A Hawaii court recently ruled in a case involving Hai Run LLC, a limited liability corporation, and its members, Michelle Zhang and Aiwu Liu. The Intermediate Court of Appeals decided to vacate a previous ruling that barred Zhang from testifying at trial. This decision affects the ongoing legal dispute between the members of the LLC and highlights the importance of fair trial procedures.

The case, Hai Run LLC v. Liu, was filed under docket number CAAP-25-0000249. The court's ruling was made on September 29, 2026, and it has significant implications for the parties involved. The court's decision emphasizes the need for proper legal procedures and the rights of individuals in civil cases.

Background

The dispute centers around Hai Run LLC, where Michelle Zhang is a member and Aiwu Liu serves as the manager-member. Zhang filed a lawsuit against Liu on November 22, 2021, claiming that Liu had fraudulently deprived her of her interest in the LLC. Liu responded by counterclaiming against Zhang and also filing a third-party complaint against Zhang's husband, Richard Wu.

The case progressed through the court system, culminating in a jury-waived trial set for July 8, 2024. However, complications arose when Liu sought to bar Zhang from testifying at trial. This motion was granted on the first day of trial, leading to further legal challenges from Zhang and Wu.

The Ruling

The Intermediate Court of Appeals ruled that the previous decision to bar Zhang from testifying was excessive. The trial court had initially imposed this sanction due to Zhang's failure to cooperate during her deposition, which was deemed necessary for Liu to prepare for trial. The court found that Zhang had not provided sufficient evidence for her claims of illness that prevented her from completing her deposition.

The court ruled, "the trial court exceeded its discretion by precluding Zhang from testifying at all during trial."

The judges on the panel included Presiding Judge Keith K. Hiraoka, Associate Judge Clyde J. Wadsworth, and Associate Judge Sonja M.P. McCullen. They determined that the trial court should have considered lesser sanctions before completely barring Zhang from testifying.

Impact

This ruling has significant implications for the ongoing legal battle between Zhang and Liu. By vacating the previous decision, the court has allowed Zhang the opportunity to present her case. This decision reinforces the principle that all parties in a legal dispute should have the chance to present their evidence and arguments.

The ruling also sets a precedent regarding the handling of sanctions in civil cases. It emphasizes that courts must consider less severe measures before imposing drastic actions that can effectively dismiss a party's claims without a trial. This case serves as a reminder of the importance of due process in legal proceedings.

What's Next

The case has been remanded to the circuit court for further proceedings consistent with the appellate court's ruling. It remains to be seen how the lower court will proceed with the case now that Zhang is allowed to testify. There are no indications that this ruling will be appealed further at this time.