for use by Legislative Auditor to assess even when only portion of predecessor employer’s business has been acquired. (383-66). impact of proposed changes to mandatory health insurance coverage. (23-51). System of worker profiling has been adopted. (383-92.5). Long-Term Care Insurance standards enacted which conform to provisions in 1998 Employer required to contribute up to 50% of cost of employment training program Long-Term Care Insurance Model Act and Model Regulations of the National Associa- and subject to .01% tax. (383-128, 383-129). tion of Insurance Commissioners. Allows employers to offer group long-term care in- Parties may file appeals directly with Employment Security Appeals Referee’s Office. surance policies, if they choose to do so. Appropriates funds for long-term care actuarial (383-38). study on feasibility and advisability of establishing state-sponsored universal program of long-term care. (431:10H-101 et seq.). Public Employees.—U.S. citizen and state residency requirements for elected (three years) and appointed (one year) officers of state government or municipal subdivisions Temporary Disability Law enacted entitling employee to weekly benefits for dis- thereof; all other employees must be U.S. citizens, nationals or permanent resident aliens ability resulting from accident, sickness, pregnancy, or termination of pregnancy not and state residents at time of application for employment. (78-1). Employment preference connected with or resulting from employment (392-21, -22); exemptions enumerated at granted to state residents who have filed resident returns and their dependents. (78-1). 392-5. After seven day waiting period (392-23, -24) in amount computed by formula Exceptions for University of Hawaii and positions requiring highly specialized technical based on wages up to maximum under workers’ compensation law (392-22); with certain and scientific skill or knowledge. (78-1). Public employees permitted by Haw. Const. Art. exceptions, disabled employee not eligible if not under care of physician or other licensed XIII, §2 to organize for collective bargaining as prescribed by law. C. 87A establishes practitioner who certifies disability (392-26). Eligibility for benefits based on the 52 Hawaii Employer-Union Health Benefits Trust Fund. C. 88 establishes State Pension and weeks immediately preceding first day of disability. (392-25). Employer required to Retirement Systems. Reciprocal beneficiaries eligible for many of same benefits as provide for benefits through insurance or other methods specified by statute. (392-41). spouses. (431:10A-601). Reciprocal beneficiary family coverage available to reciprocal Penalties for employers who fail to comply with these laws. (392-92). Each insurer must beneficiaries to same extent family coverage available to non-reciprocal beneficiaries. maintain complete claims service office or engage independent claims adjusting service (431:10A-601). C. 89 prescribes methods of organizing and collective bargaining for in Hawaii. (392-42.5). state, county and municipal employees, including those employed by Board of Education Substance Abuse Testing.—All substance abuse testing must be done in state licensed and University of Hawaii. Negotiations may not include proposals which violate merit laboratory, except that employer is allowed to administer substance abuse on-site screen- principles. (85 Haw. 61, 937 P.2d 397). Hawaii Labor Relations Board created. (89-5). ing tests for preemployment purposes provided: (1) Test is administered according to Provision made for grievance procedures, impasse procedures, mediation, fact-finding U.S. Food and Drug Administration on-site screening drug test guidelines; (2) on-site and arbitration (89-11), compulsory arbitration required for institutional, health, and screening test has been approved by Director of the Hawaii Department of Health (DOH) correctional workers (89-11), firemen and police officers (89-11), and strikes by public for such preemployment screening; (3) employer adheres to rules adopted by DOH for employees permitted after all such channels exhausted, but not if disputes submitted for handling of specimens, chain of custody, and confidentiality; (4) operator who admin- binding arbitration (89-12). Exclusive representative must be given access to employee’s isters test has been trained in use and administering of test by manufacturer of test; (5) personal records which are relevant to investigation or processing of grievance. Exclusive specimens which test positive in on-site test are submitted for confirmatory test if positive representative cannot share or disclose specific information contained in personal records test result could affect employment decision; (6) positive confirmatory test is reviewed and must notify employee that access has been obtained. (89-16.5). Post-employment by medical review officer. (c. 329B). Individual tested must receive written statement of

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–25 EMPLOYMENT MARTINDALE-HUBBELL LAW DIGEST - 2007

LABOR RELATIONS . . . continued telephone numbers, and websites available at http://www.hawaii.gov/portal/government/ specific substances to be tested for and medication disclosure form. Test results to be agencies.html. confidential. Third parties covered by federal drug testing regulation exempt. (c. 329B). Prohibited Acts of Pollution.—See specific subheads. Most environmental statutes Workers’ Compensation.—Uniform Workmen’s Compensation Act adopted with broadly prohibit violating any provision of statute or regulations promulgated thereunder. amendments. (c. 386). Worker’s Compensation Benefits Facilitator established to assist All administrative rules available by topic at http://www.hawaii.gov/ltgov/office/ workers, employers, insurers and providers with filing and processing claims. (386-71.6). adminrules. With exception of civil actions for sexual harassment or sexual assault (378-3), 386-5 Air Pollution Control.—Permit required to cause any pollution and for construction, provides exclusive remedy for injuries arising out of and in course of employment, operation, and modification of most stationary sources. (§§342B-11, 342B-22). Envi- including alleged emotional distress injuries arising from termination (9 Haw. App. 21, ronmental Protection Agency has approved state’s permit program, which implements 821 P.2d 937; 899 F.2d 845). Claims for mental stress resulting solely from disciplinary requirements of Clean Air Act, 42 U.S.C. §7401 et seq. Permit issued for term up to five action taken in good faith by employer are prohibited; provided that if collective bar- years (342B-25) and not transferable (HAR §11-60.1-7). Civil penalties up to $25,000 gaining agreement or other employment agreement specifies different standard for dis- per day and possible criminal penalties for violating c. 342B. (§342B-47). State citizen ciplinary actions, standards set in such agreements shall be applied in lieu of good faith suits authorized. (§342B-56). Open fires generally prohibited. (HAR §11-60.1-52). Fines standard. Injuries covered (386-3) include psychogenic disabilities (714 F.Supp. 1108). up to $10,000 per day. (§342B-47). Smoking prohibited in certain public places. (c. Employer may determine benefits and coverage through collective bargaining with ap- 328K). No motor vehicle air conditioning equipment repair in violation of ozone pro- propriate bargaining unit. (386-3.5). Employer disclosure of premium information to tection requirements. (§437B-12). Violations of any statute, rule or permit condition employees mandated. (431:14-110.5). Ceiling on death or disability benefits is 312 times governing asbestos prohibited. (§342P-40). Criminal penalties for knowing asbestos maximum weekly benefit. (386-43[b]). Ceiling on disfigurement is $30,000. (386-32). violations and false statements. (§342P-24). Ceiling for weekly benefit is 662⁄3% of state’s annually determined average weekly wage. (386-31, -32). (Duration depends on nature of injury, or identity of dependent in case of Water Quality Control.—No discharges in violation of water quality, effluent or death.). Director of Labor and Industrial Relations must approve claims for services. treatment standards; standards of performance for specific areas and types of discharges; (386-94). Statutory presumption that claim is for covered work injury. (386-85). Adopted National Pollution Discharge Elimination System. (§342D-5; HAR cc. 11-54 and 11-55). temporary disability insurance for many nonoccupational accidents and sickness. (c. Non-point Source Pollution Control program (c. 342E); and safe drinking water (c. 340E) 392). ‘‘Odd-lot’’ factors such as age, limited education, and limited transferable skills provisions. Violator must report unlawful pollution within 24 hours. (§342D-51). Civil cannot be considered impairments for purposes of rating preexisting permanent partial penalties up to $25,000 per day, and criminal penalties for negligent and knowing disability. (892 P.2d 468). Reimbursement of physical therapist assistants required. (386- violations. (§§342D-30 to 342D-35). Any new or renewed lease of water rights from state 1). Vocational rehabilitation unit established within Department, which allows injured requires watershed management plan. (§171-58). Causing nuisance by discharging nox- employee under workers’ compensation to select certified provider of rehabilitation ious matter in stream or shore water prohibited. (§181-3). services. (386-25). Filing requirements for out-of-state employers. (386-10). Director of Noise Pollution.—‘‘Excessive noise’’ in volume, quantity, or duration that endangers Labor and Industrial Relations has original jurisdiction over controversies and disputes health, safety or property or unreasonably interferes with comfortable enjoyment of life over employment and coverage under Workers’ Compensation law. (386-73.5). Penalties and property prohibited. (c. 342F). Penalties up to $10,000 per day. (§342F-9, HAR for employers who fail to comply with these laws. (386-95; -97.5; 392-92; 393-33-34; §11-46-16). 386-92). Director decisions may be enforced by circuit court. (386-91). Fraudulent Hazardous Materials.—No transport or release of hazardous materials in violation of insurance acts subject to criminal penalties. (386-98). Hawaii Employer’s Mutual In- rules. (§286-223). Reporting hazardous materials incidents required. (§286-225). Own- surance Company established to provide workers’ compensation coverage to employers; ership, construction, or operation of hazardous waste management facility without permit starting Jan. 1, 1997, applicable to Hawaii employers otherwise entitled to coverage but prohibited, and treatment, storage, or disposal of hazardous waste at unpermitted facility not able to or not electing to purchase in voluntary insurance market. (c. 431:14A). prohibited. (§342J-30). Required annual notifications of disposition of hazardous waste. Injuries occurring on employer’s premises are covered by workers’ compensation only (§342J-6.5). Fines of up to $25,000 per day for violating c. 342J, any permit, variance, insofar as they arise out of employment-related risk. (77 Haw. 100, 881 P.2d 1246). or rule thereunder. Fines up to $10,000 per day for denying or obstructing authorized Disclosure of workers’ compensation evidence may be appropriate where purpose rel- inspection or failing to provide certain required information. (§342J-9). Asbestos and lead evant to trial. (897 P.2d 941). Employers have until Jan. 31 to file annual injury report. regulated. (c. 342P). (386-95). Used oil transport, recycling and disposal regulated. (c. 342J). Discharging or Medical redefined to include services provided by occupational therapist, certified allowing oil to enter ground, sewers, drainage systems, surface or ground waters, or occupational therapy assistant or licensed massage therapist. (386-1). marine waters prohibited. (§342J-52). Permit required to transport, market, or recycle Business Closing or Relocation.—Dislocated Workers Act adopted. (c. 394B). Em- used oil or used oil fuel. (§342J-53). Fines of up to $25,000 per day for violating c. 342J, ployers with 50 or more employees must provide employees and Department of Labor any permit, variance, or rule thereunder. Fines up to $10,000 per day for denying or and Industrial Relations with 60-day (394B-9) written notice of business closing, partial obstructing authorized inspection or failing to provide certain required information. closing or relocation of operations and must pay supplemental unemployment benefits for (§342J-9). approximately four weeks (394B-9; B-10). Dislocated worker allowance available to Underground Storage Tanks.—Various sections describe tank standards, notification supplement unemployment compensation for unemployed due to plant closure or layoff. requirements, prohibited acts, enforcement procedures, emergency procedures, petroleum (394B-10). releases, penalties, and permit requirements. (c. 342L). Fines of up to $25,000 per day Whistleblower Protection.—Public and private employees who report suspected vio- for violating c. 342L, any permit, variance, or rule thereunder. Fines of up to $500 per lations of law can invoke judicial recourse if retaliated against for such reports by day for denying or obstructing authorized inspection. (§342L-10). Owner of leaking employer. (378-63). Protection for employees who report or are about to report to underground storage tank must restore environment to acceptable condition. (§342L-35). employer or public body. (378-62). Statute of limitations increased to two years and Lead Acid Batteries.—No disposal or discharge of electrolyte from used lead batteries maximum penalty to $5,000. (378-63, -65). onto ground or into sewers, drainage systems, surface or ground waters, or ocean waters. Smoking in Workplace.—Written smoking policy required for any state or county (§342I-1.5). Lead acid battery wholesalers must accept used lead batteries. (§342I-4). agency or any private corporation, firm, or association which receives state funds. Fines up to $10,000 per day for violations, and criminal penalties for knowing violations. (328K-13). (§342I-8). Family Leave.—Employees employed not less than six months by employer who Pesticides.—Unlawful acts include selling, transporting unlicensed pesticides, im- employs 100 or more workers may take four weeks family leave upon birth of child, properly labeled pesticides, pesticides containing prohibited ingredients; defacing pes- adoption, or to care for child, spouse or parent with serious health condition. (c. 398). ticide label; selling restricted use pesticides without label (§149A-11), using pesticide in Employers of 100 or more workers who provide sick leave must allow employees to use manner inconsistent with its label or in manner which would have unreasonable adverse up to ten days of accrued and available sick leave to care for child, spouse, parent or effects on environment (§149A-31). Administrative penalties up to $5,000 for violating grandparent with serious health condition. (398-4). Paid leave of two hours for parent any statutory provision or rule, and criminal penalties for knowing violations. (§149A- to attend scheduled education conference for minor child. (78-31). 41). Reciprocal beneficiaries receive identical benefits as spouses in many circumstances. Remediation.—Environmental Response Law (state “Superfund” law) (c. 128D; HAR (c. 572C). §11-451) patterned after Federal Comprehensive Environmental Response, Compensa- tion and Liability Act (CERCLA). “Hazardous substance” includes oil and trichloro- WORKERS’ COMPENSATION LAW: propane. (§128D-1). Liability for release of heavy fuel oil from interisland tank barge See topic Labor Relations. limited to $700,000,000. (§128D-6.5). Voluntary response program in effect. (§128D-31). Uniform Environmental Covenants Act. (2006 Sess. Law Act 279). Solid Waste Management.—Standards for solid waste disposal facilities. (cc. 342G, ENVIRONMENT 342H; HAR 11-58.1). Dumping solid waste outside permitted solid waste management system punishable by loss of contractor’s or other license, and fines and criminal pen- ENVIRONMENTAL REGULATION: alties. (§342H-39). Dumping one cubic yard petty misdemeanor. (§342H-39). Dumping General Supervision.—Department of Health responsible for air, noise, and water ten cubic yards or more felony. (§342H-37). Transporting petroleum-contaminated soil pollution; solid and hazardous waste; and underground storage tanks. except to soil remediation site generally prohibited. (§342H-4.5). Constructing, modi- State Emergency Response Commission administers Hawaii Emergency Planning and fying, or operating solid waste disposal unit without permit prohibited. (§342H-52). Community Right-to-Know Act (HEPCRA). (c. 128E). County responsibility for private sewage and wastewater treatment systems. (§342G-61). State Office of Environmental Quality Control evaluates environmental assessments Plastic containers must have labels showing type of plastic resin made of. (§342H-42). and impact statements. (c. 343). Board of Land and Natural Resources responsible for Advance deposit on beverage containers to encourage recycling. (§342G-102). Removal public lands (c. 171), water (c. 174) and coastal areas (c. 200), forests (c. 183), aquatic of recyclable materials from collection sites prohibited. (§342H-21). Recycled glass life (c. 187A-190), wildlife resources (c. 183D), soil conservation (c. 180), and historic sometimes required for pavement construction. (§103D-407). Disposal of used tires only preservation (c. 171 to 200). Commission of Water Resource Management administers with tire seller or recycler. (§342I-22). Littering prohibited. First littering offense pun- Water Code. (c. 174C). Office of Planning administers coastal zone management. (c. ishable by four hours of picking up litter. (§§291C-132, 339-8). 205A-2). Board of Agriculture regulates pesticides. (c. 149A). All agency addresses, Recycling.—See Solid Waste Management and Lead Acid Batteries, supra.

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–26 HAWAII LAW DIGEST ESTATES AND TRUSTS

ENVIRONMENTAL REGULATION . . . continued Survivorship.—Uniform Simultaneous Death Act (c. 534A) repealed effective Jan. 1, Land Use Planning.—Land Use Commission’s classifications of all land in state 1997. (1996 Haw. Sess. Laws 288, §9). Arts. I through IV of 1993 Uniform Probate Code limits permissible uses. (c. 205). No unauthorized activities, in conservation districts (c. adopted as 560:1-101 to 560:4-401, with modifications (existing 560:1-101 to 560:4-401 183C, HAR §13-5-22), in coastal zone management areas (c. 205A), or agricultural repealed). See topic Descent and Distribution. districts (§205-4.5). See category Civil Actions and Procedure, topic Actions, subhead Abatement and Enforcement.—Department of Health and Board of Land and Natural Resources can Revival. conduct administrative inspections and obtain injunctive relief or administrative, civil, Action for Death.—Legal representative, surviving spouse, reciprocal beneficiary, and criminal penalties for violations within their respective jurisdictions. Administrative children, father, mother, or dependent of one whose death was caused by wrongful act hearing and judicial review of agency action available under c. 91. Agency enforcement of another may maintain action for damages against person causing or responsible for policies available through requests for public documents. (c. 92F). death. Action must be brought within two years. No limitation of recovery. Damages may Environmental assessments and public review and comment required for proposed include loss of society, companionship, comfort, consortium, protection, marital care, actions involving public lands or funds, projects in designated areas, and certain activities attention, advice, counsel, loss of filial care, loss of parental care, training, guidance, on private lands, including expansion in generating capacity of existing power-generating education. (663-3). facility. (§343-5, 2004 c. 55, HAR §11-200-6). Environmental impact statement required Living Will.—Recognized in Uniform Health-Care Decisions Act (Modified), adopted if proposed action may have significant effect on environment. (§343-5). Office of with certain modifications for surrogate decision-making. (c. 327E). See topic Wills. Environmental Quality Control Responsibility evaluates adequacy of environmental as- Death Certificate.—See category Documents and Records, topic Records, subhead sessments and impact statements. (§343-5, HAR §11-200-6). Vital Statistics. Historic Preservation.—Injuring or altering historic property, artifact, or burial site Uniform Anatomical Gift Act adopted. (c. 327, Part I). Modified by allowing re- prohibited. (c. 6E-71). ciprocal beneficiary to have same right as spouse to make, revoke, or object to anatomical Conservation.—Polluting or disturbing cave surfaces or resources prohibited. (c. 6D). gifts. (327-3). Fines for violations of c. 6D and criminal penalties for knowing or reckless violations Determination of Death.—Death occurs when irreversible cessation of spontaneous c. 6D. (§§6D-11, 6D-12). No importation from foreign countries or other states of respiratory and circulatory functions first coincide, or, when artificial life support systems substances or plants diseased or infected with insects or likely to assist in transmission utilized, when there is irreversible cessation of all brain and brain stem functions. of disease or infestation. (c. 141-2). Fines for violations of c. 141. (§141-7). Strip mining (327C-1). or noxious matter in stream or shore water prohibited. (§181-3). Fines and criminal penalties for violating c. 181. (§181-9). Natural Area Reserve System protects unique DECEDENTS ESTATES: geological and volcanological features and marine and terrestrial plants and animals. (§195-1). Fires, tent camping, and entry into lake or pond in natural area reserve pro- See topics Executors and Administrators, Descent and Distribution, and Wills. hibited. (HAR §13-209-4). Fine up to $2,500 for first offense. (c. 195-8). No fires, unleashed pets, improper vehicle use in forest preserves. (HAR §§13-104-7, 13-104-11, DESCENT AND DISTRIBUTION: 13-104-12). Criminal and administrative penalties for violating forest reserve law. Uniform Probate Code.—Arts. I through IV of 1993 Uniform Probate Code adopted (§183-18; 183-21). Vehicles prohibited in natural area reserve. (c. 195). Conservation as 560:1-101 to 560:4-401, with following modifications: Validity of letters testamentary easements recognized. (c. 198). Renewable energy and energy efficiency for state fa- and letters of administration limited to three years. (560:1-201). Excepting from juris- cilities, vehicles, and equipment. (c. 196, §W3D-412, c. 46). diction family court’s exclusive jurisdiction over guardianship of person. (560:1-302). No Marine and Aquatic Resources.—Taking certain aquatic life without license pro- change from 1992 law (formerly 560:2-109); adopted child has right to inherit from hibited. (§187A-13). Unlawful to use explosives, electrofishing devices or poisonous natural parents if child adopted within extended family; definition of natural parent substances without permit. (§188-23). Fishing in certain waters prohibited. (§188-35). expanded to include prior adoptive parents. (560:2-114). Parent of minor decedent will Taking marine life for commercial purpose without license prohibited. (c. 189). All be treated as if parent predeceased minor if parent abandoned or failed to support minor marine waters are marine life conservation area. Taking coral, sand or marine life without as defined in 560:2-103. Surviving spouse or reciprocal beneficiary may choose partial permit prohibited. (§§188-68, 190-1, 190-4, HAR §13-34-2). Fines and/or criminal pen- elective share. (560:2-202). Raises to $20,000 aggregate amount of pre-death transfers alties for violating cc. 187A, 188, 189, and 190, or rules or permits thereunder. (§§187A- by decedent to donee other than spouse or reciprocal beneficiary that are exempt from 13, 188-70, 189-4, 190-5). Liability for damage by grounded vessels. (§200-47.5). augmented estate. (560:2-205). Augmented estate property gifted to or held in trust for decedent when neither decedent nor surviving spouse or reciprocal beneficiary was Penalties.—Varying administrative, civil, and criminal penalties for specific prohibited responsible for creating property (continuing special status of this property under Hawaii acts. Enhanced penalties for repeat violations. See specific subheads. family law); property must have been held segregated from other augmented estate Permits.—See specific subheads. assets. (560:2-208). Additional protection provided to descendants of first spouse or Coastal Zone Management.—Development in violation of shoreline setbacks or reciprocal beneficiary to die against election by guardian of incapacitated surviving special management area restrictions prohibited. Penalties include civil fine up to spouse or reciprocal beneficiary. (560:2-212). Increased sanctions on person who know- $100,000, $10,000 per day, and costs of restoration of affected environment. (§205A-32, ingly and willfully ‘‘hides’’ will of decedent. (560:2-516). Instances where property can HAR §15-150-32). Expanded definition of “coastal zone management area”. (§205A-1). be substituted for specifically devised property are restricted. (560:2-606). Substitutes prior Hawaii law five year limit to submit will for probate. Informally probated will WATER LAW: contest period expires 90 days after receiving notice, 12 months from date will informally admitted, or 30 days after order settling estate, whichever occurs first. (560:3-108; No withdrawal or diversion of water in water management area without permit. 560:3-301[a][1][f]). Requires prior notice of application for informal probate of will to (§174C-48). No well construction without permit. (§174C-84). heirs and devisees if person making application is not professional fiduciary or close family member. (560:3-302; 560:3-306). Beneficiaries and heirs must be notified that WILDLIFE AND ENDANGERED SPECIES: court is available to resolve disputes about attorney’s fees. (560:3-306). Burden of proof Endangered or threatened species protected. (c. 195D-4). Taking endangered or threat- in contested probate cases may shift as prescribed by rules of evidence. (560:3-407). ened species prohibited. (HAR §13-124-3). Citizen suits against governmental agencies Bonds in probate do not lapse because of personal representative’s errors. (560:3-606). to challenge habitat conservation plans and safe harbor agreements. (§195D-32). No UPC scheme generally abandoning court confirmation of sales of realty retained, except hunting of wildlife or possession of weapons or traps on public lands without permit or that interested party may still request judicial intervention under 531-28.5 and 531-29. authorization. (HAR §13-121-3). Various penalties. (HAR §13-121-5). Prohibitions about (560:3-715). Personal representatives have option to publish notice to creditors and game hunting and commercial shooting preserves, including kind of game (HAR §13- provide vehicle for trustees of decedent’s trust to publish notice compelling creditors to 122-7), limited hunting hours (HAR §13-122-8) and methods (HAR §13-122-12). In- timely present their claims or have them time barred (if no publication, creditor’s claims vasive Species Council. (2006 Sess. Law Act 109). would be barred if not presented within 18 months after death). (560:3-801; 560:3-803). New law also affects estates open before Jan. 1, 1997, but rules of construction relating to ‘‘per stirpes’’, “by representation”, and “per capita at each generation” apply only to ESTATES AND TRUSTS testamentary instruments executed after Jan. 1, 1997 (560:2-709). Consult 1996 Act 288, §5 for other effective dates. ADMINISTRATION: Afterborn heirs must survive at least 120 hours after birth. (560:2-108). See topic Executors and Administrators. Half Blood.—Relatives of half blood inherit same as relatives of whole blood. (560:2- ADVANCEMENTS: 107). See topic Descent and Distribution. Children Born to Parents Not Married to Each Other.—Individual is child of natural parents regardless of their marital status. (560:2-114). Parent-child relationship ALLOWANCES: may be established under c. 584. See topic Executors and Administrators. Adopted Children.—See category Family, topic Adoption. Determination of Heirship.—Judges of circuit court determines. (560:3-405). CLAIMS: Election.—Uniform Probate Code applies (560:2-201, et seq.), with modifications See topic Executors and Administrators. discussed supra. Escheat.—Uniform Unclaimed Property Act. (c. 523A). See category Property, topic DEATH: Absentees, subhead Escheat. Presumption of death from absence of five year continuous period. (560:1-107[5]). See also topic Executors and Administrators. Certificate.—Obtained from Vital Records Section, Department of Health, State of Hawaii, Honolulu, Hawaii 96813. Fee $10 for first copy, $4 for each additional copy ELECTION: ordered at same time. See topic Wills.

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–27 ESTATES AND TRUSTS MARTINDALE-HUBBELL LAW DIGEST - 2007

ESTATES: Employees trusts as part of plan for exclusive benefit of employees are lawful. (c. See category Property, topic Real Property. 555). Gifts to Minors.—See category Family, topic Infants. EXECUTORS AND ADMINISTRATORS: Eligibility and Competency.—No corporation may act as trustee in Hawaii except a Uniform Probate Code.—Effective Jan. 1, 1997, Arts. I through IV of 1993 Uniform trust company (412:8-103), or bank authorized to engage in trust business (412:5-205). Probate Code adopted as 560:1-101 to 560:4-401 with following modifications. Uniform See category Business Regulation and Commerce, topic Banks and Banking. Probate Code procedure applies, unless court decides, in interest of fairness, that it does Accounting.—Required unless statute, trust document or will provides to contrary. not or former rules are applicable. (1996. Act 288, §5[b][2], amending UPC, Art. III). (554-4). Accounts usually filed annually but court can permit biennial or triennial filing. All rights and priorities of spouse also apply to reciprocal beneficiary. (572C-1). (554-4). Accounts may be referred to master (usually disinterested). Accounts of chari- Exemption from Bond.—No bond is required of personal representative unless: table trusts are referred to attorney general. special administrator appointed; will requires bond; bond is requested by interested party Uniform Fiduciaries Act adopted in 1945. (c. 556). §189-3, Revised Laws of Hawaii and court is satisfied it is desirable; court determines it is needed. (560:3-603). 1955, pertaining to Uniform Fiduciaries Act repealed by adoption of Uniform Commer- Notice of Appointment.—State limits ‘‘no notice’’ ability to certain relations to cial Code. (490:10-102[1]). decedent and corporate personal representatives. All others must give notice. (560:3-302 Uniform Trustees’ Accounting Act has not been adopted. to 306). Uniform Common Trust Fund Act has been adopted, with modifications. (412:8- Uniform Fiduciaries Act adopted in 1945. (c. 556). §189-3, Revised Laws of Hawaii 402). 1955, pertaining to Uniform Fiduciaries Act repealed by adoption of Uniform Commer- cial Code. (490:10-102[1]). Revised Uniform Principal and Income Act has been adopted, with modifications. (c. 557A). Revised Uniform Principal and Income Act has been adopted, with modifications. (c. 557A). Securities in Name of Nominee.—Statute permits any trust company acting as fi- duciary, and any fiduciary acting as co-fiduciary with a trust company to hold securities Uniform Transfer-On-Death (TOD) Security Registration Act adopted, enabling in the name of a nominee or nominees unless expressly otherwise provided by the individuals to designate non-testamentary beneficiary for transfer of registered securities. instrument, decree or order creating the fiduciary relationship. (412:8-203). (c. 539). Accumulations.—No statutory rule. FIDUCIARIES: Perpetuities.—See category Property, topic Perpetuities. See topics Executors and Administrators, Trusts; category Family, topic Guardian and Ward. WILLS: Uniform Probate Code.—Effective Jan. 1, 1997, Arts. I through IV of 1993 Uniform INTESTACY: Probate Code adopted as 560:1-101 to 560:4-401 with modifications. See topic Descent See topic Descent and Distribution. and Distribution. Simultaneous Death.—See topic Death, subhead Survivorship. LIVING WILLS: Testamentary Trusts.—See topic Trusts. See topic Wills. Unclaimed Legacies.—Uniform Unclaimed Property Act adopted in amended form. PROOF OF CLAIMS: (c. 523A). See category Property, topic Absentees, subhead Escheat. See topic Executors and Administrators; category Civil Actions and Procedure, topic Living wills recognized in Uniform Health-Care Decisions Act (Modified), adopted Pleading. with certain modifications for surrogate decision-making. (c. 327E). All interested per- sons shall reach consensus as to who should make health care decisions on behalf of TRUSTS: patient. If there is no consensus, any interested person may seek guardianship. Surrogate who was not designated by patient may only decide to withhold artificial nutrition and Uniform Custodial Trust Act adopted (c. 554B) with following modifications: Ben- hydration after primary physician and second independent physician determine that it is eficiary treated as incapacitated where required by transferor in trust instrument; or merely prolonging death and patient is not likely to have any neurological response. (c. custodial trustee makes such determination. (554B-10). Custodial trust terminates when 327E-5). Durable power of attorney authorizes agent to make health care decisions. trustee receives signed instruction from beneficiary, if not incapacitated, or beneficiary’s (551D-2.5). For form of health care power of attorney see subhead Form of Durable guardian; or upon beneficiary’s death. (554B-17). Power of Attorney, infra. See also topic Death. Uniform Disclaimer of Property Act adopted. (c. 526). Optional Form of Durable Power of Attorney.—Power of attorney authorizing Uniform Probate Code.—Arts. I through IV of 1993 Uniform Probate Code adopted health care decisions. Durable power of attorney authorizes agent to make lawful health as 560:1-101 to 560:4-401 with modifications. See topic Descent and Distribution. Art. care decisions pursuant to c. 327E. (551D-2.5). Uniform Health-Care Decisions Act VII of 1969 Uniform Probate Code (c. 560), but not 1975 or 1977 Official Amendments, Optional Form for Durable Power of Attorney for Health-Care Decisions (with modi- still applies with following modifications: Trustee personally liable on contracts entered fications) adopted. (327E-16). into in fiduciary capacity in course of administration of trust estate unless otherwise provided in contract; trustee also personally liable for obligations arising from ownership or control of property of trust estate and for torts committed in course of its adminis- FAMILY tration without regard to whether he is personally at fault (560:7-306). Qualification of Foreign Trustees omitted from Hawaii statute. Claim against trustee for breach of trust ADOPTION: may be brought by beneficiary within two years after receipt of final account or state- Any proper adult person, not married, or married to legal parent of minor, or husband ment. (560:7-307). and wife jointly, may petition family court of circuit wherein they reside, or individual Uniform Prudent Investor Act adopted. (c. 544C). to be adopted resides or was born, for leave to adopt, and for change of name of Uniform Trustees’ Powers Act adopted. (c. 554A). Applies to any trust with Hawaii individual. (578-1). Decree may be set aside or modified within one year, for good cause. situs. (554A-8). Revised to permit non-pro rata distribution (554A-3) and to permit After one year, decree may be set aside only for fraud. (578-12). trustee to divide trust for generation skipping transfer tax purposes (§554A-3[c][26]). Written consent must be given by: (1) Mother of child; (2) legal father of child born Generally, common law governs creation, administration, and termination. Statutes of parents married to each other; (3) natural father adjudicated by court; (4) natural father should be consulted regarding vesting of title of trust estate (554-1); nomination of as presumed by statute; (5) natural father who demonstrates concern and responsibility trustees by beneficiaries (554-2); power of circuit court to authorize or direct trustee to for child; (6) person or agency having legal custody; (7) court having jurisdiction if lease or invest (554-3); annual accounts (554-4); restriction on investments (554-6); guardian or custodian not empowered to consent to adoption; (8) child if over ten years assignees for creditors (554-7); charitable trusts (554-8, 9, 10); land trusts (c. 558). Parol old. (578-2[1]-[8]). Petition to adopt adult niece, nephew or stepchild may be granted if trusts have been held valid. (2 Haw. 662[1863]). written consent to adoption has been executed by adult and spouse, if adult is married. Investments by trustees are restricted. (554-6). See category Business Regulation and (578-2[b]). Consent not required of: (1) Parent who has deserted for 90 days without Commerce, topic Banks and Banking, subhead Trust Companies. affording means of identification, or who voluntarily surrendered child to care and Trustee must comply with Prudent Investor Rule. (554C-1). custody of another for over two years; (2) parent who has not communicated with child or provided support for one year; (3) natural father whose relationship has not been Compensation.—Of all money and property received as trust income, trustee is adjudicated, who is not entitled to presumption of paternity as defined in 578-2(d), or allowed 7% commission for first $5,000 and 5% commission for all over $5,000 payable who has not demonstrated reasonable degree of interest, concern or responsibility for as income is received, but not more often than once a year. (607-18[a]). On principal, welfare of child; (4) parent whose rights have been judicially terminated, or who is commissions are as follows: 1% on value at inception of trust, payable at such inception judicially declared mentally ill or retarded and has been found by court to be incapaci- out of principal: 5/10 of 1% on value at end of each year, except to extent trustee employs tated from giving consent; (5) legal guardian or custodian who fails to respond to request outside clerical and bookkeeping services at expense of estate; 1% on value of all or any for consent for 60 days, or who unreasonably withholds consent; (6) parent of child who part of estate on final distribution thereof, payable at termination of trust out of principal; has been in custody of petitioner for at least one year and who entered U.S. as conse- 21⁄2% on cash principal received after inception of trust, payable at time of receipt out quence of extraordinary circumstances in country of origin by reason of which existence, of principal; 21⁄2% on final payment of any cash principal prior to termination of trust, identity or whereabouts of child’s parents is not reasonably ascertainable, or there is no payable at time of such final payment out of principal. Further allowance may be made reasonable means of obtaining suitable evidence of child’s identity or availability for by court for special services, but contract for higher compensation between trustee and adoption (578-2[c][1]). Court may dispense with consent of concerned father who has beneficiary is void. (607-18[c]). Trustees of charitable trusts will receive reasonable not filed petition to adopt, or whose petition to adopt has been denied, or of adjudicated, compensation. (607-20). presumed, or concerned father who is not fit to give child proper home, or whose child Common Trust Funds.—See category Business Regulation and Commerce, topic has lived with his legal mother and petitioning stepfather for one year. (578-2[c][2]). Due Banks and Banking. notice, actual or constructive, must be given each parent who has not consented unless

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ADOPTION . . . continued If service is not feasible, inconvenient, or defendant is outside state, personal notice consent or notice waived by court as permitted by 578-2. (578-2[e]). Parental rights may through court authorized person permissible and hearing held not less than 20 days be terminated for purposes of making available for adoption. (571-61[b]). Parental con- thereafter. If defendant cannot be found after 15 days reasonable search either before or sent valid and binding even though it does not designate any specific adoptive parent(s), after filing complaint, published notice at least once a week for three successive weeks if it clearly authorizes department of human services licensed child placing organization may be authorized by court and case heard at time specified, not less than 20 days after (346-17), or some proper person not forbidden by law to place child for adoption, to last publication. (580-3). If plaintiff, due to impoverishment, cannot publish notice, select and approve adoptive parent(s) for child. plaintiff may file affidavit attesting to impoverishment and that whereabouts of individual Effect of Adoption.—Adopted child becomes in all respects child of adoptive parents, sought are unknown. Service can be made by forwarding certified copy of pleadings and and inherits from and through them; loses all rights incident to former status. (578-16). process to individual at last known address by registered or certified mail, sending If adopted before age of majority by natural relation or spouse of natural relation, then certified copy of pleadings and process to defendant’s closest known relative, and posting under any will, trust, or other lifetime instrument, rights of adopted individual’s natural copy of pleadings and process at courthouse where pleadings and process have been filed. family not affected by adoption; adopted individuals included in determination of heirs (580-3[e]). or class members, unless specifically excluded. (560:2-114). Adopted individual desig- Pleading.—Action commenced by filing complaint and must allege (in general terms): nated in two or more classes, both by adoption or natural relation, entitled to benefit in Residency and domicile (see subhead Residence, supra), parties are lawfully married, class with largest share. (560:2-113). Adopting parents by earlier adoptions included in number of children below 18 or above 18 but still dependent on parties, best interests definition of ‘‘natural parent’’. (560:2-114[d]). re custody, awards of property, payment of debts, orders for child and spousal support Jurisdiction; Venue.—Family court of circuit in which adoptive parents reside or in and grounds. In actions involving minor children, plaintiff must attach exhibit pertaining which adoptee resides or was born or in which approved child placing organization is to conciliation, child care and child custody proceedings. (583A-209; HFCR.90[b]). In located. (578-1). all actions, matrimonial action information form must accompany complaint. (HFCR.90). Petition shall be in such form and shall include such information and exhibits as may Defendant may file cross-complaint. (580-4). be required by family court. (578-1). Practice.—Contested matters are placed on calendar by filing motion to set case for Proceedings.—Any person authorized by court may serve summons containing notice trial. (HFCR.94). Motion to set must be accompanied by asset and debt, income and of time and place for adoption hearing. (578-4). Hearing must be held at which peti- expense statements of movant as well as position statement re all issues of divorce. tioner(s), any legal parent married to petitioner, any subject of adoption whose consent Temporary orders re restraining orders (580-10), child custody or support (580-11) or is required personally appear before court, unless expressly excused by court. Where alimony (580-9) may be issued. child is adopted from foreign country, court has discretion to dispense with hearing if Decree becomes final on date fixed therein but in no event later than one month from issues have received full consideration by foreign country and U.S. Immigration and date of decree. (580-45). Naturalization Service. (578-8[c]). Investigation will be made by Director of Human Final decree not entered because of mistake, negligence or inadvertence may be Services or nearest county administrator of Department of Human Services as to fitness entered subsequently and divorce is deemed to have become final at date decree could of petitioners to adopt individual and as to whether best interests of individual to be have been first entered. (580-46). adopted will be served by adoption; provided that court may waive investigation. (578- Personal Judgment.—Court may render personal judgment against party outside state 8[b]). and over whom jurisdiction is acquired by service of process (see above) and if party Decree.—Court may enter decree of adoption if it is satisfied that individual is was domiciliary of state: (1) At time cause of action arose, or (2) at time of commence- adoptable and physically, mentally and otherwise suitable for adoption by petitioners, that ment of proceeding, or (3) at time of service. (580-3.5). petitioners are fit and proper persons and financially able to provide proper home and Alimony.—Both temporary (580-9; 44 Haw. 491, 355 P.2d 188) and permanent (580- education, and that adoption will be for best interests of individual. (578-8[a]). 47) may be awarded. Amount is in sound discretion of court; factors considered are Name.—First and last names of adopted child changed to any name stipulated by financial resources of parties, ability of party seeking support to meet his or her needs parents or in best interests of child (578-13) and birth certificate so amended (578-14). independently, duration of marriage, standard of living established during marriage, age New birth certificate must include names of natural parents if requested by adoptive of parties, physical and emotional condition of parties, usual occupation of parties during parents and consented to by natural parents. (578-14). marriage, vocational skills and employability of party seeking support, needs of parties, Miscellaneous.—Provision is made for confidentiality of proceedings and records. custodial and child support responsibilities, ability of paying party to meet his or her own (578-15). Medical information concerning natural parents of adopted child must be filed. needs, financial condition under which parties may be left, probable duration of need Adoptive parents or adult adopted child entitled to access to medical information. (578- (580-47; 41 Haw. 345); and may be modified upward (39 Haw. 245) or downward (34 14.5[h]). Provision is made for petition by adopted children for access to adoption Haw. 237), even in cases where parties stipulated that support payments may not be records sealed by court; court may release records based upon express or implied consent modified (8 Haw. App. 391, 804 P.2d 891). of natural parents; natural parents may file request that records remain sealed. (578-15). Change of husband or wife’s surname may be granted in decree. Provision is made for insurance coverage for newborn adopted children. (431:10A-116). Custody and visitation of children is matter for discretion of court. (580-47). Each Hawaii is member of Interstate Compact on Placement of Children, effective 1985. parent has equal right to award of custody of minor child; neither parent has any preferred status for award of custody. Criteria and procedures in awarding custody are ALIMONY: best interests of child, may be awarded to one or both parents or other parties, wishes See topic Divorce. of child of sufficient age, social study and investigation by court personnel, expert testimony; visitation may be awarded to parents and grandparents or any person inter- COMMUNITY PROPERTY: ested in welfare of child. (571-46; 56 Haw. 51, 527 P.2d 1275). Court can award joint See topic Husband and Wife. custody upon application of either parent. Court may order any party to attend coun- seling. (571-46.2). Prior to awarding visitation rights to parent who committed family DISSOLUTION OF MARRIAGE: violence, court must find that child’s physical safety and psychological well-being will See topic Divorce. be protected, and that adequate provision can be made for safety of parent who is victim of family violence. (571-46). Uniform Child Custody Jurisdiction and Enforcement Act DIVORCE: (583A; 2002, Act 124) replaced Uniform Child Custody Jurisdiction Act. Sibling may file petition with court for order of reasonable visitation rights. (571-46[7]). Chapter 571 Generally, this subject is governed by c. 580. amended to require that custody shall be awarded to assure frequent, continuing, and Grounds for Absolute Divorce.—Marriage is irretrievably broken; expiration of term meaningful contact with both parents and encourages both parents to share responsibility in decree of separate bed and board without reconciliation having been effected; living of raising their child; requires submission of parenting plan with divorce complaint and separate and apart under decree of separate maintenance for period of two years or more answer. (571; 2005, Act 244). and no reconciliation has been effected; voluntarily living separate and apart continuously Division of Property of Spouses. for two years or more and there is no reasonable likelihood that cohabitation will be —Court has discretion to divide and distribute real, resumed, and court satisfied divorce would not be harsh or oppressive to defendant or personal or mixed estate of spouses, whether community, joint or separate. (580-47). contrary to public interest. (580-41). Following entry of decree of divorce, spouses’ rights in property are governed by cc. 533 and 560 until entry of order dividing property. (580-56). Grounds for Legal Separation.—Family court may decree separation from bed and board for period not to exceed two years upon petition for separation when court finds Support of Children.—Complies with federal Personal Responsibility and Work marriage is temporarily disrupted. (580-71). Separation decree is not bar to divorce. Opportunity Reconciliation Act of 1996 (‘‘Welfare Reform Act’’). All support orders (580-71.5). Upon decree of separation, court may further decree for support and main- accompanied by wage assignment. (571-52). Child Support Enforcement Act (c. 576D); tenance of either spouse and minor children. (580-74). Administrative Process for Child Support Enforcement (c. 576E). Under cc. 576D and 576E, party may petition court at any time to opt out of child support enforcement agency Residence.—One party must be domiciled or physically present in state for continuous system and enter into alternative arrangement for direct payment of child support. Such period of six months immediately before filing of complaint. Persons residing on military petition will have priority to be heard by court. (580-47.5). bases or present in state under military orders not prohibited from meeting residence requirement. (580-1). Remarriage.—There are no restrictions on remarriage of divorced persons, but on remarriage of party decree for alimony may be modified or terminated. (580-51). Venue.—Action must be brought in circuit in which plaintiff has been domiciled or physically present for three months next preceding his or her application. (580-1). Separation for period of not to exceed two years may be decreed in any matrimonial action upon petition for separation when court finds marriage is temporarily disrupted. Jurisdiction.—No divorce shall be granted unless either party to marriage has been (580-71). Decree of separation is not bar to petition for divorce; however, fact that parties domiciled or physically present in state for six months next preceding his or her ap- have lived separate and apart under decree of separation may not be used as ground in plication. (580-1). support of such petition. (580-71.5). Process.—Action commenced by filing complaint with circuit court and issuance of Registration of divorces and annulments is not required. summons. (580-2). Personal service required if defendant is within state unless defendant enters appearance in person or in writing. Actual receipt by defendant or service by Annulment of Marriage.—See topic Marriage. registered or certified mail is equivalent to personal service if defendant is outside circuit. Effect of Divorce.—See category Estates and Trusts, topic Wills.

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–29 FAMILY MARTINDALE-HUBBELL LAW DIGEST - 2007

DOMESTIC VIOLENCE: powers. (560:5-425). Power to sell, lease or mortgage Hawaii real property is subject to Domestic Violence and Sexual Assault Special Fund.—Changes name of department court confirmation. (531-28.5 and 531-29). of health’s domestic violence prevention special fund to domestic violence and sexual Caveat.—For disclosure requirements in conveyance of real property made or taken assault special fund. (c. 235-102.5, 321-1.3). (2005, Act 142). Requires report to leg- in representative capacity, see category Property, topic Deeds. islature on expenses and improvements that can be made and on strategic plan to improve Liabilities.—Guardians of minor and incompetent person are not: (i) Obligated to use support services. (c. 338-14.5). (2005, Act 142). own funds for ward’s expenses; (ii) liable to others in exercise of duties and powers of guardian; (iii) liable for acts of ward based solely by reason of guardian relationship; and GUARDIAN AND WARD: (iv) liable for injury to ward caused by third party, if exercised reasonable care in Uniform Probate Code.—Uniform Probate Code adopted as 560:1-101 to 560:8-102. selecting third party. (560:5-316). See category Estates and Trusts, topic Descent and Distribution. Art V of 1969 Uniform Conservator is not personally liable: (i) On contract properly entered into in fiduciary Probate Code (c. 560:5-101 to 560:5-433), Guardianship of the Persons and Property of capacity in course of administration of estate unless conservator fails to reveal in contract Minors and Incapacitated Persons, is replaced by Hawaii’s adoption of Uniform Guard- representative capacity and identify estate (560:5-431[a]); and (ii) environmental con- ianship and Protective Proceedings Act (2004, Act 161), with some modifications. dition or injury resulting from environmental condition on land solely by reason of Jurisdiction and Venue.—Family court has exclusive jurisdiction over guardianship acquisition of title (560:5-430[e]). However, conservator is personally liable for obli- proceedings concerning minors. (560:5-106). Circuit court has exclusive jurisdiction over gations arising from ownership or control of property of estate or for other acts or conservatorship and protective order proceedings concerning adults and minors. (560:5- omissions occurring in course of administration of estate if conservator is personally at 106). Concurrent jurisdiction exists over guardianship and related proceedings concern- fault. (560:5-430[b]). ing adults. (560:5-106). Venue for guardianship proceedings for: (i) Minor, is in circuit Accounts.—Conservator must file petition for approval of accounts and report to court in which such minor resides or is present when proceeding is commenced (560:5-108[a]); for administration of estate annually unless court otherwise directs, upon resignation or and (ii) incapacitated person, is in circuit where such respondent resides or is institu- removal, upon termination of conservatorship, and at other times as court directs. Every tionalized pursuant to court order (560:5-108[b]). Venue for protective proceedings is in conservator must account to court periodically as court may direct. (560:5-420). circuit where respondent resides. (560:5-108[b]). Termination.—Guardianship terminates upon death, resignation, or removal of guard- Selection of Guardian.—Person becomes guardian of minor by parental appointment ian, or in accordance with terms of appointment. Guardianship of minor also terminates or by judicial appointment. (560:5-202). Parent may nominate guardian for minor by will upon minor’s death, adoption, emancipation or attainment of majority or as ordered by or by other signed writing (560:5-202), which may be subject to objections raised by court. (560:5-210). Guardianship of incapacitated person also terminates upon death of interested parties (560:5-203). Court shall approve appointment of qualified person seek- ward or upon order of court. Conservatorship terminates upon death, resignation, or ing guardianship if interest of minor shall be best served by such appointment. (560:5- removal of conservator, or in accordance with terms of appointment. Resignation is 205). Person nominated to serve as guardian by minor who has attained at least 14 years considered effective when approved by applicable court. (560:5-112). of age shall be appointed unless best interest of minor shall not be served by such appointment. (560:5-206). Person becomes guardian of incapacitated person by appoint- Incapacitated Persons.—“Incapacitated person” means individual who, for reasons ment by parent, spouse, reciprocal beneficiary or court. (560:5-301). Parent, spouse or other than being minor, is unable to receive and evaluate information or make or reciprocal beneficiary may nominate guardian for incapacitated person by will or by other communicate decisions to such extent that individual lacks ability to meet essential signed writing (560:5-302), which may be subject to objections raised by interested requirements for physical health, safety, or self-care, even with appropriate and reason- parties (560:5-302[c]). Court may appoint limited or unlimited guardian only if it finds ably available technological assistance. (560:5-102). by clear and convincing evidence that respondent is incapacitated person whose needs Foreign Conservator.—If conservator has not been appointed in this state and petition cannot be satisfied by less restrictive means. (560:5-311). Selection of guardian requires in protective proceeding is not pending in this state, conservator appointed in state in court to consider following, in priority as presented: (1) Current guardian; (2) person which protected person resides may file in court of this state, in circuit in which property nominated by respondent; (3) agent appointed by respondent under medical directive/ belonging to protected person is located, authenticated copies of letters of appointment healthcare power of attorney; (4) person nominated by will or other writing executed by and of any bond. Thereafter, conservator may exercise all powers of conservator ap- deceased spouse or reciprocal beneficiary; (5) adult child of respondent; (6) parent of pointed in this state as to property in this state and may maintain actions and proceedings respondent; and (7) adult with whom respondent has resided for more than one year. in this state subject to any conditions otherwise imposed upon nonresident parties. (560:5-310). Court may appoint emergency guardians (560:5-312) and temporary sub- (560:5-433). stitute guardians (560:5-313) as it may deem appropriate. Gifts to Minors.—See topic Infants. Selection of Conservator.—Person becomes limited or unlimited conservator of in- dividual, including minor, by judicial appointment. (560:5-401). Selection of conservator Uniform Fiduciaries Act adopted in 1945. (c. 556). §189-3, Revised Laws of Hawaii requires court to consider following, in priority as presented: (1) Current conservator, 1955, pertaining to Uniform Fiduciaries Act repealed by adoption of Uniform Commer- guardian of estate, or like fiduciary; (2) person nominated by respondent; (3) agent cial Code. (490:10-102[1]). appointed by respondent to manage property under durable power of attorney; (4) spouse or reciprocal beneficiary of respondent; (5) adult child of respondent; (6) parent of HUSBAND AND WIFE: respondent; and (7) adult with whom respondent has resided for more than one year. Governed generally by HRS chapters 321, 510, 572, 573 and 560. (560:5-413). Married person may make contracts, oral and written, with persons other than her or Eligibility and Competency.—Any competent and qualified individual and/or quali- his spouse, in same manner as if sole. Spouses may contract with each other: (1) By deed fied organization may be appointed as guardian of person of minor (560:5-205), guardian or assignment; (2) by agreement setting respective rights in property owned by them, or of person for incompetent person (560:5-310), and/or conservator (560:5-413). either of them, when agreement made in contemplation of divorce or judicial separation; Qualification.—Court may require conservator to furnish bond conditioned upon (3) by agreement providing for periodic payments for support and maintenance of one faithful discharge of all duties of conservatorship according to law, with sureties as it may spouse by other or for children when made in contemplation of divorce or judicial specify, all of which cost shall be charged to protected party’s estate. (560:5-415). separation provided that agreement will be subject to court approval; (4) by partnership agreements (572-22); and (5) may waive rights to election as surviving spouse, before Inventory.—Within 60 days after entry of order of appointment, conservator shall or after marriage, of deceased spouse’s homestead allowance, exempt property and prepare and file with appointing court detailed inventory of estate subject to conserva- family allowance (560:2-204). Prospective spouses may enter into premarital agreements. torship, together with oath or affirmation that inventory is believed to be complete and (c. 572D). accurate as far as information permits. (560:5-419). Upon marriage both spouses shall declare their married middle and last names. Names Powers and Duties.—Except as limited by court, guardian of minor has duties and may be his or her own, that of spouse, or combined and hyphenated with spouse’s but powers of parent as enumerated. (560:5-207 and 5:208, respectively). State law mandates names must have been legally used at some time by either spouse. (574-1). that each child placed in foster care must be covered by comprehensive health care plan. Actions.—Spouses or reciprocal beneficiaries may sue other partner in tort. (572-28; (587-85). Except as otherwise limited by court, guardian of incapacitated person has 663-1). Either spouse may maintain action in Family Court for nonfelonious offense by duties and powers of parent as enumerated and any additional powers granted by law to other spouse. Domestic violence laws define ‘‘family or household members’’ to include trustee. (560:5-314 and 5-315, respectively). Guardian of minor or incapacitated person persons having child in common. (709-906). Married person not liable for debts of may delegate to another person his/her/its power regarding care, custody or property of spouse; nor is married person’s property liable to be taken on execution or other process minor or ward, by execution of power of attorney, effective term of which cannot exceed against that person’s spouse. (572-23). Spouses bound to maintain, provide for, and one year. (560:5-106). Conservator has duty to act as fiduciary, and must observe stan- support one another during marriage and shall be liable for all debts contracted by one dards of care applicable to trustee. (560:5-418). Other powers and duties include, but are another for necessaries of family during marriage. (572-24). not limited to, inventory, record keeping, accounting, holding title to all of protected person’s property and enumerated statutory powers of administration, distribution, estate Agency.—Custom permits either spouse to act as attorney in fact for the other, planning and claims payment. (560:5-418, 5-419 and 5-425). although there is no statutory authority therefor. (See 7 Haw. 216; 17 Haw. 481.) Investments.—Conservator has power, without court authorization or confirmation, to Desertion.—Uniform Desertion and Non-Support Act has been adopted with modi- invest and reinvest funds of estate as would trustee. (560:5-425[5]). fications. (c. 575). Securities in Name of Nominee.—See category Estates and Trusts, topic Trusts, Community Property.—Provisions establishing community property were effective subhead Securities in Name of Nominee. from June, 1945 through June, 1949. Provisions controlling management and disposition Real Estate.—Conservator, acting reasonably and in effort to accomplish purpose of of existing community property are in c. 510. appointment, has power, without court authorization, to collect, hold and retain assets, Uniform Premarital Agreement Act adopted. (c. 572D). including land in another state, until he judges disposition should be made; to acquire and dispose of assets, including land in another state, for cash or on credit, at public or Uniform Disposition of Community Property Rights at Death Act adopted. (c. private sales; to repair, alter, improve or demolish buildings and other structures; to 510). subdivide, develop or dedicate land to public use, adjust boundaries, dedicate easements Uniform Interstate Family Support Act replaces and repeals c. 576, Uniform Re- to use without consideration, to enter into leases; to grant and take options, and has other ciprocal Enforcement of Support Act. (c. 576B).

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–30 HAWAII LAW DIGEST HEALTH

INFANTS: in writing, accompanied by a statement signed and sworn to by each applicant setting Age of majority is 18 for both sexes. Parents are liable for support of their minor forth full name, age, race, residence, relationship of applicants if any, full names of unmarried children, and have equal powers and duties with respect to them: they are parents and date of death of last prior spouse or date and jurisdiction of dissolution of jointly their natural guardians, are jointly and severally liable for their torts and are last prior marriage, if any. (572-6). jointly and severally entitled to prosecute and defend suits in which they or their property Marriage ceremony must be performed by validly licensed person or society. (572-1). are concerned. (c. 577). Parents may sue children (51 Haw. 74, 450 P.2d 998) and vice License to solemnize marriage revoked for failure to comply with rules of department versa (51 Haw. 484, 462 P.2d 1007). Uniform Parentage Act adopted. (c. 584). Parents of health. (572-11). Ceremony may be performed any place in state provided man, and guardian also accountable for child’s compliance with student code of conduct. woman and marriage officiant are all physically present at same place and time for (302A-1133.5). ceremony. (572-1). Any person under 18 must have consent of parent, guardian or other Administrative Enforcement for Child Support.—See generally c. 576E. Office of person having care and government of such party. (572-2). Special licenses to solemnize Child Support Hearings established within Department of Attorney General. (576E-10). marriages are required, and persons so licensed must deliver copy of certificate of marriage to all persons married by them (572-13) and report such marriage within three Child Support Enforcement.—If child support payments are made through agency, business days to department of health. (572-13[b]). agency must enforce support orders. (576D-3[b]). Parent locator services extend to both custodial and absent parent. (576D-6). Child support order shall be recorded in bureau Record.—Names, ages, number times married, residence, birthplace, parents’ names, of conveyances. Recordation of order shall procure lien on land registered in land court date and place of marriage, name of officiant required. See also category Documents and under c. 501. (576D-10.5). Child support payments withheld from obligor’s income are Records, topic Records, subhead Vital Statistics. not to exceed maximum limits set under Consumer Credit Protection Act. (576E-16). Proxy marriages and marriage by written contract are not recognized. Provides authority for Child Support Enforcement Agency (CSEA) to provide services Common law marriages are not recognized in Hawaii. (27 F.2d 582). to noncustodial parents, allows disclosure of information in administrative proceedings, Local Recognition of Out of State Marriages.—Marriages legal in country where and issuance of income withholding orders c. 576D-3, 576D-14, 576E-11 (2005, Act 26). contracted are legal in courts of Hawaii (572-3), unless odious by common consent of Requires noncustodial parent to keep CSEA informed of medical insurance coverage, c. civilized nations (3 Haw. 489; 12 Haw. 329). There is presumption of validity. (29 Haw. 576E-17. Enables CSEA to notify employers of requirement to provide medical insurance 716). coverage by regular mail or transmission by electronic means c. 576E-3. (2005, Act 26). Proposed Administrative Findings and Order shall be issued by Child Support En- Annulment of marriage may be granted for the following causes: (1) That the parties forcement Agency (CSEA). If either party objects to proposed Administrative Findings stood in such relation to each other that they could not lawfully marry; (2) that one or and Order and requests hearing, hearing is conducted by Office of Child Support Hear- both of the parties had not attained the legal age of marriage; (3) that either party had ings (OCSH), which then issues actual, filed Administrative Findings and Order. (Ya- an undivorced spouse living; (4) that one of parties lacked mental capacity to consent sumura v. CSEA, Intermediate Court of Appeals of the State of Hawaii [May 9, 2005]). to marriage; (5) that consent to marriage of party applying for annulment was obtained Burden is on CSEA to seek proof from custodial parent or adult child. §576E-14(f) by force, duress or fraud, and there has been no subsequent cohabitation; (6) that one and §580-47(a) imposes burden of proving to CSEA adult child’s continuing education. of parties was suffering from leprosy or afflicted with any loathsome disease and said When case is being heard by OCSH, CSEA has burden of proving that it properly sought fact was concealed from, and unknown to, party applying for annulment. (580-21). proof and response it did or did not receive. (Yasumura v. CSEA, Intermediate Court of Same-Sex Marriage.—Only male-female marriages are recognized. (572-1; Contra 92 Appeals of the State of Hawaii [May 9, 2005]). Haw. 634, 994 P.2d 566). Emancipation.—Minor who has legally married (c. 572) is treated as having attained Foreign Marriages.—Marriages legal in country where contracted are legal in Ha- age of majority and has all rights, duties, privileges and responsibilities thereunder, with waii. (572-3). certain enumerated exceptions (577-25). Uniform Premarital Agreement Act, adopted. (c. 572D). Disability.—Infants may bring personal actions within respective statutes of limitation after disability of infancy is removed, or at any time while it exists. (657-13). Infants or MARRIED WOMEN: any one claiming under them may bring real action at any time within five years after disability is removed notwithstanding that 20 year statute of limitations has expired. See topics Husband and Wife, Marriage; categories Civil Actions and Procedure, topic (657-34). But if infant dies without recovering premises, no further time is permitted by Evidence, subhead Witnesses; Debtor and Creditor, topic Homesteads; Documents and reason of disability of his successor in claim. (657-36). Records, topic Acknowledgments; Estates and Trusts, topics Executors and Administra- tors, Wills; Property, topic Dower. Disaffirmance of contract of minor must be made within reasonable time after reach- ing age of majority. (19 Haw. 474). NAMES: Actions.—Guardians ad litem may be appointed to represent minors whose interests Procedure for change of names is handled by Lieutenant Governor, unless change are affected by litigation. (551-2). ordered in adoption or divorce decree. (574-5). Involuntary Termination of Parental Rights.—Family courts may terminate parental See also topic Husband and Wife. rights only when verified petition has been filed by some responsible adult on behalf of child in family court of circuit in which child resides or was born and court has conducted RECIPROCAL BENEFICIARY: hearing of petition unless hearing waived if waiver permitted by statute. (571-61). In Reciprocal beneficiary status extends certain rights to couples comprised of two adult custody proceedings, past family violence committed by parent creates rebuttable pre- individuals who are ineligible for marriage under c. 572. (572C-1). Benefit areas include, sumption that it is not in best interest of child to be placed with that parent. (571-46[9]). but are not limited to, survivorship, inheritance, insurance and real property rights. Unless Parental Responsibility.—Parents liable for torts of unmarried minor children. expressly provided, reciprocal beneficiaries shall not have same rights and obligations (577-3, 663-1). conferred through marriage under c. 572. (572-6). Caveat: Provisions of Act are sev- Paternity/Parentage.—Voluntary admission of paternity admissible as evidence of erable (1997, Haw. Sess. Laws, Act 383, §75), and are subject to federal preemption and parentage in any family court proceeding. (338-12). Must treat paternity determination pending legislative and judicial decisions. in any state or U.S. territory as adjudication in this State. (584-8.5). Sets standard for Qualification requirements for each applicant: minimum 18 years of age; sign Dec- genetic testing. (584-11). Presumed to be natural father if genetic testing results do not laration of Reciprocal Beneficiary Relationship form issued by Director of Health; con- exclude possibility of paternity. Acknowledgment of paternity filed with department of sent to relationship not obtained by force, duress, or fraud; prohibited from marrying one health may establish support obligation. (584-4). another under c. 572; neither party be married nor party to another reciprocal beneficiary Support of Minor.—Family court has continuing jurisdiction to compel parents to relationship. (572C-4). provide for support, maintenance and education of minor children and adult children in Termination.—Either party may terminate relationship by filing declaration of ter- some cases. (580-47). mination with Director. (572C-7). Termination automatic upon obtaining marriage license Uniform Gifts to Minors Act (c. 553) repealed and replaced by Uniform Transfers in Hawaii by either party, or upon legal marriage of either party. (572C-7). to Minors Act (c. 553A). Age of majority under Act is 21 years. (553A-1). Uniform Securities Ownership by Minors Act has not been adopted. Interstate Compact on Juveniles enacted. (c. 582). HEALTH Child Protective Act.—(c. 587). CONTROLLED SUBSTANCES: Children’s Advocacy Program.—(c. 588). Adopted Uniform Controlled Substances Act. (c. 329). Adoption.—See topic Adoption. FOOD, DRUGS, DEVICES AND COSMETICS: MARRIAGE: Regulated generally by c. 328. Chapter covers following acts in regard to food, drug, In order to make valid the marriage contract, it is necessary: (1) That respective parties medical device, or cosmetic: misbranding, adulteration, false advertising, misrepresen- do not stand in relation to each other of ancestor and descendant of any degree what- tation, improper labeling, trademark infringement, and improper substitutions. (328-6). soever, brother and sister of whole or half blood, uncle and niece or aunt and nephew, Act 190 provides that previously dispensed prescription drugs may be returned to whether relationship is result of issue of parents married, or not married, to each other, dispensing pharmacy for credit to payer and subsequent reuse. (2) that each of parties be at least 16 (or 15 with written approval of family court, but in no case less than 15); (3) that neither party has any lawful spouse living; (4) that HEALTH INSURANCE BENEFITS: consent of neither party has been obtained by force, duress or fraud; (5) that neither party Prepaid Health Care Act.—Hawaii Prepaid Health Care Act (c. 393) requires local be afflicted with any loathsome disease concealed from, and unknown to, other party; (6) employers to provide coverage for employees by prepaid group health care plan. Re- that marriage shall only be between a man and a woman. (572-1). quired health care benefits addressed in 393-7. Mandatory coverage regulated by c. 393, License.—It is not lawful for any persons to marry in the state without a license for Part II. Administration and enforcement, including penalties, provided in c. 393, Part III. that purpose duly obtained from the agent appointed to grant marriage licenses. Both Part IV of c. 393 provides for governmental subsidies to cover certain health insurance applicants for a license must appear in person before the agent and file an application premium costs.

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–31 HEALTH MARTINDALE-HUBBELL LAW DIGEST - 2007

HEALTH INSURANCE BENEFITS . . . continued Effective Nov. 16, 2006, smoking prohibited in enclosed and partially enclosed areas State Health Insurance Program Act.—Regulated by c. 431N. Establishes program owned and operated by State or counties, including buildings and vehicles; in enclosed within Dept. of Health to ensure basic health insurance coverage to Hawaii residents who or partially enclosed places open to public; in enclosed or partially enclosed places of are medically uninsured and who are defined as ‘‘gap group individuals’’. (431N-1). employment; sports arenas, outdoor arenas, stadiums, and amphitheaters; and within Medicaid-Related Mandates.—Regulated by c. 431L. Prohibition against employers presumptively reasonable minimum distance of 20 feet from entrances, exits, windows taking Medicaid status into account when making payments for benefits. (431L-1). that open and ventilation intakes that serve enclosed or partially enclosed area where Provides for state’s right to third party payments. (431L-2). Provides for coverage of smoking is prohibited. (2006, Act 295). Following areas are exempt: private residences children under Medicaid. (431L-3, 5, 6). Specifies employer obligations to provide health not used as licensed child care, adult day care, or health care facility; designated smoking insurance coverage for certain children of employees if such coverage is pursuant to court rooms in hotels and motels; retail tobacco stores; private and semiprivate rooms in or administrative order. (431L-4). nursing homes and long-term care facilities occupied by one or more persons, all of whom are smokers and have requested in writing to be placed in smoking room; outdoor Health Maintenance Organization Act.—Regulates establishment and operation of areas of places of employment; all areas when smoking is part of production being Health Maintenance Organizations. (c. 432D). filmed; and state correctional facilities. (2006, Act 295). Owner, operator, manager, or Long-Term Care Financing Program.—Establishes long-term care services for other person in control of establishment, facility, or outdoor area may declare entire qualifying individuals. (c. 346C). establishment, facility, or outdoor area or any part thereof as place where smoking is Informed Consent.—Physicians have obligation to obtain informed consent of pa- prohibited. (2006, Act 295). Enforcement of compliance shall be under jurisdiction of tients prior to administering diagnostic, therapeutic, and treatment procedures. Rendering Dept. of Health. (2006, Act 295). of professional medical services without informed consent is tort. (671-1[2]). Information Distribution of Cigarettes and Tobacco Products (Effective Nov. 16, 2006).—Sale provided must include: (1) Condition to be treated; (2) description of proposed treatment or distribution at no charge of cigarettes by following methods is prohibited: from or procedure; (3) intended and anticipated results of proposed treatments or procedures; vending machines unless in bar, cabaret, or establishment where minimum age of entry (4) recognized alternative treatments or procedures, including option of not providing is 18; or from lunch wagons engaging in sales within 1,000 feet of public or private these treatments or procedures; (5) recognized material risks of serious complications or elementary or secondary school. (2006, Act 295). Distribution of samples of or coupons mortality associated with: (a) Proposed treatment or procedure, (b) recognized alternative for cigarette or tobacco products prohibited within 1,000 feet of any elementary, middle treatments or procedures, and (c) not undergoing any treatment or procedure; and (6) or intermediate, or high school. (2006, Act 295). Distribution of cigarette or tobacco recognized benefits of recognized alternative treatments or procedures. (671-3; 98 Haw. promotional materials or coupons for such promotional materials prohibited within 1,000 470, 50 P.3d 946). feet of any elementary, middle or intermediate, or high school. (2006, Act 295). Dis- tribution prohibitions not applicable to private commercial establishments as long as LICENSURES AND CERTIFICATION: distribution not visible to public from outside establishment and commercial establish- Care Homes.—Adult residential care homes must be licensed. (321-15.6). ments where access to premises by persons under 18 years is prohibited. (2006, Act 295, c. 3285). Pharmacists.—Commencing on Jan. 1, 2008, licensed pharmacists required to com- plete 30 hours of continuing education courses within two-year period preceding renewal date. INSURANCE Mental Health Counselors.—Required to be licensed by department of commerce and consumer affairs. INSURANCE COMPANIES: Nurses.—Persons practicing or offering to practice as advanced practice registered Regulated by complete and comprehensive code, adopted in 1955, and revised ef- nurse, registered nurse, or licensed practical nurse for compensation must be recognized fective as of July 1, 1988, as in force and governs Hawaii insurance law. (c. 431). or licensed by state board of nursing. (457-1). Graduates of foreign practical nursing Supervision by Insurance Commissioner (hereafter ‘‘Commissioner’’) (355 Merchant program must submit proof of eligibility. (457-8). License automatically forfeited if not Street, Honolulu, Hawaii 96813) who serves at will of Director of Department of Com- timely renewed. (457-9). Nurses not actively practicing for more than five years may be merce and Consumer Affairs. (431:2-102). required to submit proof of continued competency by re-taking and passing licensing Rates must not be excessive, inadequate or unfairly discriminatory. (431:14- examination. (457-9). 103[a][1]). Every insurer shall file in triplicate with Commissioner, except as to specific Board may grant prescriptive authority to qualified advanced practice registered nurses marine risks and bail bonds issued under §804-62, every manual of classifications, rules and must designate requirements. (457-8.6). and rates, every rating plan, every other rating rule, and modification of any of foregoing Special Treatment Facilities and Therapeutic Living Programs.—Required to be it proposes to use. (431:14-104[a]). Each filing must be accompanied by $50 fee payable licensed. (321-16.5, 321-16.6). to Commissioner. (431:14-104[b]). Willfully withholding information from or knowingly Developmental Disabilities.—Dept. of Health issues licenses for developmental dis- giving false or misleading information which will affect rates or premiums chargeable abilities domiciliary homes for persons with developmental disabilities who are unable under Art. 14 of c. 431 is subject to penalties under 431:14-117. (431:14-115). Insurance to live independently and who require supervision or care, but do not require care by Rating Organization regulations contained in 431:14-107 et seq. Commissioner may licensed nurses in domiciliary setting. (321-15.9). reduce or adjust rates annually for all types of insurance. (431:14-103.3). Annual Statements.—Authorized insurance companies must file annual audit of com- MEDICAL USE OF MARIJUANA: pany’s financial condition by independent CPA or accounting firm. (431:3-302.5). Risk Medical use of marijuana by qualified patient is permitted. (329-122). Patients must based capital formula for life and health insurers. Insurers must file annual and quarterly be registered with Department of Public Safety. (329-123). financial statements with National Association of Insurance Commissioners (NAIC). (431:3-302). PATIENT’S BILL OF RIGHTS: Policies.—Accident and Sickness Insurance Contracts. (431:10A). Insurance coverage Generally.—Regulated by c. 432E. for newborn adopted children provided. (431:10A-116[5]). Insurance coverage for out- patient diabetes self-management training is provided. (431:10A-121). Insurers must Pain.—Adopted Pain Patient’s Bill of Rights (327H). Provides that patient suffering generally provide coverage for reciprocal beneficiaries to same extent that they provide from severe acute pain or severe chronic pain has option to request or reject use of pain coverage for spouses and families. (431:10A-601). Reciprocal beneficiary couples com- relief modalities. prised of two adult individuals who are ineligible for marriage under c. 572. (572C-4). See also category Family, topic Reciprocal Beneficiary. Code promotes availability of SMOKING REGULATION: long term care insurance, sets policy standards and provides for coverage comparison. Smoking in Public Places.—Regulated by 328K-1 to 7. Smoking prohibited in certain (c. 431:10H). Discrimination based on genetic information is prohibited. (431:10A-118). enumerated private and publicly owned facilities and areas as specified in 328K-2. Credit Life Insurance and Credit Disability Insurance. (431:10B). Motor Vehicle Insur- Exceptions stated in 328K-3. Posting signs required in 328K-4. Cigarette sales from ance and No-Fault Insurance Law. (431:10C). Personal injury protection benefits insur- vending machines and lunch wagons are regulated as provided in 328K-7. Penalties and ance required. (431:10C-104). Life Insurance and Annuities. (431:10D). Qualifying non- procedures set forth in 328K-5. (Effective until Nov. 15, 2006). profit organizations which enter into charitable gift annuity agreements with donors are Smoking in Workplace.—Regulated by 328K-11 to 15. Each employer in Hawaii excluded from regulation under Insurance Code. (431:1-204). Property Insurance. must maintain written smoking policy which must contain, at minimum, statements that: (431:10E). Surety Insurance. (431:10F). Motorcycle and Motor Scooter Insurance. (A) If nonsmoking employee objects to employer about smoke in workplace, employer (431:10G). Liability and medical payment coverage consistent with motor vehicle in- will attempt to reach reasonable accommodation between preferences of smoking and surance laws amounts. (431:10G-301). Insurance Holding Company System. (431:11). nonsmoking employees, and (B) smoking policy shall be announced within two weeks Limits acquisition of insurer authorized to do business in Hawaii. (431:11-104). Business of vote of preferences of employees in each respective work area and posted conspicu- Transacted with Producer Controlled Property/Casualty Insurer. (431:11A). ously in all affected workplaces. (328K-13). Smoking in property owned or leased by Insurance contracts generally regulated by Art. 10. federal government entities is not regulated by this chapter. (328K-14). This chapter also Right to Return Policy.—Purchasers of individual life or disability insurance policies does not regulate private enclosed office workplaces occupied exclusively by smokers have right to return policies without obligation within ten days of receipt. This does not (except where smoking is prohibited by county fire department or other ordinance). apply to single premium nonrenewable policies or travel accident policies. (431:10-214). (328K-14). Penalties include fine not to exceed $500, as provided in 328K-15. (Effective Disclosure of health care coverage and benefits required. (431:10-109). until Nov. 15, 2006). Pooled insurance allowed. (431:10-222.5). Distributions of Sample Tobacco Products.—It is unlawful for any person to dis- Discrimination prohibited as to terms or conditions of any insurance contract, or in tribute samples of tobacco products, or coupons redeemable for cigarette or tobacco rate or amount of premiums charged therefor, or in benefits payable or in any other right products on any street, sidewalk, park, or within 1,000 feet of any elementary, middle, or privilege accruing thereunder, in favor of particular individuals or persons, or between intermediate, or high school; any person convicted of violating this section may be fined insureds or subjects of insurance having substantially like insuring, risk, and exposure up to $1,000. (328K-22). factors, or expense elements. (431:13-103[a][7]). Permits.—Beginning Dec. 1, 2006 must be obtained by retailers engaged in retail sale Rebates are prohibited except as otherwise expressly provided by law. (431:13- of tobacco. (2005, Act 131). 103[a][8]). Commissioner is authorized to investigate claims of unfair or deceptive acts

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–32 HAWAII LAW DIGEST INSURANCE

INSURANCE COMPANIES . . . continued Retaliatory Laws.—None. or practices prohibited by 431:13-102 and defined by 431:13-103. (431:13-105). How- ever, following practices will not be considered prohibited rebate: (1) Payment of bo- Premium Tax.—Insurers pay 2.75% on gross life insurance premiums, 0.8775% on nuses (in case of any contract of life insurance or life annuity) out of surplus accumulated gross underwriting profit of marine insurance, and 4.265% on all other gross premiums. from nonparticipating insurance if payment is fair, equitable and in best interests of (431:7-202). Taxes shall be paid quarterly with quarterly tax statement, failure to do so insurer and policyholders; (2) allowance to policyholders (in case of life insurance subjects insurer to fine. (431:7-202). Low-income housing tax credit may be claimed policies issued on industrial debit plan) who have continuously, for specified period, against this tax. (431:7-208). made premium payments directly to office of insurer in amount fairly representing saving Privilege Tax.—Certificate of authority is $900 for first year and $600 for each in collection expense; (3) readjustment of premium rate for group insurance policy based subsequent year. Agents pay annual license fee of $75. Application fee of $1,500 and on loss or expense thereunder, and (4) distribution of savings, earnings or surplus $150 for issuance of permit. Adjusters pay license fee of $75 first year and $45 annually equitably among class of policyholders in case of any insurance contract. (431:13- thereafter. (431:7-101) 103[9]). Uniform Insurers Liquidation Act.—Repealed HRS §§431-661 to 431-668, which Liens.—None. constituted substantial adoption of major provisions of Uniform Insurers Liquidation Act, Agents and Brokers.—Adjusters and independent bill reviewers must obtain license and enacted in lieu thereof Art. 15 (§§431:15-101 to 431:15-411) entitled ‘‘Insurers from State before soliciting business. (431:9-201[a]). Subject to exceptions, application Supervision, Rehabilitation and Liquidation’’. New provisions cannot be considered and examination necessary for license. (431:9-206). 431:8 provides instances allowing substantial adoption of major provisions of Uniform Act, although they contain some insurance business transactions by unauthorized insurers. 431:9 and 431:9A regulate similar provisions and have same general purpose. licensing, duties, examination and liabilities of managing general agents. Any title insurer or insurer that operates as escrow depository must be licensed pursuant to c. 449. Benefit societies addressed in c. 432; mutual benefit societies (Art. 1) and fraternal (431:20-106.5). benefit societies (Art. 2). Domestic mutual benefit societies required to file annual audits. (432:1-405). Separate chapter adopted in 1992 providing for stricter disclosure, review, Process Agent.—Captive insurance companies required to appoint resident agent to reporting and financial examination requirements, consistent with National Association accept service of process. (431:19-102[b][4]). Attorney-in-fact for reciprocal insurer of Insurance Commissioners (NAIC) standards. Separate chapter adopted in 1976 to empowered to accept service of process and can authorize Commissioner to receive cover medical torts; includes provisions for establishment of medical claim conciliation service of process in actions upon contracts exchanged. (431:4-406[b][2]). Every fra- panel. (c. 671). Hawaii Medical Malpractice Underwriting Plan provides contingency ternal benefit society authorized to do business in Hawaii shall appoint in writing plan to be instituted by Commissioner upon availability of medical malpractice insurance Commissioner and each successor to be its true and lawful attorney upon whom all lawful in Hawaii. (c. 435C). process in any action against it shall be served. (432:2-701[a]). Each authorized foreign Insurer, self-insured employer or Special Fund can recover temporary disability ben- or alien insurer shall appoint Commissioner as its attorney to receive service of, and upon efits overpaid employee. (392-78). whom may be served, all legal process issued against it in Hawaii upon claims arising Courts enforce objectively reasonable expectations of parties claiming coverage under within Hawaii. (431:2-205[a]). Any act of transacting insurance business in Hawaii by insurance contracts, which are construed in accord with reasonable expectations of unauthorized insurer constitutes irrevocable appointment of Commissioner or successor layperson. (72 Haw. 80, 807 P.2d 1256). to be true and lawful attorney of insurer upon whom may be served any notice, order, pleading or process in any proceeding before Commissioner and arising out of transacting Credit for Reinsurance.—Domestic ceding insurer can credit on its financial state- insurance business in Hawaii. (431:8-207[a]). Each licensed nonresident agent or broker ments, as asset or deduction from liability, risks ceded to group of incorporated under- shall appoint Commissioner as agent’s or broker’s attorney to receive service of legal writers and individual unincorporated underwriters. (431:4A-101). Any society that takes process upon claims arising within Hawaii. (431:9[a]-108.5). credit for reserves on risks ceded to reinsurer shall be subject to provisions for c. 432. (432:1). Investments, as well as prohibitions and limitations thereon, discussed in Art. 6 of c. 431. Investments of foreign or alien insurers as permitted by laws of domicile, but must Unfair Trade Practice Regulations.—Art. 13 entitled Unfair Methods of Competition be of quality substantially as high as those required for domestic insurers. (431:6-501). and Unfair or Deceptive Acts and Practices in Business of Insurance. Following defined Related insurers allowed to acquire investments in investment pools. (431:6-601[b]). as unfair methods of competition and unfair or deceptive acts or practices in insurance Foreign Insurance Companies.—Foreign insurance company must qualify for and business: Misrepresentation and false advertising of insurance policies; false information can transact insurance in Hawaii only through certificate of authority from Commissioner. and advertising generally; defamation; boycott, coercion and intimidation; false financial Foreign and alien insurers must either be licensed under laws of not less than three states statements; stock operations and advisory board contracts; unfair discrimination; rebates designated by Commissioner from among states accredited by NAIC (431:3-201; 431:3- except as otherwise expressly provided by law; unfair claim settlement practices; failure 203; 431:3-203.5) or satisfy following criteria: (1) Be stock, mutual or reciprocal insurer to maintain compliant handling procedures; misrepresentation in insurance applications or same general type as may be formed as domestic insurer under Art. 4 of c. 431; (2) to obtain fee; and failing to provide, or limiting, coverage available to individual because have capital funds as required by c. 431; (3) transact or propose to transact insurances of third party claim for damages. (431:13-103). in Hawaii which are authorized by its charter and meet standards of c. 431; (4) fully Privacy of Consumer Financial Information.—Governs treatment of nonpublic per- comply with provisions of c. 431; (5) appoint general agent who qualifies under Art. 9 sonal financial information about individuals by all insurance licensees. Requires licensee of c. 431 (this requirement does not apply to foreign and alien reinsurers licensed to notice to individuals about privacy policies, establishes conditions for disclosure of transact business in Hawaii that assume any portion of risk of another insurer); and (6) individual nonpublic personal financial information to affiliates and nonaffiliated third have continuously, actively and successfully transacted insurance business for at least five parties, and provides individuals with means to prevent disclosure of covered informa- years immediately prior. Each foreign insurer must prepare annual statement in accor- tion. (431:3A). dance with NAIC Practices and Procedures Manual. (431:3-301). Insurer who wishes to withdraw from State must do so in compliance with 431:3-215. Duty to Defend.—Duty rests on possibility, however remote, that coverage exists. (78 See category Business Organizations, topic Corporations, subhead Foreign Corpora- Haw. 174, 891 P.2d 261). tions. Breach of duty to defend does not result in irrebuttable presumption that insurer is obligated to indemnify insured; however, presumption is appropriate where coverage was Captive Insurance Companies.—Insurance Code applies to certain captive insurance first admitted and then later denied. (81 Haw. 235, 915 P.2d 1336). companies. (431:19-115). Insurance Commissioner appoints advisor to review captive Defense costs incurred before tender of notice to insurer are not covered. (76 Haw. insurance company applications. (431:19-102[f]). All nonpublic financial information in 346, 876 P.2d 1314). captive insurance company’s application for licensure, its business plan, or of, its parent, or parent’s member organization, disclosed as result of application process shall be given Direct Actions Against Insurers.—See category Transportation, topic Motor Vehicles, confidential treatment. (431:19-101.2[a]). Commissioner may make public all or part of subhead Direct Action. nonpublic information with written notice. (431:19-101.2[b]). Commissioner has author- ity to approve service providers to captive insurance companies. (431:19-101.4). Each Hurricane Relief Fund.—Relief fund established to monitor availability of property pure captive insurance company licensed to do business in Hawaii must pay Director of insurance and to offer hurricane property insurance when such insurance is unavailable Finance through Commissioner 0.25% on $0-$25,000,000, 0.15% on $25,000,000- in private market. Special mortgage recording fee of 0.1% of mortgage is imposed to $50,000,000 and 0.05% on more than $50,000,000 tax on gross premiums received from create hurricane trust fund. Use graduated percentages to determine post-hurricane as- all risks or property resident, situated, or located in Hawaii and on risks and property sessment on servicing facilities. (431P-16). Other provisions of fund are discussed in c. situated elsewhere upon which no premium tax is otherwise paid during year ending on 431P. preceding Dec. 31, less return premiums and less any reinsurance accepted. Each captive Worker’s Compensation.—See category Employment, topic Labor Relations. insurance company chartered in Hawaii as other than pure captive insurance company must pay 1% tax instead. (431:19-116). These taxes are due and payable on or before Guaranty Associations.—Guarantee payment on policies where insurer is unable to Mar. 1 of each year. When paid, these taxes shall be in settlement of and in lieu of all make payment. (431:16). demands for all taxes except: (1) Taxes on real property and (2) taxes on purchase, use Hawaii Property Insurance Association.—Established to provide basic property in- or ownership of tangible personal property. (431:19-116). All such taxes and fees are surance to owners and occupants of property in areas of high risk to natural disasters. credited to captive insurance administration fund from which Commissioner may com- (431:21-101). pensate captive insurance administrator who is responsible for implementation of rules concerning captive insurance companies and from which up to 10% of total moneys Prepaid Health Care Law.—See category Employment, topic Labor Relations. credited will be transferred to insurance regulation fund. (431:19-101.8). Redomestication of authorized insurance companies addressed. (c. 431, Arts. 3, 19). SURETY AND GUARANTY COMPANIES: Requirements for foreign or alien captive insurance company to become Hawaii domestic captive insurance company. (431:19-102.3[a]). Such companies must register with Director of Department of Commerce and Con- Requirements for domestic captive insurance company to transfer to new domicile. sumer Affairs of the State, and foreign corporations must comply with laws relating to (431:19-102.4). such corporations. (78-20). See category Business Organizations, topic Corporations. Association and risk retention captives must file NAIC annual statement blank and If bond executed by a principal and by corporation authorized to do surety business, audit with Insurance Division and NAIC. (431:19-107). corporation may be accepted as sole surety on bond. (78-20).

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–33 INTELLECTUAL PROPERTY MARTINDALE-HUBBELL LAW DIGEST - 2007

Tues. preceding last Wed. of Feb. and July each year. Latest information available from INTELLECTUAL PROPERTY prerecorded message at Supreme Court; telephone (808) 539-4907. TRADEMARKS, SERVICE MARKS, AND TRADENAMES: Examination.—Multistate Bar Examination, Multistate Essay Examination, Multistate Model Trademark Act (482-A et seq.) was adopted on Apr. 19, 2001, and took effect Performance Test, and Multistate Professional Responsibility Examination used. Transfer on July 1, 2003 (2001, Act 15). of multi-state scores from other jurisdictions not accepted. Subjects tested on essay portion include business organizations, wills and trusts, civil procedure, Uniform Com- Registration.—DCCA requires that all trademark registration applications be made on mercial Code (Arts. 2, 3 and 9), family law, and legal ethics. its appropriate forms. Forms and filing at: Department of Commerce and Consumer Affairs, Business Registration Division, 335 Merchant St., Rm. 201, Honolulu, Hawaii Clerkship.—No requirement of clerkship prior to admission. 96813. Telephone: (808) 586-2727. (HAR 16-36-4[4]). Filing fee is $50 for term of five Admission without Examination.—A full-time member of faculty of University of years from date of filing, $20 for expedited service. (482-2, 3, 36). Registrations may be Hawaii Law School who meets citizenship and educational requirements and is admitted renewed for additional periods of five years from date of renewal by filing application to practice in another U.S. jurisdiction may be admitted to bar without examination for for renewal and $50 fee. (482-3, 25). Application must be accompanied by one specimen a three-year period. After satisfactory completion of three-year period, that faculty mem- showing mark as actually used. (482-22). See 482-21 and 482-22 for specific application ber may be granted admission without limitation of time. (RSCH 1.8). requirements. See also Hawaii Administrative Rules (HAR) 16-36-15. Fictitious firm Full-time active duty military officer serving Staff Judge Advocate who meets other names may be registered with DCCA by single proprietor, partnership, or corporation requirements may apply for limited admission for four years; may be extended once. JA upon payment of fee of $50 provided name is not substantially identical to previously may receive no client fees in addition to ordinary military pay. registered name. Renewal for additional five year periods. (482-2, 3). No statutory Admission Pro Hac Vice.—Attorneys from other states, on special order, may be requirement that individual, partnership, or corporation file tradename; no civil or crimi- associated with local counsel on specific cases. For each year order is effective, attorney nal penalties for failure to file. Limited partnerships are not required to file tradenames allowed to appear pro hac vice shall pay annual Disciplinary Board fee to State Bar in Hawaii, although it is common practice to do so if limited partnership operates under Association. Only one fee is required even if attorney appears in more than one case. assumed name. Forms available at: Department of Commerce and Consumer Affairs, (RSCH 1.9). Eligibility to appear pro hac vice in U.S. District Court of Hawaii and Business Registration Division, 335 Merchant St., Room 201, Honolulu, HI 96813. application process therefore are regulated by Local Rules of Practice for the United Telephone: (808) 586-2727. States District Court for the District of Hawaii. (LR 83.1[e]). Assignment.—Assignee of sole proprietor of trademark may register mark. (482-26). Licenses.—License issued by Supreme Court. DCCA requires assignor to submit appropriate form, original and one true copy of mark, Membership in Bar Assn. mandatory. Annual fee structured in three classes for private and $50 filing fee. (482-22). practice: Active, less than five years in profession, $245; more than five years, $430; Protection Afforded.—Unlawful to adopt or use trademark or service mark identical inactive, $100; call (808) 537-1868 for latest information. or confusingly similar with one previously registered. (482-4, 31). Counterfeiting of mark Privileges.—Lawyer-client privilege recognized. (H.R.E. 503). is class C felony for which forfeiture of property is authorized. (708-875). As civil Disabilities.—Attorney cannot act as surety on any bond or undertaking in any action penalty, infringement of validly registered mark gives rise to fine of not more that $1,000. or proceeding unless authorized by court. (Circuit Court Rule 26). (482-5). For violation of labor union’s or association of employees’ mark, attorney’s fees and costs incurred in enforcement of statute and damages may be imposed. (482-4). Liabilities.—See topic Costs. Uniform Deceptive Trade Practices Act adopted. (c. 481A). Cyber-squatting prohibited; Compensation.—Fees governed by Hawaii Rules of Professional Conduct (HRPC) unlawful to, in bad faith, register, traffic in, or use Internet domain name identical or Rule 1.5. Fee must be reasonable. (Rule 1.5[a]). Contingent fee agreement must be in confusingly similar to distinctive mark registered and used in Hawaii. (481B-22). writing and must state method by which fee is to be determined. (Rule 1.5[c]). Con- tingent fees not permitted in criminal cases, divorce, alimony or support, or property TRADE SECRETS: settlement proceedings. (Rule 1.5[d][1]&[2]). Uniform Trade Secrets Act adopted, amended in part. (482B et seq.). Section pro- Lien.—Hawaii recognizes right of discharged attorney to assert charging lien for costs vides relief for actual or threatened misappropriation of trade secret. (482B-3). Relief advanced and reasonable attorney fees against former client’s recovery in case. (6 Haw. may include injunction, damages, attorney’s fees, or other affirmative acts as compelled App. 296, 719 P.2d 1107). Attorney who has been discharged by client but is entitled to by court order. (482B-3, 4, 5). some fees may file lien where there is fund sub judice. (1 Haw. App. 560, 623 P.2d 450). Attorney who did not prove specific amount due on asserted fee lien acquired by assignment from former employer was not entitled to enforce lien. (6 Haw. App. 296, LEGAL PROFESSION 719 P.2d 1107). Attorney has lien by law upon action, suit, and proceeding that results in judgment, decree, order, settlement, or award in client’s favor and on proceeds paid ATTORNEYS AND COUNSELORS: in satisfaction of those judgments, decrees, orders, settlements, or awards in same action State Bar is integrated. that attorney represented client. (507-81). Disbarment or Suspension. Jurisdiction over Admissions.—Supreme Court is given power to regulate practice —Supreme Court may publicly censure, suspend for up in state by Haw. Const. Art. VI, §7. (See also 50 Haw. 107, 432 P.2d 887.) Supreme Court to five years, or disbar and may order restitution or payment of costs (except attorney’s Rules prescribe procedures for admission to bar and for discipline. (Rules 1 and 2, fees). Disciplinary Board may publicly or privately reprimand or informally admonish. respectively). Hawaii Board of Bar Examiners Rules of Procedure [HBBERP] also Practicing law during period of suspension of license may result in disbarment. (See 79 prescribe procedures for admission to bar. (Part 2). Haw. 201, 900 P.2d 777.) Model Rules of Professional Conduct are adopted with slight modifications to govern Unauthorized Practice.—Individuals, associations or corporations not admitted to bar members of bar. (Rules of the Supreme Court of the State of Hawaii [RSCH] 2.2). prohibited from practice of law. (605-14 and HRPC). Attorney General or Bar Asso- Disciplinary Board of Hawaii Supreme Court and Disciplinary Counsel consider and ciation (605-15.1) may prosecute violators in Circuit Court (605-15). Any person who investigate any alleged grounds for discipline of attorneys. (RSCH 2.4, 2.6). commits violation is guilty of misdemeanor. (605-17). Eligibility.—Before any admission to bar, Supreme Court shall be satisfied of good Mandatory Continuing Legal Education.—None. moral character of applicant. Burden of proving good moral character is on applicant. Specialty Certification Requirements.—Lawyer not permitted publicly to represent (RSCH 1.3[c]). No applicant shall be allowed to sit for Hawaii Bar Examination or be or imply that (s)he is recognized, designated, or certified specialist, except: (1) Lawyer admitted to Hawaii Bar during any period in which Hawaii’s Child Support Enforcement admitted to engage in patent practice before U. S. Patent and Trademark Office may use Agency or like body in another jurisdiction has certified applicant is not in compliance designation ‘‘Patent Attorney,’’ or similar designation, and (2) lawyer engaged in ad- with order of child support or is not in compliance with subpoena or warrant relating to miralty practice may use designation ‘‘Admiralty,’’ ‘‘Proctor in Admiralty,’’ or similar paternity or child support proceeding. (RSCH 1.3[h]). designation. (HRPC 7.4[a]&[b]). However, lawyer may communicate that (s)he is cer- Registration as Law Student.—No requirement exists. See Supreme Court Rule 7 for tified as specialist in field of law by named organization provided that communication rules governing supervised student practice of law. Students must apply to court clerk is not misleading, clearly states name of certifying organization and is accompanied by to become law student intern. statement that “The Supreme Court of Hawaii grants Hawaii certification only to lawyers in good standing who have successfully completed a specialty program accredited by the Educational Requirements.—Applicant must graduate from law school accredited by American Bar Association.” (HRPC 7.4[c]). Council of American Bar Association on Legal Education and Admission to the Bar. (RSCH 1.3[b], HBBERP 2.2). If applicant is not graduate from accredited law school, Professional Association (or Corporation).—Attorneys may associate to practice law applicant is eligible for admission if applicant has practiced law for five of six years as partners. Statute (415A) permits professionals (including attorneys) to incorporate in before application and: (1) Is admitted to practice before highest court of another state, restricted form. Attorneys may form professional corporations, but attorneys of such territory, or District of Columbia; or (2) is admitted to practice and is in good standing corporations retain liability as though association were partnership. (RSCH 6[g]). Statute before highest court in foreign country where English common law forms basis of prohibiting attorneys from forming limited liability partnerships has been repealed. country’s jurisprudence and English is language of instruction and practice. (RSCH (2000, Act 218, §8). See also category Business Organizations, topic Corporations. 1.3[b]). Under this rule, service as judge of court of record is equivalent to active practice Powers.—Attorneys have control of an action to judgment and execution, but have no of law. (RSCH 1.3[b]). power to compromise, arbitrate, or settle without written authority. (605-7). Petition for Admission.—Applicants for bar must submit, in duplicate, verified ap- Rules of Professional Conduct.—Hawaii has adopted HRPC fashioned after uniform plication on form provided by Hawaii Board of Bar Examiners. (RSCH 1.3, HBBERP model rules. See 81 Haw. 410, 917 P.2d 1284. 2.1). Application must be accompanied by letters of recommendation from at least two attorneys licensed to practice in State, which must state circumstances under which attorney has known applicant and appraisal of applicant’s moral character. Applicants for MINERAL, WATER AND FISHING RIGHTS bar must submit verified application for Feb. examination on or before 20th day of Nov. preceding exam; for July examination on or before 20th day of Apr. preceding exami- FISHING: nation. (HBBERP 2.1). Fee for examination is $300 plus $175-$300 character report fee, Fishing Rights.—All fishing grounds appertaining to any government land or other- and successful applicant must pay additional $10 for admission. Examinations begin on wise belonging to government, except ponds, are open for free and equal use by all

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–34 HAWAII LAW DIGEST MORTGAGES

FISHING . . . continued MORTGAGES OF PERSONAL PROPERTY: persons; provided that for protection of these fishing grounds, Department of Land and See topic Chattel Mortgages. Natural Resources may manage and regulate taking of aquatic life. (187A-21). There are administrative or civil penalties for violation of statutes regulating aquatic resources and wildlife. (187A-12.5, 13). License can be obtained for mullet, nehu, iao and other MORTGAGES OF REAL PROPERTY: baitfish, and certain crustaceans. (188-44; 45; 57). No person shall knowingly harvest Transfers of interests in real property or fixtures made as security for performance of shark fins from State of Hawaii territorial waters, or land shark fins in state, unless fins another act or subject to defeasance on payment of an obligation, whether such transfers were taken from shark landed whole in state. (188-40.5). Illegal to take or kill female are in trust or otherwise, are deemed mortgages and create liens, but do not pass title. ula, Kona crabs, or Samoan crabs. (HRS §188-58.5). (506-1). Permit required to pick Limu in Limu management area. (HRS §188-22.8). Property.—Subject to certain limitations (c. 506, 490:9-334, and 490:9-604), if mort- Community subsistence fishing. (2006 Sess. Laws Act 241). gage so provides, its lien may attach to additions, improvements, and purchases or Konohikis.—Private vested fishing right giving tenants ability to either: (1) Set aside substitutions made to supply place of any real property or fixtures disposed of and to all right to take one type of aquatic species for exclusive use of konohiki; or (2) prohibit other after-acquired real property or fixtures referred to in mortgage when mortgagor all taking of aquatic life during certain months of year; provided that during fishing acquires interest therein to extent of such interest, but subject to existing liens and lien season within private fishery, konohiki may exact up to one-third of aquatic life taken of purchase money mortgage given by mortgagor of any such after-acquired real property within private fishery from each fisher among tenants. (187A-23). or fixtures (506-2). Further, lien does not attach to after-acquired real property and fixtures not described in mortgage until, after acquisition, instrument or affidavit is MINES AND MINERALS: recorded referring to book and page number of mortgage and containing description of Strip Mining.—Regulated and controlled by State Board of Land and Natural Re- real property, fixtures, and real property to which fixtures attach. (506-3). sources. (c. 181). Permit required to engage in strip mining. (181-3). Permit application Execution.—The same formalities as to execution of mortgages are required as in the procedure governed by 181-4; bond required. (181-5). case of deeds. (q.v.). State Mineral Rights.—Reservation and disposition governed by c. 182. Recording.—In order to constitute notice as against subsequent bona fide purchasers Geothermal Resources.—Production and utilization statutorily encouraged. State au- or encumbrancers, mortgage must be recorded in Bureau of Conveyances of State of thorized to waive royalty payments from geothermal mining lessees to encourage initial Hawai’i, or if Torrens Act land, in Office of Assistant Registrar of Land Court of State or continued production of geothermal resources. (182-18). Surface owner has first right of Hawai’i. For all recorded mortgages, copies must be single-sided, consecutively 1 × 1 of refusal for mining lease. (182-5). Only areas designated as geothermal resource paginated, and not exceed 8 ⁄2 11 inches. Top 3 ⁄2 inches of first page of all documents subzones may be utilized for geothermal development activities (development, or pro- must be left blank for use of recording officer. Following 1 inch space shall be reserved 1 duction of electrical energy from geothermal resources). (205-5.1[a]). Exploratory drill- for information showing to whom document should be returned, beginning 1 ⁄2 inches 1 ing is permitted outside of geothermal resource subzones. (c. 205). State Board of Land from left margin and not exceeding 3 ⁄2 inches per line. First page shall include, if and Natural Resources responsible for designation of geothermal resource subzones. possible, all names of grantors and all names and addresses of grantees, type of docu- (205-5.2). Use of area for geothermal development activities within geothermal resource ment, and tax map key number (see example Commercial Code Form at end of this subzone governed by county planning commissions, except where conservation district Digest). If there is more than one page, document should be stapled once in upper left affected. (205-5.1[c]). Activities within conservation district subject to state regulation. corner. (502-31, 501-108). Recording fee is $25 per document and additional $1 for every (205-5.1[d]). Naturally heated fluids below 150 degrees Fahrenheit are not geothermal page over 20. (HAR 13-16-22). When grantee is corporation or partnership document resources. (182-1). Thirty percent of all royalties received by state shall be paid to county must indicate state where entity is registered and entity’s address. (501-105). If mortgage in which mining operations are situated. (182-7[c][3]). affects Torrens Act land, reference to number of certificate of title of affected land must be incorporated in body of mortgage tendered for registration. (501-108[a]). All names Mining of sand, dead coral, coral rubble, rocks, soil or other beach or marine deposits of all natural persons signing in their individual capacity in such mortgage must be from shoreline area is prohibited (with exceptions). (205A-44). typewritten, stamped, legibly printed by hand, or by mechanical or electrical printing method beneath all signatures. (501-108[c]). WATER: See category Property, topic Deeds. Water Use.—Use of surface and ground waters governed by State Water Code and Recording Schedule of Fees set forth in 501-218, as amended by Bureau of Con- Commission on Water Resource Management. (c. 174C). The Public Trust Doctrine veyances, and 502-25. Special mortgage recording fee for hurricane reserve trust fund applies to all water resources in State, including surface and ground waters. (94 Haw. set forth in 431P-16. 97, 9 P.3d 409). Commission has jurisdiction to hear any dispute regarding water resource protection, water permits, constitutionally protected water interests, appurtenant water Priorities.—Covered by 506-1. rights and competing needs for water. (174C-10). Coastal waters governed by Hawaii Taxes.—See category Taxation, topic Property Taxes, subhead Mortgage Recording Coastal Zone Management Law and special management area guidelines. (c. 205A). Fee. Office of State Planning is responsible for management of coastal waters. (c. 205A). Release.—Covered by 506-8. See subhead Satisfaction, infra. Declaration of Water Use.—Any person making use of water in any area of state must file declaration containing, among other things: information regarding quantity of Trust deeds are not commonly used, except to secure bond issues. water used, purpose or manner of use, time of taking water, and point of withdrawal or Future Advances.—Mortgage may secure past debts or future advances even though diversion of water. (174C-26). Upon determination by Water Commission that use is mortgagee is under no contractual duty to make such advances (506-1), but debts or ‘‘reasonable-beneficial use,’’ certificate describing use shall be issued. (174C-27). ‘‘Rea- advances must relate to same transaction or series of transactions for which mortgage is sonable-beneficial use’’ means use of water in such quantity as is necessary for economic given or mortgage must specifically refer to it for advance to be secured (50 Haw. 304, and efficient utilization, for purpose, and in manner which is both reasonable and con- 440 P.2d 262). Except with regard to security interests in fixtures (490:9-334 and 490:9- sistent with state and county land use plans and public interest. (174C-3). 604), advances up to maximum amount of mortgage shall be superior to any subsequently Designated Water Management Areas.—When Water Commission determines that recorded mortgage, lien or encumbrance other than liens for real property taxes and for water resources of area are being threatened by existing or proposed withdrawals of public improvements (506-1). water, Commission may, after public hearing, designate water management areas, sub- Satisfaction.—Mortgagee shall provide mortgagor with recordable release of mort- jecting both ground and surface water diversions to requirements of Water Code. (174C- gage upon full satisfaction of mortgage and discharge of any debt secured thereby. Title 41, 94 Haw. 97, 9 P.3d 409). Except for domestic consumption of water by individual insurers and underwritten title companies authorized to execute release of mortgages of users and uses of catchment systems to gather water, no person may make any with- real property or fixtures on behalf of mortgagee under certain circumstances. (506-8). drawal, diversion, impoundment or consumptive use of water in any designated water Discharge. management area without first obtaining permit from Commission. (174C-48). Under —See subhead Satisfaction, supra. public trust and Water Code, permit applicants have burden of justifying their proposed Foreclosure.—Mortgages may be foreclosed: (1) By usual action in court; (2) by sale uses in light of protected public rights in resource, “reasonable-beneficial use” require- under power contained in mortgage, after publication of notice in English language once ment and other criteria listed in 174C-49. (94 Haw. 97, 9 P.3d 409). Commission may, in each of three successive weeks, last publication not less than 14 days before sale, as condition for issuing permits, require use of dual line water supply systems in new affidavit showing all details of notice and sale to be recorded within 30 days after sale. industrial and commercial developments in designated water management areas. (174C- (c. 667). Any person who forecloses on property within planned community association, 51.5). Permits are generally valid until designation of water management area is re- condominium or apartment in cooperative housing project must notify board of directors scinded unless revoked or modified. (174C-55). Every 20 years, Commission is to by registered or certified notice. (667-5.5). Condominium associations which have filed conduct comprehensive study of all permits issued under Code to determine whether notice of lien against foreclosed property may recover delinquent maintenance fees in conditions of such permits are being complied with. (174C-56). Permits may be trans- amount limited to amount of regular monthly common assessments unpaid during six ferred in whole or in part if conditions of use of permit remain same and Commission months immediately preceding completion of foreclosure, with maximum recovery of is informed of transfer within 90 days. (174C-59). Water Code does not modify Native $1,800, from (i) foreclosure purchaser if notice of lien is filed before foreclosure purchase Hawaiian Water Rights. (174C-101). is recorded; or (ii) subsequent purchaser if notice of lien is filed before subsequent purchaser’s acquisition of title. (514B-146). Mortgage of time share interest may also be foreclosed by sale under power if power of sale is contained in such mortgage or loan MORTGAGES document. (667-62). Mailed notice of senior mortgagee’s intent to foreclose under power of sale may be obtained by junior mortgagees of premises from foreclosing mortgagee CHATTEL MORTGAGES: by submitting written request to him any time after junior mortgage is filed but before period of published notice of foreclosure has run. (667-6). Alternate, nonjudicial, power Uniform Commercial Code adopted. See category Business Regulation and Com- of sale foreclosure process established. (667-21 through 667-42). merce, topic Commercial Code, especially for variations in connection with filing. Uni- form Commercial Code has made use of chattel mortgages unnecessary. Sale.—See subhead Foreclosure, supra. Forms.—For UCC Forms, see end of this Digest. Redemption rights have been abolished.

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–35 MORTGAGES MARTINDALE-HUBBELL LAW DIGEST - 2007

MORTGAGES OF REAL PROPERTY . . . continued hereby assigned to the Mortgagee and the Mortgagee is hereby irrevocably authorized Forms.—There are no statutory forms. The following forms may be used but not for to demand, sue for, collect, receive and receipt for the same and apply the net proceeds loans under $25,000 (see category Business Regulation and Commerce, topic Consumer of the same toward the payment of the indebtedness secured hereby; Protection): The Mortgagee shall have the right and is hereby expressly authorized to apply any Mortgage.— payments received and any rents, issues and profits collected upon any indebtedness of KNOW ALL MEN BY THESE PRESENTS: the Mortgagor to the Mortgagee hereby secured and any such application shall in all That (name, marital status and address of mortgagor), Mortgagor, in consideration of respects be binding upon the Mortgagor; ...... DOLLARS ($...... )to...... loaned and advanced by (name and PROVIDED, HOWEVER, that if the Mortgagor shall pay all indebtedness hereby address of mortgagee), Mortgagee, the receipt of which is hereby acknowledged, and in secured, whether or not the same is mature, of which indebtedness the records of the order to secure the repayment thereof according to the promissory note ....hereinafter Mortgagee shall be prima facie evidence, and otherwise well and faithfully perform and mentioned, and also the repayment of any and all other indebtedness now or as may observe all of the covenants and conditions aforesaid, and pay the cost of release hereof, hereinafter be or become owing by the Mortgagor to the Mortgagee, do ....hereby this mortgage shall become void; but all indebtedness hereafter owing by the Mortgagor grant .....unto said (name of mortgagee—and if two or more, specify whether as to the Mortgagee shall be secured by this mortgage, whether or not at the time such joint tenants, tenants in common, or as tenants by the entirety): indebtedness shall accrue there shall be then outstanding indebtedness owing by the (description of property) Mortgagor to the Mortgagee, unless a release of this mortgage shall have been executed TOGETHER with all improvements now or hereafter constructed or placed thereon by the Mortgagee prior to the time such indebtedness shall accrue; and all fixtures now or hereafter attached to or used in connection with the property BUT UPON ANY DEFAULT in the performance or observance of any covenant or hereinabove described, including, without limiting the generality of the foregoing, the condition herein or in any promissory note contained or of the terms of any other following described household appliances, together with any replacements thereof or indebtedness hereby secured, or if the Mortgagor (or any of them, if there be more than additions thereto, which are, and shall be deemed to be, fixtures, a part of the interest one) is adjudicated a bankrupt or insolvent, or shall file any petition or answer seeking in said property and a portion of the security for the indebtedness secured hereby: relief as a debtor under any law for the relief or aid of debtors, or shall enter into any TO HAVE AND TO HOLD the same, with all improvements now or hereafter placed arrangement or composition with creditors, or if a receiver is appointed with respect to or constructed being thereon, and all rights, easements, privileges and appurtenances the property herein described, or if the mortgaged property, or any part thereof, shall be thereto belonging, and the rents, issues and profits thereof, unto the Mortgagee and the seized or levied upon under any legal process or under any claim of legal right, then, (successors, heirs) and assigns of said Mortgagee forever. in each such event, the whole amount of all indebtedness owing by or chargeable to the AND the Mortgagor hereby covenants with the Mortgagee as follows: Mortgagor under any provision of this mortgage, or intended to be secured hereby, on The Mortgagor is lawfully seised in fee simple (as joint tenants, etc.) of the granted any and every account, shall at the option of the Mortgagee become at once due and property and has ....good right to grant and convey the same as aforesaid; that said payable without notice or demand, and with or without foreclosure the Mortgagee shall property is free from all encumbrances (except as aforesaid); that the Mortgagee shall have the immediate right to receive and collect all rents and profits due or accrued or quietly enjoy and possess the same; and that the Mortgagor will and (its successors—or to become due, and said rents and profits are hereby assigned to the Mortgagee, and said the executors and administrators of the survivor of them, etc.) shall warrant and defend Mortgagee is hereby irrevocably appointed the attorney in fact of the Mortgagor with the same unto the Mortgagee and the ...... andassigns of the Mortgagee forever power in the name of the Mortgagor or the Mortgagee to demand, sue for, collect, recover against the lawful claims and demands of all persons ...... ; and receive all such rents and profits, to compromise and settle claims for rents or profits ...... will pay unto the Mortgagee said sum of ...... Dollars ($...... ) upon such terms and conditions as may seem proper, and to enter into, renew or terminate with interest thereon, all according to the terms of the ...... promissory note .... leases or tenancies, and the Mortgagee may foreclose this mortgage, by court proceeding therefor of even date, made by the Mortgagor ...... hereby secured; and will also (with the immediate right to a receivership with the aforesaid powers on ex parte order pay all other indebtedness now or as may hereafter be or become owing by the Mortgagor and without bond pending foreclosure), or, as now or then provided by law, either by to the Mortgagee on any and every account, together with interest thereon as may be entry and possession, or (with or without entry and possession) by advertisement and sale specified with respect thereto; of the mortgaged property or any part or parts thereof at public auction in ...... , Until such payment the Mortgagor will also pay all taxes, assessments and charges of State of Hawaii, and may in the name of the Mortgagee or as the attorney in fact of the every kind, to whomsoever assessed or chargeable, whether on the mortgaged property Mortgagor, for such purpose hereby irrevocably appointed, effectually convey the prop- or any interest therein, or with respect to any improvements thereon, benefits thereto, erty so sold to the purchaser or purchasers absolutely and forever; and any foreclosure income therefrom, or the indebtedness secured hereby, without any allowance or de- shall forever bar the Mortgagor and all persons claiming under the Mortgagor from all duction whatsoever on account thereof from any indebtedness due under or secured by right and interest in said property; and out of the proceeds of any foreclosure sale the this mortgage; and will, upon request, deposit the receipts therefor with the Mortgagee; Mortgagee may deduct all costs and expenses of foreclosure and/or suit, and retain or The Mortgagor will, in the name and for the benefit of the Mortgagee, during the term be awarded all sums then payable by or chargeable to the Mortgagor, rendering to the of this mortgage, keep all improvements now or hereafter erected upon the mortgaged Mortgagor the surplus, if any. If such proceeds shall be insufficient to discharge the same property insured against hazards of such type or types and in such amount or amounts in full, the Mortgagee may have any other legal recourse against the Mortgagor for the and form of policy as the Mortgagee may from time to time require, and deposit the deficiency. The Mortgagee shall have the right to enforce one or more remedies here- policy or policies with the Mortgagee (it being agreed and conditioned that in event of under or any other remedy the Mortgagee may have, successively or concurrently, loss or damage the proceeds of insurance shall be applied by the Mortgagee, at the option including the right to foreclose this mortgage with respect to any portion of the mort- of the Mortgagee, either to rebuilding or repair of damage or in reduction of any gaged property without thereby impairing the lien of this mortgage on the remainder of indebtedness secured hereby unless otherwise required by law); and if the Mortgagor the mortgaged property or affecting the remedies of the Mortgagee available with respect shall procure any other insurance thereon, all such insurance shall likewise be made thereto. payable to and be claimable only by the Mortgagee, and whether so made payable or not If the property includes, or is under, covered, or affected by any leases, and the it may be recovered by the Mortgagee by any appropriate proceeding and be similarly Mortgagor or anyone else with right to and/or obligations under any property leases, applied; including, but not limited to lessors, lessees, sublessors, and sublessees, become a debtor The Mortgagor will punctually pay the rent at all times and in the manner in said lease in a voluntary or involuntary bankruptcy case, and an order for relief is issued pursuant required, and otherwise observe and perform all of the covenants and conditions thereof to the bankruptcy laws, then Mortgagor will take the actions necessary to prevent the on the part of the Lessee, and in all other respects keep the same in good standing and property lease(s) from being rejected by Mortgagor, any bankruptcy trustee or any other free from all liens and other encumbrances; (for leasehold only) person pursuant to the bankruptcy laws, or from being terminated in any manner. Mort- The Mortgagor will keep the mortgaged property in good condition and repair, and will gagor will take such actions within five days from the date of filing of the order of relief. permit the Mortgagee to enter and inspect the mortgaged property, and will comply with The bankruptcy laws include, but are not limited to, §365 of Title 11 of the provisions all laws, rules and regulations made by governmental authority and applicable thereto, of the United States Code, as it may be amended; (for leasehold only). and will not commit or suffer any strip, waste or any unlawful, improper or offensive IT IS ALSO AGREED: use of said property, or any other act of negligence by which the same or any interest Upon the happening of any event entitling the Mortgagee to foreclose this mortgage, therein shall become liable under any lien or to seizure or attachment on mesne or final or if the Mortgagee shall be served with garnishee process in which the Mortgagor (or process of law, in bankruptcy or otherwise, or by which the security hereof shall be any of them, if there be more than one) shall be named as defendant, whether or not the impaired or threatened; Mortgagor shall be in default hereunder at the time, the Mortgagee may, but shall not Upon any failure of the Mortgagor to observe or perform any covenant or condition be required to, set off any indebtedness owing by the Mortgagee to the Mortgagor (or of this mortgage, or if any suit, proceeding or other contingency shall arise or be any of them, if there be more than one) against any indebtedness secured hereby, without threatened relating to any of the mortgaged property, the Mortgagee may at the option first resorting to the mortgaged property and without prejudice to any other rights or of the Mortgagee, without notice or demand, make any advances or incur such expenses remedies of the Mortgagee or the lien of the Mortgagee on the mortgaged property; or otherwise act as may in the judgment of the Mortgagee seem advisable to protect the In the event of a sale of said premises or any part or parts thereof under and by virtue security of the Mortgagee hereunder or carry out the covenants of the Mortgagor herein, of the provisions of this mortgage the purchaser or purchasers thereof shall have im- even though any tax, assessment, rate, encumbrance or charge paid in such behalf by the mediate and peaceable possession of the same and that if the Mortgagor shall remain in Mortgagee shall be invalid; possession after the effective date of such sale such possession shall be construed as a All advances, costs, expenses and attorney’s fees which the Mortgagee may make, pay tenancy at sufferance only, giving unto the purchaser all remedies, by way of summary or incur under any provision of this instrument, for the protection of the security of the possession or otherwise, conferred by law in such case. Mortgagee or any of the rights of the Mortgagee in connection with the mortgaged The Mortgagor (and each of them, if there be more than one), and any successor in property, or in foreclosure proceedings commenced and subsequently abandoned, or in interest to the whole or any part of the mortgaged property, hereby waive diligence, any dispute or litigation in which the Mortgagee or the holder of said note may become presentment, demand and notice of dishonor, and consent to extensions of time, surrender involved by reason of or arising out of this mortgage shall be paid by the Mortgagor to or substitution of security, failure to apply deposit or other forbearance, without notice, the Mortgagee upon demand and bear interest until paid at the rate of ten per cent per with respect to any indebtedness hereby secured; annum, all of which obligations shall be additional charges upon the mortgaged property The Mortgagor will pay to Mortgagee, to the extent requested by the Mortgagee, on and be equally secured hereby; dates upon which interest payable, such amounts as the Mortgagee may from time to time In case of condemnation of the mortgaged property or any part thereof by paramount estimate as necessary to create and maintain a reserve fund from which to pay before authority, whether or not the mortgagor shall be in default hereunder at the time, any the same become due, all ground rentals (if any), taxes, assessments, liens and charges portion or all of any condemnation award to which the Mortgagor shall be entitled is on or against the property hereby mortgaged, and premiums for insurance held or

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–36 HAWAII LAW DIGEST PROPERTY

MORTGAGES OF REAL PROPERTY . . . continued Ruth Roe, of Honolulu, City and County of Honolulu, State of Hawaii, Mortgagor, dated required by the Mortgagee. Payments from said reserve fund for said purposes may be ...... ,andrecorded in the Bureau of Conveyances of the State of Hawaii in Liber made by the Mortgagee at its discretion even though subsequent owners of the property ...... ,page ...... (or‘‘and filed in the Office of the Assistant Registrar of the Land described herein may benefit thereby. In the event of any default under the terms of this Court of the State of Hawaii as Document No. ....andnoted on Transfer Certificate mortgage, any part or all of said reserve fund may be applied to any part of the of Title No. ....issued to said Mortgagor,’’ if Torrens Act land), in consideration of indebtedness hereby secured and in refunding any part of said reserve fund the Mort- One Dollar ($1) to them paid by the Mortgagor, the receipt of which is hereby ac- gagee may deal with whomever is represented to be the owner of said property at that knowledged, do hereby release and discharge from said mortgage: time; (insert description) The Mortgagee or any person in behalf of the Mortgagee may purchase at any PROVIDED, HOWEVER, that this release shall not affect or impair the security of foreclosure sale, and no other purchaser shall be answerable for the application of the said mortgage with respect to the remaining premises therein described and not hereby purchase money; and that until any default the Mortgagor may hold and enjoy the or heretofore released. mortgaged property and receive the rents and profits thereof; that the terms ‘‘advances,’’ IN WITNESS WHEREOF, said Joe Doe and Jane Doe have hereunto set their hands ‘‘costs’’ and ‘‘expenses’’ wherever herein used, shall include reasonable attorney’s fees . this .....dayof...... ,20..... whenever incurred; that the term ‘‘Mortgagor’’ shall include the plural and in such case ...... shall bind the Mortgagors jointly and severally; that the term ‘‘indebtedness’’ shall mean ...... and include, but shall not be limited to, all claims, demands, obligations and liabilities (Acknowledgment) whatsoever, however, arising and whether owing by the Mortgagor (or any of them, if there be more than one) individually, or as partners, or as a partner or jointly or in Chattel Mortgages.—See topic Chattel Mortgages. common with any other or others, and whether absolute or contingent, as principal debtor Reverse mortgage loans are permitted on condition that lender, prior to accepting any or as accommodation maker or as endorser, liquidated or unliquidated, and whenever application for such loan, refers borrower to counseling from housing counseling orga- contracted, accrued or payable; and that these presents shall be equally binding upon and nization that is approved by U.S. Department of Housing and Urban Development. inure to the benefit of the legal representatives and successors in interest of the parties Lender must receive certification from counselor indicating that borrower has received hereto respectively. such counseling. Any lender that fails to comply with this requirement shall be deemed In the event of the existence at the date of this instrument or the adoption or amend- to have engaged in unfair or deceptive acts in conduct of trade within meaning of §480-2. ment, after the date of this instrument, of any law of the United States, of the State of (506-10). Hawaii, or any foreign country, or of any other taxing jurisdiction, which in any way shall impose a tax on mortgages or debts secured by mortgages to the end that directly or indirectly Mortgagee shall be required to pay on account of this mortgage, said prom- PROPERTY issory note or any other indebtedness secured hereby any tax other than a tax on, according to, or measured by net income, or any existing franchise tax applicable to ABSENTEES: Mortgagee, the holder of this mortgage may give at any time written notice to Mortgagor Care of Property.—Where heirs or legatees cannot be found, personal property to that the said holder elects to have the indebtedness secured by this mortgage become due which they would be entitled may be deposited with clerk of court. (560:3-1212). and payable six months from the giving of such notice unless Mortgagor, within the said six months’ period, shall agree in writing to pay the amount of such taxes; and in the Other.—No other statutory provision. event Mortgagor within such six months’ period so agrees to pay the amount of such Process Agent.—For nonresident motorists, see category Transportation, topic Motor taxes, such agreement of Mortgagor shall be deemed to be a covenant and obligation of Vehicles. For nonresident shipping lines see category Business Regulation and Com- Mortgagor under this mortgage for all purposes and in the event Mortgagor fails within merce, topic Carriers. Otherwise see category Civil Actions and Procedure, topic Process. said six months’ period to so agree to pay such taxes, the indebtedness secured by this Escheat.—Uniform Unclaimed Property Act. (523A). All unclaimed property subject mortgage shall become due and payable upon the last day of the six months’ period. If to delivery to state if last known address of owner is in state. (523A-53). All unclaimed, at any time Mortgagor’s agreement to pay the amount of such taxes shall be prohibited intangible property, presumed abandoned after five years. (523A-2). Interest in Kuleana by law or the payment of the same by Mortgagor would make the transaction usurious, lands shall pass to state if owner of such lands dies without heirs. (560:2-105.5). See also then the indebtedness secured hereby shall become due and payable six months after the category Business Regulation and Commerce, topic Banks and Banking, subhead Escheat giving of written notice by the holder of this mortgage and the promissory note secured of Inactive Accounts. hereby that it elects to have the indebtedness secured hereby become due and payable. Nonsupport by Husband or Parents.—Absence for three continuous months without If without prior written consent of the Mortgagee any of the property subject to this support of spouse or children is prima facie evidence of desertion. (575-2, modifying mortgage shall be conveyed, assigned, sold, encumbered, leased or transferred, including Uniform Desertion and Non-Support Act). transfer by way of agreement of sale or as security, by the Mortgagor to any other party, other than by will or intestate succession, then and in any such event all of the indebt- ADVERSE POSSESSION: edness hereby secured shall at once become due and payable at the option of the Acquisition of title through possession of real estate inconsistent with title of another. Mortgagee (any provision or term thereof to the contrary notwithstanding), and delay or failure on the part of the Mortgagee to demand such payment shall not prejudice the Character of Possession.—Subject real property must be five acres or less, and claim Mortgagee’s rights thereto. If the Mortgagor then holding title to all or any part of the may be asserted in good faith not more than once in 20 years. (657-31.5). However, does mortgaged property (or any of them if there be more than one) shall be a corporation, not include similar claims made before Nov. 7, 1978. (657-31.5). Adverse possession then as to such Mortgagor, any sale, assignment, transfer (other than by will or intestate claim allowable for real property exceeding five acres, as long as person adversely succession) or exchange of any of the shares of the capital or common stock of the possessed for not less than 20 years prior to Nov. 7, 1978, or for not less than earlier Mortgagor, or any issuance of any new shares of stock of any class of the Mortgagor, applicable time periods. (669-1[b]). or any merger or consolidation of the Mortgagor with or into any other corporation Must be in actual, open, hostile, notorious, continuous and exclusive possession of whereby in any such event the shareholders of such Mortgagor immediately prior to such property for statutory period. (48 Haw. 17, 395 P.2d 273). Good faith must be shown, event (or their heirs or legatees) shall fail to own and control one hundred per cent i.e. that reasonable person would believe that person has interest in title to property, and (100%) of the voting stock of the Mortgagor shall be deemed a conveyance or assignment belief based upon inheritance, written instrument of conveyance or judgment of court of of the Mortgagor’s interest in the mortgaged property for purposes of this paragraph and competent jurisdiction. (669-1[b]). No requirement taxes be paid throughout adverse shall require the prior written consent of the Mortgagee. The Provisions of this paragraph period. (50 Haw. 125, 432 P.2d 890). shall constitute a continuing covenant or condition, and any failure on the part of the Plaintiff does not need to have perfect title to establish prima facie case, but must at Mortgagee to exercise its option to declare all indebtedness due and payable on the least prove that he has substantial interest in property and that his title is superior to that occurrence of any one event hereinabove mentioned shall not prejudice the right of the of defendant. (76 Haw. 402, 879 P.2d 507). Mortgagee to declare the indebtedness hereby secured at once due and payable on the Duration of Possession.—Adversely possess for 20 years or more unless one has occurrence of any other event hereinabove mentioned. possessed for ten years prior to May 1973. (657-31). There is no adverse possession Mortgagee and Mortgagor intend and agree that, although the Leasehold and the Fee, against titles registered under Torrens Act (see category Documents and Records, topic which is the reversionary interest in the Property upon termination of the Leasehold, are Records). An action may be brought in circuit court in which property situated by any both owned by mortgagor, for purposes of this and any other mortgages of the Fee and/or person against another person who claims or may claim adversely to plaintiff. Adverse the Leasehold, the Leasehold and Fee shall be treated as separate interests and shall not possessor must have been in possession for period of 20 years to initiate action estab- be deemed to have merged, the Leasehold having been mortgaged by mortgagor, and if lishing title. (669-1). applicable, the Fee also having been mortgaged by mortgagor under a mortgage or Easements.—No different requirements. mortgages prior in lien to this Mortgage; (if applicable). Disabilities.—Persons under disability (minority, imprisonment, incompetency) have This mortgage is governed by and shall be construed in accordance with the laws of a further period of five years after removal of disability. (657-34). Death within 20 year the State of Hawaii. In the event that the interest rate provided herein, or in said period extends time to heirs, devisees, etc. for an additional five years after death. promissory note, or in any other instrument of indebtedness hereby secured, or the (657-35). interest rate applicable to any other indebtedness hereby secured, together with any late charge, fees or other charges applicable thereto, shall be in excess of the permissible rate CONDOMINIUMS: under any applicable usury statute or similar law governing maximum rates of interest, fees or charges, then such rate of interest and/or said late charges, fees or other charges See topic Real Property, subhead Condominium. shall be reduced to the maximum rate permitted by law, anything herein or in said promissory note or other instrument to the contrary notwithstanding. CONVEYANCES: (Signatures, acknowledgment, etc.) See topic Deeds.

Partial Release of Mortgage.— CURTESY: KNOW ALL MEN BY THESE PRESENTS: Uniform Probate Code, but not 1975 or 1977 Official Amendments, adopted (c. 560), That JOHN DOE and JANE DOE, husband and wife, of ...... ,State of ...... , effective July 1, 1977 U.P.C. section abolishing curtesy not adopted. For rights accruing the Mortgagees named in that certain mortgage made by RICHARD ROE, husband of prior to July 1, 1977, following is applicable:

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–37 PROPERTY MARTINDALE-HUBBELL LAW DIGEST - 2007

CURTESY . . . continued unto the Grantees, as tenants by the entirety with full rights of survivorship, and their Husband has life interest in one-third of lands owned by his wife in fee simple, assigns, and the heirs and assigns of the survivor of them: (insert description) freehold or in leasehold at date of her death, and absolute property in one-third of her SUBJECT, HOWEVER, to the following: (insert encumbrances, if any) remaining property after payment of her debts. During her life, he has no curtesy right, TO HAVE AND TO HOLD the same, together with the improvements thereon and the inchoate or otherwise. (533-16). rights, easements, privileges and appurtenances thereunto belonging or appertaining, unto Bar.—Curtesy right is barred by one year’s desertion or nonsupport. (533-16). the Grantees, as tenants by the entirety, and the survivor of them and their assigns and the heirs and assigns of the survivor of them, forever. DEEDS: (Insert warranty clause and provision for pro-rating of current realty taxes, if desired.) AND, for the consideration aforesaid, JANE DOE, wife of the Grantor, does hereby Execution.—Deeds must be acknowledged in order to be recorded unless executed on release and forever quitclaim unto the Grantees, as tenants by the entirety aforesaid, all behalf of U.S. or State of Hawaii. (502-41). If acknowledgment cannot be obtained, proof her right, title and interest in and to the premises hereinabove granted, whether by way of execution must be made before judge of Land Court or Circuit Court. (502-50). If of dower, community property, elective share or otherwise. executed by attorney-in-fact, power of attorney must be recorded. (502-84). If grantor is IN WITNESS WHEREOF, the Grantor and said Jane Doe have hereunto set their married man, wife may be required to join in order to bar her dower, see topic Dower. hands this ...... dayof...... 20..... (533-10). If grantor is married woman, no release of curtesy by husband is necessary ...... (unless land was acquired by wife during 1945-1949 period of Community Property Law John Doe and deed of acquisition was not acknowledged by husband as wife’s separate property Grantor or if property was not acquired from her separate funds or by inheritance). If grantors ...... are husband and wife as joint tenants or as tenants by entirety, no dower release is Jane Doe necessary. Husband may sign as attorney-in-fact for wife except as to release of dower Dower in which case power must name some third party as attorney and must specifically refer to and cover her dower rights as being subject of power. Doctrine of merger of underlying Note.—Refer to subhead Execution, supra for requirements for execution. contract for conveyance and deed applied. (75 Haw. 480, 866 P.2d 951). Taxes.—See category Taxation, topic Real Estate Conveyance Tax. See also topics Real Property, Curtesy, Dower; category Debtor and Creditor, topic Homesteads; Family, topic Husband and Wife. DEEDS OF TRUST: Recording.—All deeds, leases for term of more than one year, mortgages of any See category Mortgages, topic Mortgages of Real Property. interest in real estate, or other conveyances must be recorded in office of registrar of conveyances in Honolulu; otherwise they are void as against any subsequent purchaser, DOWER: lessee or mortgagee, in good faith and for valuable consideration, not having actual Note: 533-1, dealing with dower rights, was repealed by 1997 Legislature (c. 244), notice of such conveyance of same real estate, or any portion thereof, whose conveyance effective June 17, 1997. However, dower releases for conveyances of real property may shall be first duly recorded. (502-83). Deeds must contain address of grantee. (502-34). still be required by title insurance companies in connection with dower rights that have For deeds or other conveyance instruments executed after July 1, 1989, all names of all vested prior to effective date of repeal. natural persons signing in their individual capacity shall be typewritten, stamped, legibly printed by hand, or by mechanical or electrical printing method beneath all signatures. ESCHEAT: Top 31⁄2 inches of first page must be left blank for use of recording officer. Following 1 inch space shall be reserved for information showing to whom document should be See topic Absentees, subhead Escheat; categories Business Regulation and Commerce, returned beginning 11⁄2 inches from left margin and not exceeding 31⁄2 inches per line. topic Banks and Banking, subhead Unclaimed Deposits; Estates and Trusts, topics De- First page shall include, if possible, all names of grantors and all names and addresses scent and Distribution, subhead Escheat, Wills, subhead Unclaimed Legacies. of grantees, type of document, and tax map key number. (502-31). When grantee is corporation or partnership, document must contain state where entity is registered and HORIZONTAL PROPERTY REGIME: entity’s address. (501-105). If more than one page, deed must be stapled once in upper See topic Real Property, subhead Condominium. left corner. Assistant registrar may refuse to record document longer than 81⁄2 inches by 11 inches. (502-31). LANDLORD AND TENANT: Recording Fees.—Recording fee for deeds is $25 and $1 per page for each page over Generally, common law governs rights and liabilities arising out of landlord-tenant 20 pages unless otherwise provided by rules adopted by Department of Land and Natural relationship. Dwelling unit rentals also governed by comprehensive residential landlord- Resources pursuant to c. 91. (Hawaii Administrative Rules [HAR] 13-16-22). See cat- tenant code. (c. 521). Additional statutory provisions governing long-term residential egory Documents and Records, topic Records. leases are found in cc. 516 and 519 and other statutory provisions governing real property See category Taxation, topic Property Taxes, subhead Real Estate Conveyance Tax. leases are found in c. 666. Operation and Effect.—Doctrine of merger disallows any recovery on covenant Uniform Commercial Code Art. 2A adopted. contracts once grantee accepts deed, so that deed’s covenant control, rather than terms Discrimination in Real Property Transactions.—Governed by c. 515. Conforms to of prior sales contract. (76 Haw. 396, 879 P.2d 501). federal Fair Housing Amendments Act of 1988. Prohibits steering persons toward and Torrens Act.—Land Court registration is provided for by c. 501. Deed purporting to away from real estate transaction and adds age as protected group. Gender identity, convey or affect land registered with Land Court is not effective as conveyance and does expression, and sexual orientation also impermissible grounds for discrimination, with not bind land until registered in Office of Assistant Registrar of Land Court in Honolulu. narrow exception provide for religious institutions. (2005, Act 214). Age is exception to (501-101). Deed must contain full name, or names, address and marital status of grantee discrimination in real estate transaction law as it pertains to housing for elderly. (515-4). and, if married, full name of spouse. Deed conveying (1) one or more (but not all) lots, Kinds of Tenancy.—Landlord and tenant may agree to any period as term of dwelling or (2) all interests in lot appurtenant to apartments in condominium property regime shall rental agreement. In absence of agreement tenancy shall be from month-to-month or, in disclose easements, rights-of-way, and all other liens and encumbrances affecting lots or case of boarders, week-to-week. (521-22). When other real property is rented for in- interests. (501-105). Deed must refer to number of certificate of title affected and if definite period, it is construed as tenancy from month-to-month, or for period-to-period certificate reference is not current, endorsement of current certificate of title. (501-108). on which rent is payable. (666-2). Top 31⁄2 inches of all instruments to be filed and recorded shall be reserved for recording information. Following 1 inch space shall be reserved for information showing to whom Leases.—Contract for lease or sublease is within statute of frauds. (See 656-1[4].) document should be returned. (501-108). First page shall include all grantors’ names and Lease must be acknowledged to be recorded. (502-50). Oral leases for period not ex- names and addresses of all grantees, document type, and tax key number. (501-108). ceeding one year are valid and enforceable as if in writing. (666-4). When grantee is corporation or partnership, document must contain state where entity is Dwelling Unit Leases.—Leases of dwelling units are governed by Residential Landlord registered and entity’s address. (501-105). Each instrument shall be stapled once in upper Tenant Code. (c. 521). ‘‘Dwelling unit’’ is structure or part of structure used as home, left corner, shall not have cover or backer, and each page shall be single-sided sheets of residence or sleeping place by one person or two or more persons maintaining common written text numbered consecutively. All names of all natural persons signing in their household to exclusion of all others. (521-8). Code does not apply to: Residence at individual capacity shall be typewritten, stamped, legibly printed by hand, or by me- institutions, student and faculty housing of University of Hawaii, including fraternity chanical or electrical printing method beneath all signatures. There shall be no discrep- houses; occupancy under contract of sale with tenant as purchaser; day-to-day occupancy ancy in any name as it appears in body, beneath signature or in notary acknowledgment. in hotel or motel; occupancy by employee or landlord whose occupancy is conditional No instrument will be filed that will not reproduce legibly or which is larger than 81⁄2 on such employment or occupancy for period of up to four years subsequent thereto, inches by 11 inches in size. (501-108). For most Torrens documents, filing fee is $25 and pursuant to plan for transfer of dwelling unit or property of which it is part to occupant; $1 per page for each page over 20 pages. If document is deed, fee of $25 for new lease of improved residential land for term of 15 years or more; occupancy by pro- certificate of title is also charged unless otherwise provided by rules adopted by De- spective purchaser after offer to purchase has been accepted and before owner’s rights partment of Land and Natural Resources, pursuant to c. 91. (HAR 13-16-22). Knowledge have been transferred; occupancy in project for temporary or transitional housing for of unregistered encumbrance does not disqualify holder of certificate of title from pro- homeless persons if operated by nonprofit corporation that has filed copy of its rules and tection under 501-82. (75 Haw. 370, 862 P.2d 1048). Registered land subject to encum- regulations with Director of Commerce and Consumer Affairs; or residence or occupancy brances noted on certificate of title; sufficiency of notation specified. (501-82). in public housing complex or shelter directly controlled, owned, or managed by Housing There is no statutory form. The following may be used: and Community Development Corporation of Hawaii (521-7). Residential Leases.—Leases with terms in excess of 35 years, if in existence on June Form 24, 1976, or with terms exceeding 20 years after June 24, 1967, including options for KNOW ALL MEN BY THESE PRESENTS: renewal or extension of term, of parcel of land two acres in size or less, zoned for That JOHN DOE, husband of Jane Doe, of ...... State of ...... ,Grantor, in residential use and intended or permitted to be used or occupied as principal place of consideration of the sum of Ten Dollars ($10) and other good and valuable consideration residence for single family are subject to regulation under cc. 516 and 519. to him paid by RICHARD ROE and RUTH ROE, husband and wife, whose address is State may exercise power of eminent domain to condemn underlying fee for resale to ...... Street, Honolulu, City and County of Honolulu, State of Hawaii, Grantees, the qualified holders of residential leases. (516-22 to 27). Resale restricted to lessee pur- receipt of which is hereby acknowledged, does hereby grant, bargain, sell and convey chasers who do not own other lands in fee simple (including fee simple lands under trust

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LANDLORD AND TENANT . . . continued arise out of and refer to land or premises whose possession is sought. (666-7). Landlord agreement, whether as trustee, co-trustee or beneficiary) and who are both domiciled in who interrupts essential services to take possession engaged in unfair trade practice and State of Hawaii and intending to reside on lot within five years of purchase. (516-1). is subject to penalties under 480-2; minimum penalty of $1,000 or three times monthly Lease agreement for space to be occupied for residential purposes for term not ex- rent, whichever is greater. (521-74.5). Tenant’s failure to comply with record keeping ceeding five years, or lease for which aggregate rent over term is less than $25,000 must requirements of percentage lease due to gross negligence or persistent or wilful mis- be written in plain language using words with common and everyday meanings. Lessor conduct on tenant’s part grounds for dispossession under c. 666. (10 Haw. App. 162, 862 is subject to amount for actual damages plus $50 penalty for violation. Lease is not void P.2d 282). or voidable for violation. (487A-1). See also category Business Regulation and Com- merce, topic Consumer Protection, subhead Plain Language. Distress or Other Remedies.—Distress for payment of rent under common law is not available. Residential Landlord-Tenant Code provides landlord with right to bring action Security Deposits.—In lease of dwelling unit, landlord may not receive from tenant for summary possession to collect unpaid rent at any time after notice of intention to do more than one month’s rent as security deposit and first month’s rent. If tenant is not so has been given (521-68), to terminate lease or remedy tenant’s failure to comply with in default, landlord must refund unearned rent and security deposit within 14 days after applicable laws or maintain premises in clean and safe condition or keep all appliances tenancy ends or notify tenant of any amount being retained for repairing damages, and furnishing supplied by landlord in good condition or to comply with restrictions cleaning unit or as compensation for damages for wrongful quitting of unit, along with necessary for preservation of property or protection of persons; or landlord may bring estimates of costs of remedying tenant defaults. Return of deposit is presumptively action for waste or breach of contract for tenant’s willful or negligent failure to perform proven if mailed to tenant with acceptable proof of mailing within 14 days after ter- foregoing (521-70). Tenant is liable to landlord for unpaid future rents or damages if he mination or if there is acknowledgment of receipt by tenant within 14-day limit. Security wrongfully quits premises. (521-70). deposit is not to be construed as last month’s rent unless landlord and tenant agree in Retaliatory eviction and rent increases are prohibited under lease of dwelling unit. writing. (521-44). (521-74). Recording.—Leases of more than one year that are not recorded are void as against Tenant under lease of dwelling unit may terminate lease on notice during first week subsequent purchaser, in good faith and for valuable consideration, not having actual if landlord fails to comply with rental agreement or fails to comply with applicable laws notice, whose conveyance is first duly recorded. (502-83). Leases of more than one year affecting premises. (521-62). Tenant may, if not at fault, terminate lease on one week’s affecting land registered under Torrens system are only contract to lease until filed and notice if landlord deprives tenant of substantial part of his benefit of his bargain under noted on Certificate of Title. (501-101). Leases are filed or recorded in Office of Registrar rental agreement. No notice is required if condition renders unit uninhabitable or poses of Conveyances in Honolulu, Hawaii. See category Documents and Records, topic imminent threat to health or safety. (521-63). Landlord is liable to tenant for $100 plus Records. Actual possession of tenant constitutes notice. (See 26 Haw. 342.) reasonable attorney’s fees for failure to make required statutory disclosures. (521-67). Rent.—Counties have power to regulate renting, subletting, and rental conditions of Rental agreement may provide that reasonable attorney’s fees and costs be awarded to residential property by ordinance. (46-1.5). Renegotiation of rents for residential leases prevailing party in suit arising under c. 521, Residential Landlord-Tenant Code. (521-35). (defined above) or cooperative housing leases, if not agreed upon by parties, are subject Collection of Rent.—Landlord may, in action for summary possession, join actions to mandatory arbitration by Housing and Community Development Corporation of Ha- for rent, lodging, board, profits, damages, and waste which arise out of land possession waii and statutory procedures for valuation and limit on rate of return. (519-3). Person of which is sought. (666-7). Tenant may be required in any legal dispute over rent, to must be certified or licensed to practice as real estate appraiser and must comply with pay rent to special trust fund as it becomes due unless rent already paid to landowner uniform standards of professional appraisal practice. (466K-4). For leases executed and or written agreement states otherwise. (521-78; 666-21). effective after June 24, 1967. During first 20 years of residential lease, lessee may extend Residential Leases. term for 55 years for purpose of obtaining mortgage financing if remaining term is less —Fee interest under residential leaseholds (defined above), is than 50 years. (516-65). Annual rent during term is set by statute and pursuant to subject to condemnation by State for benefit of lessees in development tract. (c. 516). mandatory arbitration. (516-66). Person may not be denied right to become lessee of residential lot because of his race, In leases of dwelling units, rents are payable monthly unless otherwise agreed and religion, sex, ancestry or physical handicap. (516-62). Residential leases may be assigned apportioned on daily basis. When tenancy is month-to-month, rent may be increased only without lessor’s consent provided true or executed copy of assignment is provided to on notice given 45 days prior to effective date of increase. (521-21). Tenancy for lessor and assignee undertakes to perform all obligations of lessee under lease. No such indefinite term with periodic rent reserved is deemed tenancy from period to period. assignment shall release assignor from liability under lease unless lessor consents in (666-2). Tenant may withhold up to $500 in rent if landlord has been notified by state writing to assignment. (516-63). Lessee’s interest cannot be forfeited for failure to pay or county agency of health or safety violation on premises and repairs are not commenced rent or perform his obligations without notice and at least 30 days to cure default. within 12 days, or tenant has notified landlord that dwelling is not in compliance with (516-64). applicable laws and ordinances, common areas are not in clean, sanitary and safe con- Seller of residential leasehold property must provide buyer copy of original lease and dition, premises are not habitable, electrical, plumbing or other facilities supplied by any amendments no later than ten calendar days from seller’s acceptance of buyer’s offer. landlord are not in good working order, appropriate trash receptacles for normal use are (516-71). Seller must disclose that there are no current provisions nor assurances for not available, or running water is not provided and landlord fails to commence repairs future laws for mandatory conversion of leasehold condominiums, cooperatives, and within five days (12 days if notification comes from tenant) and provide tenant with residential leases. (516D-11). Buyer has five calendar days from receipt of lease docu- reasonable tentative completion date, provided funds withheld are used to provide nec- ments to review, accept or reject terms of lease. Within five calendar days of acknowl- essary repairs or facilities. (521-64). edged receipt of contract, buyer may cancel offer to purchase without loss of deposit. (516-71). Seller and buyer may, on standardized form, agree to reduce or extend periods Lien.—Landlord’s lien not available. See category Business Regulation and Com- for production and review of lease documents. (516-71). Civil penalty of $1,000 for merce, topic Commercial Code. violation and violator also liable for actual damages. (516-72). Termination of Tenancy.—Periodic tenancy is subject to forfeiture for act or creation Uniform Residential Landlord and Tenant Act adopted with substantial modifica- of nuisance under 712-1270 if, after warning to abate of 24 hours, nuisance is not abated tions. (c. 521). and five day notice of termination is given. (666-3). However, if lease is of dwelling unit, landlord must give tenant ten days to remedy noncompliance. (521-69). Periodic tenancy Partition.—Any one or more joint tenants or tenants in common, where one or more may be terminated by ten days notice, if parol lease (666-1) or by notice given 25 days of them have estate in fee, or life estate in possession, may bring action in circuit court prior to end of period otherwise (666-2). But if lease is of dwelling unit, 45 days written of circuit in which property or some part thereof is situated. (668-1). Notwithstanding notice is required for month-to-month or longer term and ten days notice written for lease nondiscretionary nature of partition action, right to partition may be waived by express less than month to month. (521-71). If landlord provides notice of termination, tenant or implied contracts. (3 Haw. App. 555, 655 P.2d 881). may vacate at any time within last 45 days of period between notification and termination See category Civil Actions and Procedure, topic Partition. date provided tenant notifies landlord of date tenant will vacate and pays prorated rent for period occupied. (521-71). If landlord contemplates voluntary demolition of dwelling PERPETUITIES: or conversion to condominium property regime or to transient vacation rental, tenant Uniform Statutory Rule Against Perpetuities.—Adopted, with 1990 amendments. must receive at least 120 days notice to terminate. Tenant may vacate at any time between Common law rules superseded by workable wait-and-see element. Generally allows notification and termination date, but tenant shall notify landlord of date tenant will vesting no later than 21 years after life in being or 90 years after it was created. (525-1). vacate and pay prorated rent for that period of occupation. (521-38, 71). Holding Over.—If tenant from month to month or period to period holds over, a valid, Accumulations.—Governing board of institution or institutional fund may accumulate enforceable tenancy is created for additional period; if tenant fails to pay rent as agreed, so much of annual net income of endowment fund as is prudent under standard estab- landlord may terminate on five days notice. (666-2). If tenant holds over under lease of lished by §517D-8, and may hold any or all of accumulated income in income reserve dwelling unit after expiration or termination without landlord’s consent, during first for subsequent expenditure for uses and purposes for which endowment fund is estab- month of holdover tenant may be liable, in court’s discretion, to pay landlord twice lished or may add any or all of accumulated income to principle of endowment fund, monthly rent for preceding month; and monthly rent for second month of holdover, as is prudent under this standard. (517D-4[b]). Restriction upon accumulation of income prorated on daily basis. Landlord may initiate summary possession action against tenant or addition to principal of income may not be implied from designation of gift as any time within first 60 days of holdover, except acceptance of rent during this period, endowment, or from direction or authorization in applicable gift instrument to apply to in absence of agreement to contrary, creates month-to-month tenancy. Landlord’s failure uses and purposes of fund ‘‘income’’, ‘‘interest’’, ‘‘dividends’’, ‘‘currently expendable to commence possession action within first 60 days of holdover, in absence of rental income’’, or ‘‘rent, issues, or profits’’ or direction which contains other words of similar agreement, creates month-to-month tenancy at previous rental rate beginning at end of import. (517D-5). first 60 days of holdover. (521-71). See category Estates and Trusts, topic Trusts, subhead Accumulations. Dispossession.—Landlord may have summary possession against tenant holding with- PERSONAL PROPERTY: out right or holding by parol lease after ten days notice to quit. (666-1). Landlord may have summary possession against tenant for failure to pay rent by giving notice to vacate Common law rules prevail. Personal property may be held in tenancy by entirety, of five days. (666-2). But if lease is of dwelling unit, demand for payment within five including leaseholds, shares of corporate stock and automobiles. Tenancy continues in business days must be made. Summary possession or other proper proceeding may be proceeds of sale of property held in tenancy by entirety. brought if tenant remains in default. (521-68). In any action for summary possession, Motor vehicle registered in two or more names presumed owned in joint tenancy. plaintiff may join actions for rent, lodging, board, profits, damages and waste where these (286-49).

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–39 PROPERTY MARTINDALE-HUBBELL LAW DIGEST - 2007

POWERS OF ATTORNEY: and not in limitation or definition thereof, hereby ratifying all that my said attorney shall lawfully do or cause to be done by virtue of these presents. Attorneys in Fact.—Agent lacks authority to make gift of principle’s property, unless IN WITNESS WHEREOF I have hereunto set my hand this day of , authority is expressly given in power of attorney. (83 Haw. 65, 924 P.2d 559). Funda- 20 . mental rule in construing power of attorney is that intent of parties governs, as gleaned from entire context of instrument. (Id.). Revocation.—To constitute revocation of power of attorney there must be something Recording.—If power of attorney is recorded, following requirements must be met: besides mere appointment of another attorney. (13 Haw. 471). Affidavit executed by Top 31⁄2 inches of first page of all documents must be left blank for use of recording attorney-in-fact under power of attorney stating that attorney-in-fact did not have at time officer. Following 1 inch space shall be reserved for information showing to whom of exercise of power actual knowledge of termination of power by revocation or of document should be returned, beginning 11⁄2 inches from left margin and not exceeding principal’s death, disability, or incapacity is conclusive proof of non-revocation or non- 31⁄2 inches per line. First page shall include, if possible, all names of grantors and all termination of power at that time. If exercise of power of attorney requires execution and names and addresses of grantees and type of document. When grantee is corporation or delivery of any instrument that is recordable, affidavit when authenticated for record is partnership, document must contain state where entity is registered and entity’s address. likewise recordable. This section does not affect any provision in power of attorney for (502-31). If more than one page, document should be stamped once in upper left corner. its termination by expiration of time or occurrence of event other than express revocation or change in principal’s capacity. (551D-5). Power of attorney authorizing transactions concerning real property must be recorded in Bureau of Conveyances. (502-84). Uniform Durable Power of Attorney Act adopted. (c. 551D). Form of General Power of Attorney.—There is no statutory form of General Power REAL PROPERTY: of Attorney. The following may be used: Estates in fee tail are not recognized, and will be held to create fee simple or life estate KNOW ALL MEN BY THESE PRESENTS: in grantee depending on construction of grant. (12 Haw. 375). Conveyances and devises That I, [John Doe] , a resident of [address] , to two or more persons are construed to create tenancies in common unless it shall have made, constituted and appointed and by these presents do make, constitute and ‘‘manifestly appear from the tenor of the instrument’’ that it was intended to create joint appoint [Richard Doe] , of [address] , my true and tenancy or tenancy by entirety. This does not apply to grants, conveyances, or devises lawful attorney to act in, manage and conduct all my estate and all my affairs, and for to personal representatives or trustees. (509-1). that purpose for me and in my name, place and stead, and for my use and benefit, and Conveyance tax adopted. (c. 247). See category Taxation, topic Property Taxes, sub- as my act and deed, to do and execute or to concur with persons jointly interested with head Real Estate Conveyance Tax. myself therein in the doing or executing of, all or any of the following acts, deeds and See also topics Curtesy, Deeds, Dower; categories Debtor and Creditor, topic Home- things, that is to say: steads; Documents and Records, topic Records; Family, topic Husband and Wife. (1) To buy, receive, lease, accept or otherwise acquire; to sell, convey, mortgage, hypothecate, pledge, quitclaim, lease or otherwise encumber or dispose of; or to contract Rule in Shelley’s Case is not recognized. (12 Haw. 375). or agree for the acquisition, disposal or encumbrance of; any property whatsoever, real Discrimination in Real Property Transactions.—Conforms to federal Fair Housing or personal, or any custody, possession, interest or right therein, upon such terms as my Amendments Act of 1988. Prohibits steering persons toward and away from real estate said attorney shall think proper; transaction and adds age as protected group. (515-2, 3). Gender identity or expression (2) To take, hold, possess, invest, lease, let or otherwise manage any or all of my and sexual orientation also is protected category. Narrow exception is provided for property, real or personal, or any interest therein; to eject, remove or relieve tenants or accommodations provided by religious institutions. (515.4). Age is exception to dis- other persons from and recover possession of, such property by all lawful means; and crimination in real estate transaction law as it pertains to housing for elderly. (515-4). to maintain, protect, preserve, insure, remove, store, transport, repair, rebuild, modify or Recording decrees quieting title to real property provided in 669-8. improve the same or any part thereof; Mandatory Disclosures in Residential Real Estate Transactions.—Sellers of resi- (3) To make, do and transact all and every kind of business of whatever kind or nature, dential real property must disclose any material fact, defect, or condition past or present, including the receipt, recovery, collection, payment, compromise, settlement and adjust- that would be expected to measurably affect value to reasonable person of residential real ment of all accounts, legacies, bequests, interest, dividends, annuities, demands, debts, property being sold. (508D-1). Release from or waiver of liability or release from taxes and obligations which may now or hereafter be due, owing or payable by me or warranty by seller to any government agency, contractor, engineer, architect, land sur- to me; veyor or landscape architect for any defect, mistake or omission in design or construction (4) To make, indorse, accept, receive, sign, seal, execute, acknowledge and deliver of any residential real property that measurably affects value of property is material fact. deeds, leases, assignments, agreements, certificates, mortgages, releases of mortgages, (508D-4.5). Seller must provide buyer with requisite disclosure statement no later than hypothecations, checks, notes, bonds, vouchers, dividend warrants, receipts and such ten calendar days from acceptance of purchase offer. Buyer has 15 calendar days to other instruments in writing of whatever kind and nature as may be necessary, convenient rescind purchase offer. (508D-5). Any action to rescission must be commenced prior to or proper in the premises; recorded sale of real property (closing). (508D-16.5). Certain limited exemptions apply. (5) To deposit and withdraw for the purposes hereof or any other purpose, in either (508D-3). In addition, sales contracts for new residential structures and contracts for the name of my attorney or in my name, in or from any banking institution, or any construction on substantial remodeling of premises must contain required notice to owner account therein, any funds, negotiable paper or moneys which may come into my said of contractor’s right to resolve alleged construction defects before claimant may com- attorney’s hands as such attorney or which I now or hereafter may have on deposit or mence litigation. (672E-11). be entitled to; (6) To institute, prosecute, defend, compromise, arbitrate and dispose of legal, equi- Foreign Conveyances.—If instrument would be valid and entitled to be recorded in table or administrative hearings, actions, suits, attachments, arrests, distresses or other state where executed, generally it may be recorded in Hawaii. But see category Docu- proceedings, or otherwise engage in litigation in connection with the premises; ments and Records, topic Acknowledgments, subhead Changes, Erasures or Interlinea- (7) To act as my attorney or proxy with respect to any stocks, shares, bonds or other tions. investments, rights or interests I may now or hereafter hold; and to appoint any other Condominium.—Applicable to condominiums created prior to July 1, 2006. (HRS person or persons as my proxy or proxies; 514B-21). However HRS 514B, -4, -5, -35, -41(c), 46, 72 and Part VI of c. 514B and (8) To engage and dismiss agents, counsel and employees, and to appoint and remove 514B-3 to extent applicable shall apply (HRS 514B-22) to events and circumstances at pleasure any substitute for, or agent of my attorney, with respect to all or any of the occurring on or after July 1, 2006, and shall not invalidate existing provisions of matters or things herein mentioned and upon such terms as my attorney shall think fit; declaration, bylaws, condominium map or other construction documents if to do so would (9) To execute vouchers in my behalf for any and all allowances and reimbursements invalidate reserved rights of developer or be unreasonable impairment of contract. FHA payable to me by the United States, including but not restricted to allowances and model act, modified, has been adopted. (c. 514A). Contents of declaration, master deed, reimbursement for transportation of dependents or for shipment of household effects as apartment deeds, floor plans, and bylaws are regulated by c. 514A. For mixed use authorized by law or Army or Navy regulations, and to receive, indorse and collect the condominiums, by vote of apartment owners, bylaws of association of apartment owners proceeds of checks payable to the order of the undersigned drawn on the Treasurer of may be amended to provide that composition of board of directors be proportional with the United States; number of apartments for residential, commercial or other use. (514A-82.15). Each (10) To prepare, execute and file income and other tax returns, claims for refunds and condominium project association must prepare and adopt annual operating budget and other governmental reports, applications, requests and documents; and to appear for me have adequate funding of maintenance replacement reserves. (514A-83.6). Emergency and represent me before the Treasury Department of the United States and the Tax situation includes extraordinary expense necessary to respond to any legal or adminis- Commissioner of any state or territory in connection with any matter involving federal, trative proceeding brought against association not reasonably foreseen by board when state, or territorial taxes for any year to which I am a party, giving my said attorney full preparing annual operating budget. (514A-83.6). Exemption provided for two-apartment power to do everything whatsoever requisite and necessary to be done in the premises, condominium projects. (c. 514A-Part III). Statute and bylaws govern operation, main- and to receive refund checks, to execute waivers of the statute of limitations and to tenance charges, etc. Each apartment owner must comply with bylaws and house rules. execute closing agreements; (514A-88). Owners not liable for costs of reproduction of legal documents or other (11) To have access to, take possession and order the removal and shipment of any information for condominium association, unless prior notice of charge given by asso- of my property from any post, warehouse, depot, dock, safety deposit box or other place ciation, but no notice required for delinquent assessments or in connection to proceedings of storage or safekeeping, governmental or private; and to execute and deliver any to enforce law or association’s governing documents. (514A-92.5). Directors may use release, voucher, receipt, shipping ticket, certificate or other instrument necessary or condominium funds for reasonable educational purposes. (514A-82). Board of Directors convenient for such purpose; may authorize installation or abandonment of telecommunications equipment upon com- (12) To borrow money and to obtain credit by letters of credit, overdrafts, notes or mon elements of condominium project. (514A-13.4). No apartment owner may withhold otherwise on such terms as my said attorney shall think proper and to execute any assessment claimed by condominium association. Disputes among owners, boards of instruments binding me to the repayment thereof. directors, and managing agents regarding interpretation of condominium statute or con- GIVING AND GRANTING unto my said attorney full power and authority to do and dominium’s guaranty documents are subject to arbitration at request of party, subject to perform all and every act, deed, matter and thing whatsoever in and about my estate, certain exceptions (514A-121; c. 658A); provided that mediation is also available at property and affairs as fully and effectually to all intents and purposes as I might or could request of party (514A-121.5). If dispute is not resolved by mediation, party may request do in my own proper person if personally present, the above specially enumerated powers administrative hearing. (514A-121.5[b]). Administrative hearings one part of two year being in aid and exemplification of the full, complete and general power herein granted pilot program to be repealed June 30, 2006. In arbitration proceeding, award of attorneys’

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–40 HAWAII LAW DIGEST PROPERTY

REAL PROPERTY . . . continued and property taxes are assessed and collected with respect to apartments taken indi- fees and other costs is in sole discretion of arbitrator, but in mediation proceeding and vidually. (§514B-4). In general, Hawaii Condominium statute is patterned after 1980 administrative proceeding all parties bear their own costs unless otherwise agreed by Uniform Condominium Act, with appropriate changes and 1994 Uniform Common In- parties or ordered by hearings officer. (514A-124, 514A-121.5 and 514A-121.5[b]). terest Ownership Act. Unless statutory exclusion available, condominium developer must Purchasers have statutory rescission rights. (514A-69). Unless statutory exclusion avail- publish announcement of its intent to sell residential units and indicate that at least 50% able, condominium developer must publish announcement of its intent to sell residential of residential units being sold shall be offered only to prospective owner-occupants. units and indicating that at least 50% of residential units being sold shall be offered only (§514B-95.5). Commission has broad powers of investigation, imposition of penalties, to prospective owner-occupants. injunction, etc. Owner of condominium unit may make improvements to his unit upon Sales to Individual Lessees.—Right of First Refusal for Condominiums and Coop- certain conditions. (§514B-140). Any person who violates part IV, part V, §§514B-103, erative Housing Corporations provided for in c. 514C. Seller of residential leasehold 514B-132, 514B-134, 514B-149, 514B-152 to 514B-154, or rules of real estate com- property must provide buyer no later than ten calendar days from seller’s acceptance of mission adopted pursuant thereto shall be subject to civil penalty not to exceed $10,000. buyer’s offer one of following documents which contains major provisions of lease: (§514B-69). Current master lease, current apartment lease or, for initial buyers of condominiums, If one or more existing buildings are being converted to condominium status, each unexpired preliminary, final or supplemental condominium public report. (516D-11). residential unit must first be offered for sale to owner-occupant. (§514B-95.5). Buyer has ten calendar days from receipt of contract to review, accept or reject terms Time sharing plans law enacted. (c. 514E). Time-share owner’s associations required of lease. (516D-11). Seller and buyer may, on standardized form, agree to extend or to adopt annual budget, to require annual independent audit of association’s financial reduce time periods for production and review of lease documents. (516D-11). Buyer of accounts, and to extend regulation of time-sharing plans. (514E-10.3). Time-share own- leasehold property may cancel offer to purchase with no loss of deposit within ten er’s association may levy assessments which shall be lien on owner’s time share interest. calendar days of acknowledged receipt of contract. Every residential lease shall contain (514E-29). Director of Department of Commerce and Consumer Affairs authorized to provision for mandatory arbitration of any rent renegotiation. (516D-12). Liens against investigate, enjoin, disapprove applications, impose fines up to $25,000 and suspend or common elements (514A-16) and blanket mortgages (514A-18) prohibited. Partition revoke licenses. (514E-12). Prohibited practices provided for in 514E-11. Maintenance severely regulated. (514A-21). Home exemption laws are applicable to each apartment, fees paid to time share owner’s associations are subject to State general excise tax. (1990, and property taxes are assessed and collected with respect to apartments taken indi- Act 181). Condominium apartments providing transient lodging for periods of less than vidually (514A-6). In general, Hawaii Condominium statute is patterned after FHA model 30 days must register with Commission on annual basis as ‘‘condominium hotel’’ subject act and New York modifications. Unless statutory exclusion available, condominium to bonding requirements. (467-30). Initial sale of time share interests duly registered developer must publish announcement of its intent to sell residential units and indicate under current effective disclosure statement pursuant to c. 514E exempt from Mandatory that at least 50% of residential units being sold shall be offered only to prospective Seller Disclosures in Real Estate Transactions (508D-3) (see subhead Mandatory Dis- owner-occupants. (514A-102). Commission has broad powers of investigation, imposi- closures in Residential Real Estate Transactions, supra). Leasehold time share interests tion of penalties, injunction, etc. Owner of condominium unit may make improvements must be registered with Bureau of Conveyances, and need not be recorded by Land to his unit upon certain conditions. (514A-89). Any person who violates any provision Court. (501-241). See topics Curtesy, Deeds, Dower, Landlord and Tenant, subhead of c. 514A, or rules of real estate commission adopted pursuant thereto shall be subject Partition; categories Debtor and Creditor, topic Homesteads; Family, topic Husband and to civil penalty not to exceed $10,000. (514A-107.5). Wife; Mortgages, topic Mortgages of Real Property; and Business Regulation and Com- Condominium consists of real estate, portions of which are designated for separate merce, topic Securities. Exemption for time share use plans containing units in Hawaii ownership and remainder of which is designated for common ownership solely by owners and offered for sale outside U.S. from time share law as long as plan does not place of those portions. (§514B-3). To create condominium property regime, all owners of fee blanket liens on its Hawaii units and complies with contractual resale restrictions and simple interest in property shall execute and record declaration submitting land to con- consumer disclosure. (2006, Act 278, c. 514E). dominium property regime and record master deed. (§514B-31). Condominium property Uniform Simplification of Land Transfers Act not adopted. regime shall be subject to any interest existing when declaration is recorded if person Cooperative Housing Corporations.—The Hawaii Business Corporation Act (c. 414) holding such interest does not execute or join in declaration or otherwise subordinate applies except to extent that its provisions are inconsistent with 421I. (421I-11). such interest. (§514B-31). Content of declaration, apartment deeds and leases, condo- minium map and bylaws are regulated by statute. (§514B-108 and §§514B-32, 514B-33, Uniform Land Sales Practices Act enacted. (c. 484). 514B-34 and 514B-44). For mixed use condominiums, by vote of apartment owners, Boundaries Along Sea.—Previously established rule that private ownership of land bylaws may be amended to provide that composition of board of directors be proportional along sea generally runs to highwater mark as defined by U.S. Coast and Geodetic Survey with number of apartments for residential, commercial or other use. (§514B-110). Each has been judicially overruled by Hawaii Supreme Court decisions in 50 Haw. 314, 440 condominium project association must adopt annual operating budget and have adequate P.2d 76 and 55 Haw. 176, 517 P.2d 57, which held that boundary of unregistered land funding of maintenance replacement reserves. (§§514B-144 and 148). Emergency situ- and registered land altered by accretion or erosion was upper reaches of wash of waves ation includes extraordinary expense necessary to respond to any legal or administrative as marked by line of vegetation, or in its absence by line of debris. proceeding brought against association not reasonably foreseen by board when preparing Nonresident Owners.—See category Taxation, topic Income Tax, subhead Withhold- annual operating budget. (§514B-148). Exemption from registration requirements pro- ing of Tax on Disposition of Real Estate, for Hawaii Real Property Tax Act (HARPTA). vided for dispositions of units exempted from public report requirements set forth in §514B-81(b), projects in which all units are restricted to nonresidential use are to be sold Condemnation in Fee Simple of Lands Subject to Residential Lease- for $1,000,000 or more, and sales of units in bulk. (§514B-51). Statute and bylaws holds.—Hawaii Finance and Development Corporation may acquire by condemnation govern management of condominium, however, if so provided in declaration or bylaws, contiguous parcels of land which are in excess of five acres and which are or will be statute shall not apply to condominiums in which all units are restricted to nonresidential subdivided into residential lots of one acre or less if land is under lease for term of 35 use or condominiums not subject to any continuing development rights, containing no years or more on June 24, 1967, or for term of 20 years or more thereafter. (516-21). more than five units. (§514B-101). Each unit owner is subject to statute, declaration and Lessee of residential lot in condemned tract has option to purchase his lot from Authority bylaws and house rules. (§514B-112). Compliance with certain provisions in declaration under certain conditions. (516-30). Lessee purchasers must not own other lands in fee and bylaws specified in §514B-111 may be excused by court if such provision unrea- simple (including fee simple lands under trust agreement, whether as trustee, co-trustee sonably interferes with association’s ability to manage common property, not necessary or beneficiary) and must be both domiciled in State of Hawaii and intending to reside to protect legitimate interests of members or lenders holding security interests. (§514B- on lot within five years of purchase. (516-1). Financing up to 90% of purchase price is 111). Owners not liable for reasonable costs of reproduction of legal or other information available in certain cases from Corporation. (516-34). Constitutionality of c. 516 upheld. for condominium association, unless prior notice of charge given by association, but no (467 U.S. 229). County ordinance allowing condemnation of lessor’s leased fee interest notice required for delinquent assessments or in connection with proceedings to enforce in leasehold condominium developments, cooperative housing corporation developments, law or association’s governing documents. (§514B-105). Directors may use condo- and planned unit developments upheld. (76 Haw. 46, 868 P.2d 1193). County ordinance minium funds for reasonable educational purposes. (§514B-107). Board of Directors may allowing condemnation for lease-to-fee conversions did not violate RLUIPA because authorize installation or abandonment of telecommunications equipment upon common ordinance did not constitute “land use regulation”. (110 Hawaii 39, 129 P.3d 542). elements of condominium project. (§514B-140). No unit owner may withhold assessment Displaced Person Compensation.—Persons lawfully occupying real property dis- claimed by association. (§514B-146). Disputes among owners, boards of directors, and placed by state or county action entitled to compensation under certain circumstances managing agents regarding interpretation of condominium statute or condominium’s and, if displaced from commercial or industrial lease, right of first refusal of lease on guaranty documents are subject to arbitration at request of party, subject to certain other appropriate State land. (c. 101; 111-1). State can recover from person responsible exceptions (§514B-162; c. 658A); provided that mediation is also available at request of for code violation that results in displacement costs of compensation. (111-8.5). party (§514B-161). In arbitration proceeding, award of attorneys’ fees and other costs is Developer Impact Fees.—Enactment of development impact fees (for public facility in sole discretion of arbitrator, but in mediation proceeding, all parties bear their own capital improvement costs) by counties authorized. Guidelines for assessing need for costs unless otherwise agreed by parties. (§514B-161 and §514B-162). Purchasers have impact fees, imposition and collection, and refunding in event impact fee ordinance is statutory rescission rights. (§514B-87). repealed. Sets out specific requirements to ensure: (1) Fees are reasonably related to Sales to Individual Lessees.—Right of First Refusal for Condominiums and Coop- benefits accruing to development or its geographically limited benefit zone and (2) do erative Housing Corporations provided for in c. 514C. Seller of residential leasehold not exceed proportionate share of costs incurred by county in accommodating devel- property must provide buyer no later than ten calendar days from seller’s acceptance of opment. (46-141 to 148). buyer’s offer one of following documents which contains major provisions of lease: Historic Sites.—Development of real property with historically significant sites must current master lease, current apartment lease or, for initial buyers of condominiums, conform to historic preservation requirements of Hawaii Historic Preservation Act. (c. unexpired preliminary, final or supplemental condominium public report. (516D-11). 6E). Historic property includes any building, structure, site or area which is over 50 years Buyer has ten calendar days from receipt of contract to review, accept or reject terms old. (6E-2). Burial sites have special protections. (6E-43). of lease. (516D-11). Seller and buyer may, on standardized form, agree to extend or reduce time periods for production and review of lease documents. (516D-11). Buyer of Time Required to Grant Permits.—State agencies and counties to enact ordinances leasehold property may cancel offer to purchase with no loss of deposit within ten to limit time required to review and grant plan and permit approvals and zoning changes calendar days of acknowledged receipt of contract. Every residential lease shall contain for housing development. (1994, Act 261). provision for mandatory arbitration of any rent negotiation. (516D-12). Liens against Hawaii Hurricane Relief Fund.—Establishes Hawaii Reinsurance Assistance Cor- common elements (§514B-43) and blanket mortgages (§514B-45) prohibited. Partition poration as mechanism for providing homeowners’ and hurricane reinsurance coverage severely regulated. (§514B-47). Home exemption laws are applicable to each apartment, to insurers, including county insurance trusts. Except as determined by board orders,

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REAL PROPERTY . . . continued BUSINESS TAXES: mortgage recording fee is imposed on each mortgage and certain amendments to mort- Bank Tax.—See category Business Regulation and Commerce, topic Banks and Bank- gage. Fees collected are deposited into hurricane reserve trust fund. (431P-16). Collection ing. of special mortgage recording fee of 1⁄10 of 1% of principal amount of debt or increase in debt has been suspended as of July 1, 2001, and shall remain suspended until Franchise Tax.—See category Business Regulation and Commerce, topic Banks and reactivated by Hawaii Hurricane Relief Fund’s board of directors. (2001, Act 153, §4). Banking, subhead Bank Tax. Covenants.—Restrictive covenants strictly construed in favor of grantee and against Hotel Room Tax.—7.25% tax on transient accommodations (237D-2), including grantor. Party seeking enforcement of restrictive covenant has burden to prove parties leases for less than 180 days (237D-1). clear intention to create covenant running with land. In order to provide holder of transfer Insurance Company Tax.—See category Insurance, topic Insurance Companies. certificate of title full notice of encumbrance from face of certificate, encumbrance must Nursing Facility Tax.—Quarterly tax of 6% shall be assessed and collected on all be separately and clearly noted therein. (75 Haw. 370, 862 P.2d 1048). Private restrictions nursing facility income. (346E-2). Nursing facility income means total compensation in conveyance on certain agricultural activities on lands classified agricultural, are void- received from furnishing nursing facility services, including all receipts from ‘‘ancillary able except if to protect environment or cultural resources. (205-4.6). services’’ to provision of nursing facility services, and receipts from items supplied in Enterprise Zones.—Upon county application, Department of Business, Economic connection with these services. (346E-1). Tax assessment excepted where individual Development and Tourism can declare area to be ‘‘enterprise zone’’. (209E-4). Enterprise facility determined to be financially distressed. (346E-2). Director, at his discretion, may zones are intended to stimulate business and industrial growth in areas which would allow semiannual or annual returns in lieu of quarterly returns. (346E-3). Operator may result in neighborhood revitalization of those areas by means of regulatory flexibility and opt to have taxes owing withheld from Medicaid payments owed by Department to tax incentives. (209E-1). Enterprise zones must meet specific criteria. Certain businesses operator. (345E-4). Appeals governed by 235-114. (346E-8). Taxes paid pursuant to this located within enterprise zones receive certain tax incentives. (209E-10, 11). chapter are reimbursable costs for federal Medicaid reimbursement purposes. (346E-14). Penalties for failure to file return or filing fraudulent return include assessment of taxes Seizure.—Property subject to forfeiture can only be seized pursuant to court order plus interest, and injunctive relief. (346E-6, 11). issued after pre-seizure hearing. (712A-6). See topics Curtesy, Deeds, Dower, Landlord and Tenant; categories Civil Actions and EMPLOYMENT TAXES: Procedure, topic Partition; Debtor and Creditor, topic Homesteads; Documents and Records, topic Records; Family, topic Husband and Wife; Mortgages, topic Mortgages Unemployment Compensation Tax.—For purpose of providing unemployment ben- of Real Property; Taxation, topic Taxes. efits, every employer is required to pay into unemployment compensation fund, per- centage of payroll based upon employer’s benefit experience. (383-62, 383-68). Quieting Title.—In action to quiet title, burden is on plaintiff to prove title in and to See also category Business Organizations, topic Corporations, subheads Franchise Tax land in dispute. Absent such proof, defendant need not make any showing. (2006 WL and Taxation of Corporate Stock. 1118890 Haw. App.). ESTATE TAX: TRUST DEEDS: State death tax imposed is credit for State death taxes on federal return under IRC See category Mortgages, topic Mortgages of Real Property. §2011. Estates of resident decedents receive credit for death taxes paid to another state. (236D-3). Estates of nonresident decedents are subject to tax on Hawaii situs real property, including trust property and beneficial interests in land trusts, and tangible TAXATION personal property located in Hawaii. For nonresident’s estate, State death tax is state death tax credit under IRC §2011 times ratio of total property in Hawaii to decedent’s ADMINISTRATION: gross estate. (236D-4). Hawaii estate tax return is due on or before date federal estate tax return is filed, including any extension of time if copy of grant of extension is filed Hawaii Department of Taxation, headed by Director of Taxation, is charged with with Department within 30 days of issuance. (236D-5). If no estate tax is due, request administration and enforcement of State tax revenue laws and collection of State taxes. for release should be filed with Department. (236D-5[e]). For appeals of estate and (26-10; 231-3). Department has power to construe revenue laws, prescribe forms, make transfer tax see 236D-15. rules and regulations, compromise tax claims, remit delinquency penalties and interest except in fraud or willful violation cases, enter into final closing agreements relating to Apportionment Against Inter Vivos Dispositions.—Apportionment controlled by liability of taxpayer, conduct investigations, hold hearings, subpoena witnesses, require Uniform Probate Code. (560:3-916). production of documents and records pertinent to such inquiries, and enforce payment Interstate Cooperation.—No statutory procedure available for compromise of death by assumpsit action or by levy and distraint upon all property and rights to property. taxes where decedent’s domicile is disputed. (231-3, 7, 25). Director of Taxation may compromise tax claims where tax is $50,000 or less (exclusive of penalties and interest). With consent of Governor, Director may GASOLINE AND SPECIAL FUELS TAXES: compromise tax claims greater than $50,000 (exclusive of penalties and interest). (231-3; Gasoline Tax.—Imposed by 243-4. Gasoline tax of 16¢ per gallon, to which county 2003, c. 136). Director may appoint and commission one or more tax investigators with tax added as set from time to time by counties, except fuel used in or for airplanes which power of police officers, including power to arrest. (2003, c. 136). Tax returns and return is 1¢ per gallon. Diesel oil 1¢ per gallon, unless used for operating vehicles on public information are confidential. (235-116, 237-34, 237D-13). Written opinions of Depart- highways, then tax is additional 15¢ (243-4) per gallon plus county tax. Liquified ment are open to public inspection and copying. (231-19.5). For purposes of taxation, petroleum used in internal combustion engines 1¢ per gallon, and if used in vehicles State is divided into four tax districts: (1) City and County of Honolulu; (2) Counties operating on public highways additional tax equal to two-thirds rate on diesel oil for of Maui and Kalawao; (3) County of Hawaii; and (4) County of Kauai. (231-2). Taxes vehicles operating on public highways. (243-4). imposed by counties are administered by county officials (for City and County of Honolulu, Director of Finance). GENERATION SKIPPING TAX: Penalties and interest may be assessed with respect to any taxpayer for: (1) Failure Generation Skipping Transfer Tax.—Tax imposed on generation skipping transfers to file; (2) failure to pay; or (3) failure to pay within 60 days of filing timely return. equal to federal credit on transfers of property located in state and property from resident (231-39). Criminal penalties may be imposed under 231-34, 231-35, and 231-36 on (1) trusts. (236D-3.5). Any person who willfully attempts to evade or defeat tax imposed under title 14; (2) any person who willfully fails to file, supply information, or secure license; or (3) any person GIFT TAX: who willfully makes false and fraudulent statements, or willfully aids or assists in None. preparation of document required to be filed under title 14 which contains false or fraudulent statements. ‘‘Person’’ includes certain individuals of taxable entities under INCOME TAX: duty to perform and who are principally responsible for performing act in question. (231-1). Prosecutions under 231-34, 231-35, or 231-36 must be commenced within seven State income tax provisions generally conform to Federal income tax provisions of years after commission of crime. (231-41). Computation of interest is not affected by Internal Revenue Code (IRC). (235-2.3). In general, subtitle A, c. 1 of Federal IRC, as subsequent reduction in tax due because of net operating loss carry back until period amended as of Dec. 31, 2005, has been adopted as state law; consult c. 235 for con- following taxable year in which loss arises. (231-39). Interest does not accrue on ad- forming and nonconforming provisions. (236D-3.5). ditional fees imposed for costs or expense incurred by Department as result of any action Persons Subject to Tax.—Tax is imposed on: (1) Resident Individuals: Tax applies taken to enforce collection of taxes administered under title 14. (231-25.5[b]). No tax- to entire income computed without regard to source in State; (2) Nonresident Individuals: payer is exempt from any penalty or interest by reason of having contested tax except For nonresident individuals, tax applies to income received or derived from property to extent tax is adjudged excessive or contrary to law. (231-39). Additional penalty owned, personal services performed, trade or business carried on, and any and every provisions exist as to specific taxes. See topics detailing particular taxes. other source in State. (235-4). Standard deduction and personal exemption are prorated based on percentage of Hawaii adjusted gross income to total adjusted gross income. ALCOHOL, BEVERAGES AND TOBACCO TAXES: (235-5). For nonresident spouse filing joint return with resident spouse, tax applies to entire income of nonresident spouse computed without regard to source in State. (235- Liquor Tax.—Provides tax rates per gallon on beer, wine and other liquor. (244D-4). 4[b]). Credit is given with certain restrictions for income tax paid to another jurisdiction Cigarette and tobacco tax imposed on wholesaler or dealer. (245-3). Sales of ciga- on income derived or received therefrom (235-55); (3) Corporations: Foreign and do- rettes and tobacco products to agencies of U.S. are exempt. (245-3). Excise tax for each mestic (Hawaii) corporations are taxed on income received or derived from property cigarette sold, used, or possessed by wholesaler or dealer shall increase from 5¢ to 6¢ owned, trade or business carried on, and any and every other source in State. Domestic after Sept. 30, 2002, to 6.5¢ after June 30, 2003, to 7¢ after June 30, 2004, to 8¢ after (Hawaii) corporations also taxed on income from sources outside State unless subject to Sept. 30, 2006, to 9¢ after Sept. 30, 2007, to 10¢ after Sept. 30, 2008, to 11¢ after Sept. income tax in another jurisdiction (235-4[d]); (4) Estates and Trusts: Income of resident 30, 2009, to 12¢ after Sept. 30, 2010, to 13¢ after Sept. 30, 2011. (2006, Act 316). Excise estate or trust is computed without regard to source in State, except nonresident ben- tax of 40% of wholesale price of each article or item of tobacco products sold by eficiaries of resident trusts or estates are not subject to tax on their share of intangible wholesaler or dealer, whether or not sold at wholesale or used by wholesaler or dealer. income of trust. (235-4[e]; 235-4.5[a]). Each estate or trust must include in its return all (245-3). information necessary to determine taxability of income regardless of source. (235-4[e]);

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INCOME TAX . . . continued facilities. (235D-2). Hotel construction and remodeling tax credit allowed for 4% of (5) Partnerships and S Corporations: Partnership as such is not taxable under c. 235. construction or renovation cost incurred during taxable year for each qualified hotel Partners are liable for income tax only in their separate or individual capacities. (235- facility located in Hawaii. (234-110.4). Residential construction and remodeling tax 2.3). S Corporation tax conforms to Model S Corporation State Income Act. (235-121). credit allowed for 4% of construction or renovation costs up to $250,000 per unit Valid election under IRC is effective for Hawaii law purposes. (235-122). Qualified S incurred before July 1, 2003. (235-110.45). Ethanol investment tax credit enacted. (235- Corporations are exempt from State corporations tax, except to extent they are subject 110.3). Tax credit for technology infrastructure renovation of commercial building. to federal tax. (235-122). Income of S Corporation attributable to State that is subject (2001, c. 221). High technology business investment tax credit available. (235-110.9) Tax to federal tax is taxed at highest marginal rate of tax imposed on net income of cor- credit available for qualified research activities. (235-110.9). Attraction and educational porations. (235-122). S Corporations are required to obtain agreements from nonresident facilities income tax credit is available for qualified costs incurred from June 1, 2003, shareholders that they shall file and pay State tax on share of S Corporation’s Hawaii through May 31, 2009, at Ko Olina Resort and Marina and Makaha Resort. (235-2.45; income. (235-128); (6) Tax-Exempt Organizations: Tax-exempt organizations are subject 235-110.46). to tax on unrelated business taxable income if subject to tax on such income under IRC (235-2.4[j]); and (7) Limited Liability Companies: Tax classification under c. 235 as Special Provisions.—Uniform Division of Income for Tax Purposes Act has been disregarded entity, partnership or corporation follows corresponding classification for adopted. (c. 235, Part II). Under Uniform Act, special rules apply to allocation of gain federal income tax purposes. or loss from sale of partnership interest based on ratio of original cost of partnership’s tangible property in state to original cost of all partnership tangible property. Special rules Persons Exempt.—Persons and organizations not taxable under c. 235 include: banks, apply if more than 50% of partnership’s assets are intangibles. (235-26). Other allocation building and loan associations, financial services loan companies, financial corporations, rules apply to income not subject to Uniform Act. (235-5). Multistate Tax Compact has small business investment companies, trust companies, mortgage loan companies, fi- been adopted. (c. 255). Tax incentives to promote knowledge-based industries enacted, nancial holding companies, subsidiaries of financial holding companies as defined in c. including: (1) Tax credits (235-110.9, 235D); (2) prohibition on discriminatory tax on 241, development companies taxable under c. 241, insurance companies, agricultural electronic commerce or Internet access (231-8.6); (3) gross income exclusion for amounts cooperative associations, fish marketing associations exclusively taxable under other laws received as royalties and other income from patents, copyrights and trade secrets asso- and persons engaged in business of motion picture and television film production. ciated with qualified high technology businesses and performing arts products (235-7.3); (235-9). (4) gross income exclusion for stock options from qualified high technology businesses Personal exemptions available: (1) To individuals, $1,040 for each exemption al- (235-9.5); (5) qualified high technology businesses may apply to Department of Taxation lowable under IRC, provided exemption is zero if individual’s exemption is allowable to sell unused net operating loss carryovers to another taxpayer (235-111.5); (6) part- to another taxpayer; (2) to estate, $400; (3) to trust, $200 if trust is required to distribute nerships have flexibility to allocate high technology business investment tax credit (235- all income currently, for all other trusts, exemption is $80; and (4) to blind, deaf, or 110.9) among partners without regard to their proportionate interests (235-2.45); (7) 15 totally disabled person, $7,000 in lieu of all other exemptions. (235-54). year capital loss carryforward period for qualified high technology businesses (235-2.45); Rates.—For individuals, estates and trusts, rates on taxable income range from 1.6% and (8) college savings program established (c. 256). Individual development accounts to 8.75%. (235-51). Top rate reduced to 8.25% by 2002. (235-51). For specific rates for allowed to encourage saving for certain qualified expenditures, including costs associated individuals filing joint returns and for surviving spouses, see 235-51(a); for heads of with first home ownership, post-secondary education, vocational training, and small households, see 235-51(b); for unmarried individuals (other than surviving spouse and business capitalization (c. 257), income derived from sale of net operating loss or head of household), and for married individual who does not make single return jointly qualified high technology business’s exempted until Dec. 31, 2005 (237-29.75), income with individual’s spouse, see 235-51(c); for estates and trusts, see 235-51(d); for indi- earned from stock options or stock of qualified high technology business by employee, viduals who do not itemize deductions and do not reach ceiling amount, see 235-53. For officer, or director of qualified high technology business is excluded (235-9.5). Contri- net capital gains of individuals, trusts, and estates, maximum tax rate is 7.25%. (235- butions into individual development accounts are excluded from gross income, and 51[f]). Net unearned income of child who has not reached age 14 at close of taxable year matching contributions are eligible for 50% tax credit. (257-9). is taxed as if earned by parent where resulting tax is higher than if taxed at child’s rate. Penalties and interest prescribed by 231-39 and are added to tax. (235-104). Failure (235-7.5). to make timely return subjects taxpayer to assessment by Department. (235-107). Failure Corporations are subject to tax on taxable income (other than capital gains) at rates to pay tax within 60 days of filing return subject to 20% penalty. (231-39[b][3]). For ranging from 4.4% to 6.4%. (235-71). For corporations, regulated investment companies, calculation of interest charges see 231-39(b)(4). Interest may be charged with respect to and REITs with net capital gains, alternative tax under IRC §1201 may be operative if underpayment or nonpayment of tax due. (231-39[b][4]). Criminal penalties may be alternative tax is less than regular corporation tax. Alternative tax is sum of regular tax imposed under §§231-34, 231-35, and 231-36. Interest imposed for underpayment of computed on taxable income reduced by net capital gains plus 4% of net capital gain. estimated tax owed is computed monthly. (235-97). (235-71.5). Withholding of Tax on Disposition of Real Estate.—Under Hawaii Real Property Audit and Assessment.—Director may audit taxpayers and employers with respect to Tax Act, transferee of real property located within State must withhold 5% of amount wages and assess taxes not paid. Director must give taxpayer or employer notice of realized on transfer. (235-68[b]). Withholding tax is applied against underlying income proposed assessment and taxpayer or employer has 30 days to confer with Department tax liability of transferor; excess withholding is refundable. (235-68). Withholding tax with respect thereto. After such 30 days, Department is to assess income it believes not must be remitted to State within 20 days following transfer. (235-68[c]). Transferor may theretofore assessed and give notice of tax, interest, and penalties. These must be paid apply for exemption certification from Department if no gain will be recognized from within 20 days after date notice was mailed, properly addressed to taxpayer or employer transfer, or if there are insufficient proceeds to pay withholding after payment of trans- at last known address or place of business. (235-108). action costs and mortgage liens on property. (235-68[e]). Exception provided if seller used property as principal residence for year preceding transfer and gross proceeds do Appeal.—Any person aggrieved by assessment or liability imposed may appeal to not exceed $300,000. (235-68[f]). Definition of resident includes Hawaii resident indi- board of review or tax appeal court. (235-114). Appeals before Tax Appeal Court are viduals, trusts, and estates; Hawaii corporations, partnerships, limited liability companies governed by Rules of the Tax Appeal Court and resort to Rules of the Circuit Courts or and limited liability partnerships; and non-Hawaii corporations, partnerships, limited HRCP in matters not specifically provided in RTAC. (108 Hawaii 69, 116 P.3d 711). Any liability companies and limited liability partnerships registered to do business in Hawaii. tax assessment must be paid before appeal can be taken to TAC. (235-114, 108 Hawaii (235-68[a]). Department may enter into withholding agreements with taxpayers who 69, 116 P.3d 711). Denial of tax refund may be appealed by filing notice of appeal within engage in more than one real estate transaction a year. (235-68[g]). 30 days of denial of claims. (232-14.5). May appeal for review of merits of tax refund claim by filing notice of appeal within 180 days from date claim was filed, provided that Wage Withholding.—Every employer is required to deduct and withhold taxes on department has not given notice of denial of claim. (232-14.5). For procedures for appeal wages paid to employees. (235-61). Maximum withholding rate is 8%. (235-61[c]). For to board of review or tax appeal court see topic Property Taxes, subhead Review of provisions on withholding taxes, see 235-61 to 235-69. Employers are required to make Assessment. return with Department on or before 15th day of calendar month following month for which taxes have been withheld. (235-62). Employers whose annual liability for taxes Credits and Refunds.—Overpayments of installments are to be credited against un- withheld exceeds $40,000 annually must remit semi-weekly complete amount of with- paid installments, if any. (235-110). Overpayments of taxes are to be refunded. (235-110). held tax. Employer is required to make statement to employee of taxes withheld from Refund procedure does not apply to payments pursuant to assessments under 235-107 or employee’s wages by Jan. 31 of year following tax year for which taxes have been 235-108(b). No refund or credit unless payment was due to tax being interpreted dif- withheld. (235-63). Taxes withheld must be held in trust. (235-64). ferently than with respect to taxpayers generally. With respect to all tax payments for Returns are required by every individual doing business in State or having taxable which refund is not authorized, remedies under appeal or protest procedures are exclu- gross income therefrom. (235-92). Return is required for estates with taxable income of sive. (235-110). Refunds shall be made in accordance with 231-23(c). (235-110). $400 or more. Return is required for trust which, under its governing instrument, is Statute of limitations for assessing deficiencies, except in cases of violations under required to distribute all of its income currently, and has taxable income of $200 or more. §§231-34, 231-35, and 231-36, is three years, commencing from date of filing or due date Return is required for all other trusts with taxable income of $80 or more. (235-54, whichever is later. (235-111). Prosecutions under §§231-34, 231-35, and 231-36, must 235-92[3]). Affiliated groups of Hawaii corporations may file consolidated returns in commence within seven years after commission of crime. (231-41). Claim for credit or manner consistent with IRC §§1501-1505 and 1552. (235-92). Returns for taxable year refund must be filed within later of three years from filing date or due date, or two years must be filed by 20th day of fourth month thereafter. (235-97[b]). Informational returns from date tax was paid. (235-111[b]). Statutory period for assessment of any deficiency may be required by regulations. (235-96). Pay-as-you-go provisions requiring declara- or determination of refund attributable to amendment made to federal income tax return tions of estimated tax and periodic estimated tax payments are similar to IRC. (235-97). shall be one year from date Department is notified in writing of such amendment. Taxpayer must report (by filing amended return) any change in federal tax or return to (235-101[b]). Payments made before due date are deemed to have been paid on due date. Department of Taxation within 90 days thereof; Department may inspect or require filing (235-111[b]). Limitation for assessing deficiencies respecting gains realized on conver- of federal return. (235-101). Partnerships are required to file returns. (235-95). Decla- sions subject to election under IRC §1033(a)(3)(A) does not expire until three years after rations of estimated taxes are filed with Department. (235-97). Returns are confidential. Department is notified of replacement or intended not to replace. (235-112). (235-116). Department may exchange or provide information to IRS. (235-117). Tax Credits.—For various tax credits available, see 235-12, 235-12.5, 235-15 to INHERITANCE TAX: 235-17, 235-55 to 235-55.91, 235-110 to 235-110.91, and c. 235D. Qualified improve- ment tax credit allowed on capitalized costs for construction of certain resort or general None.

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–43 TAXATION MARTINDALE-HUBBELL LAW DIGEST - 2007

PROPERTY TAXES: priority as tax lien of State. (231-61). Notices of liens for State and federal taxes are kept Real and Personal Property Taxable.—No tax on personal property. All real property by Director of Finance. (286-46). Liens are enforced by state tax collector in circuit court tax functions are exercised by respective counties, except for county of Kalawao. (246A- where property is located. 2). County ordinances should be consulted with respect to real property tax laws, in- Sale.—In cases where Director has levied on property or rights to property of taxpayer, cluding exemptions, assessment, appeals, payment, penalties, rates, and liens, in par- Director may seize and sell such property to satisfy taxes due and unpaid. (231-25). State ticular county. tax collector may sell via foreclosure any property encumbered by state tax lien, and if Exemptions.—For real property tax exemptions, see county ordinances. For income any lien has existed thereon for three years, may sell at public auction to highest bidder tax exemptions, see topic Income Tax, subheads Persons Exempt, Personal Exemptions after proper notice has been given. (231-63). Sale of property takes place within 30 days Available. after seizure but may be postponed no later than 45 days after seizure. (231-25[b][6][c]). Director of taxation issues bill of sale to purchaser. (231-25). In addition, State may Assessment of real property tax is made by county in which property is located, on procure lien and enforce it by sale. (231-33[h]). Certain property is exempt from levy. annual basis. Tax year with respect to real property is July 1 to June 30. Tax is assessed (231-25). as of specified date (Oct. 1 for City and County of Honolulu) preceding tax year. With certain exceptions, real property is assessed at 100% of fair market value. See specific Redemption.—As provided by ordinance, taxpayer may redeem real property sold in county ordinances for details. Counties determine tax rates for land and for buildings in satisfaction of real property taxes by payment to purchaser at sale, within one year from various classifications on each of following classes. For counties other than Kauai date thereof, or if purchaser’s deed is not recorded within 60 days of sale, within one County, property classes are as follows: (1) Improved residential; (2) apartment; (3) year from such recordation. Taxpayer must reimburse expenses including 12% interest commercial; (4) industrial; (5) agricultural; (6) conservation; (7) hotel and resort; (8) to purchaser. unimproved residential; and (9) homeowner (Maui and Hawaii counties only). For Kauai Mortgage Recording Fee.—See categories Insurance, topic Insurance Companies, County, property classes are (1) single family residential; (2) apartment; (3) commercial; subhead Hurricane Relief Fund; Mortgages, topic Mortgages of Real Property, subhead (4) industrial; (5) agricultural; (6) conservation; (7) hotel and resort; and (8) homestead. Recording Schedule of Fees. Assessment of taxes administered by Department is made by Director of Taxation. Real Estate Conveyance Tax.—Any real property or interest therein, transferred or Review of Assessment.—In general, dispute between taxpayer and assessor may be conveyed by deed, lease, sublease, assignment, transfer, or conveyance, or any other appealed by filing notice of appeal with board of review or tax appeal court. (232-15, document not otherwise exempt under 247-3, is subject to conveyance tax. (247-1). Tax 16). Other than for real property tax, payment of assessment must be made prior to appeal imposed is 10¢ per $100 of actual and full consideration paid or to be paid. (247-2). In to tax appeal court. Payment of assessment not required for appeal to board of review. case of lease or sublease whose full unexpired term is for period of five years or more, (235-114, 237-42). Taxes may be paid under protest in writing signed by person making tax imposed is based on cash value of lease rentals discounted to present day value, and payment, setting forth grounds for protest. (40-35, c. 232). Appeals of assessments of fuel capitalized at rate of 6% plus actual and full consideration paid or to be paid for any and tax (c. 243), conveyance tax (c. 247), or estate and transfer tax (c. 236D), handled in all improvements. (247-2). Tax imposed for each transaction shall not be less than $1. same manner as income tax appeals (235-114; 243-14.5, 247-4.5, 236D-15). (247-2). Certificate of conveyance declaring actual and full consideration of property Appeals from Board of Review.—May be made to tax appeal court by filing written transferred is required to be filed and recorded. (247-6). Exemptions from tax imposed notice of appeal in tax appeal court within 30 days after filing of decision of board of under this section are found in 247-3. Assessments, levies, or credits for overpayment review and payment of costs fixed by 232-22. (232-17). must be made within three years from filing date. (247-6.5). Refund for taxes erroneously Appeals from Tax Appeal Court.—May be made to Supreme Court from tax appeal or unjustly paid is made in accordance with 231-23. (247-8). court by filing written notice of appeal with tax appeal court and depositing costs of Tax Liability.—Party conveying real property (seller, lessor, etc.) is liable for tax appeal within 30 days after filing of decision. (232-19). imposed, except when U.S., state, or any agency thereof is conveyor, or tax liability is Payment.—For real property tax, payment of tax for tax year July 1 to June 30 is due on purchaser (buyer, lessee, etc.). (247-4). Tax is to be paid not later than 90 days after in two equal installments on Aug. 20 and Feb. 20. Fuel, tobacco and use taxes are due transaction and in any event prior to imprinting of seals. (247-4). on last day of following month. (238-5, 243-8, 245-5). Withholding taxes are due on 15th Imprinting of Seals.—On document as evidence of tax payment, seal will be im- day of following month unless withholding amount exceeds $100,000. Then, withholding printed upon payment of tax and any penalties or interest and prior to recordation. taxes are due on tenth day of following month. (235-62). If due date falls on Sat., Sun., (247-5). or holiday, payment may be made on next day which is not one of such days. (231-21). For other taxes, see applicable headings. SALES AND USE TAXES: Collection.—For real property tax, county official designated by ordinance is respon- Sales Tax.—None, but see subhead General Excise Tax, infra. sible for collection (Director of Finance for City and County of Honolulu). See ordi- nances as to specific collection proceedings. For other taxes, see applicable topics/ General excise tax also known as ‘‘gross excise’’ tax, is assessed and collected against subheads. Department of Taxation responsible for collection of taxes imposed under title persons and entities on account of their business and other activities conducted in State. 14 (c. 231-257), except those which by law are to be collected by county treasurers. (237-13). Businesses are classified and taxed based on following categories: (1) manu- Department may charge added fee for costs or expenses incurred as result of any action facturers; (2) business of selling tangible personal property, producing; (3) contractors; taken to enforce collection of taxes administered under title 14. (231-25.5). Director is (4) theaters, amusements, radio broadcasting stations, etc.; (5) sales representatives, etc.; authorized to require every person whose tax liability for one taxable year exceeds (6) service business; (7) insurance solicitors and agents; (8) professions; (9) receipts of $100,000 to remit payment via electronic funds transfer. (231-9.9). Action in assumpsit sugar benefit payments; (10) business of leasing real property (237-16.5); and (11) other may be brought in courts of State or by levy on property or rights to property not business. Tax is measured by application of rates against values of products, gross otherwise exempt under 231-25(b)(5), which belongs to taxpayer or on which there is proceeds of sales or gross income. (237-13). Business includes all activities (personal, lien. (231-25). Execution may issue upon judgment and be satisfied out of any real or professional, or corporate), engaged in or caused to be engaged in with object of gain personal property of defendant. (231-25). or economic benefit either direct or indirect, but does not include casual sales. (237-2). Tax imposed at entity level. Includes tax on interstate and foreign common carrier Credits and Refunds.—Except with respect to conveyance taxes (c. 247) and taxes telecommunications services and mobile telecommunications services. (237-13[6][D] and collected under chapter containing special provision for refund and credit of tax paid in [E]). Tax on gross proceeds from sale of electric power to public utility company for excess of tax imposed, credit or refund may be claimed under procedures set forth in resale to public is taxed at same rate as tax on ‘‘producer’’ under 237-13(2)(A). (237- 231-23. Taxpayer entitled to refund may elect to apply amount of refund as to over- 13.5). As condition precedent to engaging in business in state, license must be obtained. payment credit to taxes subsequently accruing under same chapter. (231-23). Department One-time fee of $20 is assessed for license. (237-9). Director of taxation to develop is authorized to retain refunds due to overpayment of tax due for persons who owe debt system to determine when contractors from U.S. mainland work on federal construction to State; are delinquent in child support payment; who default on educational loans held projects, to enforce collection of general excise taxes. (231-9.3). Department of Taxation by United Student Aid Funds; who owe federal income tax; or who receive medicaid authorized to enter into streamlined sales and use tax agreement with one or more states overpayment subject to recovery. (231-51). Refunds or credits for reasons other than to simplify and modernize sales and use tax administration. (255D-4). overpayment for estate and transfer taxes, general excise taxes, fuel taxes, conveyance Application.—See 237-3 for definition of gross income. Transactions between entity taxes, and rental motor vehicle and tour vehicle surcharge taxes, may only be sought by and shareholder or partner are generally taxable. For treatment of expense reimburse- appeal or by payment under protest pursuant to 40-35. (231-23[a]). ments, see 237-20. When gross income is divided between provider of services and travel Lien.—As provided by ordinance, real property taxes are paramount liens upon prop- agency or tour packager, tax imposed on each person’s respective portion of proceeds erty assessed. Any State tax due and unpaid is debt due to State and constitutes lien in only. (237-18[f]). When gross income is divided between hotel and travel agency for favor of State on all real and personal property belonging to any person liable for tax. hotel accommodations, tax imposed on respective portion of proceeds only. (237-18[g]). (231-33). Lien for tax, including penalties and interest arises at earlier of: (1) time of Partnerships are taxed at entity level. assessment; (2) time return is filed; or (3) certificate provided for under 231-33(f) is filed. Persons Exempt.—237-23 provides exemptions from tax imposed under c. 237 for (231-33[b]). Except as provided in 231-33(c), (d), and (e), from time State tax lien arises, certain persons. Persons exempted generally include: public service companies (as de- it is paramount lien on property and rights to property against all parties. (231-33[b]). fined in 239-2), public utilities owned and operated by state, county or other political Liens on tangible personal property held for purpose of sale to public in ordinary course subdivision, fraternal benefit societies, religious, charitable, scientific or educational of business are extinguished upon such sale for valuable consideration. (231-33[d]). organizations or trusts, business leagues, hospitals, cooperative associations (including Liens on securities, negotiable instruments, and money are extinguished upon transfer to farmers coops exempt under IRC §531), public Internet data center, and others exempted person without notice for valuable consideration in money or money’s worth, and lien for special purposes. 237-17, 237-27, 237-29.65, 237-29.7, 237-29.8, 237-29.65. To is not valid against mortgagee or pledgee for adequate and full consideration in money obtain allowance of exemption, certain persons must register their federal exemption or or money’s worth who is located outside State and takes possession of property if he is application for recognition of exempt status. Other persons must file application for without notice or knowledge of existence of lien. (231-33[d]). Mere filing of certificates exemption in form of affidavit. (237-23). Limited exemption for financial institutions. by Department does not constitute notice for this purpose. (231-33[d]). Lien does not (237-24.8). apply if statute imposing particular tax contains specific provision for lien. (231-33[i]). Transactions Exempt.—237-23.5, 237-24 through 237-29.75 provides exemption for If co-tenancy exists with respect to property subject to lien, co-tenant may pay non- particular transactions or businesses. contributing co-tenant’s outstanding tax debt due to State for whom lien is imposed. Rates depend on class of business engaged in. Most transactions taxed at 4%. Whole- (231-61). Upon proper recordation co-tenant shall acquire lien on nonpaying co-tenant’s salers, manufacturers, sugar processors, sales from disabled persons or their corporations, property interest. (231-61). Lien may be enforced by action in equity and has same sellers of electric power generated from nonfossil fuels to public utilities for sale to

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–44 HAWAII LAW DIGEST TRANSPORTATION

SALES AND USE TAXES . . . continued MOTOR VEHICLES: public pay 0.5%; insurance solicitors pay 0.15%; and retailers, service businesses, pro- County finance directors have supervision over registration of vehicles (286-42), fessions and all others pay 4%. (237-13 to 237-17). Tax on intermediate sales of services county examiner of drivers over licensing of operators (c. 286-236). County of Hawaii, reduced from 4.0% to 0.5% in 0.5% increments each year (2.0% in 2003). (237-13.3). Finance Department, 26 Aupuni Street, Hilo, Hawaii 96720; City and County of Ho- Payment.—Tax is payable in monthly installments on or before last day of month nolulu, Motor Vehicle Licensing Division, 530 S. King Street, Rm. 208, Honolulu, following month in which it accrues, but approval for quarterly payment can be obtained Hawaii 96813, mailing address: P.O. Box 30330, Honolulu, Hawaii 96820-0330; County where total tax liability for calendar year will not exceed $2,000, or semiannual payments of Kauai, Finance Department, 44 Rice Street, Lihue, Kauai, Hawaii 96766; County of where total tax liability for calendar year will not exceed $1,000. (237-30). Director may Maui, Motor Vehicle Registration, 200 S. High Street, Wailuku, Maui, Hawaii 96793. permit filing of fiscal year returns. (237-30). Returns.—Each taxpayer must make out monthly return, showing estimated tax li- Vehicle License.—Numbered plates on front and rear, renewed annually for all ve- ability and transmit same, with remittance of amount of tax, to appropriate tax official. hicles except those publicly owned or owned by certain disabled veterans. (249-4, 6,7). (237-30[b]). Quarterly or semiannual filings permitted depending on total tax liability for No exemption to vehicles owned by members of armed forces. Penalty for nonpayment year. Annual reconciliation return under oath must also be made on or before 20th day includes seizure and sale. (249-10). No person shall manufacture, sell, display, permit to of fourth month following close of taxable year, showing gross proceeds of sales or gross be displayed, or possess any reproduction, imitation, or facsimile of license plate with income for previous year. On this annual return amount of tax chargeable against tax- similar design, shape, size, and color as license plates contracted for director of finance payer must be computed. Amount of monthly payments already made deducted and of city and county of Honolulu pursuant to c. 249-9. (c. 249-11[b], 2005, Act 5). Director remittance of residue of tax made with return. (237-33). Amendment to federal tax return of finance may revoke approval of organization’s application for special number plates is required to be reported to Department pursuant to procedures in 235-101. (237-33.5). within three years of receiving approval, if organization’s number of registered vehicles Collection.—Department may collect taxes due and unpaid together with penalties and that obtained special number plates is less than 150. (c. 249-9-3[6], 2005, Act 8). interest by action in assumpsit or other appropriate proceedings, injunction restraining Operator’s License.—Required of all drivers unless specifically excluded by statute. further conduct of business in State may be obtained until payment of delinquent taxes, (286-102, 105, 110, 236, 239). Parents or guardian of minor under 18 liable for minor’s penalties and interest have been paid. (237-46). Contractor’s license may be suspended negligence. (286-112). Exemptions granted to certain federal and state employees. (286- for failure to pay delinquent general excise tax or to honor payment installment plan. 105). Driver License Compact provides reciprocal recognition of driver’s licenses from Penalties and interest shall be added to and become part of tax where Department other states, District of Columbia and Commonwealth of Puerto Rico. (c. 286C-1). determines that general excise tax on any gross income or gross proceeds of sale have Operation of mopeds. (291C-191 to 207). not been assessed. (237-32, 39). Penalties and interest may be assessed for refusing to Renewals.—License expires on licensee’s fourth birthday after issuance of license file return required under 237-33. Criminal penalties may also be imposed under 231-34, except that license expires on licensee’s 2nd birthday after issuance where licensee is 72 231-35, and 231-36. Advertisement that tax imposed under c. 237 is not considered as years of age or older, 24 years of age or younger, has received nine points or more for element in price to purchaser is prohibited. (237-49). traffic violations under previous point system within two years, or has physical disabili- Appeal from assessment of tax is available to board of review or tax appeal court ties not overcome by doctor’s certificate or special equipment on vehicle. (286-106). pursuant to procedure in 235-114. (237-42). Driver licensing point system repealed in 1997. (286-128, am’d 1997, Act 60). Credits and Refund.—Taxpayer entitled to credit where general excise tax is imposed Provisional Driver Licensing Program.—Established for persons at least 16, but under upon transaction subject to sales, gross receipts, or use tax in another state or taxing age of 18; holding instruction permit for period of at least 180 days in good standing; jurisdiction. (237-22). Credit or refund for overpayment of tax available in manner satisfactorily completes all requirements. (c. 286-108, 109). Any motor vehicle operated provided in 231-23(c). (237-37). Qualified improvement tax credit allowed on capitalized by provisional licensee, all occupants shall be restrained by safety belts or child pas- costs for construction of certain resort or general facilities. (235D-2). senger restraint system as required (c. 291-11.5, 11.6); shall not transport more than one Statute of Limitations.—Taxes imposed under c. 237 shall be assessed or levied within person under age of 18 without being accompanied by licensed driver who is provisional three years after annual return is filed or within three years of due date prescribed for licensee’s parent or guardian during hours of 11:00 p.m. and 5:00 a.m.; provisional filing, payment of tax. (237-40). Claims for credit or refund must be made within three licensee may drive between hours of 11:00 p.m. and 5:00 a.m. without licensed parent years of filing, payment of tax or due date. (237-40). Amendments to federal tax return or guardian for purpose of employment with signed statement from employer verifying required to be reported to Department under 235-101 extend statutory period for as- employment and work hours; or school-authorized activity with signed statement from sessment of deficiency or determination of refund for one year beginning date Depart- parent or guardian verifying activity. Should provisional licensee violate of any require- ment is notified in writing of such amendment. (237-33.5). Prosecution for violations ments or be convicted of offense relating to operation of motor vehicle, shall have under 231-34, 231-35 and 231-36 must commence within seven years of commission of provisional license suspended or revoked by district court or family court judge. Driver’s crime. (231-41). license may be issued to provisional licensee if provisional license is held for at least Bulk Sales.—Bulk sale or transfer of merchandise, fixtures or other assets of business, six months satisfactorily; at least 17 years of age; and all requirements have been not in ordinary course of business, must be reported by seller not less than ten days after complied. Fee for provisional license shall be determined by council of each county. (c. possession, title or control of property, or any part thereof, passes to purchaser. (237- 286-111). Provisional licenses shall not apply to emancipated minors and motorcycle or 43[a]). Purchaser must withhold payment of purchase price until he receives tax clear- motor scooter drivers. (2005, Act 72). ance certificate from Department to effect that all seller’s State taxes have been paid. Titles.—Issued upon initial registration. (286-47, 48, 52, 55). Vehicles may be junked (237-43[b]). If purchaser does not obtain tax clearance certificate, purchaser becomes by surrendering title to Director of Finance. (286-51.5). All non-repairable vehicles liable for seller’s unpaid taxes and also for any other unpaid taxes, that are lien against junked under this section will never be titled or registered again. (286-51.5). items sold. (237-43[c]). Certificate will not be issued while Department investigates Sales.—Vehicle must be registered by new owner, old certificate of ownership must (including by audit) whether taxes have been levied or accrued against seller. (237-43[b]). be surrendered within 30 days of transfer, and new certificate of ownership must be Use Tax.—Compensating Use Tax Law (c. 238) imposes tax on tangible personal issued or transfer deemed incomplete. (286-52). Notice to Dept. of Finance prior to property and services (238-2) imported or purchased from unlicensed operator for con- issuance of new certificate of ownership relieves transferee of civil and criminal liability sumption or use in Hawaii. No tax imposed if importer or purchaser is licensed under incurred after Notice, by transferor, because of his ownership of vehicle. (286-52). Where general excise tax and is wholesaler purchasing for resale or manufacturer incorporating vehicle is deemed abandoned and certificate of ownership or registration is unavailable, imported item, which remains perceptible to senses, in his finished product, and it is sold bill of sale executed by authorized seller is satisfactory evidence authorizing transfer of at wholesale. (238-2). Tax of 0.5% is imposed on retailers and service businesses im- title or interest by operation of law. (209-25). porting for resale, or manufacturers or contractors importing material to be incorporated Upon transfer by sale or otherwise of moped, person whose interest is to be transferred into their finished product which is sold at retail. (238-2[2]). In all other cases, tax is 4%. and transferee must write their signatures with ink upon certificate of registration issued (238-2[3]). Credit given for sales or use taxes paid by purchaser or importer to other for moped, together with address of transferee. Within 30 days, transferee must forward states or its subdivisions on same transaction, but not to exceed amount of use tax which endorsed certificate of registration to Director of Finance. (249-14.2). would be paid in Hawaii. (238-3[i]). Tax is not applied to certain property listed in Liens.—For unpaid taxes. (231-33). Mechanics’ lien for reasonable charges for work 238-3(e) to (h), (j), and (k). Proof of payment of use tax required to register motor vehicle done and materials furnished, excluding storage charges, and may retain possession of imported into State. (238-9.5). Department of Taxation authorized to enter into stream- property until charges are paid. (507-18, 19). See category Business Regulation and lined sales and use tax agreement with one or more states to simplify and modernize sales Commerce, topic Commercial Code, subhead Article 9. and use tax administration. (255D-4). Identification Marks.—Penalty for altering, fine up to $1,000, imprisonment up to one year, or both. (286-43, 61). Markings shall be readily visible during daylight hours, STAMP AND SEAL TAXES: from distance of 50 feet (15.24 meters) while motor carrier vehicle is stationary. This Stamp Tax.—None. ensures conformance with federal standards. (286-202.6; 2005, Act 28). Odometer systems regulated by 486-71, 75, 77-84, 87. No vehicle may be introduced TAX LIENS: into Hawaii unless odometer complies with regulations. Operation Prohibited.—By persons whose term of suspension or revocation of op- Uniform Federal Tax Lien Registration Act.—Adopted, with modifications. (c. 505). erator’s license has not expired, has been convicted within two years of driving while under influence of alcohol or drugs and unlicensed, has not passed examination, has not provided proof of financial responsibility, or has physical or mental disability which TRANSPORTATION prevents safe operation. (286-104). Size and Weight Limits.—Regulated by 291-34 to 37 inclusive. HIGHWAYS: Equipment Required.—Regulated by 70-63, §18 of Traffic Code of City and County (c. 264). of Honolulu and similar ordinances of other counties; General Safety Code of the State; regulations of State Public Utilities Commission. Highway Development.—Department of Transportation directed to establish new Certain equipment may not be sold for use or actually used in vehicles without guidelines that take into account need for flexibility in highway design. Limited liability approval of director of transportation. (286-83). Such approval may be revoked by of State and counties in application of flexible highway design standards. (2005, Act director of transportation after conducting appropriate hearings and determinating that 185). equipment does not comply with requirements of 286-83. (286-84).

See note at head of Digest as to 2006 legislation covered. See Topical Index in front part of this volume. HI–45 TRANSPORTATION MARTINDALE-HUBBELL LAW DIGEST - 2007

MOTOR VEHICLES . . . continued Nonresident Operators.—No statutes restricting operation by validly licensed non- Power output for mopeds regulated by 291C-202. resident operators. Lights Required.—Regulated by 291-25 to 32 inclusive. Actions against Nonresidents.—Operation of motor vehicle by resident or nonresi- Inspection.—Safety inspection required every two years except for certain vehicles dent on public highway in state subjects person to state’s jurisdiction whether he is which must be inspected every six or 12 months. (286-26). nonresident at time of or subsequent to accident. Service of process is of same legal force Traffic Regulations.—Generally c. 291 and c. 291C. Term of imprisonment for op- as upon resident. See category Civil Actions and Procedure, topic Process, subhead erating vehicle under influence of intoxicant, shall not exceed maximum term provided Nonresidents Generally. in 291E-61(b)(1), (b)(2) and (b)(3) c. 291E-61. (2005, Act 33). Penalties for accidents Other matters governed by ordinances of the several islands, differing in their re- involving damage to vehicle or property are provided for in c. 291C-161. Repeal of quirements. penalties provided in 291C-13 and 291C-18. (2005, Act 73). Driver of vehicle approach- Direct Action.—No statutory provisions regarding direct actions against insurers. ing marked crosswalk shall stop and yield right of way to allow pedestrians to cross, Motor Vehicle Carriers.—Economic regulation, safety, equipment, and inspection of regardless of whether traffic-control signals are in place or in operation. (291C-72; 2005, commercial motor vehicles regulated by Public Utilities Commission. (c. 271). Certificate Act 73). Limits on time in which prior conviction may be basis for enhanced penalties or permit required before transporting persons or property for compensation (271-8, 13), for subsequent offenses as follows: three years for offenses involving child restraints; one and must carry such insurance protection as Commission requires (271-17). Motor carrier year for offenses involving violations relating to motor vehicle lights; and five years for vehicles must exhibit identification and informational markings. (286-202.6). offenses involving motor vehicle alarms continuously going off for period of five min- utes. (291-11.5; 2005, Act 74). Subsequent violation of same provision within one year Commercial Motor Vehicles.—Economic regulation, safety, equipment and inspec- shall be subject to twice fine. (291-32; 2005, Act 74). Infractions not resulting in criminal tion are regulated by Public Utilities Commission. (c. 271). Certificate or permit required charge do not require court adjudication. (291D-3). Time for answering a notice of a before transporting persons or property for compensation (271-8, 13), and must carry traffic infraction is amended from 15 to 21 days. (291D-6). No penal sanction that such insurance protection as Commission requires (271-17). Motor vehicle carriers shall includes imprisonment applies to traffic infraction. (291D-3). Person answering notice of obtain vehicle identification card by filing form with specified information with director traffic infraction shall request hearing if person wishes to personally appear before judge. of transportation. (2005, Act 134). Motor carrier vehicles shall operate with mudguards. (291D-6). Persons may make credit or debit card payments over Internet or by telephone Commercial motor vehicles are prohibited from being operated on public highways for total amount stated on notice for admitted traffic infractions. (291D-6; 2005, Act 48). unless vehicle is equipped with fenders, covers, or other devices, including flaps or splash aprons, to minimize spray of water or mud to rear of vehicle. Violation subject to fine. Accidents.—Good Samaritan Act adopted. (663-1.5). Duty to give information and (2005, Act 134). render aid. (291C-14). Duty to report accidents when apparent extent of damages exceeds $3,000. (287-4). Police are required to disclose traffic accident reports to anyone directly Motor Vehicle Lease Disclosure Act establishes mandatory disclosures by retail involved in accident or having proper interest. (291C-20). lessor to consumer. (c. 481L). Liability of Owner.—No statutes covering liability of owner for negligence of others. Seat Belt Requirements.—U.S. Dept. of Transportation approved child passenger Guests.—No statutes covering liability for injury to guests. restraint system required whenever transporting child under four years old. (291-11.5). For child four years or older, requirements do not apply if number of persons in vehicle Proof of Financial Responsibility.—Regulated by c. 287. exceeds greatest number of seat belt assemblies, all seat belts are in use, and unrestrained Insurance.—Tort liability abolished with respect to accidental harm arising from child is in back seat. (291-11.5). First conviction will result in fine of not more than $100, accidents except where death, permanent disfigurement, or significant loss of body part required attendance at safety class, and $50 driver education assessment. Subsequent or body function occurs, or where as result of injury, personal injury protection benefits convictions result in increased fines to $500. (291-11.5). incurred equal or exceed $5,000. (431:10C-306). Bodily injury and property damage Motor Vehicle Taxes.—All motor vehicles are subject to annual tax according to net insurance are mandatory for all registered vehicles. (431:10C). Minimum policy coverage weight of each vehicle, except as otherwise provided. (c. 249). Proof of payment of use of $20,000 for personal injury and $10,000 for property damage required. (431:10C-301). tax required for registration of vehicles bought out of state. (286-41[d]). Insurer must offer insured opportunity to purchase coverage for damage by owners and Rental Motor and Tour Vehicle Surcharge Tax.—(c. 251-2). operators of uninsured and underinsured vehicles and make available specified additional optional insurance coverage. (431:10C-301, 302). Insurer has burden of proving legally Abandoned Vehicles.—Counties may cause vehicles that have been abandoned to be sufficient offer was made. (72 Haw. 314, 816 P.2d 968). Motor vehicle insurance re- taken into custody and disposed. Abandoned is defined by ordinance of county in which quirement may be satisfied if vehicle owner provides bond and proof of qualification as vehicle is located. Vehicle considered abandoned if left unattended for continuous period self-insurer (431:10C-105), upon application to commissioner in format approved by of more than 24 hours and it is unlawfully parked on easement, or right of way that is commissioner pursuant to rules (431:10C-105[b]). Claimant or defendant will have op- adjacent to or part of public highway. (c. 290-1). Counties and housing and community tion to elect arbitration to resolve claim in tort covered by motor vehicle liability development corporation of Hawaii (HCDCH) are authorized to dispose of abandoned insurance (431:10C-213-5), but amount of arbitration award shall not be binding on vehicles. Owner, lien holder, or other person with interest in derelict or abandoned subsequent under insured motorist claim (431:10C-213.5[9]). vehicle shall be given notice and opportunity to request post-custodial administrative No-Fault Insurance.—Personal injury protection benefits replace no-fault benefits. hearing before disposition. (290-1[c], 2005, Act 162). (431:10C-304). Gasoline Tax.—See category Taxation, topic Gasoline and Special Fuels Taxes, sub- Foreign Vehicles.—Nonresidents must register vehicle within 30 days after com- head Gasoline Tax. mencing to operate vehicle or causing or permitting it to be operated within state. Lemon Law.—See category Business Regulation and Commerce, topic Consumer (286-54). Protection.

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COMMERCIAL CODE FORMS

See Part VI, Uniform and Model Acts, Commercial Code Amendments for National Forms.

FORMS

[Coversheet for documents filed at Bureau of Conveyances]

LAND COURT SYSTEM REGULAR SYSTEM

Return by Mail ( ) Pickup ( ) To:

TITLE OF DOCUMENT:

PARTIES TO DOCUMENT:

MORTGAGOR:

MORTGAGEE (NAME AND ADDRESS):

TAX MAP KEY(S): Oahu

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SATISFACTION OF JUDGMENT; Form #1DC48 h RELEASE OF GARNISHEE(S)

IN THE DISTRICT COURT OF THE FIRST CIRCUIT DIVISION STATE OF HAWAII

Plaintiff(s)

Reserved for Court Use

Civil No.

Filing Party(ies)/Filing Party(ies)’ Attorney (Name, Attorney Number, Firm Defendant(s) Name (if applicable), Address, Telephone and Facsimile Numbers)

Name of Garnishee(s) to be released: Date Garnishee Summons Order Granted: (If none, date of Garnishee Summons)

SATISFACTION OF JUDGMENT h RELEASE OF GARNISHEE

The undersigned acknowledges full satisfaction and payment of the JUDGMENT in the above-entitled case.

h Release of Garnishee(s) as stated above.

CERTIFICATE OF SERVICE I certify that a copy of this Satisfaction was served at the last known address(es) of Judgment Debtor(s) or Judgment Debtor(s)’ attorney/h Garnishee(s) on by h Hand-delivery or h Mail, Postage Prepaid, at the following address(es):

Signature of Filing Party(ies)/Filing Party(ies)’ Attorney:

Date: Print/Type Name: In accordance with the Americans with Disabilities Act if you require an accommodation for your disability, please contact the District Court Administration Office at PHONE NO. 538-5121, FAX 538-5233, or TTY 539-4853 at least ten (10) working days in advance of your hearing or appointment date. For Civil related matters, please call 538-5151.

SATISRLS.X (Amended 4/18/97)v I certify that this is a full, true, and correct copy of the original on file in this office.

Clerk, District Court of the above Circuit, State of Hawaii

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