## Facts

- A property owner rented a Honolulu residence through his daughter acting as his agent.
- The tenant negotiated to rent the owner’s house for one year at a reduced rate in exchange for making improvements and was given an option for one additional year.
- The tenant provided a deposit and a signed letter of intent that misstated the property address, while otherwise describing a one-year term with a one-year option.
- The tenant later drafted a formal lease identifying the correct property but inserted a renewal option “in perpetuity,” materially expanding his rights beyond the parties’ agreed terms.
- The agent signed the lease in haste after the tenant pressed for quick execution and did not notice the perpetual-renewal language.
- After taking possession, the tenant made extensive improvements and asserted long-term rights based on the perpetual-renewal clause.
- The owner sued for fraud; the tenant counterclaimed seeking reformation in his favor and damages.
- After a bench trial, the court found the tenant committed fraud, reformed the lease to reflect the actual agreement, and awarded the owner $1,800 compensatory damages and $20,000 punitive damages.

## Issues

1. Whether the evidence supported the trial court’s finding that the tenant committed fraud in procuring and drafting the rental documents.
2. Whether reformation of the lease and awards of compensatory and punitive damages were proper remedies for the proven fraud.

## Decision

- The Supreme Court of Hawaii affirmed the judgment.
- The court upheld the trial court’s fraud findings, including that the tenant used document misstatements and execution tactics to obtain unbargained-for perpetual renewal rights.
- The court upheld reformation of the lease to conform to the parties’ actual agreement.
- The court upheld the damages awards of $1,800 compensatory and $20,000 punitive.

## Legal Principles

- Appellate review of bench-trial findings is deferential; factual findings, including credibility determinations, are not disturbed unless clearly erroneous.
- Fraud may be established by proof of intentional misrepresentation or concealment of material terms in transaction documents, intended to induce reliance, causing resulting harm.
- A court may reform a written instrument when, due to fraud or inequitable conduct, it does not reflect the parties’ true agreement.
- Punitive damages may be awarded for intentional fraud when the defendant’s conduct is sufficiently willful or aggravated, including manipulative drafting and concealment of material contract terms.

## Conclusion

The court affirmed that a tenant who intentionally misstates or conceals material lease terms to obtain expanded renewal rights can be found liable for fraud, allowing equitable reformation of the lease to match the actual bargain and supporting compensatory and punitive damages.


Kang v. Harrington, 587 P.2d 285 (Haw. 1978)