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                                                              Electronically Filed
                                                              Supreme Court
                                                              SCWC-30606
                                                              05-JUN-2014
                                                              11:30 AM




           IN THE SUPREME COURT OF THE STATE OF HAWAI#I

                               --- o0o ---


     EMERSON M.F. JOU, M.D., Petitioner/Plaintiff-Appellant,

                                    v.

       ARGONAUT INSURANCE COMPANY, An Entity, Form Unknown;
 CITY AND COUNTY OF HONOLULU, A Self-Insured Governmental Entity;
HEMIC, aka Hawaii Employers Medical Insurance Company, An Entity,
      Form Unknown; and MARRIOTT CLAIM SERVICES CORPORATION,
          a Corporation, Respondents/Defendants-Appellees.
                 (ICA NO. 30606; CIV. NO. 03-1-1445)
 ----------------------------------------------------------------
      EMERSON M.F. JOU, M.D., Petitioner/Plaintiff-Appellant,

                                    v.

     HEMIC, aka Hawaii Employers Medical Insurance Company,
   An Entity, Form Unknown, Respondents/Defendants-Appellees.
               (ICA NO. 30607; CIV. NO. 09-1-1529)


                               SCWC-30606

         CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS

                              JUNE 5, 2014

      NAKAYAMA, ACTING C.J., MCKENNA, AND POLLACK, JJ., AND
CIRCUIT JUDGE TRADER, IN PLACE OF RECKTENWALD, C.J., RECUSED, AND
      CIRCUIT JUDGE BROWNING, IN PLACE OF ACOBA, J., RECUSED
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                 OPINION OF THE COURT BY POLLACK, J.

               The sole issue in this case is whether Petitioner

Emerson M.F. Jou, M.D. (Jou) is eligible to be awarded appellate

costs.    Jou filed separate appeals to the Intermediate Court of

Appeals (ICA) regarding two orders of the Circuit Court of the

First Circuit (circuit court) that had granted motions in favor

of Respondent Hawaii Employers Medical Insurance Company (HEMIC).

The ICA vacated one order, but denied Jou’s request for costs

related to the appeal of that order, relying on Hawaiian Ass’n of

Seventh-Day Adventists v. Wong, 130 Hawai#i 36, 305 P.3d 452

(2013).   We hold that the ICA misapplied Seventh-Day Adventists

in denying Jou’s request for costs related to that appeal.

Accordingly, we vacate the order and judgment of the ICA that

pertained to its denial of appellate costs.

                                    I.

               On July 11, 2003, Jou filed Civil No. 03-1-1445

(the 2003 Case) against Argonaut Insurance Company (Argonaut),

the City and County of Honolulu, HEMIC, and Marriott Claim

Services Corporation (Marriott), alleging insurer bad faith,

interference, and statutory torts.         On April 22, 2005 the circuit

court entered a judgment in favor of Argonaut, the City and

County of Honolulu, HEMIC, and Marriott as to all counts in the



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complaint, and awarded HEMIC $8,750.00 in attorneys’ fees and

$833.20 in costs.1

                 Jou appealed the circuit court’s decision to the

ICA.       While the appeal was pending, Jou settled with Argonaut,

and a partial dismissal of the appeal was approved by the ICA.

On April 5, 2007, the ICA entered a summary disposition order

affirming the circuit court’s decision.            The ICA entered an order

awarding attorneys’ fees and costs related to the appeal:

$4,804.50 to Marriott, $6,275.40 to the City and County of

Honolulu, and $9,462.20 to HEMIC.

                 Thereafter, Jou and HEMIC began settlement

negotiations regarding the awards of attorneys’ fees and costs by

the circuit court and the ICA.           In a settlement conference held

at the circuit court on May 4, 2009, HEMIC, Jou, and the court

signed a handwritten document (Settlement Document).2



       1
            The circuit court awarded Argonaut $12,500.00 in attorneys’ fees,
and the City and County $5,321.50 in attorneys’ fees and $238.69 in costs.

        
       2
              The document states:

              1. $8,000 (JOU ÷ HEMIC).
              2. JOU global release & indemnity (& dismissal)—incl. class DCD
              appeal vs. HEMIC of all claims accrued to date of R & IA.
              3. JOU & related providers … initiate administrative, judicial, or
              other proceeding for 10 yrs after R & IA executed, arising out of
              SVS provided by JOU or related providers (incl. Employers).
              4. Stip dismiss all—own attys fees & costs.



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                                    A.

              Following the apparent settlement agreement, Jou

initiated Civil No. 09-1-1529 (the 2009 Case) on July 6, 2009

against HEMIC, alleging that, during the May 4, 2009 settlement

negotiations, HEMIC concealed the fact that it had recorded a

judgment lien against Jou’s property.        Jou further alleged that

the lien resulted in a denial of a real estate loan.           Jou filed

an amended complaint on July 9, 2009 that asserted claims of

tortious judgment lien, settlement fraud, intentional infliction

of emotional distress, and negligence.

              On February 19, 2010, HEMIC filed two motions.            The

first, a Motion to Enforce Settlement was filed in the 2003 Case.

The second, a Motion to Enforce Settlement by Dismissing Action,

was filed in the 2009 Case.

              The circuit court held a consolidated hearing and

orally granted both motions on May 28, 2010.          The circuit court

entered two orders: (1) an “Order Granting Defendant HEMIC’s

Motion to Enforce Settlement” (Order Enforcing Settlement) in the

2003 Case, which enforced the Settlement Document as a binding

agreement; and (2) an “Order Granting Defendant HEMIC’s Motion to

Enforce Settlement by Dismissing Action” (Order Dismissing

Action), which dismissed the 2009 Case.         Judgment pursuant to the




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orders was entered on July 8, 2010.

                                    B.

              Jou filed separate appeals to the ICA of the Order

Enforcing Settlement and the Order Dismissing Action.            The

appeals, Appeal Nos. 30606 and 30607, were consolidated by the

ICA as Appeal No. 30606 (Consolidated 30606 Appeal).           However,

the ICA continued to refer to the original appeal numbers in

addressing and deciding the issues that pertained to each appeal

in its memorandum opinion and subsequent order pertaining to

costs.

              In Appeal No. 30606, Jou argued that the circuit

court’s Order Enforcing Settlement in the 2003 Case was contrary

to law.   Jou contended that the Settlement Document was merely a

proposal for a release that required the execution of a signed

release and indemnity agreement (indemnity agreement), and HEMIC

waived a material condition in the release by not pursuing the

execution of an indemnity agreement.        The ICA disagreed, holding

that the Settlement Document sufficiently represented the terms

of the settlement and a separate indemnity agreement was not

required.   Jou v. Argonaut Ins. Co., No. 30606, 2013 WL 6043901

at *2 (App. Nov. 15, 2013) (mem.).         The ICA therefore affirmed

the Order Enforcing Settlement.       Id.

              In Appeal No. 30607, Jou argued that the circuit


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court’s Order Dismissing Action in the 2009 Case was also in

error.   Jou contended that the circuit court erred by enforcing

the Settlement Document as a global release of claims that had

accrued after May 4, 2009.      Id.

               The ICA reviewed HEMIC’s Motion to Enforce

Settlement as a motion for summary judgment because it found the

Order Dismissing Action was based “in part on a substantive

determination as to the merits of the claims asserted in [the

2009 case].”   Id. at *3.     The ICA concluded summary judgment was

improper because HEMIC failed to establish that there were no

genuine issues of material fact that either Jou’s claims in the

2009 Case had accrued by the time the Settlement Document was

executed, or that the dismissed claims were precluded by the

Settlement Document.     Id. at *3-4.      Further, the ICA found that

the substantive merits in regards to Jou’s fraud claims were not

properly raised or addressed by the parties.          Id. at *4.    The ICA

therefore vacated the judgment entered by the circuit court and

the Order Dismissing Action.      Id. at *5.

                                      C.

               Following the ICA’s entry of judgment, Jou filed a

Request and Declaration of Counsel for Costs (Request for Costs).

                                      1.

               Jou requested reimbursement of $1,396.85 in costs


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associated with the Consolidated 30606 Appeal based on the

following breakdown:

             Item            Cost - 30606            Cost - 30607
             Filing Fees:    $275.00                 $275.00
             Transcript:     $151.83                 $291.80
             Copy:           $224.91                 $116.75
             USPS Postage:   $46.66                  $14.90
             Total:          $698.40                 $698.45

             In regards to Appeal No. 30607, which pertained to the

Order Dismissing Action in the 2009 Case, Jou argued that costs

should be awarded because the ICA ruled in his favor by vacating

the circuit court’s judgment in favor of HEMIC.

             In regards to Appeal No. 30606, which pertained to the

Order Enforcing Settlement in the 2003 Case, Jou argued that the

thrust of HEMIC’s Motion to Enforce Settlement was to achieve

dismissal of the tort claims in the 2009 Case.          Therefore,

according to Jou, the ICA’s decision vacating the judgment in

Appeal No. 30607 granted him “the remedy he sought (and obtained)

in [Appeal No. 30606]; that is, saving the [2009 Case] tort

claims from the effects of the previously signed settlement

document.”     Jou argued that he thereby was rendered the

prevailing party on the main issue in Consolidated Appeal 30606.

                                    2.

             On December 30, 2013 HEMIC filed an “Objection and Memo

in Opposition to [Jou’s] Request and Declaration of Counsel for

Costs.”   HEMIC argued that Jou would not be able to repudiate the


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Settlement Document on remand, and would be barred from filing

any claims to the extent that the claims accrued during the time

covered by the Settlement Document.

          HEMIC contended “the central issue in both appeals was

whether the parties had entered into an enforceable settlement.”

Because the Settlement Document was enforceable, HEMIC was the

“prevailing party” in both appeals.

          HEMIC further argued that the ICA’s affirmation that

the Settlement Document was enforceable was significant because

the circuit court, on remand, would determine when Jou’s claims

accrued and whether those claims were barred.          Similarly, HEMIC

argued that the settlement agreement would preclude Jou from

asserting future claims.3

                                    3.

          On January 6, 2014, Jou filed “[Jou’s] Reply to

[HEMIC’s] Objection and Memorandum in Opposition to [Jou’s]

Request and Declaration of Counsel for Costs.”          Jou argued HEMIC

failed to identify, or to prevail on, the disputed main issue in

Appeal Nos. 30606 and 30607, which was the 2009 tort action and

not the Settlement Document.      Jou also contended that HEMIC’s

underlying motivation for filing the Motion to Enforce Settlement

in the 2003 Case, more than six months after the filing of the

     3
          HEMIC did not otherwise object to specific costs itemized by Jou.


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complaint in the 2009 Case, was an attempt to rid itself of

potential liability resulting from the 2009 tort action, and not

a concern with the Settlement Document.

                                    4.

          On January 17, 2014, the ICA filed an “Order Denying

Petitioner’s Request and Declaration of Counsel for Costs” (Order

Denying Costs).    In denying the Request for Costs related to

Appeal No. 30606, the ICA held Jou was not the prevailing party.

The ICA explained that:

          On appeal, Appellant Jou had argued that the circuit court
          erred in upholding the settlement agreement as an effective
          agreement and release. This court determined Appellant
          Jou’s arguments were without merit, affirmed the circuit
          court, and thus Appellant Jou was not the prevailing party
          on appeal as to appeal No. 30606.

          In denying the Requests for Costs related to Appeal No.

30607, the ICA relied on Hawaiian Ass’n of Seventh-Day Adventists

v. Wong, 130 Hawai#i 36, 305 P.3d 452 (2013).         The ICA held a

prevailing party had yet to be determined and accordingly denied

the motion.   The ICA explained:

          In appeal No. 30607, we vacated the Judgment entered in [the
          2009 Case], as well as the [Order Dismissing Action], and
          remanded to the circuit court for further proceedings.
          Appellate costs are not awardable absent a prevailing party
          in the case. Hawaiian Ass’n of Seventh-Day Adventists v.
          Wong, 130 Hawai#i 36, 50, 305 P.3d 452, 466 (2013); SCWC-12-
          0000535 Mickelson v. United Servs. Auto. Ass’n, 2013 WL
          5509088 at *1. In Hawaiian Ass’n of Seventh-Day Adventist,
          the supreme court vacated this court’s order awarding costs
          on appeal “because a prevailing party has yet to be
          determined.” Id. Here, in appeal No. 30607, this court



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          remanded the case to the circuit court and no prevailing
          party has been determined. Pursuant to Hawaiian Ass’n of
          Seventh-Day Adventists, we thus deny Appellant Jou’s request
          for costs in appeal No. 30607.

(Emphases added).    Consequently, the ICA denied Jou’s Request for

Costs because “[a]ppellate costs are not awardable absent a

prevailing party in the case.”       The ICA filed a Judgment on

Appeal RE: Costs on January 21, 2014.

                                     D.

          Jou timely filed his Application for Writ of Certiorari

(Application) with this court on February 15, 2014.4           Jou

presents the following questions for review:

          Whether Schefke v. Reliable Collection Agency Ltd., 96 Haw
          408, 409, 32 P.3d 52 (2001) required the ICA to provide a
          readily discernible rationale for its denial of costs (based
          on no prevailing party)?

          Whether the ICA was required to base its denial of costs to
          petitioner Dr. Jou based on long-settled standards, restated
          by his court in Nelson v. Hawaiian Homes Comm’n, 130 Haw
          162, 166, 307 P.3d 142, 146 (2013)?

          Whether, on balance, Petitioner Dr. Jou was the prevailing
          party in ICA No. 30606, in that the entire proceeding,
          initiated by Respondent HEMIC to enforce a settlement
          agreement, was to bar Petitioner’s tort claims in No. 30607,
          arising from the settlement, including fraud?

          Whether, in ICA No. 30607, Petitioner is the prevailing
          party at the ICA level because, despite remand, the ICA
          vacated the Circuit Court’s dismissal?

                                     1.

          On the first issue, Jou argues the ICA’s sole legal

criterion in denying the Requests for Costs in the Consolidated


    4
           HEMIC did not file a response.


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30606 Appeal was that Jou was not the prevailing party or that no

prevailing party has been determined.        Jou contends that the ICA

was required to provide a readily discernible rationale for a

denial of costs, and no rationale is apparent from the record.

Because the ICA did not provide a readily discernible rationale

for its denial of costs, Jou argues the denial of costs in the

Consolidated 30606 Appeal should be remanded to the ICA.

                                    2.

          In regards to the denial of the Request for Costs in

Appeal No. 30606, Jou argues the ICA erred by failing to apply

the balancing test recognized by Hawai#i case law.          Jou contends

that he is “on-balance” the prevailing party and therefore

entitled to costs.    In support of his position, Jou advances

several arguments.

          First, Jou contends that the thrust of HEMIC’s Motion

to Enforce Settlement in the 2003 Case was to block the tort

claims in the 2009 Case.      Jou supports this argument by quoting

from HEMIC’s answering brief, which states that “Plaintiff Jou’s

filing of the underlying action is barred by the plain language

of the settlement agreement he signed.”         Jou maintains that

HEMIC’s focus was not on its own settlement agreement, but on

eliminating liability from the tort claims in the 2009 Case.                As

HEMIC’s liability under the 2009 Case was the main disputed issue


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in the Consolidated 30606 Appeal, Jou asserts that under the

ICA’s ruling in regards to Appeal No. 30606 (the 2003 Case), the

tort claims in the 2009 Case can now proceed.          Thus, Jou argues

that he prevailed as to the main issue in the Consolidated 30606

Appeal and is entitled to appellate costs in Appeal No. 30606.

          Second, Jou contends that the ICA failed to follow

Hawai#i case law in determining the prevailing party in a case:

“This court has previously given guidance on determining which

party prevailed in a case in which the relief granted was not

solely in favor of . . . the successful party in the case, based

on the pleadings and proof.”      Jou contends that, on balance, he

was the prevailing party in Appeal No. 30606.

          Third, Jou argues that “the ICA’s lack of guidance to

the trial court on remand is complicated by its reliance on

Hawaiian Ass’n of Seventh-Day Adventists v. Wong[.]           There, the

Hawaii Supreme Court stated ‘in light of our decision that

Paragraph 16 is ambiguous, we conclude that neither party had

prevailed on appeal.’”     Jou distinguishes Seventh-Day Adventists

because that case was remanded based on a finding of ambiguity,

which is missing in the instant case.        Here, Jou contends that he

“is not being placed back where he started; rather, the

settlement agreement the ICA upheld no longer bars his tort

claims against HEMIC in No. 30607.         [Jou] is substantially better


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off than when he started.”

                                    3.

          In regards to the denial of the Request for Costs in

Appeal No. 30607, Jou states that “where a party prevails on the

disputed main issue, even though not to the extent of his

original contention, he will be the successful party for the

purposes of taxing costs and attorneys’ fees.”          Jou concludes he

“should have been assigned the prevailing party status even

though there was a remand.”      Therefore, Jou contends that he is

entitled to costs in Appeal No. 30607.

                                    II.

          The questions presented by Jou relate to the

appropriate award of appellate costs pursuant to Hawai#i Rules of

Appellate Procedure (HRAP) Rule 39.

                                    A.

          As to the ICA’s denial of costs in Appeal No. 30607,

the core issue raised by Jou relates to the construction of HRAP

Rule 39 and the ICA’s application of Seventh-Day Adventists.

                                    1.

          HRAP Rule 39 provides, in relevant part:

          (a) Civil Costs; To Whom Allowed.  Except in criminal cases
          or as otherwise provided by law, if an appeal or petition is
          dismissed, costs shall be taxed against the appellant or
          petitioner upon proper application unless otherwise agreed
          by the parties or ordered by the appellate court; if a



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          judgment is affirmed or a petition denied, costs shall be
          taxed against the appellant or petitioner unless otherwise
          ordered; if a judgment is reversed or a petition granted,
          costs shall be taxed against the appellee or the respondent
          unless otherwise ordered; if a judgment is affirmed in part
          and reversed in part, or is vacated, or a petition granted
          in part and denied in part, the costs shall be allowed only
          as ordered by the appellate court. If the side against whom
          costs are assessed has multiple parties, the appellate court
          may apportion the assessment or impose it jointly and
          severally.

HRAP Rule 39(a) (2007) (emphasis added).

          A request for costs following an appellate judgment or

order pursuant to HRAP Rule 39(a) must necessarily conform to one

of the four categories set forth in the rule.          Under the first

three categories, costs are taxed: (1) against the appellant, if

the appeal is dismissed; (2) against the appellant/petitioner, if

the judgment is affirmed or the petition is denied; or (3)

against the appellee or respondent, if the judgment is reversed

or the petition granted.      HRAP Rule 39(a).     Under the fourth

category however, when the “judgment is affirmed in part and

reversed in part, or is vacated, or a petition granted in part

and denied in part, the costs shall be allowed only as ordered by

the appellate court.”     Id. (emphases added).

          HRAP Rule 39(a) therefore provides clear guidance for

the allowance of costs under the first three categories:

dismissal, reversal or affirmance.         However, under the fourth

category, costs are only allowed as ordered by the court.             When a

judgment is vacated, or a judgment or petition is either affirmed


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or granted in part, or reversed or denied in part, an award of

costs is subject to the discretion of the appellate court.

                                    2.

          The application of HRAP Rule 39(a)’s fourth category

was explained in Leslie v. Estate of Tavares:

          The intent of [HRAP Rule 39] is to allow the party
          prevailing on appeal to recover those costs reasonably
          incurred in prosecuting the appeal. Although this court did
          not “reverse” a circuit court’s “judgment,” but, rather,
          vacated the circuit court’s final order, the effect of the
          decision on appeal was to grant Leslie the remedy he sought,
          thereby causing him to “prevail” on appeal.

93 Hawai#i 1, 7, 994 P.2d 1047, 1053 (2000) (emphases added).

The Leslie court, therefore, reviewed the HRAP Rule 39 request

for costs based upon evaluating the remedy sought by the

appellant in conjunction with the remedy granted on appeal.

          In Nelson v. Hawaiian Homes Commission, this court

provided further guidance by defining “prevailing party”:

          The first step in analyzing whether Plaintiffs are entitled
          to attorneys’ fees (and costs) is to determine whether they
          are the prevailing party. The prevailing party is the one
          who prevails on the disputed main issue. Even if the party
          does not prevail to the extent of his original contention,
          he will be deemed to be the successful party for the purpose
          of taxing costs and attorney’s fees.

          The [] court is required to first identify the principle
          issues raised by the pleadings and proof in a particular
          case, and then determine, on balance, which party prevailed
          on the issues.

130 Hawai#i 162, 165, 307 P.3d 142, 145 (2013) (emphases added)

(citations, brackets, and quotation marks removed).           Under




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Nelson, even in cases where appellate relief is not granted

solely in favor of one party, a party may still be the prevailing

party for the purposes of an award of fees and costs if the party

is, on balance, the successful party on appeal.          Id. at 166, 307

P.3d at 146.

          Therefore, under HRAP Rule 39 and the decisions in

Leslie and Nelson, when a judgment is affirmed in part and

reversed in part, or is vacated, or a petition is granted in part

and denied in part, costs may be granted, subject to the

discretion of the appellate court to determine the party that, on

balance, prevailed on the main disputed appellate issue(s).

                                    3.

          Pursuant to Leslie and this court’s subsequent

decisions, costs under HRAP Rule 39(a)’s fourth category have

been routinely granted.

          In Leslie, the petitioner filed a notice of dismissal

with prejudice in the circuit court pursuant to a signed release

and settlement agreement, but later filed a motion to vacate the

notice of dismissal, which was denied by the circuit court.

Leslie, 93 Hawai#i at 3, 994 P.2d at 1049.         The petitioner in

Leslie raised three points of error in the underlying case.             This

court agreed with the first two points of error, but remanded for

further proceedings as to the third point of error.           Leslie v.


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Estate of Tavares, 91 Hawai#i 394, 396, 994 P.2d 1220, 1222

(1999).   Although the petitioner’s request for attorneys’ fees

was denied, the petitioner’s HRAP Rule 39 request for costs was

granted without objection from the respondent.           Leslie, 93

Hawai#i at 7-8, 994 P.2d at 1053-54.

           In Nelson v. University of Hawaii, the trial court

granted the defendant’s motion for judgment notwithstanding the

verdict, and entered judgment in favor of the defendant on all

counts.   99 Hawai#i 262, 264, 54 P.3d 433, 435 (2002).          This

court vacated the trial court’s judgment in part and remanded for

a new trial on three of the six counts.         Id.   Subsequently, the

plaintiff’s HRAP Rule 39 request for costs on appeal was granted

without objection from the defendant, although the request for

attorneys’ fees was denied.      Id.

           In Willis v. Swain, the plaintiff-appellant sought

uninsured motorist coverage under her personal automobile policy.

113 Hawai#i 246, 248, 151 P.3d 727, 729 (2006).          A motion for

summary judgment on the coverage issue filed by the defendant-

appellee was granted by the circuit court.         Id.   This court

vacated the circuit court’s decision and remanded for further

proceedings.   Id.   Subsequently, the plaintiff-appellant’s HRAP

Rule 39 request for costs was granted, without objection from the




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defendant-appellee.        Id. at 250, 151 P.3d at 731.

             In Kaleikini v. Yoshioka, the petitioner filed a

complaint seeking six counts of declaratory injunctive relief

against the City and County of Honolulu.            129 Hawai#i 454, 461,

304 P.3d 252, 259 (2013).         The circuit court granted summary

judgment in favor of the City.          Id. at 458, 304 P.3d at 256.            On

appeal, this court vacated summary judgment on four counts and

affirmed on two counts.        Id. at 461, 304 P.3d at 259.         Appellate

costs pursuant to HRAP Rule 39(a) were granted.             Id. at 476, 304

P.3d at 274.

             In Nelson v. Hawaiian Homes Commission, the circuit

court granted summary judgment in favor of the petitioners on two

of the four counts.        130 Hawai#i at 166, 307 P.3d at 146.           The

ICA vacated the circuit court’s order granting summary judgment.

Id.    The petitioners sought review in this court on one count.

Although this court held in favor of the petitioners, it

concluded that the respondents were the “prevailing party” for

purposes of appellate attorneys’ fees.            Id.   The respondents

filed a HRAP Rule 39 request for costs, but their request did not

include supporting documentation such as invoices, bills,

vouchers, and receipts.        Id. at 173, 307 P.3d at 153.         The

petitioners objected on the grounds that respondents’ request for




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costs failed to comply with HRAP Rule 39(d) governing the form of

the request for costs.     Id.   Respondents filed a Reply that

included supporting documentation, but this court dismissed the

request because HRAP did not allow an opposing party to file a

response to the Reply with objections to any of the itemized

costs.   However, the dismissal was made without prejudice to the

respondents, allowing them to renew their request for appellate

costs before the circuit court where the petitioners would be

able to file objections.      Id.

           Therefore, in situations in which a judgment is

affirmed in part and reversed in part, or is vacated, or a

petition granted in part and denied in part, courts have

routinely ordered an award of appellate costs to the party that

prevailed on the main disputed issue on appeal.

                                     4.

           Seventh-Day Adventists properly applied the

Leslie/Nelson rule.     In Seventh-Day Adventists, Appellant

Seventh-Day Adventists’ (SDA) complaint alleged five counts

seeking, inter alia, a declaratory judgment on count I.            130

Hawai#i at 41, 305 P.3d at 457.       Cross–Appellant Wong’s (Wong)

counterclaim alleged four counts.         Id.   The parties filed

multiple motions for summary judgment.          The circuit court granted

summary judgment: in favor of Wong on counts I-IV of the SDA


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complaint, in favor of SDA on count VI,5 and in favor of SDA on

the four counts in the counterclaim.         Id. at 43, 305 P.3d at 459.

             SDA appealed the circuit court’s judgment as to count I

of the complaint, and Wong appealed the circuit court’s judgment

as to counts I-III of the counterclaim.          Id. at 43-44, 305 P.3d

at 459-60.    The ICA reversed summary judgment as to count I of

the SDA complaint and remanded to the circuit court for further

proceedings, and affirmed summary judgment as to counts I-III of

Wong’s counterclaim.      Id. at 44, 305 P.3d at 460.        The ICA also

vacated the circuit court’s award of fees and costs to Wong.                 Id.

The ICA’s rulings were in favor of SDA on all issues presented to

it; therefore, at that point, SDA was the prevailing party on

appeal.

             SDA then filed a HRAP Rule 39 motion for attorneys’

fees and costs with the ICA.        Id.   Relying on the holding in

Leslie, the ICA denied attorneys’ fees, but granted appellate

costs.    Order Denying Request For Attorney’s Fees and Awarding

Costs in the Reduced Amount, at 2, Hawaiian Ass’n of Seventh-Day


     5
             The five counts in SDA’s complaint were numbered Counts I, II,
III, IV and VI. Seventh-Day Adventists, 130 Hawai#i at 41, 305 P.3d at 457.
Although the circuit court initially granted summary judgment in favor of SDA
on count VI, the circuit court apparently recognized that this ruling
contradicted its granting of summary judgment to Wong with regards to Count I
of the complaint. Thus, the circuit court later dismissed Count VI of the
complaint, and SDA did not appeal that dismissal. Seventh-Day Adventists, 130
Hawai#i at 43 n.6-7, 305 P.3d at 459 n.6-7.



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Adventists v. Wong, No. 28592, 2012 WL 1293093 (App. 2012)

(mem.), aff’d in part, vacated in part, 130 Hawai#i 36, 305 P.3d

452 (2013) (SCWC-28592 ICA Docket No. 63).         The ICA held that

“[a]n award of costs is appropriate, irrespective of the fact

that a ‘losing party’ cannot as yet be determined, because the

‘party [that] prevails on appeal’ can be determined.”            Id.

(emphasis added); see also Seventh-Day Adventists, 130 Hawai#i at

44, 305 P.3d at 460.

           In his application for certiorari to this court, Wong

contended that the ICA erred in: vacating the circuit court’s

grant of summary judgment in his favor on count I of the SDA

complaint; affirming summary judgment against him on counts I-III

of his counterclaim; and vacating the circuit court’s award of

his attorneys’ fees and costs at trial.         Id. at 44, 305 P.3d at

460.

           This court affirmed the ICA’s holding as to count I of

the SDA complaint, but for reasons other than those stated by the

ICA.   Id. at 50, 305 P.3d at 466.       This court also affirmed the

ICA’s ruling in favor of SDA on count I of the counterclaim, but

vacated the ICA’s judgment in favor of SDA on counts II and III

of Wong’s counterclaim.     Id.   Therefore, in the decision of this

court, SDA was denied summary judgment in its favor as to count I




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of the complaint, and “[i]n light of our decision that [the

relevant contract provision in Count I was] ambiguous,” this

court concluded “that neither party [] prevailed on appeal.”                  Id.

(emphasis added).

            This court then vacated the ICA’s order granting

appellate costs in favor of SDA, stating:

            [b]ecause SDA has not prevailed on appeal, however, we
            vacate the ICA’s order awarding costs to SDA. See Hawai#i
            Rules of Appellate Procedure Rule 39(a) (“[I]f a judgment is
            affirmed in part and reversed in part, or is vacated, or a
            petition granted in part and denied in part, the costs shall
            be allowed only as ordered by the appellate court.”).

Id. at 50, 305 P.3d at 466 (emphasis added).            Therefore, this

court determined that SDA was not entitled to recover appellate

costs because it had not, on balance, prevailed on the main

disputed issues on appeal.6




      6
            Although the opinion in Seventh-Day Adventists did not explain its
rationale for vacating the ICA award of costs to SDA, HRAP Rule 39(a) provides
that an allowance of costs is awarded in the discretion of the appellate
court. A statement of a rationale is not specifically required under HRAP
Rule 39(a), however it is noted that SDA’s position on appeal in regards to
count I of the complaint was that there were no disputed facts and it was
entitled to summary judgment as a matter of law. This court determined there
were disputed issues of material fact as to SDA’s count I, and vacated summary
judgment in favor of SDA on counts II and III of Wong’s counterclaim. Thus,
there was a manifest basis for this court, in its exercise of discretion, to
conclude SDA did not, on balance, prevail on the main disputed issues on
appeal and to vacate the award of costs.



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                                    5.

            In the present case, the ICA misapplied Seventh-Day

Adventists.    The ICA denied appellate costs to Jou by apparently

relying on language in the section of Seventh-Day Adventists

entitled Conclusion that summarized the holdings of the court.

The sentence states “[w]e also vacate the ICA’s order awarding

costs on appeal to SDA because a prevailing party has yet to be

determined.”     Seventh-Day Adventists, 130 Hawaii at 50, 305 P.3d

at 466.    The sentence does not state that a prevailing party has

yet to be determined in the case.        However, the ICA Order Denying

Costs to Jou reads that phrase into the Conclusion from Seventh-

Day Adventists, stating “[a]ppellate costs are not awardable

absent a prevailing party in the case,” (emphasis added), citing

to the Conclusion of Seventh-Day Adventists as support for this

proposition.

            Any perceived ambiguity in the Conclusion section of

Seventh-Day Adventists is resolved by the explicit holding of the

opinion.   In the section of the opinion entitled “Attorneys’ Fees

and Costs,” it is clearly stated that “[b]ecause SDA has not

prevailed on appeal, however, we vacate the ICA’s order awarding

costs to SDA.”    Seventh-Day Adventists, 130 Hawai#i at 50, 305



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P.3d at 466 (emphasis added).        The opinion specifically states

the following:

            In light of our decision that Paragraph 16 is ambiguous, we
            conclude that neither party has prevailed on appeal . . . .
            Because SDA has not prevailed on appeal, however, we vacate
            the ICA’s order awarding costs to SDA. See Hawai#i Rules of
            Appellate Procedure Rule 39(a) (“[I]f a judgment is affirmed
            in part and reversed in part, or is vacated, or a petition
            granted in part and denied in part, the costs shall be
            allowed only as ordered by the appellate court.”)

Id. (emphases added).      Additionally, interpreting the holding of

Seventh-Day Adventists in the manner adopted by the ICA would

contravene HRAP Rule 39(a), Leslie, Nelson, and prior decisions

of this court, which Seventh-Day Adventists did not profess to

overrule.    Therefore, the Leslie/Nelson rule is dispositive, and

the ICA’s Order Denying Costs to Jou must be vacated as it

applied an erroneous legal standard.

                                     6.

            The ICA granted Jou the sole remedy he sought in Appeal

No. 30607, which was to vacate the circuit court’s judgment

entered by the circuit court and the order dismissing the 2009

Case.   This disposition falls squarely within the fourth category

of HRAP Rule 39(a), which states that “if a judgment . . . is

vacated . . . the costs shall be allowed only as ordered by the

appellate court.”     HRAP Rule 39(a).      Consistent with our past




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decisions, Jou is the prevailing party on the singular disputed

issue on appeal because the 2009 Case has been reinstated, and

Jou is therefore eligible for an award of costs related to Appeal

No. 30607 including: filing costs of $275, transcript costs of

$221.52,7 copying costs of $116.75, and postage costs of $14.90,

for a total award in the amount of $628.17.

                                     B.

           Jou also contends that he is entitled to an award of

costs in regards to Appeal No. 30606.         Jou argues that the sole

purpose of HEMIC’s Motion to Enforce Settlement in the 2003 Case

was to bar Jou’s tort claims in the 2009 Case and because the

ICA’s decision allowed the 2009 Case to proceed, Jou was “on

balance” the prevailing party.        Jou also contends that the ICA

was required to provide a readily discernible rationale for the

denial of costs.

                                     1.
     7
            Jou requested an award of $291.80 in transcript costs associated
with Appeal No. 30607. Jou submitted documentation demonstrating amounts paid
for transcript costs, including invoices for $151.83 and $139.37, totaling
$291.20. However, the receipt for $139.37 indicates that the cost was for
both the 2003 Case and the 2009 Case, although Jou only assigned the costs to
Appeal No. 30607 (relating to the 2009 Case). In contrast, the receipt for
transcript costs of $151.83 indicates that it was entirely for the 2009 case.
In its memorandum in opposition to Jou’s Request for Costs, HEMIC did not
object specifically to the transcript costs. Therefore, HRAP Rule 39 allows
an award of costs for $151.83 and one-half of the $139.37 amount, for a total
award of $221.52.



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             Jou argues the ICA erred by failing to apply the

standards stated in Nelson v. Hawaiian Homes Commission.            Nelson

provides that in cases where appellate relief is not granted

solely in favor of one party, a party may still be the prevailing

party for the purposes of an award of fees and costs if the party

is, on balance, the successful party on appeal.          Nelson, 130

Hawai#i at 166, 307 P.3d at 146.

             In his first point of error to the ICA in regards to

Appeal No. 30606, Jou contended that “the circuit court erred in

upholding the [Settlement Document] as an effective settlement

agreement and release.”     Jou, 2013 WL 6043901, at *2.         However,

the ICA’s holding in Appeal No. 30606 upheld the circuit court’s

determination that the Settlement Document was an effective

agreement.    Id. at *2 (“the [Order Enforcing Settlement] is

therefore affirmed.”).     As Jou was the appellant and the judgment

was affirmed, Jou is not entitled to be awarded costs related to

Appeal No. 30606.    HRAP Rule 39(a) (“[I]f a judgment is affirmed

. . . costs shall be taxed against the appellant unless otherwise

ordered”).    Therefore, the ICA’s decision denying costs to Jou

related to Appeal No. 30606 is affirmed.

                                    2.



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           Jou also argues that the ICA was required to provide a

“readily discernible rationale” for its denial of costs, pursuant

to Schefke v. Reliable Collection Agency Ltd., 96 Hawai#i 408, 32

P.3d 52 (2001).

           The “readily discernible rationale” principle in

Schefke was applied in the context of statutory fee awards in

employment discrimination cases under Hawaii Revised Statutes

§§ 378-5(c) and 388-11(c).      Schefke, 96 Hawai#i at 458-59, 32

P.3d at 102-03.    The principle has not previously been applied to

a HRAP Rule 39(a) request for costs.        Additionally, the ICA

provided a “readily discernible rationale” for denying Jou’s

requests for costs when it stated “[t]his court determined

[Jou’s] arguments were without merit, affirmed the circuit court,

and thus [Jou] was not the prevailing party on appeal as to

Appeal No. 30606.”    [ICA Dkt 84:2]

                            III. CONCLUSION

           The ICA’s Order Denying Costs filed January 17, 2014

and Judgment on Appeal RE: Costs filed January 21, 2014 are

vacated.   In regards to Appeal No. 30607, costs in favor of Jou

in the amount of $628.17 are awarded against HEMIC.           In regards

to Appeal No. 30606, Jou’s request for an award of costs is


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denied.



Stephen M. Shaw                        /s/ Paula A. Nakayama
for petitioner
                                       /s/ Sabrina S. McKenna

                                       /s/ Richard W. Pollack

                                       /s/ Rom A. Trader

                                       /s/ R. Mark Browning




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