Green Energy Team LLC v. Kauai Island Utility Cooperative

• Court: Hawaii Intermediate Court of Appeals
• Decided: April 11, 2025
• Docket: CAAP-22-0000071
• Status: Published

Opinion

NOT FOR PUBLICATION IN WEST'S HAWAI‘I REPORTS AND PACIFIC REPORTER

Electronically Filed Intermediate Court of Appeals CAAP-XX-XXXXXXX 11-APR-2025 08:10 AM Dkt. 55 SO

NO. CAAP-XX-XXXXXXX

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI‘I

GREEN ENERGY TEAM LLC, Claimant-Appellee, v. KAUAI ISLAND UTILITY COOPERATIVE, Respondent-Appellant

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT (CASE NO. 1CSP-XX-XXXXXXX)

SUMMARY DISPOSITION ORDER (By: Leonard, Acting Chief Judge, Wadsworth and Guidry, JJ.)

Respondent-Appellant Kauai Island Utility Cooperative

(KIUC) appeals from the Circuit Court of the First Circuit's

(circuit court)1 (1) Order Denying KIUC's Motion to Dismiss Green

Energy Team LLC's (GET) Motion to Confirm Arbitration Award

(Order Denying KIUC's Motion to Dismiss), filed on December 3,

2021; (2) Order Denying KIUC's Motion to Vacate Arbitration

1 The Honorable Jeffrey P. Crabtree presided. NOT FOR PUBLICATION IN WEST'S HAWAI‘I REPORTS AND PACIFIC REPORTER

Award or, in the Alternative to Clarify (Order Denying KIUC's

Motion to Vacate), filed on January 26, 2022; (3) Order Granting

GET's Motion to Confirm Arbitration Award (Order Granting GET's

Motion to Confirm), filed on January 26, 2022; and (4) Amended

Final Judgment, filed on March 31, 2022.

This matter arises out of an arbitration between KIUC

and GET. In January 2011, KIUC and GET entered into a Power

Purchase Agreement (PPA), pursuant to which, inter alia, GET

would sell energy to KIUC, and KIUC would pay a monthly Capacity

Charge that was set by the PPA. In September 2018, GET sought

an increase in the Capacity Charge; KIUC denied this request.2

In August 2020, KIUC and GET entered into an Agreement to

Participate in Binding Arbitration (Arbitration Agreement). The

arbitration was conducted "remotely through [Z]oom" in April

2021, with the arbitrators located in the First Circuit. The

parties presented a single issue for arbitration: "Whether KIUC

unreasonably withheld approval of GET's request for a [C]apacity

[C]harge increase." In August 2021, the arbitrators issued the

Final Arbitration Award, in which they found that KIUC

unreasonably withheld approval, and awarded GET a specific

Capacity Charge increase, and attorneys' fees and costs.

2 Pursuant to the PPA, the Management Committee, comprised of three KIUC representatives and two GET representatives, reviews requests for capital additions and modifications that would increase the Capacity Charge. The record reflects that all three KIUC representatives opposed GET's request.

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In September 2021, GET initiated a special proceeding

in circuit court to confirm the Final Arbitration Award. In

October 2021, KIUC filed its Motion to Dismiss GET's Motion to

Confirm Arbitration Award or, in the Alternative, to Transfer

Venue, which the circuit court denied. In November 2021, KIUC

filed its Motion to Vacate Arbitration Award or, in the

Alternative, to Clarify. In January 2022, the circuit court

denied KIUC's motion to vacate and granted GET's motion to

confirm. In March 2022, the circuit court entered an Amended

Final Judgment. This appeal followed.

On appeal, KIUC raises three points of error: (1) "The

[c]ircuit [c]ourt erred when it denied KIUC's Motion To Dismiss

and denied KIUC's request to change venue"; (2) "The [c]ircuit

[c]ourt erred when it denied KIUC's Motion To Vacate and granted

GET's Motion To Confirm when it concluded that the arbitrators

were within their authority to increase the Capacity Charge

without approval from the [Public Utilities Commission (PUC)]";

and (3) "The [c]ircuit [c]ourt erred when it denied KIUC's

Motion To Vacate in part" when it found that one of the

arbitrators "properly and fully disclosed her prior involvement

in another arbitration[.]"

Upon careful review of the record, briefs, and

relevant legal authorities, and having given due consideration

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to the arguments advanced and the issues raised by the parties,

we resolve KIUC's points of error as follows:

(1) KIUC contends that, pursuant to the PPA, the

proper venue for GET's motion to confirm was the Fifth Circuit,

and not the First Circuit. We review the circuit court's ruling

on a motion to dismiss de novo under the right/wrong standard.

Kamaka v. Goodsill Anderson Quinn & Stifel, 117 Hawaiʻi 92, 104,

176 P.3d 91, 103 (2008).

Here, the express terms of the PPA conflict with the

relevant legal authority. The plain language of the PPA states

that "[s]ubject to Article 14, the venue for any civil action

related to this [PPA] shall be the judicial circuit in which

[GET's] facility is located," which, here, would be the Fifth

Circuit. Hawaii Revised Statutes (HRS) § 658A-27 (2016) states

that motions to confirm an arbitration award "shall be made in

the court of the circuit in which the agreement to arbitrate

specifies the arbitration hearing is to be held or, if the

hearing has been held, in the court of the circuit in which it

was held."3

"[T]he statute must take precedence over the terms of

the contract" where the contract's terms appear to be in direct

3 The Arbitration Agreement does not specify a venue. However, by entering into the Arbitration Agreement, the parties agreed to abide by the Dispute Prevention & Resolution, Inc. Rules which set Honolulu as the arbitration venue. The parties also stipulated to designate Honolulu as the arbitration venue, and all of the arbitrators were located in Honolulu.

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conflict with the statute. Sol v. AIG Haw. Ins. Co., 76 Hawaiʻi

304, 307, 875 P.2d 921, 924 (1994) (citation omitted). The

First Circuit was therefore, pursuant to the statute, the proper

venue for the motion to confirm. We therefore conclude that the

circuit court did not err in denying KIUC's motion to dismiss

and request to change venue.

(2) KIUC contends that the circuit court erred in

denying KIUC's motion to vacate and granting GET's motion to

confirm, and, in so doing, concluding that the arbitrators were

authorized to change the Capacity Charge set in the PPA without

PUC approval. "We review [a] [circuit] court's ruling on an

arbitration award de novo," but are cognizant that a circuit

court's "review of an arbitration award [must be] confined to

the strictest possible limits, and a court may only vacate an

award on the grounds specified in HRS § 658A-23 [(2016).]"

Tatibouet v. Ellsworth, 99 Hawaiʻi 226, 233, 54 P.3d 397, 404

(2002) (citation omitted); Haw. State Tchrs. Ass'n v. State

Dep't of Educ., 140 Hawaiʻi 381, 391, 400 P.3d 582, 592 (2017)

(cleaned up).

HRS § 658A-23 states that "[u]pon motion to the court

by a party to an arbitration proceeding, the court shall vacate

an award made in the arbitration proceeding if . . . [the]

arbitrator exceeded the arbitrator's powers[.]" "The scope of

an arbitrator's authority is determined by [the] agreement of

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the parties. [Arbitrators] must act within the scope of the

authority conferred upon [them] by the parties and cannot exceed

[their] power by deciding matters not submitted." State Org. of

Police Officers (SHOPO) v. Cnty. of Kauaʻi, 134 Hawaiʻi 155, 159,

338 P.3d 1170, 1174 (App. 2014) (citation omitted).

Pursuant to the PPA, arbitrators may "interpret and

apply [the PPA's] terms and conditions . . . and . . . order any

remedy allowed." They are prohibited, however, from changing

any term or condition of the PPA.

Here, we conclude that the arbitrators did not exceed

the scope of their authority by finding, based upon the totality

of the evidence and arguments presented, "that KIUC unreasonably

withheld approval of GET's request for a [C]apacity [C]harge

increase." The PPA authorizes KIUC's Management Committee to

approve requests for "capital additions and modifications," and

instructs that the Management Committee cannot unreasonably

withhold such approval.4

4 Section 5.1C(2) of the PPA states that "[c]apital additions or modifications that require any change to the Capacity Charge are subject to approval by the Management Committee," and such approval cannot be "unreasonably with[held]." Section 3.2J of the PPA provides that "requests for amendment to [the PPA] . . . are subject to the approval of KIUC and [GET], and the PUC if applicable." Section 24.14 of the PPA states that "any amendments . . . [are] subject to approval by the PUC and the Parties' respective obligations hereunder are conditioned upon receipt of such approval[.]" The term "capital addition" is not defined in the PPA. Therefore, approving capital additions would not change a term in or amend the PPA.

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We further conclude, however, that the arbitrators

exceeded their authority by also awarding GET "a [C]apacity

[C]harge increase of $8.03/kW." Section 24.14 of the PPA states

that "any amendments . . . [are] subject to approval by the

PUC[.]" "Capacity Charge" is a defined and fixed term.5 A

change to the Capacity Charge set by the PPA – i.e., the

amendment of a defined and fixed term within the PPA – requires

PUC approval. We therefore conclude that the circuit court

erred in denying KIUC's motion to vacate, and granting GET's

motion to confirm.

(3) KIUC contends that one of the arbitrators failed

to adequately disclose her involvement in a prior arbitration

between GET and another entity. In light of our decision to

5 The PPA reads, in relevant part:

ARTICLE 1. DEFINITIONS . . . .

Capacity Charge - The amount to be paid by KIUC to [GET] pursuant to Section 5.1[C] (Capacity Charge). . . . .

[5.1]C. Capacity Charge

The monthly Capacity Charge shall be Seventy-One and Forty-Five/100 Dollars per kW ($71.45/kW) per Month. The Capacity Charge shall be paid monthly, and is net, including all taxes. . . . . . . . Following the In-Service Date, the Capacity component may be increased if there are capital additions for plant modifications as approved by KIUC in accordance with Section 5.1C(2) below.

(Emphasis added.)

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vacate the Order Denying KIUC's Motion to Vacate and the Order

Granting GET's Motion to Confirm, we need not determine whether

the arbitrator made sufficient disclosures, and whether KIUC

waived its ability to challenge the Final Arbitration Award on

this ground.

For the foregoing reasons, we affirm the Order Denying

KIUC's Motion to Dismiss, but we vacate the Order Denying KIUC's

Motion to Vacate, the Order Granting GET's Motion to Confirm,

and the Amended Final Judgment, and remand for further

proceedings consistent with this summary disposition order.

DATED: Honolulu, Hawaiʻi, April 11, 2025.

David J. Minkin, /s/ Katherine G. Leonard for Respondent-Appellant. Acting Chief Judge

Grant Fasi Allison, /s/ Clyde J. Wadsworth for Claimant-Appellee. Associate Judge

/s/ Kimberly T. Guidry Associate Judge