HB 981: RELATING TO ATTORNEYS' FEES.

A BILL FOR AN ACT

RELATING TO ATTORNEYS' FEES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  The legislature finds that attorney's fees can cost a prevailing party a significant portion of their settlement amount or monetary award.  In some cases, a prevailing party may only receive sixty to sixty-five per cent of the settlement amount or monetary award after attorney's fees and costs are deducted.  For a plaintiff that is suing for construction defects, a significant reduction in the settlement amount or monetary award may not leave the plaintiff with enough money to cover the necessary repair costs.  In that situation, the plaintiff may end up in a worse position than before they initiated the lawsuit and publicly disclosed the existence of the construction defects.  A property with known construction defects may become significantly devalued, which will impact the plaintiff's ability to sell or refinance the property.

     The purpose of this Act is to limit the attorneys' fees and costs in settlement agreements relating to, or actions brought as a result of, construction defects to ensure that plaintiffs can better afford the repair costs.

     SECTION 2.  Chapter 605, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§605-     Attorney's fees in disputes relating to construction defects; settlements; limitation.  (a)  Notwithstanding any other law to the contrary, in matters arising from a dispute relating to construction defects that are settled, practitioners representing plaintiffs shall be entitled to their accrued attorney's fees and costs not to exceed twenty-five per cent of the recovery amount.

     (b)  For the purposes of this section, "construction defect" means a deficiency in, or arising out of, the design, specifications, surveying, planning, construction, supervision, or observation of construction of a building or structure."

     SECTION 3.  Chapter 607, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§607-     Attorney's fees in actions alleging construction defects; prevailing plaintiff; limitation.  (a)  Notwithstanding any other law to the contrary, in actions alleging construction defects, the court shall deny the awarding of accrued attorney's fees and costs to a prevailing plaintiff's attorney in excess of twenty-five per cent of the recovery amount.

     (b)  For the purposes of this section, "construction defect" has the same meaning as in section 605-   ."

     SECTION 4.  This Act shall not be applied so as to impair any contract existing as of the effective date of this Act in a manner violative of either the Constitution of the State of Hawaii or Article I, section 10, of the United States Constitution.

     SECTION 5.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 6.  New statutory material is underscored.

     SECTION 7.  This Act shall take effect on July 1, 3000.

Report Title:

Settlements; Civil Actions; Attorney's Fees and Costs; Construction Defects

Description:

Limits the accrued attorneys' fees and costs in matters relating to, or actions brought as a result of, construction defects to twenty-five per cent of the recovery amount.  Effective 7/1/3000.  (HD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

RELATING TO ATTORNEYS' FEES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  The legislature finds that attorney's fees can cost a prevailing party a significant portion of their settlement amount or monetary award.  In some cases, a prevailing party may only receive sixty to sixty-five per cent of the settlement amount or monetary award after attorney's fees and costs are deducted.  For a plaintiff that is suing for construction defects, a significant reduction in the settlement amount or monetary award may not leave the plaintiff with enough money to cover the necessary repair costs.  In that situation, the plaintiff may end up in a worse position than before they initiated the lawsuit and publicly disclosed the existence of the construction defects.  A property with known construction defects may become significantly devalued which will impact the plaintiff's ability to sell or refinance the property.

     The purpose of this Act is to limit the attorneys' fees in settlement agreements relating to, or actions brought as a result of, construction defects to ensure that plaintiffs can better afford the repair costs.

     SECTION 2.  Chapter 605, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§605-     Attorney's fees in settlements relating to construction defects; limitation.  (a)  Notwithstanding any other law to the contrary, practitioners shall limit the amount of attorney's fees in any settlement agreement arising from a dispute relating to construction defects to ensure that the plaintiff receives an amount that is at least ninety per cent of the repair cost for the construction defect, after attorney's fees and costs, if any, are deducted.

     (b)  For the purposes of this section, "construction defect" means a deficiency in, or arising out of, the design, specifications, surveying, planning, construction, supervision, or observation of construction of a building or structure."

     SECTION 3.  Chapter 607, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§607-     Attorney's fees in actions brought as a result of construction defects; limitation.  (a)  Notwithstanding any other law to the contrary, a court shall limit the amount of attorney's fees allowed or awarded in actions brought as a result of construction defects to ensure that the prevailing plaintiff receives monetary damages in an amount that is at least ninety per cent of the repair cost for the construction defect, after attorney's fees and costs, if any, are deducted.

     (b)  For the purposes of this section, "construction defect" has the same meaning as in section 605-   ."

     SECTION 4.  This Act shall not be applied so as to impair any contract existing as of the effective date of this Act in a manner violative of either the Constitution of the State of Hawaii or Article I, section 10, of the United States Constitution.

     SECTION 5.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 6.  New statutory material is underscored.

     SECTION 7.  This Act shall take effect upon its approval.

Report Title:

Settlements; Civil Actions; Attorneys' Fees; Construction Defects

Description:

Limits the attorneys' fees in settlement agreements relating to, or actions brought as a result of, construction defects to ensure that plaintiffs receive an amount that is at least ninety per cent of the repair cost for the construction defect.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

STAND. COM. REP. NO.  429

Honolulu, Hawaii

                , 2025

RE:   H.B. No. 981

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

     Your Committee on Consumer Protection & Commerce, to which was referred H.B. No. 981 entitled:

"A BILL FOR AN ACT RELATING TO ATTORNEYS' FEES,"

begs leave to report as follows:

     The purpose of this measure is to limit attorneys' fees in settlement agreements relating to, or actions brought as a result of, construction defects to ensure that plaintiffs can better afford the repair costs.

     Your Committee received testimony in support of this measure from D.R. Horton; Hawaii Laborers and Employers Cooperation and Education Trust; Gentry Homes, Ltd.; Stanford Carr Development, LLC; Building Industry Association of Hawaii; and one individual.  Your Committee received testimony in opposition to this measure from Kasdan Turner Thomson Booth, LLLC; and two individuals.

     Your Committee finds that attorney's fees can cost a prevailing party a significant portion of the party's settlement amount or monetary award.  In some cases, a prevailing party may only receive sixty to sixty-five percent of the settlement amount or monetary award after attorney's fees and costs are deducted.  This is particularly concerning if the claim is based on a construction defect since a significant reduction in the settlement amount or monetary award may not leave the plaintiff with enough money to cover the necessary repair costs.  In such cases, the plaintiff may actually be in a worse position than before the suit.  This measure limits the attorney's fees in cases with construction defect claims to ensure that plaintiffs receive a greater portion of their settlement amount or monetary award.

     Your Committee has amended this measure by:

     (1)  Specifying that attorneys are entitled to their accrued attorney's fees and costs not to exceed twenty-five percent of the recovery amount, rather than specifying that plaintiffs receive ninety percent of the repair cost;

     (2)  Changing the effective date to July 1, 3000, to encourage further discussion; and

     (3)  Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.

     As affirmed by the record of votes of the members of your Committee on Consumer Protection & Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 981, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 981, H.D. 1, and be referred to your Committee on Judiciary & Hawaiian Affairs.

Respectfully submitted on behalf of the members of the Committee on Consumer Protection & Commerce,