NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
08-AUG-2022
08:02 AM
Dkt. 52 SO
NO. CAAP-XX-XXXXXXX
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI#I
DOREEN R. McKERNAN and MICHAEL S. McKERNAN,
PlaintiffS-Appellees, v.
THE ASSOCIATION OF APARTMENT OWNERS OF
KAMAOLE SANDS, Defendant-Appellant,
and
JOHN DOES 1-100; JANE DOES 1-100;
DOE PARTNERSHIPS 1-100; DOE CORPORATIONS 1-100;
and DOE ENTITIES 1-100, Defendants
APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUIT
(CIVIL NO. 18-1-0493(1))
SUMMARY DISPOSITION ORDER
(By: Leonard, Presiding Judge, Wadsworth and McCullen, JJ.)
Defendant-Appellant The Association of Apartment Owners
of Kamaole Sands (AOAO) appeals from the July 31, 2019 Order
Denying Defendant [AOAO]'s Motion to Dismiss Complaint Filed
December 21, 2018, or, in the Alternative, Stay Lawsuit and
Compel Arbitration (Order Denying Arbitration) entered by the
Circuit Court of the Second Circuit (Circuit Court)1 in favor of
1
The Honorable Rhonda I.L. Loo presided.
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Plaintiffs-Appellees Doreen R. McKernan and Michael S. McKernan
(McKernans).
The AOAO raises a single point of error on appeal,
contending that the Circuit Court erred in entering the Order
Denying Arbitration, because Count I (Declaratory Relief), Count
II (Breach of Fiduciary Duty and Other Common Law Duties), Count
III (Breach of Contract, Breach of Governing Documents and
Protective Covenants, Conditions and Restrictions), Count IV
(Negligence), Count V (Specific Performance), Count VI
(Injunction/Constructive Eviction), Count VII (Equitable
Accounting), second Count VII (Violation of the Condominium Act),
and Count VIII (Breach of the AOAO's Declaration) of the AOAO's
First Amended Complaint for Damages and Declaratory Relief filed
on April 18, 2019 (Complaint) are not exempt from arbitration
pursuant to Hawaii Revised Statutes (HRS) § 514B-162(b)(4)
(2018), and should have been dismissed, or stayed and ordered to
arbitration pursuant to Section 28 of the AOAO's Declaration
and/or HRS § 514B-162(a) (2018).
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 by the parties, we
resolve the AOAO's point of error as follows:
The AOAO argues that the Circuit Court erred in
entering the Order Denying Arbitration because the Complaint
includes arbitrable claims for relief, along with a claim for
2
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
injunctive relief, which the AOAO acknowledges is exempt from
arbitration.
The parties agree that the AOAO and its members are
subject to the AOAO's Declaration, as amended (Declaration), and
Hawaii's Condominium Property Act, which is codified as HRS
Chapter 514B.
Section 28 of the Declaration provides:
28. Arbitration of Disputes. As, and to the extent,
and in the manner, provided for in Part VII of Chapter
514A,[HRS], as amended, at the request of any party, any
dispute concerning or involving one or more apartment owners
and the Association, Board of Directors, Managing Agent or
one or more other apartment owners relating to the
interpretation, application or enforcement of the
Condominium Property Act, this Declaration, the By-Laws or
the administrative rules and regulations adopted in
accordance with the By-laws shall be submitted to mediation
and/or arbitration. The arbitration of appropriate disputes
shall be conducted, unless otherwise agreed by the parties,
in accordance with the rules adopted by the Real Estate
Commission and the provisions of Chapter 658 [HRS]. {Part
VII, HRS Chapter 514A}
After HRS Chapter 514A was repealed and replaced with
HRS Chapter 514B, effective July 1, 2005,2 the Declaration was
amended in 2007 to include, inter alia, Section 29 of the
Declaration, which provides in relevant part:
29. Governing Law. Notwithstanding anything herein
or in the By-Laws to the contrary:
1. This Project shall be governed by the provisions
of Hawaii Revised Statutes Chapter 514B, as
amended to the fullest extent permitted by
law[.]
Thus, pursuant to the unambiguous language of the
Declaration, as and to the extent provided in HRS Chapter 514B,
at the request of any party, any dispute concerning or involving
2
2004 Haw. Sess. Laws Act 164, § 2 at 796-98.
3
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
the McKernans, who are apartment owners at Kamaole Sands, and the
AOAO, relating to the interpretation, application or enforcement
of the Condominium Property Act, the Declaration, the By-Laws or
the administrative rules and regulations adopted in accordance
with the By-laws must be submitted to mediation and/or
arbitration. The AOAO relies on this arbitration provision and
acknowledges that it is governed by HRS Chapter 514B.
HRS § 514B-162(a) includes a mandatory arbitration
provision:
§ 514B-162 Arbitration. (a) At the request of any
party, any dispute concerning or involving one or more unit
owners and an association, its board, managing agent, or one
or more other unit owners relating to the interpretation,
application, or enforcement of this chapter or the
association's declaration, bylaws, or house rules adopted in
accordance with its bylaws shall be submitted to
arbitration. The arbitration shall be conducted, unless
otherwise agreed by the parties, in accordance with the
rules adopted by the commission and of chapter 658A;
provided that the rules of the arbitration service
conducting the arbitration shall be used until the
commission adopts its rules; provided further that where any
arbitration rule conflicts with chapter 658A, chapter 658A
shall prevail; and provided further that notwithstanding any
rule to the contrary, the arbitrator shall conduct the
proceedings in a manner which affords substantial justice to
all parties[.]
HRS § 514B-162(b) exempts certain disputes from
arbitration, including:
(b) Nothing in subsection (a) shall be interpreted to
mandate the arbitration of any dispute involving:
. . . .
(4) Actions seeking equitable relief involving
threatened property damage or the health
or safety of unit owners or any other
person[.]
The dispute between the parties, as alleged in the
Complaint, involves several incidents where the McKernans'
4
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
apartment was flooded with water and sewage, causing significant
damage, and posing a health hazard to the McKernans and their
guests. The Complaint alleges that wastewater pipes that serve
more than one unit are common elements that must be fully
investigated and repaired by the AOAO. As recognized by the
AOAO, Count VI of the Complaint seeks equitable relief ordering
that the AOAO take action and eliminate the continuing health
hazard posed by the raw sewage backups.
The AOAO does not dispute that Count VI falls within
the scope of HRS § 514B-162(b)(4). Rather, the AOAO contends
that all of the McKernans' other claims are arbitrable pursuant
to HRS § 514B-162(a). The McKernans submit that, as concluded by
the Circuit Court, pursuant to the plain language of HRS § 514B-
162(b), the Complaint falls squarely within HRS § 514B-162(b)(4)
and is therefore exempt from mandatory arbitration pursuant to
HRS § 514B-162(a). The Order Denying Arbitration states, in
part:
. . . [The AOAO] argues that . . . [the Declaration]
and [HRS] Section 514B-162(a) unambiguously requires
arbitration.
[The McKernans] do not dispute that Section 28 of [the
Declaration] provides an unequivocal mandatory dispute
resolution process for disputes involving an owner and the
AOAO relating to the interpretation, application or
enforcement of the project's governing documents and Hawaii
Condominium Property Act.
[The McKernans] argue, however, that the dispute falls
under an exception to HRS Section 514B-162(b) and is not
subject to mandatory arbitration. HRS 514B-162(b) does
state that nothing in subsection (a) shall be interpreted to
mandate the arbitration of any dispute involving actions
seeking equitable relief involving threatened property
damage or the health or safety of unit owners or any other
person.
5
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
The Court finds that the instant complaint squarely
falls within the purview of HRS 514B-162(b), as it demands
equitable relief in the form of the order directing [the
AOAO] to inspect and repair or replace defective portions of
the plumbing system and alleges that the sewage leaks
causing property damage and the threat of the health and
safety of the guests.
Questions of statutory interpretation are questions of
law to be reviewed de novo under the right/wrong standard. Ueoka
v. Szymanski, 107 Hawai#i 386, 392, 114 P.3d 892, 898 (2005).
When construing a statute, our foremost obligation is 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. Bhakta v. Cnty. of Maui, 109 Hawai#i 198,
208, 124 P.3d 943, 953 (2005) (citation and internal quotation
marks omitted). Statutory construction is guided by the
following well established principles:
[O]ur foremost obligation is 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.
And we must read statutory language in the context of the
entire statute and construe it in a manner consistent with
its purpose.
When there is doubt, doubleness of meaning, or
indistinctiveness or uncertainty of an expression used in a
statute, an ambiguity exists[.]
Ueoka, 107 Hawai#i at 392-93, 114 P.3d at 898-99 (internal
citation omitted).
Here, the plain language of HRS § 514B-162(b)(4) is
clear and unambiguous. Like HRS § 514B-162(b)(5) & (b)(7),
(b)(4) exempts certain "actions" from the arbitration mandate in
subsection (a) of the statute. In contrast, HRS §§ 514B-
162(b)(6), exempts certain "claims" from mandatory arbitration.
6
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
See generally HRS § 1-16 (2009) (laws in pari materia shall be
construed with reference to each other). It is well-established
in Hawai#i law, in a variety of contexts, that the term "action"
is synonymous with an entire "suit," as opposed to a claim or
claims, which might be prosecuted within an action or suit. See,
e.g., Leslie v. Estate of Tavares, 93 Hawai#i 1, 4, 994 P.2d
1047, 1050 (2000) (citations omitted) (discussing the definition
of "action"); see also Rapozo v. Better Hearing of Haw., LLC, 120
Hawai#i 257, 260, 204 P.3d 476, 479 (2009) (applying Leslie
definition to the term "action" in HRS § 481K-5(c) (Supp. 2007));
Nelson v. Univ. of Haw., 99 Hawai#i 262, 265, 54 P.3d 433, 436
(2002) (applying Leslie definition to the term "action" in
HRS § 378-5(c) (1993)); accord HRS § 490:1-201(1) (2008)
(regarding the definition of "action"); HRS § 658B-1 (2016)
(defining "action"); cf., e.g., Calleon v. Miyagi, 76 Hawai#i
310, 315-20, 876 P.2d 1278, 1283-88 (1994) (distinguishing
between different claims within a suit). Therefore, when
applicable, HRS § 514B-162(b)(4) applies to the action, not a
claim or claims within the action.
While the parties here were free to otherwise agree to
a different scope of mandatory arbitration, there is no evidence
or argument that they did so. Actions – not individual claims
within an action – seeking equitable relief involving threatened
property damage or the health or safety of unit owners or any
other person are statutorily exempted from the arbitration
7
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
mandate in HRS § 514B-162(a). The McKernans' suit or action, as
set forth in the Complaint, seeks equitable relief involving
threatened property damage or the health or safety of the
McKernans and/or their guests. Thus, we conclude that the
Circuit Court did not err in rejecting the AOAO's argument that
certain claims within the suit were subject to mandatory
arbitration pursuant to HRS § 514B-162(a), based on the exemption
set forth in HRS § 514B-162(b)(4).3
Accordingly, the Circuit Court's July 31, 2019 Order
Denying Arbitration is affirmed.
DATED: Honolulu, Hawai#i, August 8, 2022.
On the briefs: /s/ Katherine G. Leonard
Presiding Judge
Wesley H.H.Ching,
Nicholas P. Ching, /s/ Clyde J. Wadsworth
(Fukunaga Matayoshi Ching Associate Judge
& Kon-Herera),
for Defendant-Appellant. /s/ Sonja M.P. McCullen
Associate Judge
Terrance M. Revere,
Paul V.K. Smith,
Magdalena Bajon,
(Revere & Associates),
for Plaintiffs-Appellees.
3
The AOAO's argument that the McKernans should be estopped from
relying on HRS § 514B-162(b)(4) is raised for the first time on appeal and is
deemed waived. See, e.g., Ass'n of Apartment Owners of Wailea Elua v. Wailea
Resort Co., Ltd, 100 Hawai#i 97, 107, 58 P.3d 608, 618 (2002).
8