Green Global Communities Inc. v. Neighborhood Power Corporation

543 P.3d 1094, 154 Haw. 42

• Court: Hawaii Intermediate Court of Appeals
• Decided: February 29, 2024
• Docket: CAAP-18-0000082
• Status: Published

Opinion

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Electronically Filed Intermediate Court of Appeals CAAP-XX-XXXXXXX 29-FEB-2024 08:32 AM Dkt. 58 SO

NO. CAAP-XX-XXXXXXX

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAIʻI

GREEN GLOBAL COMMUNITIES INC., a Hawaii Corporation, Plaintiff-Appellee, v. NEIGHBORHOOD POWER CORPORATION, a California Corporation, Defendant-Appellant.

APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUIT (CASE NO. 2CC171000361)

SUMMARY DISPOSITION ORDER (By: Leonard, Acting Chief Judge, Nakasone and McCullen, JJ.)

Defendant-Appellant Neighborhood Power Corporation

(Neighborhood Power) appeals from the Circuit Court of the

Second Circuit's January 24, 2018 "Order Denying Defendant's

Motion to Compel Arbitration and Dismiss Claims and Motion for

Attorney's Fees, Filed October 25, 2017." 1 On appeal,

Neighborhood Power raises two points of error, challenging the

1 The Honorable Peter T. Cahill presided. NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER

circuit court's denial of its motion to compel arbitration and

request for attorneys' fees.

Upon careful review of the record and the briefs

submitted by the parties and having given due consideration to

the issues raised and the arguments advanced, we resolve the

points of error as discussed below, and affirm.

"[I]n order to be valid and enforceable, an

arbitration agreement must have the following three elements:

(1) it must be in writing; (2) it must be unambiguous as to the

intent to submit disputes or controversies to arbitration; and

(3) there must be bilateral consideration." Siopes v. Kaiser

Found. Health Plan, Inc., 130 Hawai‘i 437, 447, 312 P.3d 869, 879

(2013) (citations omitted). "The party seeking to compel

arbitration carries the initial burden of establishing that an

arbitration agreement exists between the parties. . . . If this

initial burden is met, the burden shifts to the opposing party

to 'present evidence on its defenses to the arbitration

agreement.'" Id. at 446, 312 P.3d at 878 (citations omitted).

We review a trial court's order granting or denying a motion to

compel arbitration de novo, "using the same standard employed by

the trial court and based upon the same evidentiary materials as

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were before [it] in determination of the motion." Id. (citation

omitted).

Assuming arguendo, Neighborhood Power established the

three elements under Siopes, the burden would then shift to

Plaintiff-Appellee Green Global Communities, Inc. (Green Global)

to raise any defenses. As a defense, Green Global argued

because "there are no 'rules of the County of Maui' for the

parties to arbitrate under[,] such an arbitration is impossible

and the Court cannot enforce that which is impossible to

perform."

Here, the arbitration clause required disputes be

arbitrated "under the rules of the county of Maui" as follows:

All disputes arising out of this Agreement between the Developers that is not resolvable by good faith negotiations by the same, shall be filed in the county of Maui, and shall be settled by binding arbitration under the rules of the county of Maui. In so agreeing the parties expressly waive their right, if any, to a trial by jury of these claims and further agree that the award of the arbitrator shall be final and binding upon them as though rendered by a court of law and enforceable in any court having jurisdiction over the same.

(Emphasis added.)

In the first sentence of the arbitration clause, the

parties agreed all disputes arising from the agreement "shall"

be arbitrated "under the rules of the county of Maui." There is

nothing ambiguous about this sentence or the parties' intent.

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See generally, Siopes, 130 Hawai‘i at 447, 312 P.3d at 879. As

drafted, the parties made conducting the arbitration "under the

rules of the county of Maui" an integral part of their

agreement. See generally, 6 C.J.S. Arbitration § 36 (2023)

(explaining "if the parties' agreement specifies that the laws

and procedures of a particular forum shall govern any

arbitration between them, that forum selection clause is an

important part of the arbitration agreement").

The only problem is no one can comply with this

contractual mandate because, as the parties agree, there are no

"rules of the county of Maui" governing arbitration. See

generally, 30 Richard A. Lord, Williston on Contracts §§ 77:1,

77:7 (4th ed. 2021) ("The doctrine of impossibility excuses

performance of a contract when the thing to be done cannot by

any means be accomplished . . ." and impossibility "of

performance under a contract [is a] complete defense[] where a

fact essential to performance is assumed by the parties but does

not exist at the time for performance.").

Neighborhood Power urged the circuit court to "blue

pencil," sever, or simply disregard the language "under the

rules of the county of Maui." But, the agreement did not

provide for these proposed solutions. To the contrary, the

agreement stated, "[t]his agreement constitutes the entire

agreement of the parties and may not be altered, unless the same

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is agreed upon in writing signed and acknowledged by the

parties." Moreover, "it is the function of courts to construe

and enforce contracts made by the parties, and not to make or

alter them." Scotella v. Osgood, 4 Haw. App. 20, 24, 659 P.2d

73, 76 (1983); see generally, Sher v. Cella, 114 Hawai‘i 263,

267, 160 P.3d 1250, 1254 (App. 2007) ("Arbitration is a matter

of contract[.]") (citation omitted).

The agreement between the parties also provided that

the "agreement shall be governed and construed by the laws of

the State of Hawaii." Hawai‘i Revised Statutes § 658A-7(a)(2)

(2016) provides where there is a motion to compel arbitration,

"the court shall proceed summarily to decide the issue and order

the parties to arbitrate unless it finds that there is no

enforceable agreement to arbitrate." The circuit court here did

that, by determining it could not enforce the arbitration

provision in this agreement because it could not order the

parties to arbitrate their dispute under the non-existent "rules

of the county of Maui." Thus, the circuit court did not err in

denying Neighborhood Power's motion to compel arbitration.

We need not address Neighborhood Power's point of

error on attorneys' fees as we affirm the circuit court's denial

of its motion to compel.

For the above reasons, we affirm the circuit court's

January 24, 2018 "Order Denying Defendant's Motion to Compel

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Arbitration and Dismiss Claims and Motion for Attorney's Fees,

Filed October 25, 2017."

DATED: Honolulu, Hawai‘i, February 29, 2024.

On the briefs: /s/ Katherine G. Leonard Acting Chief Judge Rebecca A. Copeland, for Defendant-Appellant. /s/ Karen T. Nakasone Associate Judge Gary Robert, for Plaintiff-Appellee. /s/ Sonja M.P. McCullen Associate Judge