The West Molokai Resort Association of Apartment Owners v. Kaluakoi Poolside, LLC.

548 P.3d 729, 154 Haw. 175

• Court: Hawaii Intermediate Court of Appeals
• Decided: May 14, 2024
• Docket: CAAP-19-0000519
• Status: Published

Opinion

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Electronically Filed Intermediate Court of Appeals CAAP-XX-XXXXXXX 14-MAY-2024 08:23 AM Dkt. 111 SO

NO. CAAP-XX-XXXXXXX

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI‘I

THE WEST MOLOKAI RESORT ASSOCIATION OF APARTMENT OWNERS, Plaintiff-Counter-Claim Defendant-Appellee, v. KALUAKOI POOLSIDE, LLC, Defendant-Counterclaimant-Appellant, MOLOKAI PROPERTIES, LTD., Intervenor-Defendant-Appellant, and, JOHN DOES 1-100; JANE DOES 1-100; DOE CORPORATIONS 1-100; DOES PARTNERSHIPS 1-100, Defendants.

APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUIT (CASE NO. 2CC161000404)

SUMMARY DISPOSITION ORDER (By: Hiraoka, Presiding Judge, Wadsworth and McCullen, JJ.)

Defendant-Counterclaimant-Appellant Kaluakoi Poolside,

LLC (Kaluakoi) and Intervenor-Defendant-Appellant Molokai

Properties, Ltd. (Molokai Properties) appeal from the Circuit

Court of the Second Circuit's 1 (1) June 21, 2019 order denying

Kaluakoi's motion to modify or correct the arbitrator's award

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 NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER

and Molokai Properties' joinder to Kaluakoi's motion to modify

or correct (Order); and (2) June 21, 2019 final judgment.

Kaluakoi and Molokai Properties contend the circuit

court erred in confirming a Partial Final Award of Arbitrator

and a Final Award of Arbitrator (together, Arbitration Award)

and entering final judgment against them in favor of Plaintiff-

Counterclaim Defendant-Appellee West Molokai Resort Association

of Apartment Owners (Association) because Molokai Properties was

not a party to the arbitration, and the Arbitration Award and

final judgment should have been against Kaluakoi only. 2

2 More specifically, Kaluakoi contends the circuit court erred in refusing to correct or modify the Arbitration Award where:

(1) the Arbitration Award contains an evident mistake referencing "Respondents" (plural) even though Kaluakoi was the only participating respondent;

(2) the arbitrator "made an award on a claim not submitted" because there is no theory binding Molokai Properties;

(3) the Arbitration Award is "imperfect as a matter of form not affecting the merits of the decision" as it references both "Respondent" (singular) and "Respondents" (plural); and

(4) the Arbitration Award "purports to bind non-party Molokai Properties without any cogent legal or factual reasons to do so."

Molokai Properties contends:

(1) "Vacatur (and/or modification) was warranted under HRS 658A";

(2) it was denied procedural due process; and

(3) the circuit court should have held an evidentiary hearing on its purported participation in the arbitration proceedings.

In its answering briefs, Association asserts there was no error by the Arbitrator or the circuit court in confirming the Arbitration Award because Kaluakoi is a wholly owned subsidiary of Molokai Properties, has "no identity separate and apart from" Molokai Properties, and Molokai Properties was notified of and participated in the arbitration.

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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 this

appeal as discussed below.

Under Hawai‘i Revised Statutes (HRS) chapter 658A, the

Uniform Arbitration Act, the court may vacate an arbitration

award if the arbitrator exceeded their authority or there was no

agreement to arbitrate, unless the person participated in the

arbitration without objecting. HRS § 658A-23 (2016). HRS

chapter 658A also allows the court to modify or correct an award

if there is an evident mistake or the award was made on a claim

not submitted. HRS § 658A-24 (2016).

If a party files a motion to vacate an arbitration

award and presents a prima facie basis for vacating the award,

the circuit court should conduct an evidentiary hearing and

render findings of fact and conclusions of law in support of

granting or denying the motion to vacate if material facts are

in dispute. Nordic PCL Constr. Inc. v. LPIHGC, LLC, 136 Hawaiʻi

29, 43-44, 358 P.3d 1, 15-16 (2015).

Kaluakoi requested the circuit court vacate, correct,

or modify the Arbitration Award pursuant to HRS §§ 658A-23, -24.

Kaluakoi asserted that Molokai Properties was "not a party to

this Circuit Court action and did not participate as a party in

the underlying arbitration[.]" Kaluakoi also asserted that

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Molokai Properties "never signed any arbitration agreement

regarding the 2016 Arbitration Proceeding."

In rendering its decision, the circuit court did not

conduct an evidentiary hearing. Instead, the circuit court

"presumed" the Arbitrator thought Molokai Properties

participated in the arbitration because (1) the Arbitrator

listed Molokai Properties in the caption; (2) the Arbitration

Award repeatedly referred to respondents (plural); and (3) Todd

Svetin (Svetin) attended the arbitration proceedings for Molokai

Properties.

First, the Arbitrator listing Molokai Properties in

the caption of the Arbitration Award did not establish Molokai

Properties participated in the arbitration because the

Arbitrator used different captions. For example, the caption in

the Arbitrator's April 5, 2018 decision (concluding Association

and Kaluakoi did not reach a binding settlement following the

2015 settlement discussions) did not include Molokai Properties.

Instead, the caption named various doe defendants, and

Association used this same caption in its circuit court

complaint. And the caption in the Arbitrator's August 10, 2017

decision (finding the Cades firm was disqualified from

representing Kaluakoi) listed both Kaluakoi and Molokai

Properties as respondents, matching the caption Association used

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in its Statement of Claim. But no explanation was provided for

these varying captions.

Next, although the Arbitration Award may have

repeatedly referred to "respondents," there were no findings or

conclusions explaining why Molokai Properties would be liable

under the Cross Easement Declaration, the 2009 Partial

Arbitration Award, or 2011 Modifying Agreement. Rather, the

Arbitrator found that after Molokai Properties acquired the

hotel in 2002, it conveyed the hotel to Kaluakoi, its

subsidiary. The Arbitrator did not explain why Molokai

Properties would remain liable after the conveyance. And, at

the arbitration hearing, although one of the McCorriston

attorneys indicated she represented the "respondents," the other

two McCorriston attorneys indicated they represented the

"respondent."

Finally, Svetin introduced himself at the July 25,

2018 arbitration hearing by stating, "Good morning, Todd Svetin

for Molokai Properties." Svetin, however, did not expressly

indicate whether he was appearing as a party or as a witness.

Based on the arbitration hearing excerpts in the record, Svetin

appears to have testified as a witness, as he was questioned by

Association's counsel, Kaluakoi's counsel, and the Arbitrator.

If Svetin was appearing as more than a witness, under the

Dispute Prevention and Resolution (DPR) rules "[a]ny legal or

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other authorized representative who will be participating in an

arbitration proceeding must enter an appearance in writing with

DPR and the other party(s) at least thirty (30) days before the

commencement of the arbitration hearing." 3 Arb. Rules, Proc. &

Protocols of Disp. Prevention & Resol., Inc. Rule IV(4) (2015),

https://dprhawaii.com/dpr-rules/ [https://perma.cc/CN6R-SKB3].

Association does not point to where in the record Svetin made

such an appearance.

Thus, the record does not support the bases upon which

the circuit court made its decision, and it is not apparent from

the record that Molokai Properties agreed to, or participated

in, the arbitration at issue.

Moreover, after granting Molokai Properties' motion to

intervene at the May 24, 2019 hearing on Kaluakoi's motion to

modify or correct, the circuit court noted Molokai Properties

was only a party "as of today" and acknowledged it "glossed

over" the distinction between Molokai Properties and Kaluakoi

3 We note that, according to the record, Svetin is not an attorney. Although not in effect at the time of the 2018 arbitration hearing, the current DPR rules conform with common law requiring a corporation to be represented by an attorney. Arb. Rules, Proc. & Protocols of Disp. Prevention & Resol., Inc. Rule IV(4) (2019) (providing that "except in limited circumstances, corporations, partnerships, limited liability companies and other entities must be represented by licensed attorneys") https://dprhawaii.com/wp-content/uploads/2019/12/2019-12-30-2020-Arbitration- Rules-Final-Version.pdf [https://perma.cc/YBF8-848J]; see Oahu Plumbing & Sheet Metal, Ltd. v. Kona Constr., Inc., 60 Haw. 372, 374, 590 P.2d 570, 572 (1979) (explaining "a corporation cannot appear and represent itself either in proper person or by its officers, but can do so only by an attorney admitted to practice law"); 9A Fletcher Cyclopedia of the Law of Corps. § 4463 (2023).

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during earlier arguments on Association's motion to confirm the

Arbitration Award.

Because the circuit court did not conduct an

evidentiary hearing or make findings in support of its decision,

and it is not apparent from the record Molokai Properties agreed

to, or participated in, the arbitration, we vacate the June 21,

2019 Order and final judgment, and we remand this case to the

circuit court for further proceedings consistent with this

summary disposition order.

DATED: Honolulu, Hawai‘i, May 14, 2024.

On the briefs: /s/ Keith K. Hiraoka Presiding Judge David J. Minkin, Shanlyn A.S. Park, /s/ Clyde J. Wadsworth Jesse J.T. Smith, Associate Judge (McCorriston Miller Mukai MacKinnon), /s/ Sonja M.P. McCullen for Defendant- Associate Judge Counterclaimant-Appellant Kaluakoi Poolside, LLC.

Joachim P. Cox, Robert K. Fricke, Abigail M. Holden, (Cox Fricke), for Intervenor-Defendant- Appellant Molokai Properties, Ltd.

Terrance M. Revere, Amanda L. Dutcher, for Plaintiff-Counterclaim Defendant-Appellee West Molokai Resort Association of Apartment Owners.