Hawaiʻi Supreme Court Recasts Punitive-Damages Doctrine and Rejects “Kinship” Fiduciary Duty – A Commentary on Guieb v. Guieb (2025)

1. Introduction

Guieb v. Guieb, SCWC-20-0000727 (July 1 2025), is a milestone decision from the Hawaiʻi Supreme Court that does three things of statewide—and potentially national—significance:

1. It jettisons the century-old “malice–wantonness–oppressiveness” formulation for punitive damages and adopts the Restatement (Third) of Torts § 39 standard.
2. It clarifies standing under Hawaiʻi’s consumer-protection statutes, distinguishing UDAP from UMOC claims.
3. It expressly refuses to impose a freestanding fiduciary duty based solely on sibling status, rejecting the requested “kinship duty.”

The case arose out of a bitter business breakup between two brothers—Roland and Robert Guieb—who jointly owned “Exhaust Systems Hawaii.” Their dispute spawned derivative and individual claims ranging from fraud to trade-name infringement. Three rulings by the trial court (partial summary judgment on a deceptive-trade count, dismissal of punitive damages, and dismissal of the kinship-duty count) were appealed, partially reversed by the Intermediate Court of Appeals (ICA), and then reviewed on certiorari by the Supreme Court.

2. Summary of the Judgment

• Count 12 (Trade-Name / Unfair Competition): Summary judgment for Robert reversed. While Roland lacks UDAP standing (HRS § 480-2(d)), he may proceed to trial on UMOC (HRS § 480-2(e)) and deceptive-trade-practice (HRS § 481A-3) theories because evidence of “customer confusion” exists.
• Punitive Damages: Trial court erred in granting judgment as a matter of law (JMOL). The Supreme Court installs a new substantive test (Restatement § 39) and holds that Roland adduced enough evidence for a jury to decide punitive damages.
• Kinship Fiduciary Duty (Count 4): The Court declines to recognize any automatic fiduciary duty arising solely from a sibling relationship; summary judgment for Robert reinstated.

3. Analysis

3.1 Precedents Cited and Their Influence

Three precedent streams shaped the decision:

1. Punitive-Damages Line: Bright v. Quinn (1911) → Masaki v. GM (1989) had required “malice or wantonness” proved by clear-and-convincing evidence. The Court now realigns with modern ALI thinking, mirroring jurisdictions that have updated punitive-damages doctrine (e.g., ALI Restatement (Third) § 39, tentatively approved 2024).
2. Consumer-Protection Standing: Hawaii Med. Ass’n v. HMSA (2006) & Davis v. Four Seasons (2010) distinguished between consumer-only UDAP claims and broader UMOC claims. Guieb rigorously enforces this dichotomy.
3. Confidential-Relationship / Constructive-Trust Cases: Kam Oi Lee v. Fong Wong (1976) recognized fiduciary-like duties when property is conveyed in reliance on familial trust. The Court reads Kam Oi Lee narrowly and refuses to extend its reasoning to ordinary sibling business disputes.

3.2 Legal Reasoning

3.2.1 Adoption of Restatement § 39

The Court criticizes archaic terms—“willful,” “wanton,” “oppressive,” “malicious”—as confusing to juries and analytically fuzzy. By adopting § 39 it:

• Anchors liability on intent to harm or reckless disregard of a substantial risk, supplemented by a residual “outrageous or malicious” clause.
• Maintains the clear-and-convincing evidentiary threshold established in Masaki.
• Clarifies that compensatory damages are not a necessary predicate—recoverable tort liability (including nominal or equitable relief) suffices.
• Leaves to the jury, not the judge, the task of deciding whether the clear-and-convincing threshold is met once sufficient evidence exists.

3.2.2 Standing Under HRS § 480-2

Subsection (d) restricts UDAP claims to consumers, the Attorney General, or the OCP Director; subsection (e) is broader, allowing “any person” to sue for unfair methods of competition. Roland, a non-consumer competitor, therefore lacked UDAP standing but could press UMOC claims. The Court stresses that the same factual conduct can support both UMOC (HMA v. HMSA) and deceptive-trade claims under § 481A-3.

3.2.3 No Kinship Duty

While a constructive trust may arise from a “confidential relationship” within a family (Kam Oi Lee), mere sibling status in a business venture does not create an independent fiduciary duty. The Court notes that sophisticated adults, relatively equal in experience, can protect themselves via corporate governance mechanisms already imposing fiduciary duties (e.g., duty of loyalty to the corporation).

3.3 Likely Impact on Hawaiʻi Law and Beyond

• Punitive-Damages Litigation: Jury instructions will be rewritten, briefs reshaped, and trial judges will evaluate JMOL motions under the Restatement test. The decision may influence Pacific-Rim jurisdictions that look to Hawaiʻi for guidance.
• Business-Family Disputes: Litigants cannot rely on “kinship” to expand fiduciary-duty theories; they must plead traditional duties (corporate, partnership, trustee) or prove specific confidential-relationship facts.
• Consumer-Protection Practice: Practitioners must plead standing with precision—non-consumer plaintiffs should invoke § 480-2(e) (UMOC) and/or § 481A, not UDAP.

4. Complex Concepts Simplified

Punitive Damages

Money awarded in addition to compensatory damages to punish egregious conduct and deter future wrongdoing. After Guieb, they require proof of intent to harm, reckless disregard of a substantial risk, or other outrageous/malicious behavior—proved clearly and convincingly.

UDAP vs. UMOC

Both arise under HRS § 480-2. UDAP (Unfair/Deceptive Acts or Practices) protects consumers; only consumers or government enforcers may sue. UMOC (Unfair Methods of Competition) is broader and may be asserted by competitors or any “person.”

Deceptive Trade Practices (HRS § 481A-3)

Focuses on business conduct—such as “passing off” goods as another’s—that is likely to confuse the public. No consumer-only standing limitation.

Summary Judgment (MPSJ) vs. Judgment as a Matter of Law (JMOL)

Summary judgment is decided before trial on undisputed facts; JMOL is decided during/after trial when one side lacks evidence for a jury finding.

Clear and Convincing Evidence

A level of proof between “preponderance” and “beyond a reasonable doubt”—the fact-finder must be “firmly convinced” of the truth of the allegations.

5. Conclusion

Guieb v. Guieb ushers Hawaiʻi punitive-damages jurisprudence into the twenty-first century, aligning it with the ALI’s modern mental-state taxonomy and simplifying jury tasks. Simultaneously, the Court cabins consumer-protection standing and declines to manufacture new fiduciary duties based on sibling ties alone. Practitioners must now recalibrate pleadings, evidentiary strategies, and jury instructions to the Restatement (Third) standard, and family-business litigants must ground fiduciary claims in concrete legal relationships, not mere blood bonds. The decision thus marks a significant doctrinal reset with ripple effects in tort, corporate, and consumer-protection law.