The West Molokai Resort Association of Apartment Owners v. Kaluakoi Poolside, LLC. ( 2024 )

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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.
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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.
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