Williams v. State, Department of Land and Natural Resources ( 2010 )

NOT F()R PUBLICATION lN WEST'S HAWAI‘I REP()RTS AND PACIFIC REP()RTER
NO. 29ll5
m THE INTERMED:ATE COURT @F APPEALs p``
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cF THE STATE oF HAWA:‘: jo
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DON WILLIAMS, Petitioner-Appellant, “* nj
v.
STATE OF HAWAfl, DEPARTMENT OF LAND AND NATURAL
RESOURCES, Respondent-Appellee
APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUlT
(S.P. NO. 07-l-OO6l(l))
ORDER DISMlSSlNG APPEAL FOR LACK OF JURISDICTION
(By: Nakamura, Chief Judge, Foley, and Fujise, JJ.)
This appeal arises out of a dispute over lease rent
between Plaintiff-Appellant Don Williams (Williams) as lessor and
Respondent-Appellee State of HawaFi, Department of Land and
Natural Resources (State) as lessee. For the reasons discussed
below, we conclude that this court lacks jurisdiction over the
issues raised by Williams in this appeal. We therefore dismiss
this appeal for lack of jurisdiction.
I.
On September l, 1994, Williams and the State entered
into Lease B-94~4 (Lease), for a term of 30 years, for real
property totaling 1.l37 acres on Maui. The Lease was signed on
behalf of the State by Keith W. Ahue, the duly authorized
Chairperson and Member of the Board of Land and Natural Resources
(BLNR), and was approved by the BLNR.
The Lease provides for the redetermination of the lease
rent every two years and further provides that if the parties
cannot agree, then the rent shall be determined through an
arbitration procedure set forth in the Lease. The parties could
not resolve disputes over the lease rent for the terms beginning
in September 2004 and September 2006.
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A. Circuit Court Proceedings
On October 16, 2007, williams initiated a special
proceeding, S.P. No. 07~l~006l(l), in the Circuit Court of the
Second Circuit (circuit court),F by filing an "Application: (i)
To Compel Compliance with Arbitration Agreement, (ii) For
Designation and Appointment of Arbitrator, and (iii) For Award of
Attorneys' Fees" (Williams's Application). Among other things,
Williams sought an order from the circuit court directing the
State to comply with the arbitration agreement in the Lease "by
proceeding with arbitration conducted solely pursuant to the
terms of the Lease for the purpose of determining" the market
value of the leased premises as of September l, 2004, and
September l, 2006. Williams also sought an order from the
circuit court designating and appointing an arbitrator to act as
the State's representative to make the market value determination
for the September 1, 2006, term and directing the arbitrators to
determine a series of questions.
The State opposed the Williams's Application and asked
that it be denied. The State argued that Williams's filing of
the Williams's Application was premature because 1) the State had
notified Williams that its appraisal for the 2006 term would be
completed by around the end of October 2007; 2) the State's 2006
appraisal was, in fact, completed on the same day that the
Williams's Application was filed; and 3) the State shortly
thereafter communicated the results of the 2006 appraisal to
Williams. The State also argued that the Williams's Application
was unnecessary because the State had agreed to arbitration
regarding the 2004 term and had expressed its willingness to
discuss procedures for arbitrating the rents for the 2004 and
2006 terms back to back.
Williams filed a reply memorandum which noted that the
State had agreed that the rent determination for the 2004 and
2006 terms could proceed to arbitration and had named its
1 The Honorable Joel E. August presided.
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arbitrator for the 2006 term. williams acknowledged that those
aspects of the Williams's Application were moot. Williams,
however, asserted that the parties could not agree on the timing
for the arbitrations on the 2004 and 2006 terms and on the issues
to be decided by the arbitrators. williams asked the circuit
court for guidance and for relief on these disputed matters.
During a meeting with the arbitrators selected to
determine the lease rents, it became clear that the parties did
not agree on the minimum rate of return that should be used in
calculating the rent. The parties submitted supplemental briefs
to the circuit court on whether the Lease had been modified to
increase the minimum rate of return used to calculate the rent
from 8 percent to 8.75 percent. Section 2.1 of the Lease, which
contains the procedures for determining rent, provides that rent
for each two-year term shall be the greater of:
(a) Eight percent (8%)(or the then prevailing rate of
return of land similar in type and location to the Premises,
whichever is qreater), of the fair market value of the
Premises as determined by an independent appraisal. . .; or
(b) the annual rental amount in effect during each of
the two (2) years immediately preceding the current two (2)
year segment.
(Emphasis added.)
williams argued that the Lease had been modified and
the minimum rate of return increased to 8.75 percent as reflected
in a letter, dated November 16, 1998, written by John Hino,
Property Manager for the Division of Boating and Ocean Recreation
for the Department of Land and Natural Resources (DLNR).W In
that letter, Hino noted that based on his "office's
interpretation," (1) the minimum value of the property was
$2,230,000 and the minimum rate of return to calculate rent was
8.75 percent and (2) "[i]t is understood that the value and rate
of return can never be less than [these] amounts."
YIn his supplemental brief to the circuit court, williams stated that
the parties had resolved their dispute over the timing of the arbitrations for
the 2004 and 2006 terms by agreeing to have the rents determined for both
terms in the same arbitration hearing.
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The State disputed Williams's contention that the Lease
had been modified to increase the minimum rate of return to 8.75
percent. The State argued that 1) the Lease provided that it
could only be modified by a written agreement and that Hino's
letter did not constitute a written agreement; 2) Hino had no
authority to amend the Lease; and 3) the BLNR, the only entity
with the power and authority to amend the Lease, had not approved
any change to the minimum 8 percent rate of return set forth in
the original Lease.
On February ll, 2008, the circuit court issued an order
denying the Williams's Application and further ordering that
"the: (a) minimum rate of return under the Lease remains eight
percent (8%); and (b) matters submitted to the Arbitrators for
the 2004 and 2006 rent reopening are: l) the applicable rate of
return; and 2) the fair market value of the Premises as defined
in section l.3(b) of the Lease" (February ll, 2008, Order).
Williams filed a motion for reconsideration of the
February ll, 2008, Order. On April 3, 2008, the circuit court
issued an order denying Williams's motion for reconsideration of
the February ll, 2008, Order (Order Denying Motion for
Reconsideration).
On April 18, 2008, Williams filed a notice of appeal
from the February ll, 2008, Order and the Order Denying Motion
for Reconsideration.
On April 29, 2008, in the same circuit court special
proceeding, S.P. No. 07-1-0O61(1), the State filed an
"Application: (i) To Compel Arbitration; (ii) To Impose Sanctions
Against [Williams] for Any Further Delay in the Start of
Arbitration Proceedings; and (iii) For Award of Attorney‘s Fees
and Costs Against [Williams]" (State's Application). The State
contended that williams was "delaying and refusing to proceed
with the very same arbitration proceeding" for which [Williams]
filed an application to compel. The State asked the circuit
court to compel Williams to immediately begin the arbitration
proceedings and to impose sanctions, including costs and
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attorney's fees, against Williams. williams opposed the State's
Application on the ground that he had appealed the February ll,
2008, Order and wanted to resolve the appeal before proceeding
with arbitration.
On June 5, 2008, the circuit court issued an order
granting the State's Application in part, The circuit court
granted the State's request to compel arbitration, but denied
without prejudice the request for attorney's fees and costs (June
5, 2008, Order). On June 18, 2008, Williams filed a notice of
appeal from the June 5, 2008, Order.
B. Proceedings in this Court
As noted, Williams filed a notice of appeal from the
February ll, 2008, Order and the Order Denying Motion for
Reconsideration. This appeal was designated as Appeal No. 29115
and is the appeal that is presently before this court. Williams
also filed a notice of appeal from the June 5, 2008, Order, which
was designated as Appeal No. 29209.
The State moved this court to dismiss Williams's appeal
in the instant appeal (Appeal No. 29115). The State argued that
this court did not have jurisdiction because the orders appealed
from were not appealable orders or judgments; Williams filed a
memorandum in opposition.
On September 26, 2008, we granted in part and denied in
part, the State's motion to dismiss. We stated that "[w]hen a
party appeals from a circuit court order regarding an arbitration
issue, there are two statutes that can potentially authorize an
appeal: (1) Hawaii Revised Statutes (HRS) § 641-l(a) (1993 &
Supp. 2007), and (2) HRS § 658A-28 (Supp. 2007)." Citing Jenkins
v. Cades Shutte Fleminq & Wright, 76 Hawai'i 115, 869 P.2d 1334(l994), we concluded that "[t]he circuit court has not yet
entered a final judgment" and thus an appeal could not be
maintained pursuant to HRS § 641-l(a).
We noted that HRS § 658A-28(a)(l) authorizes an appeal
from "an order denying a motion to compel arbitration."
(Brackets omitted.) We therefore concluded that the February ll,
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2008, Order was an appealable order under HRS § 658A»28(a)(l) to
the extent that it denied Williams's motion to compel
arbitration.
In a footnote, we stated:
we have no appellate jurisdiction to review the circuit
court's February ll, 2008, [O]rder to the extent that it
determined: (a) a minimum rate of return under the Lease;
and (b) the matter to be submitted to the Arbitrators.
Therefore, Williams may challenge these pre~arbitration
rulings of the court in conjunction with an appeal, if any,
from an order confirming arbitration award or other such
final order or judgment in this case.
On October 17, 2008, this court issued an order
dismissing Appeal No. 29209, in which Williams appealed from the
circuit court“s June 5, 2008, Order, for lack of appellate
jurisdiction. We concluded that the June 5, 2008, Order was not
appealable pursuant to HRS § 641-1(a) because that statute only
permits appeals from final judgments, orders, or decrees. Citing
Jenkins and the requirement of Hawafi Rules of Civil Procedure
(HRCP) Rule 58 (l990) that [e]very judgment shall be set forth on
a separate document[,]" we determined that the circuit court had
not yet entered a final judgment in the case. We further v
concluded that the June 5, 2008, Order was not appealable
pursuant to HRS § 658A-28 and that no exceptions to the final
judgment requirement applied. We ruled that "[a]bsent an
appealable final order or judgment, Appellant Williams's appeal
is premature and we lack appellate jurisdiction." (Emphasis
added.)
II.
A.
In Excelsior Lodge Number One, Independent Order of Odd
Fellows v. Eyecor, Ltd., 74 Haw. 210, 847 P.2d 652 (1992), the
HawaFi Supreme Court indicated that a trial court's pre-
arbitration ruling should be appealed in connection with an
appeal of an order compelling arbitration. In Excelsior Lodge,
NOT I*``OR PUBLICATION IN WEST'S HAWA[°I REPORTS AND PACIF!C REPORTER
the lessor filed a special proceedingF seeking to compel
arbitration to determine the lease rent according to the
agreement contained in the master lease. ;dg at 215, 847 P.2d at
655. The lessee and sublessee (collectively, "lessee") opposed
the lessor's request, arguing that a statutory rent ceiling
applied to the rent determination because the sublessee was a
cooperative housing corporation. ld; The trial court granted
the lessor's motion and entered an order compelling the parties
to follow the master lease arbitration procedure. ;dg at 2l6,
847 P.2d at 656. Lessee did not appeal from the order compelling
arbitration, and the arbitration process went forward. ;dg
During the arbitration, the lessee filed a motion with the trial
court seeking a ruling prohibiting the arbitrators from setting a
rental amount in excess of the statutory rent ceiling
requirement. ;QL The trial court ruled that the rent ceiling
requirement was not applicable. ;d;
The arbitrators subsequently awarded the lessor rent in
excess of statutory rent ceiling. ldg at 2l6, 222, 847 P.2d at
656, 658. The lessor filed a motion to confirm the arbitration
award, which the trial court granted. ;dg at 217, 847 P.2d at
656. The lessee appealed from the order compelling arbitration,
the order ruling that the rent ceiling requirement was not
applicable (rent-ceiling order), and the order confirming the
arbitration award (confirmation Order). ;Q; at 2l8, 847 P.2d at
656.
The supreme court held that the lessee could not
challenge the confirmation order by seeking to change the award
to reduce the award to the statutory rent ceiling amount because
it had failed to timely bring a motion to vacate, modify, or
9 we believe that the lessor filed a special proceeding based on the
description of the proceedings and because this court noted that lessor had
filed "S.P. 90-O0666" in our decision in Excelsior Lodge, 9 Haw. App. 354,
359, 847 P.2d 667, 670 (l992), a decision that was subsequently reversed by
the HawaiH.Supreme Court. We understand the "S.P." designation to refer to a
special proceeding.
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correct the award, ;dg at 222~23, 847 P.2d at 658.N The
supreme court further held that because the lessee had failed to
timely challenge the arbitration award, the lessee had no means
of overturning the confirmation order, and thus its appeal of the
rent~ceiling order was moot. ldg at 229, 847 P.2d at 661.
with respect to the order compelling arbitration, the
supreme court concluded that this was an appealable collateral
order that the lessee should have immediately appealed. ldg at
230-33, 847 P.2d at 662-63. The court stated, "Given its
principal claim that the provisions of [the rent ceiling statute]
apply to the instant arbitration, [lessee] should have
immediately appealed the trial court's initial decision to compel
arbitration in order to have the issue settled at the most
opportune time in the dispute." ld; at 233, 847 P.2d at 663.
The court noted that the lessee had previously filed an appeal
from the order compelling arbitration that had been dismissed as
untimely because the lessee had waited more than thirty days to
appeal that order. ld4 at 232-33, 847 P.2d at 662. The court
held that "a reviewing court shall not consider an unappealed
order compelling arbitration on an appeal from a final
judgment in the same case." ;Qg at 234, 847 P.2d at 663.
B.
We note that Excelsior Lodge was decided before the
HawaiH.Supreme Court's decision in Jenkins. In Jenkins, the
supreme court prospectively commanded strict compliance with the
separate document requirement of HRCP Rule 58 for subsequently
filed appeals and required that an appeal from a order that
purports to be a final order may be taken only after the order
has been reduced to separate judgment, Jenkins, 76 Hawafi at
118-20, 869 P.2d at 1337-39. Prior to Jenkins, the supreme court
5'The supreme court noted that even if a party files a motion to vacate,
modify, or correct an arbitration award, that party‘s appeal would be limited
to a consideration of the specific grounds authorized by the arbitration
statute for challenging an arbitration award, Excelsior Lodge, 74 Haw. at 227
11.16, 847 P.2d at 660 1'1.16.
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had permitted appeals from orders that had not been reduced to a
separate judgment. §ee id¢
Because Excelsior Lodge was decided pre-Jenkins, the
court may not have focused on the separate judgment requirement.
The court also may not have focused on whether an order
compelling arbitration issued in a special proceeding brought to
compel arbitration qualifies as a collateral order, since that
was not an issue raised by the parties. See State v. Wheeler,
121 Hawai‘i 383, 399, 219 P.3d 1170, 1186 (2009) (concluding that
for purposes of stare decisis, the holdings of cases "are limited
to issues that were actually decided by the court").
Where a motion to compel arbitration is made during the
course of a broader lawsuit seeking relief on various causes of
action, the order compelling arbitration is properly viewed as
collateral order that is independently appealable without a
separate judgment. See Association of Owners of Kukui Plaza v.
Swinerton & walberg Co., 68 Haw. 98, 102-07, 705 P.2d 28, 32-35
(1985); Douglas v. Pf1ueqer Hawaii, Inc., 110 HawaiH.520, 522 &
n.l, 523, 135 P.3d 129, 131 & 1'1.1, 132 (2006). HOWeVer, where a
motion to compel arbitration is brought in a special proceeding
whose purpose is to determine whether arbitration is required, an
order compelling arbitration does not qualify as a collateral
order because it does not "determine claims of right separable
from and collateral to, rights asserted in the action." Kukgi
P1aza, 68 Haw at 105, 705 P.2d at 34 (quoting Cohen v. Beneficial
Indus. Loan Corp., 337 U.S. 541, 546 (1949)). Instead, in such a
special proceeding, like the one instituted in this case, the
order compelling arbitration decides rights directly asserted in
and integral to the action and thus must be reduced to a separate
judgment, pursuant to Jenkins, before an appeal can be taken.
III.
In our prior order granting in part and denying in part
the State's motion to dismiss this appeal, we ruled that we had
jurisdiction over Williams's appeal from the circuit court's
February ll, 2008, Order to the extent that this order denied
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Williams's motion to compel arbitration. However, williams does
not argue in this appeal that the circuit court erred in denying
his request to compel arbitration.
In our prior order partially granting and denying the
State's motion to dismiss, we specifically stated that "[w]e have
no appellate jurisdiction to review the circuit court's February
11, 2008, [O]rder to the extent that it determined: (a) a minimum
rate of return under the Lease; and (b) the matter to be
submitted to the Arbitrators." 'The only issues raised by
williams in this appeal concern the circuit court's pre-
arbitration decision regarding the minimum rate of return under
the Lease. with respect to the issues raised by williams in this
appeal, the February ll, 2008, [O]rder was a non-fina1, non-
appealable order. Thus, we lack jurisdiction to consider the
issues raised by williams in this appeal, and we dismiss this
appeal for lack of jurisdiction.
we note that Excelsior Lodge authorizes williams to
challenge the circuit court's ruling on the minimum rate of
return in connection with an appeal of the circuit court's June
5, 2008, Order, which granted the State's request to compel
arbitration. See Excelsior Lodge, 74 Haw. at 233, 847 P.2d at
663.W we dismissed Williams's appeal of the June 5, 2008, Order
in Appeal No. 29209 as premature because no separate final
judgment had been entered. Under our ruling, which was based on
Jenkins, williams could have perfected and perhaps still can
perfect his right to appeal by having the circuit court enter a
final judgment on its June 5, 2008, Order. It appears that so
far, williams has failed to do so.
5” To the extent we suggested that williams could obtain review of the
circuit court's pre-arbitration ruling on the minimum rate of return in an
appeal from an order confirming the arbitration award, that appears to be
incorrect. §§ Excelsior Lodge, 74 Haw. at 233-34, 847 P.2d at 663.
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IV.
For the foregoing reasons, we dismiss Williams's
instant appeal (Appeal No.
jurisdiction.
291l5)
for lack of appellate
DATED= Honolulu, Hawai‘i, march 23, 2010.
On the briefs:
Matthew V. Pietsch
(Law Offices of
Matthew V. Pietsch, LLLC)
on the opening brief
for Petitioner-Appellant
Jefferry Kato
Deputy Attorney General
for Respondent-Appellee
Don williams
Petitioner-Appe1lant Pro Se
on the reply brief
ll
dear walsh
Chie Judge
of
Associate Judge
Associate Judge