Suzuki v. Mowry

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
29-DEC-2020
07:49 AM
Dkt. 54 SO
NO. CAAP-XX-XXXXXXX
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI#I
JOHN Y. SUZUKI AND LOLA L. SUZUKI,
Plaintiffs-Appellants,
v.
JOHN MOWRY dba TOWN & COUNTRY BUILDERS, LLC,
Defendant-Appellee
APPEAL FROM THE DISTRICT COURT OF THE FIRST CIRCUIT
HONOLULU DIVISION
(CIVIL NO. 1RC17-1-3158)
SUMMARY DISPOSITION ORDER
(By: Ginoza, Chief Judge, Leonard and Hiraoka, JJ.)
This appeal arises out of a contract between
Plaintiffs-Appellants John Y. Suzuki and Lola L. Suzuki
(collectively, the Suzukis) and Defendant-Appellant John Mowry
dba Town & Country Builders, LLC (T&C Builders) for renovation
work to the Suzukis' home. The Suzukis, self-represented, appeal
from the August 23, 2017 "Order Granting Defendant's Motion to
Compel Arbitration" (Order Granting Motion to Compel Arbitration)
entered in the District Court of the First Circuit (district
court).1
Upon careful review of the record and the briefs
submitted by the parties, and having given due consideration to
the arguments advanced and the issues raised, we affirm.
1
The Honorable Michael K. Tanigawa presided.
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
I. Background
In 2015, the Suzukis applied to the Rehabilitation Loan
Program (Loan Program) administered by the Department of
Community Services of the City and County of Honolulu (DCS).2
The Suzukis' application was approved and the Suzukis ultimately
selected T&C Builders as their general contractor. On or about
December 14, 2015, the Suzukis signed and accepted T&C Builders'
construction proposal dated November 20, 2015 (Proposal). On May
6, 2016, the Suzukis executed a DCS form contract (DCS Contract)
with T&C Builders that consisted of a one-page "Construction
Contract" and a six-page document titled "General Conditions of
the Contract." Attached to the Construction Contract as "Exhibit
A" was a progress payment schedule. The Construction Contract
also incorporated by reference the Proposal through a provision
that read: "The Contract shall consist of this Construction
Contract and the following documents: Bid and/or Proposal, Work
Write-Up, General Conditions of the Contract, Specifications, and
Plans and/or Drawings, if any."
On July 11, 2016, the Suzukis executed another
construction contract (July 11, 2016 Contract) submitted by T&C
Builders that contained a lien provision and other disclosures
required under HRS § 444-25.5 (2013) as well as additional terms
and conditions.3 T&C Builders asserts that the purpose of the
July 11, 2016 Contract was to supplement the DCS Contract and
comply with HRS § 444-25.5. Notably, the July 11, 2016 Contract
contained the following arbitration provision:
35. Disputes: Disputes as to removal or replacement of
work and as to damages for alleged defective materials
or workmanship or deviations from the plans and
specifications, etc., and as to alleged extras, and
other disputes arising out of the contract, plans or
specifications, shall be decided by a third party
selected by both the CONTRACTOR and the OWNER, or if
2
The Loan Program uses federal funds to make low-interest loans to
eligible homeowners who wish to make repairs or improvements to their homes.
3
This contract document was dated May 6, 2016, but the Suzukis signed it
on July 11, 2016.
2
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they cannot agree, then by three disinterested
arbitrators, one selected by the OWNER, one by the
CONTRACTOR, and the two thus chosen, all expenses
incidental thereto to be shared equally between the
CONTRACTOR and the OWNER. The arbitrator or
arbitrators shall have full power to inquire into and
determine all claims advanced by either party his or
her award shall be final and binding with no further
appeal to either party.
After T&C Builders began working on the renovations to
the Suzukis' home, several disputes arose regarding the work done
by T&C Builders. Due to the ongoing disputes, T&C Builders was
unable to complete the project and terminated the contract by
letter through counsel to the Suzukis dated March 20, 2017.
On May 8, 2017, the Suzukis filed a Complaint for
Assumpsit-Money Owed against T&C Builders for $20,000, alleging
poor workmanship, deviation from plans, and other deficiencies.
On July 14, 2017, T&C Builders filed a Motion to Compel
Arbitration based on the arbitration provision in the July 11,
2016 Contract. The district court granted the motion.
On August 14, 2017, the Suzukis filed a motion for
reconsideration of the Order Granting Motion to Compel
Arbitration. On September 12, 2017, the district court denied
the motion for reconsideration without a hearing.
On September 15, 2017, the Suzukis timely filed a
Notice of Appeal.
II. Discussion
A motion to compel arbitration is reviewed de novo and
based on the same standard that applies to a summary judgment
ruling. See Koolau Radiology, Inc. v. Queen's Med. Ctr., 73
Hawai#i 433, 439-40, 834 P.2d 1294, 1298 (1992) ("[ W]e review
this [motion to compel arbitration] de novo, using the same
standard employed by the trial court and based upon the same
evidentiary materials as were before it in determination of the
motion.") (citations, internal quotation marks, and alterations
omitted)).
"When presented with a motion to compel arbitration,
the court is limited to answering two questions: 1) whether an
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arbitration agreement exists between the parties; and 2) if so,
whether the subject matter of the dispute is arbitrable under
such agreement." Siopes v. Kaiser Found. Health Plan, Inc., 130
Hawai#i 437, 446, 312 P.3d 869, 878 (2013) (internal quotation
marks omitted) (quoting Douglass v. Pflueger Haw., Inc., 110
Hawai#i 520, 530, 135 P.3d 129, 139 (2006)). In this case, the
Suzukis challenge both the existence of an arbitration agreement
and whether their underlying claims are arbitrable.
It is well-established that "[t]he party seeking to
compel arbitration carries the initial burden of establishing
that an arbitration agreement exists between the parties." Id.(citation omitted). If the initial burden is met, the burden
then shifts to the opposing party to "present evidence on its
defenses to the arbitration agreement." Id. (citation omitted).
"[I]n order to be valid and enforceable, an arbitration agreement
must have the following three elements: (1) it must be in
writing; (2) it must be unambiguous as to the intent to submit
disputes or controversies to arbitration; and (3) there must be
bilateral consideration." Id. at 447, 312 P.3d at 879 (quoting
Douglass, 110 Hawai#i at 531, 135 P.3d at 140).
On appeal, the Suzukis do not dispute that the
arbitration provision is in writing or that it is supported by
bilateral consideration. The Suzukis' main challenge seems to be
regarding the second element of an enforceable arbitration
agreement, that is, the Suzukis argue they did not assent to the
entire July 11, 2016 Contract and that the contract was therefore
void because they executed it under pressure of time and based on
misrepresentations by John Mowry (Mowry), the owner of T&C
Builders, regarding its contents. The Suzukis argue that they
were not afforded a reasonable opportunity to read the July 11,
2016 Contract for themselves as Mowry told them it had to be
signed when he was there. According to the Suzukis, they did not
understand what they were signing but Mowry convinced them to
sign the contract by telling them it was primarily for the lien
provision but that it was otherwise like the DCS Contract. The
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Suzukis also assert, without supporting evidence in the record,
that they have medical conditions that affect their ability to
read and understand complicated terms, that Mowry was aware of
their conditions but did not fully explain the terms of the July
11, 2016 Contract, and that they would not have signed the July
11, 2016 Contract if they had known the details of the various
provisions, including the arbitration provision.
The arguments the Suzukis made before the district
court fall short of the arguments they now make on appeal. The
Suzukis only raised a challenge as to the lien provision of the
July 11, 2016 Contract. They did not argue below that they did
not read or understand the entirety of the July 11, 2016 Contract
or that they were unaware of the arbitration provision. The
district court therefore did not have the opportunity to address
these arguments and they must be deemed waived. See Cty. of
Hawai#i v. C&J Coupe Family Ltd. P'ship, 119 Hawai#i 352, 373, 198
P.3d 615, 636 (2008).
The Suzukis' primary contention below was that no
contractual relationship existed between the Suzukis and T&C
Builders or that any contractual relationship was invalidated by
fraudulent inducement. To that extent, the arbitration provision
may still be enforced even if all or part of the contract in
which it appeared was unenforceable. Lee v. Heftel, 81 Hawai#i
1, 4, 911 P.2d 721, 724 (1996) ("[A]rbitration clauses are
separable from the contracts in which they are embedded, and
where no claim is made that fraud was directed to the arbitration
clause itself, a broad arbitration clause will be held to
encompass arbitration of the claim that the contract itself was
induced by fraud.") (citation omitted)).
We must review the Motion to Compel Arbitration based
upon the same evidentiary materials as were before the district
court. Koolau Radiology, Inc., 73 Hawai#i at 440, 834 P.2d at
1298. In doing so, we conclude that T&C Builders met its initial
burden of proving that the Suzukis assented to be bound by the
arbitration provision as evidenced by the signatures on the July
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11, 2016 Contract. The first set of signatures indicated
acceptance of the terms and conditions of the agreement, which
included the arbitration provision. The second set of signatures
was on the very page that the arbitration provision was located.
Of significance, the handwritten note made by the Suzukis on the
provision immediately preceding the arbitration provision
indicates that they did, in fact, have the opportunity to review
the terms.
Since T&C Builders satisfied its initial burden, the
burden then shifted to the Suzukis to present evidence of any
defenses. The Suzukis failed to provide such evidence to the
district court.
We now address whether the dispute in this matter falls
under the scope of the arbitration provision. The provision, by
its terms, suggests a broad scope in its mandate of arbitration
for disputes arising out of "the contract, plans or
specifications[.]" The July 11, 2016 Contract does not contain a
definition of the phrase, "the contract, plans or specifications"
or any of the individual terms within the phrase. However, the
July 11, 2016 Contract provided that the scope of work under the
contract included the work outlined in the Proposal, and that the
terms and conditions of the DCS Contract were applicable. The
Suzukis' complaint alleged poor workmanship, deviation from
plans, and other deficiencies. These claims arose directly from
the work done by T&C Builders pursuant to the contracts, in
particular, the Proposal. Thus, the underlying dispute in this
matter, as set forth in the Suzukis' complaint, raises issues
within the scope of the arbitration provision.
Lastly, the district court did not abuse its discretion
in denying the Suzukis' motion for reconsideration of the Order
Granting Motion to Compel Arbitration. The evidence and
arguments that the Suzukis proffered in support of the motion for
reconsideration could and should have been submitted in support
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of their opposition to the motion to compel arbitration. See
Kamaka v. Goodsill Anderson Quinn & Stifel, 117 Hawai#i 92, 104,
176 P.3d 91, 103 (2008).
III. Conclusion
Based on the foregoing, we affirm the August 23, 2017
Order Granting Motion to Compel Arbitration.
DATED: Honolulu, Hawai#i, December 29, 2020.
On the briefs: /s/ Lisa M. Ginoza
Chief Judge
John Y Suzuki and
Lola L. Suzuki, /s/ Katherine G. Leonard
Plaintiffs-Appellants pro se. Associate Judge
Karin L. Holma, /s/ Keith K. Hiraoka
Georgia Anton, Associate Judge
for Defendant-Appellee.
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