Harrison v. Casa De Emdeko, Incorporated.

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Electronically Filed
Supreme Court
SCWC-15-0000744
26-APR-2018
07:47 AM
IN THE SUPREME COURT OF THE STATE OF HAWAII
---oOo---
________________________________________________________________
LaVONNE HARRISON, Trustee of LaVONNE’S FAMILY TRUST,
a Revocable Living Trust Agreement dated September 28, 1989,
Petitioner/Plaintiff/Counterclaim Defendant/Appellant,
vs.
CASA De EMDEKO, INCORPORATED, a Hawaii nonprofit corporation,
Respondents/Defendants/Counterclaim Plaintiffs/Appellees.
________________________________________________________________
SCWC-15-0000744
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-15-0000744; CIV. NO. 13-1-153K)
APRIL 26, 2018
RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.
OPINION OF THE COURT BY McKENNA, J.
I. Introduction
LaVonne Harrison, Trustee of LaVonne’s Family Trust, a
Revocable Living Trust Agreement Dated September 28, 1989
(“Harrison”), an owner of two commercial apartments within a
mixed-use development project managed by Casa de Emdeko,
Incorporated, a Hawaiʻi nonprofit corporation, also known as Casa
De Emdeko Association of Apartment Owners (“Casa”), filed a
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complaint in the Circuit Court of the Third Circuit1 (“circuit
court”) on March 4, 2013, alleging she was improperly assessed
for expenses that should have been charged only to residential
apartment owners. Specifically, Harrison asserts she should not
have been assessed for expenses related to elevators, lanai
railings, drains, cable television, and pest control, because
these expenses are attributable solely to residential
apartments.
In the circuit court, Harrison moved for summary judgment.
In its memorandum in opposition, Casa asserted that based on
case law allowing entry of summary judgment for a non-moving
party where there are no genuine issues of material fact, the
circuit court should grant summary judgment in its favor. The
circuit court treated Casa’s memorandum as a cross-motion for
summary judgment and granted summary judgment in Casa’s favor.
It concluded as a matter of law that the disputed assessments
were not for limited common elements exclusive to the
residential apartments, as argued by Harrison, but rather were
for common elements, and were therefore expenses for which
Harrison must pay her pro rata share. The circuit court further
concluded Harrison was estopped from disputing the expenses
because she knew or should have known that Casa had been
assessing her for the disputed items for quite some time.
1
The Honorable Ronald Ibarra presided.
2
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In its June 20, 2017 Summary Disposition Order (“SDO”), the
Intermediate Court of Appeals (“ICA”) concluded the circuit
court erred in granting summary judgment in favor of Casa with
respect to the cable television and pest control expenses
because it was unclear whether these assessments related to
common elements or limited common elements. The ICA also
concluded that pursuant to the Restated Declaration of
Horizontal Property Regime and Hawaii Revised Statutes (“HRS”)
Chapter 514A (2006), the elevators, lanai railings, drains, and
cable television wires are common elements, expenses for which
Harrison was required to contribute. The ICA also concluded,
however, that Harrison was not estopped from disputing the
assessments for cable television services and pest control
expenses.
Harrison raises a single question in her Application for
Writ of Certiorari (“Application”):
Did the Intermediate Court of Appeals of the State of
Hawaii (“ICA”) err in affirming the Circuit Court of the
Third Circuit, Kona Division’s (“Circuit Court”)
granting of Summary Judgment and Final Judgment; finding
that the expenses and costs to maintain interior
elevators, interior lanais and related interior
improvements located solely within the residential
buildings of the Casa de Emdeko Condominium Project and
which are reserved exclusively for residential purposes,
are “common elements” for which the commercial units of
Cas[a] de Emdeko Condominium Project, located entirely
in a separate building without elevators, are subject to
assessments?
(Emphasis omitted.)
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For the reasons explained below, we hold that the elevators
and lanai railings of this project are limited common elements,
expenses for which Harrison was not required to contribute as an
owner of commercial apartments. We also hold that genuine
issues of material fact precluded summary judgment as a matter
of law as to whether Harrison is liable for the challenged
expenses relating to the drains and cable television wires. We
also hold that the circuit court erred in alternatively granting
summary judgment based on estoppel by acquiescence as to all
items, as genuine issues of material fact also exist as to that
defense.
Therefore, we affirm the ICA’s SDO and its July 31, 2017
Judgment on Appeal (“JOA”) as to its rulings regarding the cable
television service and pest control services expenses and
otherwise vacate the SDO and JOA. The circuit court’s “Order
Denying Plaintiff’s Motion for Summary Judgment, Filed 4/17/14
and Granting Defendant Casa de Em Deko, Incorporated’s Cross
Motion for Summary Judgment,” filed on July 22, 2014, and the
“Amended Final Judgment,” filed on October 8, 2015, are vacated
in their entireties, and this case is remanded to the circuit
court for further proceedings consistent with this opinion.
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II. Background
A. Facts
Casa is a Hawaiʻi nonprofit corporation organized and
incorporated for the purpose of managing, maintaining,
protecting, and preserving 106 residential condominium
apartments and three commercial apartments located in North
Kona, Hawaiʻi (“the Project”). There are five buildings in the
Project -- two three-story buildings, designated as Wing A and
Wing B, containing only residential apartments, and three two-
story buildings, designated as Building C, Building D, and
Building L, each containing and constituting one commercial
apartment.
The Project was first established pursuant to a Declaration
of Horizontal Property Regime, with attached bylaws, dated
February 19, 1969.2 Since 1995, the Project has been governed by
a Restated Declaration of Horizontal Property Regime and By-Laws
of Casa De Emdeko dated February 3, 1995 (“Declaration” or “Casa
Declaration”).3
2
The original declaration was filed in the Office of the Assistant
Registrar of the Land Court of the State of Hawaiʻi as Document No. 502817,
together with Condominium Map No. 101. It was also recorded on March 12,
1969 in the Bureau of Conveyances in Book 6439, Page 410, as amended, and/or
as delineated and together with Condominium File Plan No. 128, and then duly
noted on Transfer Certificate of Title No. 133,339.
3
The Casa Declaration was filed in the Office of the Assistant Registrar
as Document No. 2253508, and also recorded on August 7, 1995 in the Bureau of
Conveyances State of Hawaiʻi as Document No. 95-101951.
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Since 1982, Harrison has been the owner of two commercial
apartments, Apartments C and D, which are buildings C and D of
the Project, and has a 6.726% ownership interest in the Project.4
Harrison also served on Casa’s Board of Directors (“Board”) from
at least 2001 to 2011. Her two commercial apartment unit
buildings do not have elevators, cable television, or lanais,
and they are physically separated from Wings A and B, the two
three-story buildings that contain residential apartments.
Pursuant to Section M of the Casa Declaration, a
Maintenance Reserve Fund was created into which all apartment
owners must pay to cover their respective obligations “to
provide for utilities, insurance, maintenance, and repair of the
common elements and other expenses of administration of the
project, which shall be deemed conclusively to be a common
expense of the project.”5 Pursuant to Section M, the apartments
4
Harrison’s Apartment C has a 2.439% common interest and Apartment D has
a 4.287% common interest, for the total 6.726% common interest. In addition
to Harrison’s commercial apartments C and D, there is an additional
commercial apartment L, with a 1.000% common interest.
5
Section M of the Casa Declaration provides in relevant part:
M. MAINTENANCE RESERVE FUND. The Board shall establish
and maintain a Maintenance Reserve Fund by the assessment
of any payment by all apartment owners in equal monthly
installments of their respective proportionate shares of
such reasonable annual amount as the Board may estimate as
adequate to cover each apartment owner’s obligations to
provide for utilities, insurance, maintenance, and repair
of the common elements and other expenses of administration
of the project, which shall be deemed conclusively to be a
common expense of the project. The Board may include
reserves for contingencies in such assessment, and such
(continued. . .)
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are assessed dues that are deposited into Casa’s “maintenance”
and “reserve” accounts for the purpose of maintenance, repair,
and replacement of both “common elements” and “limited common
elements” of the entire Project.
B. Procedural History
1. Circuit Court Proceedings
a. Complaint
On March 4, 2013, Harrison filed a civil complaint against
Casa, seeking declaratory relief, damages, and attorneys’ fees
and costs. She alleged that between 2010 and 2013, she was
improperly assessed for amounts paid into the “reserve” account”
for residential elevators, lanai railings and drains, which were
for “limited common elements” attributable solely to residential
apartments. She also asserted that between 2009 to 2013, she
was improperly assessed for amounts paid into the “maintenance”
account” for cable TV, pest control and elevator maintenance
costs. She alleged these funds were actually for “limited
common elements,” attributed solely to residential buildings and
apartments, for which she was not responsible. Harrison alleged
(continued. . .)
assessment may from time to time be increased or reduced in
the discretion of the Board. The proportionate interest of
each apartment owner in said Fund cannot be withdrawn or
separately assigned but shall be deemed to be transferred
with such apartment even though not expressly mentioned or
described in the conveyance thereof. . . .
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that Casa therefore violated the Casa Declaration and applicable
law.
On October 15, 2013, Casa filed its answer and a
counterclaim seeking declaratory relief that (1) its assessments
were lawful; and (2) Harrison had an obligation to pay the
assessments.
b. Motions for Summary Judgment
On April 17, 2014, Harrison filed a motion for summary
judgment. Harrison and Casa repeat their various legal
arguments in the circuit court, on appeal to the ICA, and on
certiorari to this court. Therefore, their arguments are
discussed and analyzed in the Discussion section, Section IV
below.
To summarize, in her motion, Harrison argued she was
improperly assessed for costs relating to elevators, stairways,
walkways, lanais, lanai railings, drains, cable television, pest
control, and elevator maintenance because they related to
residential building limited common elements. She attached
Casa’s maintenance fee calculations from 2006 to 2013
(“maintenance fee calculations”) and Casa’s “Reserve Expenses
Per Financial Statements 10/01/03 - 09/30/2012” to her motion.
In its June 12, 2014, memorandum in opposition, in summary,
Casa argued the disputed expenses related to common elements,
not limited common elements. In addition, Casa argued that
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Harrison’s claims were barred by estoppel by acquiescence and
consent since she had been an owner of the commercial apartments
for 30 years and had served on the Board from at least 2001 to
2011, but had not objected to the disputed items until recently.
Casa then argued that Flint v. MacKenzie, 53 Haw. 672, 673, 501
P.2d 357, 357-58 (1972) (per curiam), authorized the circuit
court to enter summary judgment in its favor as a non-moving
party, based on a lack of genuine issues of material fact
entitling it to summary judgment as a matter of law.6
Casa attached to its memorandum a declaration from Susan
Gand (“Gand”), a director of Pacifica Realty Management, Inc.,
which was the property manager for Casa from 2003. Gand’s
declaration stated in relevant part that (1) Harrison served on
the Board from at least 2001 until 2011, and during that time,
she “approved the association’s operating budgets, maintenance
fee calculation schedules, operating expenses, and reserves
budgets, including all assessments and expenses for common
elements and limited common elements”; (2) in 2005, Harrison did
not object to a common reserve expense for elevator repairs and
paid her proportionate share; (3) Harrison did not object to and
voted to approve common reserve expenses regarding drains in
2005 and fiscal year 2007-2008; (4) at a Board meeting on August
6
It does not appear Harrison raised arguments opposing this procedure.
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3, 2010, Harrison did not object to and voted to approve
elevator modernization as a common reserve expense of $82,500;
and (5) Harrison did not notify Casa in writing of any
complaints or objections regarding the drains, lanai railings,
pest control or cable television expenses until October 24,
2012.
On June 26, 2014, Harrison filed a reply memorandum,
raising various arguments as to why the disputed expenses
constituted charges for limited common elements for which she
was not responsible. In response to Casa’s estoppel by
acquiescence argument, Harrison argued she should not be
estopped for simply being an apartment owner for thirty years
and having served on the Board, because she objected after she
was made aware of the Association’s method of characterizing
expenses. Harrison attached a declaration asserting that (1)
after she determined how Casa was wrongfully assessing her
expenses relating to residential units, she complained to Gand
and the Board on multiple occasions; (2) after she complained to
Gand, Gand “agreed” with her complaints and brought it to the
attention of the Board; (3) thereafter, Casa’s budgets included
line items for limited common elements and one of the line items
was for elevator modernization; (4) in the approved Casa fiscal
year 2011-2012 Budget (“2011-2012 Budget”), the elevator
modernization expense of $82,500 was listed as a limited common
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element under reserve expenses; (5) the approved 2011-2012
Budget also contained the statement “LCD CE = Limited Common
Elements which are only appurtenant to the 106 residential
units”; (6) she did not know of replacements of the drain lines
in the residential apartments until after the renovations to the
residential apartments in 2006 and that there are seventeen
three-story stacks with drain lines appurtenant to and for the
use of the residential apartments only; (7) the residential
apartments each have a lanai exclusive to and appurtenant to
their apartment and the lanais on the second and third floors of
the residential apartments have lanai railings; and (8) the
lanai railings were not an issue until their replacement on or
about 2006. She also attached the 2011-2012 Budget and Casa’s
2011-2012 maintenance fee calculations.
c. Circuit Court Judgment
After a hearing on July 2, 2014, on July 22, 2014, the
circuit court entered an “Order Denying Plaintiff’s Motion for
Summary Judgment, Filed 4/17/14 and Granting Defendant Casa De
Emdeko, Incorporated’s Cross-Motion for Summary Judgment”
(“Order”), stating, in relevant part, the following:
The Court concludes as a matter of law that the
residential elevators, lanai railings, drains, and cable tv
wires are common elements and the expenses relating to the
residential elevators, lanai railings, drains, cable tv,
and pest control are common expenses pursuant to Casa de
Emdeko’s restated declaration and bylaws, and Hawaii
Revised Statutes (“HRS”) Chapter 514A, except as provided
in HRS §514B-22 and HRS §514B-23.
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Further, estoppel operates to bar the Plaintiff’s
claims for damages during the time she knew or should have
known that the Defendant was applying funds from the
reserve account and maintenance account to alleged limited
common elements or limited common expenses, but delayed in
bringing an action.
On August 22, 2014, the circuit court entered its final
judgment. (On October 8, 2015, it entered its amended final
judgment.) Harrison timely appealed to the ICA on September 19,
2014.
2. ICA Proceedings
On appeal to the ICA, Harrison asserted four points of
error in the circuit court’s Order, three of which are relevant
to this certiorari proceeding: (1) the circuit court erred in
concluding the disputed items were common elements and therefore
constituted common expenses; (2) estoppel by acquiescence was
improperly applied as there were genuine issues of material
fact; (3) the circuit court erred in concluding the disputed
items were assessable to both residential and commercial
apartments.7
The ICA vacated the circuit court’s decision in part.
Harrison v. Casa de Emdeko, No. CAAP-15-0000744 (App. June 20,
2017) (SDO). The ICA affirmed the circuit court’s conclusion
7
Harrison also asserted that the circuit court had erred by failing to
make findings of fact in its summary judgment ruling, an argument not
repeated on certiorari and that, in any event, is devoid of merit. Rule
52(a) of the Hawaiʻi Rules of Civil Procedure (2000) provides in relevant
part, “[f]indings of fact . . . are unnecessary on decisions of motions under
Rules 12 or 56 or any other motion. . . .”
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that the elevators were common elements, ruling that the
elevators were not apartments or limited common elements. Casa,
SDO at 4. The ICA further concluded that elevators were common
elements under HRS § 514A-13(h) (2006) because they were not
within the apartments themselves. Id. at 5. It also concluded
that the elevators were not entries, stairways, or walkways
under Section A(3) of the Casa Declaration, and were therefore
not limited common elements. Id.
The ICA also ruled that lanai railings were common
elements. Id. Because lanai railings were not specified as
common elements or limited common elements in the Casa
Declaration, the ICA looked to HRS Chapter 514A and concluded
that under HRS § 514A-3(8), as lanai railings were necessary for
the Project’s safety, they were common elements, regardless of
whether or not they were exclusive to the residential
apartments. Id.
In addition, the ICA concluded that drains were common
elements under Section A(2)(d) of the Casa Declaration because
they were pipes that can be used for services such as water and
sewer. Id. at 6. In its decision, the ICA referred to Merriam-
Webster’s definition of “drain” as “a means (as a pipe) by which
usu. liquid matter is drained.” Merriam-Webster’s Collegiate
Dictionary at 378 (11th ed. 2003). Casa, SDO at 6 n.3.
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Furthermore, the ICA concluded that cable television wires
were common elements under the Casa Declaration because the Casa
Declaration provides that “[a]ll . . . wiring . . . and other
central and appurtenant transmission facilities and
installations over, under and across the project for services
such as . . . television signal distribution” were common
elements. Id.
The ICA therefore rejected Harrison’s claim that she was
not liable for expenses relating to the elevators, lanai
railings, drains, and cable television wires, reasoning that
since they were common elements, the expenses related to them
were common expenses. Id. Based on its conclusion that these
were common elements, the ICA did not address the circuit
court’s alternative estoppel by acquiescence ruling regarding
these expenses. Id. at 7.
The ICA concluded, however, that the record was unclear as
to whether cable television service and pest control expenses
were common expenses for common elements. It also ruled there
were genuine issues of material fact as to the estoppel by
acquiescence defense regarding these expenses, and vacated and
remanded the circuit court’s amended final judgment as to these
expenses. Id.
3. Certiorari proceedings
On September 20, 2017, Harrison timely filed her
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Application, presenting the following question:
Did the Intermediate Court of Appeals of the State of
Hawaii (“ICA”) err in affirming the Circuit Court of the
Third Circuit, Kona Division’s (“Circuit Court”) granting
of Summary Judgment and Final Judgment; finding that the
expenses and costs to maintain interior elevators, interior
lanais and related interior improvements located solely
within the residential buildings of the Casa de Emdeko
Condominium Project and which are reserved exclusively for
residential purposes, are “common elements” for which the
commercial units of Cas[a] de Emdeko Condominium Project,
located entirely in a separate building without elevators,
are subject to assessments?
(Emphasis omitted.)
She argues the ICA erred in concluding the elevators,
lanais, and “related interior improvements” (the drains and
cable television wires) were common elements because her
commercial apartments are in buildings separate from the
residential apartment buildings and do not have these items.
She also argues that if this court reverses the ICA’s holding,
the issue of estoppel is no longer moot. We accepted certiorari
to address whether the circuit court and ICA erred by summarily
ruling that elevators, lanai railings, drains, and cable
television wires were common elements, expenses for which
Harrison would be responsible. If so, we must also address
whether the circuit court erred by alternatively granting
summary judgment in favor of Casa based on estoppel by
acquiescence.
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III. Standards of Review
A. Summary Judgment
An appellate court reviews a grant of summary judgment de
novo, applying the same standards as a trial court:
Summary judgment is appropriate if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with
the affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to
judgment as a matter of law. A fact is material if proof of that
fact would have the effect of establishing or refuting one of the
essential elements of a cause of action or defense asserted by
the parties. The evidence must be viewed in the light most
favorable to the non-moving party. In other words, we must view
all of the evidence and the inferences drawn therefrom in the
light most favorable to the party opposing the motion.
Jou v. Dai-Tokyo Royal State Ins. Co., 116 Hawaiʻi 159, 164, 172
P.3d 471, 476 (2007) (citations omitted).
B. Interpretation of a Contract
In Laeroc Waikiki Parkside, LLC v. K.S.K. (Oahu) Ltd.
P’ship, we stated:
When reviewing the court’s interpretation of a contract,
the construction and legal effect to be given a contract is
a question of law freely reviewable by an appellate court.
This court has determined that it is fundamental that terms
of contract should be interpreted according to their plain,
ordinary and accepted use in common speech, unless the
contract indicates a different meaning. Further, in
construing a contract, a court’s principal objective is to
ascertain and effectuate the intention of the parties as
manifested by the contract in its entirety. If there is
any doubt, the interpretation which most reasonably
reflects the intent of the parties must be chosen.
155 Hawaiʻi 201, 213, 166 P.3d 961, 973 (2007) (internal
quotation marks, citations, and brackets omitted).
C. Interpretation of a Statute
Statutory interpretation is guided by the following rules:
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First, the fundamental starting point for statutory-
interpretation is the language of the statute itself.
Second, where the statutory language is plain and
unambiguous, our sole duty is to give effect to its plain
and obvious meaning. Third, implicit in the task of
statutory construction is our foremost obligation to
ascertain and give effect to the intention of the
legislature, which is to be obtained primarily from the
language contained in the statute itself. Fourth, when
there is doubt, doubleness of meaning, or indistinctiveness
or uncertainty of an expression used in a statute, an
ambiguity exists.
Panado v. Board of Trs., Emps.’ Ret. Sys., 134 Hawaiʻi 1, 11, 332
P.3d 144, 154 (2014) (citations omitted).
IV. Discussion
A. Preliminary Issues
1. Issues on Certiorari
The ICA vacated the circuit court’s summary judgment
ruling that cable television service and pest control service
expenses were common expenses and that Harrison was
alternatively estopped from arguing that they were not,
concluding that there are genuine issues of material fact as to
these issues. Casa did not seek certiorari review of these
rulings. Therefore, we do not address these issues. Based on
the ICA’s rulings, this case must already be remanded to the
circuit court with respect to the cable television service and
pest control service expenses.
We must determine on certiorari whether the circuit court
and ICA erred by summarily ruling that elevators, lanai
railings, drains, and cable television wires were common
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elements, for which Harrison was proportionately liable. If we
conclude summary judgment was improperly granted as to any of
these items, then we must also address whether the circuit court
erred by alternatively granting summary judgment in favor of
Casa based on estoppel by acquiescence.
2. Condominium Law Generally and History of the Project
The starting point of determining whether part of a
condominium is a common element or limited common element begins
with a condominium’s declaration. Generally, the declaration
and bylaws of a condominium serve as a contract between the
condominium owners and the association, establishing the rules
governing the condominium. See Association of Apartment Owners
of Maalaea Kai, Inc. v. Stillson, 108 Hawaiʻi 2, 9, 116 P.3d 644,
651 (2005) (citing Bradford Square Condo. Ass’n v. Miller, 258
Ga.App. 240, 245, 573 S.E.2d 405, 409 (2002) (“The condominium
instruments, including the bylaws and the sales agreement, are a
contract that governs the legal rights between the [a]ssociation
and unit owners.”)).
The Casa Declaration was first established under the
provisions of the “Horizontal Property Act,” 1961 Haw. Sess.
Laws Act 180, which was codified as HRS Chapter 514. The
legislature then repealed Chapter 514 and passed Chapter 514A,
governing Condominium Property Regimes, as Act 98 of 1977. 1977
Haw. Sess. Laws Act 98, § 3 at 181. In 2004, the legislature
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sought to “update, clarify, organize, deregulate, and provide
for consistency and ease of use of the condominium property
regimes law,” as directed by Act 213, Session Laws of Hawaiʻi
2000. 2004 Haw. Sess. Laws Act 164, § 1 at 756. The
legislature recognized that Hawaii’s “condominium property
regimes law is unorganized, inconsistent, and obsolete in some
areas, and micro-manages condominium associations. The law is
also overly regulatory, hinders development, and ignores
technological changes and the present day development process.”
2000 Haw. Sess. Laws Act 213 § 1 at 521. As a result, the
legislature recodified Hawaii’s condominium property regimes
law, amending the HRS by adding HRS Chapter 514B. 2004 Haw.
Sess. Laws Act 164 § 2 at 756.
HRS Chapter 514A was initially scheduled to be repealed on
July 1, 2006, but before it could be repealed, the repeal
provisions themselves were repealed. 2005 Haw. Sess. Laws Act
93 § 6 at 237, 2006 Haw. Sess. Laws Act 273 § 33 at 1145.
Therefore, HRS Chapter 514A, except as provided in HRS §§ 514B-
22 (2006) and -23 (2006),8 governs existing condominiums created
before July 1, 2006, such as the Project.9
8
HRS § 514A-1.5 (Supp. 2007) states in relevant part:
(a) This chapter:
(1) Shall not apply to condominiums created on or after
July 1, 2006, or that are registered with the commission
pursuant to part IV of chapter 514B; and
(2) On and after July 1, 2006, shall apply only to:
(continued. . .)
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Here, the Casa Declaration specifies the Project was
established pursuant to HRS Chapter 514A, as amended. Thus, if
the Casa Declaration is unclear, we must turn to HRS Chapter
514A or sections of HRS Chapter 514B (2006) deemed applicable by
Chapter 514A.10
(continued. . .)
(A) Condominiums created prior to July 1, 2006, except as
provided in subsection (b) and sections 514B-22 and 514B-
23; and
(B) A developer’s sale of condominiums in a project for
which a notice of intention was filed with the commission
prior to July 1, 2006, pursuant to section 514A-31, except
where the developer elects to register an existing project
with the commission under part IV of chapter 514B, pursuant
to section 9(b) of Act 93, Session Laws of Hawaiʻi 2005.
9
Before its repeal, HRS § 514B-22 provided, in relevant part, the
following:
Applicability to preexisting condominiums. Sections
514B-4, 514B-5, 514B-35, 514B-41(c), 514B-46, 514B-72, and
part VI, and section 514B-3 to the extent definitions are
necessary in construing any of those provisions, and all
amendments thereto, apply to all condominiums created in
this State before July 1, 2006; provided that those
sections:
(1) Shall apply only with respect to events and
circumstances occurring on or after July 1, 2006; and
(2) Shall not invalidate existing provisions of the
declaration, bylaws, condominium map, or other constituent
documents of those condominiums if to do so would
invalidate the reserved rights of a developer or be an
unreasonable impairment of contract.
In our analysis, we use the terms “condominium property regime” and
“horizontal property regime” synonymously with “condominium,” “apartment”
with “unit,” “apartment owner” with “unit owner,” and “association of
apartment owners” with “association.”
10
See supra, ns.7 & 8.
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B. Analyses of the Disputed Items
1. Common Expenses for Which a Commercial Apartment Owner
of this Project is Liable
Section B of the Casa Declaration sets out the “common
interest” percentages for the various residential and commercial
apartments. Section H then defines the “common expenses” for
which residential and commercial apartment owners are liable in
proportion to their respective common interests, and provides in
relevant part:
H. COMMON EXPENSES. All charges, costs and expenses
whatsoever incurred by the Association for or in connection
with the administration of the project, including without
limitation the operation thereof, any maintenance, repair,
replacement and restoration of the common elements and any
additions and alterations thereto, any labor, services,
materials, supplies and equipment therefor, any liability
whatsoever for loss or damage arising out of or in
connection with the common elements . . . shall constitute
common expenses of the project for which all apartment
owners shall be severally liable in proportion to the
respective common interests. . . The Board of Directors of
the Association (herein called “Board”) shall from time to
time assess the common expenses against all the apartments
in their respective proportionate shares. . . .
(Emphasis added.) Thus, pursuant to the Casa Declaration,
Harrison is liable for common expenses relating to common
elements. The Declaration does not, however, discuss who is
responsible for expenses of limited common elements.
We therefore turn to statutory law. HRS § 514A-3 (Supp.
2007) defines “common expenses” to include: (1) expenses of
operation of the property; and (2) all sums designated common
expenses by or pursuant to this chapter, the declaration or the
bylaws. HRS § 514A-15(a) (2006) then provides:
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(a) The common profits of the property shall be distributed
among, and the common expenses shall be charged to, the
apartment owners, including the developer, in proportion to
the common interest appurtenant to their respective
apartments; provided that in a mixed-use project containing
apartments for both residential and commercial use, such
charges and distributions may be apportioned in a fair and
equitable manner as set forth in the declaration; provided
further that all limited common elements costs and
expenses, including but not limited to, maintenance,
repair, replacement, additions and improvements shall be
charged to the owner of the apartment to which the limited
common element is appurtenant in an equitable manner as set
forth in the declaration.
(Emphasis added.)
Therefore, pursuant to HRS § 514A-15(a), in a mixed-use
project such as this, expenses related to limited common
elements must be charged to the individual apartment owners to
which the limited common element is appurtenant, in proportion
to their common interests. Accordingly, in order to determine
whether Harrison is liable for expenses related to elevators,
lanai railings, drains, and cable television wires, it becomes
necessary to determine whether they are common elements for
which she would be liable. If they are limited common elements
or are included within the residential apartments themselves,
however, Harrison would not be liable for related expenses.
2. Apartments, Common Elements, and Limited Common
Elements of the Project
Section A(1) of the Casa Declaration defines the
residential and commercial “apartments” of the Project.
Sections A(2) and (A)(3) then define the Project’s “common
elements” and “limited common elements.”
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Section A(1) of the Casa Declaration provides:
A. DIVISION OF PROPERTY: The project is hereby divided
into the following separate freehold estates:
1. Apartment. One hundred nine (109) freehold estates
are hereby designated within the perimeter walls, floors
and ceilings of each of the 109 apartment units of the
project contained in . . . Wing A, Wing B . . . which
spaces called “apartments” are designated on said plans and
described as follows:
. . . .
(b) . . . Each apartment contains the number of rooms and
approximate floor area to these floor plans, as follows:
(1) TWO BEDROOM PLAN A UNITS . . ., including a lanai of
approximately 168 sq. ft.
(2) ONE BEDROOM PLAN A UNITS. . ., including a lanai of
approximately 96 sq. ft.
(3) Plan B Units: Seventy (70) apartments, . . . being all
of the remaining residential apartments of the project, . .
. including a lanai of approximately 98 sq. ft.
. . . .
(4) COMMERCIAL UNITS: Apartments C, D, and L,
respectively, constitute the entire contents of Building C,
Building D and Building L. . . .
(d) The respective apartments shall not be deemed to include
the undecorated or unfinished surfaces of the perimeter walls or
interior load-bearing walls, the floors and ceiling surrounding
each apartment or any pipes, wires, conduits, or other utilities
or service lines running through such apartments which are
utilized for or serve more than one apartment, the same being
deemed common elements as hereinafter provided. Each apartment
shall be deemed to include all the walls and partitions which are
not load bearing within its perimeter walls, the inner decorated
or finished surfaces of all walls, floors and ceilings, doors and
door frames, windows and window frames and all fixtures
originally installed, including stove, oven, refrigerator,
washer, dryer, disposal and dishwasher.
(Emphasis added.)
The first sentence of Section A(1)(d) expressly provides
that certain portions of all apartments are deemed common
elements. Section A(2) of the Casa Declaration further defines
common elements as follows:
2. Common Elements. One freehold estate is hereby
designated in all of the remaining portions of the project
herein called the “common elements[,”] including
specifically but not limited to:
(a) Said land in fee simple;
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(b) All foundations, floor slabs, columns, girders, beams,
supports, unfinished perimeter and load-bearing walls,
roofs, chases, entries, stairways and walkways of said
buildings;
(c) All yards, grounds, landscaping, the swimming pool and
other recreational facilities, including cabanas and
lockers; all refuse facilities; all roads, parking areas
and driveways;
(d) All breezeways, ducts, electrical equipment, wiring,
pipes and other central and appurtenant transmission
facilities and installations over, under and across the
project for services such as power, light, water, gas,
sewer, air conditioning, telephone and radio and television
signal distribution.
(Emphasis added.)
Therefore, according to the Casa Declaration, all remaining
portions of the Project not included within the residential and
commercial apartments are common elements.
HRS § 514A-3 defines “common elements” as follows:
“Common elements”, unless otherwise provided in the
declaration, means and includes:
(1) The land included in the condominium property regime,
whether leased or in fee simple;
(2) The foundations, columns, girders, beams, supports,
main walls, roofs, halls, corridors, lobbies, stairs,
stairways, fire escapes, and entrances and exits of the
building or buildings;
(3) The basements, flat roofs, yards, gardens, recreational
facilities, parking areas, and storage spaces;
(4) The premises for the lodging or use of janitors and
other persons employed for the operation of the property;
(5) Central and appurtenant installations for services such
as power, light, gas, hot and cold water, heating,
refrigeration, air conditioning, and incinerators;
(6) The elevators, escalators, tanks, pumps, motors, fans,
compressors, ducts, and in general all apparatus and
installations existing for common use;
(7) Such facilities as may be designated as common elements
in the declaration; and
(8) All other parts of the property necessary or convenient
to its existence, maintenance, and safety, or normally in
common use.
(Emphasis added.) The underlined portion of the statute
dictates that a condominium property regime’s declaration
determines what constitutes common elements.
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Section A(3) of the Casa Declaration goes on to define
certain common elements as limited common elements:
3. Limited Common Elements. Certain parts of the common
elements, herein called the “limited common elements[,”]
are hereby designated and set aside for the exclusive use
of certain apartments, and such apartments shall have
appurtenant thereto easements for the use of such limited
common elements as follows:
(a) One parking space or more, designated on said plans by
the designation corresponding to the designation of each
apartment shall be appurtenant to and for the exclusive use
of such apartment.
(b) The entries, stairways, hallways and walkways in any
residential building of the project shall be appurtenant to
and for the exclusive use of the apartments of such
building.
(c) The hallways and walkways on any floor of any
residential building of the project shall be appurtenant to
and for the exclusive use of the apartments on such floor.
(Emphasis added.)
As compared to its definition of common elements, HRS §
514A-3 defines limited common elements as follows:
“Limited common elements” means and includes those common
elements designated in the declaration as reserved for the
use of a certain apartment or certain apartments to the
exclusion of the other apartments; provided that no
amendment of the declaration affecting any of the limited
common elements shall be effective without the consent of
the owner or owners of the apartment or apartments for the
use of which such limited common elements are reserved.
(Emphasis added.)
As can be seen, in contrast with “common elements,” HRS §
514A-3 does not allow a declaration to limit the definition
“limited common elements” to how a declaration defines the term.
HRS § 514A-3’s definition of common elements includes the phrase
“unless otherwise provided in the declaration.” The statute
therefore expressly allows a declaration to designate common
elements that differ from the statutory definition. HRS § 514A-
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3’s definition of limited common elements, however, does not
contain that exception. Rather, it expressly provides that
although common elements designated as limited common elements
in a declaration are included as limited common elements,
“limited common elements” also means those common elements
designated in a declaration “as reserved for the use of” certain
apartments, whether or not they are characterized as “limited
common elements” in a declaration.11
Therefore, although Section A(3) of the Casa Declaration
seemingly restricts limited common elements to specifically
enumerated items, as a matter of law, all common elements
reserved for the use of certain apartments within the Project
are limited common elements, whether or not they are so
designated in the Casa Declaration.
Against this backdrop, we turn to address how the Project’s
elevators, lanai railings, drains, and cable television wires
must be categorized.
3. The Specific Items in Dispute
a. Elevators
As argued by Harrison, Section A(3) of the Casa Declaration
specifically defines limited common elements to include
11
This definition would appear to prevent a developer from designating
certain common elements for the exclusive use of certain apartments while
requiring all owners to share in the expenses for something they could not
use or access.
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“entries, stairways, hallways and walkways in any residential
building of the project . . . appurtenant to and for the
exclusive use of the apartments of such building.”
Although elevators are not expressly referenced, we agree
with Harrison that they are an integral part of the system of
“entries, stairways, hallways, and walkways” exclusive to the
residential buildings. The residents use the elevators as a
means of access to their individual apartments on the upper
floors. For those who live on the upper floors and are unable
to walk up the stairs, the elevators are the only means of
“entry” into their respective apartments. In addition, Section
A(3)(c) of the Casa Declaration provides that “[t]he hallways
and walkways on any floor of any residential building of the
project shall be appurtenant to and for the exclusive use of the
apartments on such floor.” Therefore, the hallways and walkways
are not even available for Harrison to use, as she owns two
commercial units in buildings separated from the three
residential buildings.
We therefore hold that, pursuant to the Casa Declaration,
the elevators are “limited common elements.”
As pointed out earlier, with respect to “limited common
elements,” if the Casa Declaration’s definition conflicted with
HRS § 514A-3’s definition, conflicting statutory law would
control. In this case, however, our holding based on the Casa
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Declaration is also supported by HRS Chapter 514A. Pursuant to
HRS § 514A-3, all common elements reserved for the use of (a)
certain apartment(s) within the Project are limited common
elements, whether or not they are so designated in the Casa
Declaration. Use of the elevators is limited to owners of
residential apartments.
In addition, contrary to Casa’s assertion, our holding is
actually supported by HRS § 514A-3(6) (Supp. 2007), which
provides “elevators . . . existing for common use” are common
elements. As the phrase “existing for common use” modifies
“elevators,” only elevators which “exist for common use” are
common elements under this statute. In this Project, the
commercial buildings do not have elevators and the elevators are
for the exclusive use of the residential apartments.
Also, contrary to Casa’s position, HRS § 514A-13(h) is not
relevant under the circumstances. This statute provides that
“[l]obby areas, swimming pools, recreation areas, saunas,
storage areas, hallways, trash chutes, laundry chutes, and other
similar areas not located inside apartments intended for
residential use or the conduct of a business shall constitute
common elements unless designated as limited common elements by
the declaration.” (emphasis added) For the reasons stated
above, this Project’s elevators are limited common elements
under the Casa Declaration.
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Therefore, pursuant to the Casa Declaration, and as
supported by statutory law, the elevators, which are exclusive
to the residential buildings, are limited common elements. The
circuit court and the ICA erred in ruling otherwise.
b. Lanai Railings
Harrison also argues that the lanai railings are limited
common elements. According to Sections A(1)(b)(1), (2), and (3)
of the Casa Declaration quoted in Section IV(B)(2) above,
“lanais” are deemed to be included within the apartments.
According to Section A(1)(d) of the Declaration, apartments do
not include “the undecorated or unfinished surfaces of the
perimeter walls or interior load-bearing walls, [or] the floors
and ceiling surrounding each apartment,” which are common
elements. “Lanai railings” do not appear to constitute
“perimeter walls” classified as common elements under this
provision.
The same provision provides that “[e]ach apartment shall be
deemed to include all the walls and partitions which are not
load bearing within its perimeter walls. . . .” “Lanai railings”
also do not appear to fall within this provision.
Therefore, although the Declaration defines “lanais” to be
included within the apartments, the Declaration is unclear
whether “lanai railings” are part of the apartments or are
common elements.
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Casa argues that “lanai railings” are common elements under
the Declaration because they are “supports” under Section
A(2)(b). This provision includes “[a]ll foundations, floor
slabs, columns, girders, beams, supports, unfinished perimeter
and load-bearing walls, roofs, chases, entries, stairways and
walkways of said buildings” within common elements.
We need not address this argument, however, because Section
A(2) controls. As noted earlier, Section A(2)of the Declaration
begins with the pronouncement that “all of the remaining
portions of the project” not specifically included within the
apartments are “common elements.” As “lanai railings” are not
otherwise included within the definition of apartments they are,
by default, common elements under Section A(2) of the
Declaration.
We then turn to Section A(3), which defines limited common
elements under the Declaration. This provision does not
specifically classify lanai railings as limited common elements.
However, as also previously noted, pursuant to HRS § 514A-3,
common elements reserved for the use of certain apartments
within the Project are limited common elements, whether or not
they are so designated in a declaration. Therefore, we hold
that the Project’s lanai railings are also limited common
elements.
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Casa argues that the lanai railings are common elements
based on HRS § 514A-3, which provides that “[a]ll other parts of
the property necessary or convenient to its . . . safety” are
common elements. Lanai railings are clearly necessary to
“safety” of the “property.”12 However, HRS § 514A-3 mandates
classification of these common elements as limited common
elements because they are for the use of (a) certain
apartment(s) to the exclusion of the other apartments.
c. Drains and Cable Television Wires
Harrison argues the ICA erred in characterizing the drains
and cable television wires as common elements because they are
located only in the residential buildings and are exclusively
for residential use.13 To repeat, we must first examine the Casa
Declaration. Section A(1)(d) of the Declaration provides that
“pipes, wires, conduits, or other utilities or service lines
running through such apartments which are utilized for or serve
more than one apartment” are common elements. Section A(2)(d)
12
“Property” is defined by HRS § 514A-3 in relevant part to “mean[] and
include[] the land, . . . the building or buildings, all improvements and all
structures thereon, . . . which have been or are intended to be submitted to
the regime established by this chapter.”
13
In her question presented in her Application, Harrison refers to
“related interior improvements” but not “drains” or “cable television wires.”
However, besides the elevators and lanais, the only remaining issues from the
ICA decision are the “drains,” which she argues in her Application, and
“cable television wires,” which the ICA held were common elements.
Therefore, we infer Harrison meant “drains” and “cable television wires” when
she referred to “related interior improvements.”
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of the Casa Declaration also provides that “[a]ll . . . wiring,
pipes and other central and appurtenant transmission facilities
and installations over, under and across the project for
services such as . . . water, . . . sewer, . . . telephone and
radio and television signal distribution” constitute common
elements.
Thus, the Casa Declaration specifies that drains and cable
television wires are common elements if they “are utilized for
or serve more than one apartment” or they are “over, under and
across the project.” Reviewed de novo, the record does not
reflect whether the drains and cable television wires for which
expenses were incurred are parts of specific apartments or are
common elements or limited common elements. Therefore, based on
the record before us, summary judgment was inappropriately
granted.
C. Estoppel by Acquiescence
In addition to ruling that all disputed items are for
common elements, the circuit court alternatively ruled Harrison
liable based on application of the doctrine of estoppel by
acquiescence, because she had served as a Casa Board member and
had apparently approved budgets that included the disputed
expenses. Because it ruled that the elevators, lanai railings,
drains, and cable television wires were common elements, the ICA
also set aside the circuit court’s estoppel by acquiescence
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ruling only with respect to the pest control and cable
television expenses for which it found genuine issues of
material fact precluding summary judgment. We have now held
that the elevators and lanai railings in the residential
buildings are limited common elements. We have also ruled that,
based on the record, genuine issues of material fact preclude
summary judgment as to the drains and cable television wires.
Because the ICA upheld the circuit court’s summary judgment
ruling that elevators, lanai railings, drains, and cable
television wires were common elements, it did not address
whether the circuit court erred by alternatively applying
estoppel by acquiescence to these categories of disputed items.
If the circuit court was correct in alternatively ruling in
favor of Casa based on this defense as to the elevators, lanai
railings, drains, and cable television wires, Harrison remains
responsible and no remand becomes necessary as to the items we
addressed on certiorari. We must therefore also address whether
the circuit court erred by alternatively granting summary
judgment based on estoppel by acquiescence.
Under Hawaiʻi law, the statute of limitations for a breach
of contract is six years. HRS § 657-1(1) (2016). Claims can be
barred earlier based on an estoppel defense. In this case, Casa
argues applicability of estoppel by acquiescence. “Hawaiʻi
recognizes the theory of quasi-estoppel, which is ‘a species of
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equitable estoppel which has its basis in election, waiver,
acquiescence, or even acceptance of benefits and which precludes
a party from asserting to another’s disadvantage, a right
inconsistent with a position previously taken by [the party].’”
Cvitanovich–Dubie v. Dubie, 123 Hawaiʻi 266, 276, 231 P.3d 983,
993 (App. 2010) (quoting Anderson v. Anderson, 59 Haw. 575, 589,
585 P.2d 938, 947 (1978). Furthermore, “[u]nlike equitable
estoppel, an estoppel by acquiescence does not require a showing
of detrimental reliance or prejudice.” 31 C.J.S. Estoppel and
Waiver § 175 (2018).
Estoppel by acquiescence does, however, require that the
party being charged with estoppel have knowledge of relevant
facts. Anderson, 59 Haw. at 589, 585 P.2d at 946. As we have
stated, “Before one may be charged with knowledge it must appear
that he possesses full knowledge of all the material particulars
and circumstances and was fully apprised of the effect of the
acts ratified and of his legal rights in the matter.” Id.
(parentheses omitted).
Here, the circuit court erred in alternatively granting
summary judgment in favor of Casa based on estoppel by
acquiescence. Casa did not meet its burden of producing
evidence that no genuine issue of material facts exists with
respect to the essential elements of this defense. See Ralston
v. Yim, 129 Hawaiʻi 46, 56-57, 292 P.3d 1276, 1286-87 (2013).
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Casa produced Gand’s declaration and records to indicate
Harrison served on the Board to establish estoppel by
acquiescence. Casa asserts that Harrison “did not object and
voted to” approve common expenses regarding the disputed items.
Casa did not, however, establish that Harrison “possesse[d] full
knowledge of all the material particulars and circumstances and
was fully apprised of the effect of the acts ratified and of
[her] legal rights in the matter.” The fact that Harrison was
an owner of commercial apartments for thirty years and served on
the Board is insufficient to establish this knowledge, which
Harrison disputes. Therefore, genuine issues of material fact
also precluded summary judgment on the estoppel by acquiescence
defense as to elevators, lanai railings, drains, and cable
television wires.14
V. Conclusion
Based on the foregoing, we hold that the elevators and
lanai railings are limited common elements. We also hold that
genuine issues of material fact exist, based on this record, as
to whether the drains and cable television wires are common
elements. Pursuant to the Casa Declaration and HRS § 514A-
14
The ICA also so ruled with respect to the pest control and cable
television expenses.
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15(a), Harrison is not responsible for expenses of limited
common elements. If, on remand, it is determined that the
challenged drain and cable television wire expenses addressed on
certiorari as well as the pest control and cable television
expenses remanded by the ICA were common expenses for common
elements, then Harrison will be liable for her pro rata share of
those expenses. If, on remand, expenses for drains, cable
television wires, cable television services, and pest control
services are determined not to be common expenses for common
elements, however, it must still be determined whether Harrison
is liable for those expenses as well as for the elevator and
lanai railing expenses based on estoppel by acquiescence.
Accordingly, we affirm the ICA’s SDO and JOA as to its
rulings regarding the cable television service and pest control
services expenses and otherwise vacate the SDO and JOA. We also
vacate the circuit court’s “Order Denying Plaintiff’s Motion for
Summary Judgment, Filed 4/17/14 and Granting Defendant Casa de
Emdeko, Incorporated’s Cross Motion for Summary Judgment,” filed
on July 22, 2014, and the “Amended Final Judgment,” filed on
October 8, 2015, in their entireties, and remand this case to
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the circuit court for further proceedings consistent with this
opinion.
Francis L. Jung /s/ Mark E. Recktenwald
for petitioner
/s/ Paula A. Nakayama
Wesley H. H. Ching
for respondent /s/ Sabrina S. McKenna
/s/ Richard W. Pollack
/s/ Michael D. Wilson
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