South Point Investment Group, LLC v. Discovery Harbour Community Association ( 2021 )

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
13-SEP-2021
07:52 AM
Dkt. 97 SO
NO. CAAP-XX-XXXXXXX
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI#I
SOUTH POINT INVESTMENT GROUP, LLC, a Hawaii limited liability
company, Plaintiff/Counterclaim Defendant-Appellee,
v.
DISCOVERY HARBOUR COMMUNITY ASSOCIATION, a Hawaii nonprofit
corporation, Defendant/Counterclaimant-Appellant
APPEAL FROM THE CIRCUIT COURT OF THE THIRD CIRCUIT
(CIVIL NO. 3CC161000195)
SUMMARY DISPOSITION ORDER
(By: Ginoza, Chief Judge, Leonard and Hiraoka, JJ.)
Defendant/Counterclaimant-Appellant Discovery Harbour
Community Association appeals from the "Judgment on Findings of
Fact, Conclusions of Law, and Order Order [sic] Regarding
Plaintiff/Counterclaim Defendant South Point Investment Group,
LLC's Motion for Summary Judgment Filed on March 12, 2019" in
favor of Plaintiff/Counterclaim Defendant-Appellee South Point
Investment Group, LLC, entered by the Circuit Court of the Third
Circuit on August 22, 2019.1 The Judgment contained a finding
"that there is no just reason for delay for [sic] entry of
judgment as to one or more but fewer than all claims or parties"
under Rule 54(b) of the Hawai#i Rules of Civil Procedure (HRCP).
For the reasons explained below, we conclude that the circuit
court was not authorized to enter the Judgment under HRCP
Rule 54(b), and we must dismiss this appeal for lack of appellate
jurisdiction.
1
The Honorable Henry T. Nakamoto presided.
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
South Point filed a Complaint against the Community
Association on May 25, 2016. The Complaint alleged that South
Point owned five parcels of land (the Subject Properties) in the
Discovery Harbour subdivision, located in Ka#u on Hawai#i Island.
The Subject Properties consist of two Commercial Lots and two or
three Golf Course Lots.2 The Complaint alleged:
3. This Complaint seeks, inter alia, a declaration
that the Subject Properties are not a Member [sic] of the
[Community Association] and that the [Community Association]
lacks authority to regulate, assess fees against or
interfere with [South Point]'s development of the Commercial
Lots.
4. [The Community Association] has interfered with
[South Point]'s development and use of the Subject
Properties by claiming the Subject Properties are members of
the [Community Association].
. . . .
8. [The Community Association] has attempted to
collect dues and assessments from the Subject Properties
claiming that they are Members of the [Community
Association].
A 103-paragraph recitation of factual allegations followed. The
Complaint contained six counts, all for declaratory judgment,
each of which "incorporates by reference the allegations made in
the preceding paragraphs." The prayer for relief sought:
A. A declaratory judgment that the [Community
Association] was not lawfully created pursuant to the
Original CC&Rs;
B. A declaratory judgment that the Subject
Properties are not Members of the [Community Association]
because neither the current owners [sic] nor its
predecessors consented to membership;
C. A declaratory judgment that the Golf Course Lots
are not subject to the Original CC&Rs;
D. A declaratory judgment that the Golf Course Lots
are not Members of the [Community Association];
E. A declaratory judgment that the Commercial Lots
are not residential lots under the 1982 Charter and are
therefore not Members of the [Community Association];
2
There appears to be some disagreement about whether there are two
or three Golf Course Lots. South Point's complaint alleges that the Golf
Course Lots are "TMK (3) 9-4-001:019 (Lot 825), TMK (3) 9-4-001:021 (Lot 825
[sic]), and TMK (3) 9-4-001:022 (Lot 821)[.]" However, the Community
Association refers to a single "Lot 825" without specifying whether the
reference is to TMK (3) 9-4-001:019, or to TMK (3) 9-4-001:021, or to both.
2
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
F. A declaratory judgment that the Original CC&Rs
do not contain limitations on the development of the
Commercial Lots and the [Community Association] has no
authority to limit use of the Commercial Lots to
residential;
G. That the [Community Association] be ordered to
refund [South Point] any and all amounts paid to the
[Community Association] as dues or assessments related to
the Subject Properties;
H. That [South Point] be awarded its attorneys'
fees, costs and other expenses of litigation; and
I. For such other and further relief as this Court
deems just and proper.
The Community Association answered the Complaint and
filed a Counterclaim. The Counterclaim alleged that the
Commercial Lots were subject to the Original CC&Rs and sought a
judgment declaring that South Point, as the owner of the
Commercial Lots, was a member of the Community Association and
subject to the Original CC&Rs. The Counterclaim did not request
any relief concerning the Golf Course Lots.
On August 3, 2017, the Community Association filed a
motion for summary judgment on all claims asserted in the
Complaint. The Community Association argued, among other things,
that Counts III and IV of the Complaint should be dismissed
because both parties agreed the Golf Course Lots were not members
of the Community Association, and accordingly there was no
"actual controversy" or "antagonistic claims" on that issue to
trigger the declaratory judgment statute, Hawaii Revised Statutes
(HRS) § 632-1. South Point opposed the motion. As to the Golf
Course Lots, South Point argued:
In this case, the [Community Association]'s judicial
admission alone will not resolve the controversy. Different
boards have taken different positions on whether the Golf
Course Lots are subject to the Original CC&Rs and whether
they are Members of the [Community Association]. See, Aff.
of Clara Lemmens and Aff. of Floyd Smithson hereto; Motion,
Declaration of Evelyn I. Eklund and Exs. E, F, G, H, I. In
addition, the fact that a recent audit was undertaken should
not provide the Court with any confidence that the
controversy is resolved. The 2008 Board Resolution cites to
records back to 1972 having been reviewed and yet the Golf
Course Lots were still listed as Members. In 2010, the
[Community Association] was placed on notice of [South
Point]'s position and yet persisted for a period of
approximately six years that the Golf Course Lots were
Members.
3
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
The Community Association's motion was heard on
October 4, 2017.3 On October 12, 2017, the circuit court entered
a written order denying the motion, finding "that there are
genuine issues of material fact."
On June 22, 2018, South Point filed its own motion for
summary judgment on all claims asserted in its Complaint. As to
the Golf Course Lots, South Point argued:
[I]n its Motion for Summary Judgment filed August 3, 2017,
the [Community Association] asked the Court to dismiss all
of [South Point]'s claims, including Counts III and IV.
[The Community Association] averred that Counts III and IV
should be dismissed because there was no longer a dispute as
[the Community Association] admits that the Golf Course Lots
are not subject to the 1972 Declaration and are not members
of [the Community Association]. Because the Court denied
[the Community Association]'s Motion for Summary Judgment in
total, there has been no judicial determination relative to
Counts III and IV, and the [Community Association] is
estopped from disputing that [South Point] should be
entitled to judgment on these counts.
The Community Association opposed the motion. However, as to the
Golf Course Lots, the Community Association reiterated its
position that there was no "actual controversy" or "antagonistic
claims" upon which to base a declaratory judgment under HRS
§ 632-1.
South Point's motion was heard on November 14, 2018.4
On March 12, 2019, the circuit court entered "Findings of Fact,
Conclusions of Law, and Order Regarding Plaintiff/Counterclaim
Defendant South Point Investment Group, LLC's Motion for Summary
Judgment, Filed June 22, 2018." The Order granted South Point's
motion for summary judgment as to Counts III and IV of the
Complaint, but denied the motion as to Counts I, II, V, and VI of
the Complaint. The circuit court determined pursuant to HRCP
Rule 54(b) that there was no just reason for delay and directed
entry of a final judgment on Counts III and IV of the Complaint.
The Community Association filed a notice of appeal on
April 9, 2019. We temporarily remanded this case, pursuant to
3
The Honorable Harry P.N. Freitas presided. The record does not
include a transcript of the hearing.
4
The Honorable Henry T. Nakamoto presided. The record does not
include a transcript of the hearing.
4
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Waikiki v. Ho#omaka Vill. Ass'n of Apartment Owners, 140 Hawai#i
197, 204, 398 P.3d 786, 793 (2017) and State v. Joshua, 141
Hawai#i 91, 93, 405 P.3d 527, 529 (2017), for entry of a separate
judgment that comported with HRS § 641-1(a), HRCP Rule 54(b),
HRCP Rule 58, and the holding in Jenkins v. Cades Schutte Fleming
& Wright, 76 Hawai#i 115, 119, 869 P.2d 1334, 1338 (1994). The
circuit court entered the Judgment on August 22, 2019.
The Community Association's opening brief states five
points of error. The one we find dispositive contends that the
circuit court erred by certifying the Judgment as final under
HRCP Rule 54(b). A trial court's decision to enter an HRCP Rule
54(b) certification of finality is reviewed under a dual
standard: whether the court was authorized to enter an HRCP Rule
54(b) certification is a question of law reviewed de novo; the
court's decision to utilize its authority under HRCP Rule 54(b)
is reviewed for abuse of discretion. Elliot Megdal & Assocs. v.
Daio USA Corp., 87 Hawai#i 129, 132, 952 P.2d 886, 889 (App.
1998). We conclude as a matter of law that the circuit court was
not authorized to certify the Judgment as final under HRCP
Rule 54(b).
HRCP Rule 54 states, in relevant part:
(b) Judgment upon multiple claims or involving
multiple parties. When more than one claim for relief is
presented in an action . . . the court may direct the entry
of a final judgment as to one or more but fewer than all of
the claims . . . only upon an express determination that
there is no just reason for delay and upon an express
direction for the entry of judgment.
In Elliot Megdal & Assocs. we noted that HRCP 54(b) is
substantially identical to Rule 54(b) of the Federal Rules of
Civil Procedure (FRCP), and that:
[FRCP] Rule 54(b) is designed to permit an immediate appeal
from an otherwise final decision in a multi-claim . . .
action. Under this rule, the power of a lower court to
enter a certification of finality is limited to only those
cases where (1) more than one claim for relief is presented
. . . and (2) the judgment entered completely disposes of at
least one claim[.]
Id. at 133, 952 P.2d at 890 (emphasis added) (citing 10 J. Moore,
W. Taggert & J. Wicker, Moore's Federal Practice ¶¶ 54.21[1] at
5
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
54-36, 54.22[1] at 54-40 — 54-41, and 54.22[2] at 54–42 (3d ed.
1997)).
In this case, the circuit court found that the Golf
Course Lots were not listed in the Community Association's
Supplemental Declaration. Accordingly, the circuit court granted
summary judgment as to Counts III and IV of South Point's
complaint, which sought declarations that the Golf Course Lots
were not members of the Community Association. However, the
Complaint's prayer also sought the following relief:
G. That the [Community Association] be ordered to
refund [South Point] any and all amounts paid to the
[Community Association] as dues or assessments related to
the Subject Properties[.]
(Emphasis added.) South Point's complaint defined the term
"Subject Properties" to mean the "Commercial Lots and Golf Course
Lots" (emphasis added). The circuit court did not completely
dispose of South Point's claim concerning the Golf Course Lots
because South Point's claim that the Community Association be
ordered to refund all dues or assessments related to the Golf
Course Lots has not been decided. The circuit court has not
ruled whether the Community Association must refund South Point's
dues or assessments related to the Golf Course Lots and, if so,
in what amount. Under these circumstances, the circuit court did
not have authority to certify South Point's partial summary
judgment5 as final. There being no judgment that resolves all
claims against all parties or that contains a valid certification
5
HRCP Rule 56 provides, in relevant part:
(d) Case not fully adjudicated on motion. If on
motion under this rule judgment is not rendered upon the
whole case or for all the relief asked and a trial is
necessary, the court at the hearing of the motion, by
examining the pleadings and the evidence before it and by
interrogating counsel, shall if practicable ascertain what
material facts exist without substantial controversy and
what material facts are actually and in good faith
controverted. It shall thereupon make an order specifying
the facts that appear without substantial controversy,
including the extent to which the amount of damages or other
relief is not in controversy, and directing such further
proceedings in the action as are just. Upon the trial of
the action the facts so specified shall be deemed
established, and the trial shall be conducted accordingly.
6
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
under HRCP 54(b), this appeal is dismissed for lack of appellate
jurisdiction. Jenkins, 76 Hawai#i at 119, 869 P.2d at 1338.
DATED: Honolulu, Hawai#i, September 13, 2021.
On the briefs:
/s/ Lisa M. Ginoza
Roy A. Vitousek III, Chief Judge
Ryan M. Hamaguchi,
Mallory T. Martin, /s/ Katherine G. Leonard
for Plaintiff/Counterclaim Associate Judge
Defendant-Appellee
South Point Investment /s/ Keith K. Hiraoka
Group, LLC. Associate Judge
John D. Zalewski,
Jana M. Naruse,
for Defendant-Appellant Discovery
Harbour Community Association.
Francis L. Jung,
Carol Monahan Jung,
for Defendant/Counterclaimant-
Appellant Discovery Harbour
Community Association.
7