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Oral Argument Before the Hawaii Supreme Court–No. SCWC-16-0000712

No. SCWC-16-0000712, Thursday, October 31, 2019, 10 a.m.

GRACE CHEN, Respondent/Plaintiff-Appellee, vs. JONATHAN WILLIAM MAH, D.D.S.; JONATHAN MAH, DDS, INC., a Hawaii corporation, Petitioners/Defendants-Appellants.

The above-captioned case has been set for argument on the merits at:

Supreme Court Courtroom
Ali iolani Hale, 2nd Floor
417 South King Street
Honolulu, HI 96813

Attorney for petitioner:

Mark G. Valencia of Case Lombardi & Pettit, A Law Corporation

Attorney for respondent:

Dennis W. King of Deeley, King, Pang & Van Etten

NOTE: Order accepting Application for Writ of Certiorari, filed 08/28/19.

COURT: Recktenwald, C.J., Nakayama, McKenna, Pollack, and Wilson, JJ.

[ Listen to the entire audio recording in mp3 format ]

Brief Description:

This case concerns a compensation dispute between an independent contractor dentist, Respondent/Plaintiff-Appellee Grace Chen (“Chen”), and the corporation and shareholder dentist that retained her services, Petitioners/Defendants-Appellants Jonathan Mah, DDS, Inc. (“Corporation”) and Jonathan Mah, D.D.S. (“Mah”) (collectively, “Defendants”) based on an oral agreement between Chen and Mah. Upon Chen’s motion, default was promptly entered. Approximately eight months later, after obtaining counsel, Defendants moved to set aside the entry of default. Relying on BDM, Inc. v. Sageco, Inc., 57 Haw. 73, 549 P.2d 1147 (1976), the circuit court denied Defendants’ motion, but permitted Defendants to file an answer as to the issue of damages only. Over one year after the circuit court had denied Defendants’ motion to set aside the entry of default, default judgment as to certain claims was entered against Defendants, and a bench trial held regarding damages for the remaining claims.

Defendants unsuccessfully appealed to the ICA the circuit court’s denial of Defendants’ motion to set aside entry of default, and their motion for reconsideration and/or for a new trial. See Chen v. Mah, CAAP-16-0000712 (App. Mar. 14, 2019) (SDO). Defendants timely filed an Application for a Writ of Certiorari (“Application”) on June 27, 2019 from the May 3, 2019 Judgment on Appeal entered by the ICA pursuant to its SDO.

Defendants presented the following five questions in their Application:

1. Did the ICA gravely err in failing to set aside the circuit court’s entry of default, where (1) the record shows the circuit court failed to analyze all twelve causes of action in the Complaint regarding meritorious defenses and the record contains substantial evidence of a meritorious defense to one or more causes of action; and (2) the circuit court failed to consider the lulling of a pro se party into inaction by engaging in months of discovery and communications before and after obtaining an entry of default, then using a long delay to help justify a purported failure to defend the case.

 2. Did the ICA gravely err in creating new law in Hawaii by affirming the circuit court’s finding of a fiduciary relationship in an independent contractor relationship?

3. Did the ICA gravely err in creating new law in Hawaii by permitting the circuit court to apply the law regarding employers and employees to an independent contractor relationship?

4. Did the ICA gravely err in allowing the circuit court to pierce the corporate veil and hold a shareholder liable for the purported acts of a corporation without any allegation or finding of alter ego/piercing the corporate veil?

5. Did the ICA gravely err in adopting scripted findings that turned what amounted to an advocate’s trial brief into findings of [f]act and conclusions of law?

Certiorari was granted on August 28, 2019 and the parties were ordered to file supplemental briefs addressing the following question:

Is a movant filing a motion to set aside entry of default under Hawai i Rules of Civil Procedure Rule 55(c) required to show (1) that the non-defaulting party will not be prejudiced by the reopening, (2) that the defaulting party has a meritorious defense, and (3) that the default was not the result of inexcusable neglect or a wilful act?