NO. SCWC-19-0000261, Thursday, November 21, 2024, 9 a.m., Loyalty Development v. Ching

LOYALTY DEVELOPMENT COMPANY, LTD., Respondent/Plaintiff-Appellee, vs. WALLACE S.J. CHING, INDIVIDUALLY AND IN HIS CAPACITY AS A DIRECTOR OF LOYALTY DEVELOPMENT COMPANY, LTD., Petitioner/Defendant-Appellant.

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

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

The oral argument will also be livestreamed for public viewing via the Judiciary’s YouTube channel at YouTube.com/hawaiicourts and ʻŌlelo Community Television olelo.org/tv-schedule/.

Attorneys for Petitioner/Defendant-Appellant WALLACE S.J. CHING, individually and in his capacity as a DIRECTOR OF LOYALTY DEVELOPMENT CO., LTD.:   
     Ward Jones of Bervar & Jones; Edmund K. Saffery and Deirdre Marie-Iha of Goodsill Anderson Quinn & Stifel

Attorneys for Respondent/Plaintiff-Appellee LOYALTY DEVELOPMENT CO., LTD.:
     Bert T. Kobayashi, Jr., Jonathan S. Moore and Caycie K. Gusman Wong of Kobayashi, Sugita & Goda, LLP

NOTE: Order accepting Application for Writ of Certiorari, filed 10/03/24.

COURT: Recktenwald, C.J., McKenna, Eddins, Ginoza, and Devens, JJ.

Brief Description:

This case involves a dispute over attorneys’ fees between Loyalty Development Company, Ltd. (Loyalty) and one of its corporate directors, Wallace S.J. Ching.  In 2016, Loyalty filed a claim for declaratory judgment against Ching in his capacity as director.  The circuit court dismissed the claim without prejudice.  Following dismissal, Ching requested that Loyalty indemnify and reimburse him for reasonable expenses incurred in connection with his defense.  Loyalty retained independent counsel to render a decision on Ching’s request and, per the independent counsel’s recommendation, issued Ching a payment of $177,755.43.

Returning to the circuit court, Ching filed a motion for fees incurred in obtaining indemnification (“fees on fees”) under Loyalty’s Articles of Association and the Hawai‘i Business Corporation Act, Hawai‘i Revised Statutes (HRS) chapter 414.  The circuit court denied Ching’s motion, finding that he was not entitled to additional recovery beyond the $177,755.43 he had already accepted from Loyalty.  The Intermediate Court of Appeals (ICA) affirmed that conclusion.  On certiorari, Ching asserts that he is entitled to mandatory indemnification under HRS § 414-243 and that the scope of that entitlement includes the recovery of “fees on fees.”