County of Hawaii v. UNIDEV, LLC.Â

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Electronically Filed
Supreme Court
SCWC-10-0000188
22-MAY-2013
09:19 AM

IN THE SUPREME COURT OF THE STATE OF HAWAI#I

---o0o---

COUNTY OF HAWAI#I, a municipal
corporation of the State of Hawai#i,
Respondent/Plaintiff-Appellee,

vs.

UNIDEV, LLC, a Delaware limited liability company,
Petitioner/Defendant and Counterclaimant-Appellant,

vs.

COUNTY OF HAWAI#I, a municipal corporation of the State of
Hawai#i, HAWAII ISLAND HOUSING TRUST, a Hawai#i corporation; and
WAIKOLOA WORKFORCE HOUSING, LLC, a Hawai#i limited liability
company, Respondents/Counterclaim Defendants-Appellees,
(CIVIL NO. 09-1-264K)

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COUNTY OF HAWAI#I, a municipal
corporation of the State of Hawai#i,
Respondent/Plaintiff-Appellant,

vs.

UNIDEV, LLC, a Delaware limited liability company,
and UNIDEV HAWAII, LLC, a Delaware limited
liability company, Petitioners/Defendants-Appellees.
(CIVIL NO. 10-1-427K)

SCWC-10-0000188

CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-10-0000188;1 CIVIL NOS. 09-1-264K and 10-1-427K)

May 22, 2013

RECKTENWALD, C.J., NAKAYAMA, ACOBA, MCKENNA, AND POLLACK, JJ.

OPINION OF THE COURT BY ACOBA, J.

We hold first, that, Hawai#i Revised Statutes (HRS) §
658A-28(a) (Supp. 2005),2 which enumerates the appeals that “may”

1
CAAP-11-0000019 was consolidated with CAAP-10-0000188 on November
23, 2011.

2
HRS § 658A-28 provides as follows:

§ 658A-28 Appeals.
(a) An appeal may be taken from:

(1) An order denying a motion to compel arbitration;

(2) An order granting a motion to stay arbitration;

(3) An order confirming or denying confirmation of an
award;

(4) An order modifying or correcting an award;

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be taken from a court order concerning an arbitration proceeding,

does not represent an exclusive list of appealable orders. Thus,

although not listed in HRS § 658A-28(a), the order compelling

arbitration in the instant case, is sufficiently “final” under

our collateral order doctrine to be appealable under the general

civil matters appeal statute, HRS § 641-1 (Supp. 2005).3 We

therefore affirm the similar conclusion in the October 17, 2011
Order of the Intermediate Court of Appeals (ICA) Denying [the]

September 19, 2011 Motion to Dismiss Appeal for Lack of

Jurisdiction filed by Petitioners/Defendants-Appellees UniDev,

LLC (UniDev) and UniDev Hawai#i, LLC (UniDev Hawai#i)

(collectively, Petitioners). Second, we hold that under the

circumstances of this case, the scope of the arbitration clause

contained in the “Development Services Agreement” (DSA) between

Respondent/Plaintiff-Appellant County of Hawai#i (Respondent) and

UniDev encompassed all claims of Respondent and the counterclaims

of Petitioners. To the extent that the ICA held otherwise, the
ICA’s August 31, 2012 opinion and October 18, 2012 judgment on

(5) An order vacating an award without directing a
rehearing; or

(6) A final judgment entered pursuant to this chapter.

(b) An appeal under this section shall be taken as
from an order or a judgment in a civil action.

(Emphases added.)

3
HRS § 641-1 provides in relevant part as follows:

(a) Appeals shall be allowed in civil matters from all final
judgments, orders, or decrees of circuit and district courts and
the land court to the intermediate appellate court, subject to
chapter 602.

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appeal are vacated. The December 17, 2010 Order Granting

Counterclaimant [UniDev’s] Motion to Compel Alternative Dispute

Resolution and to Stay Proceedings, and the January 3, 2011

Amended Order Granting Counterclaimant [UniDev’s] Motion to

Compel Alternative Dispute Resolution and to Stay Proceedings of

the Circuit Court of the Third Circuit4 (the court) are affirmed.

This case is remanded to the court for further proceedings
consistent with this opinion.

I.

A.

In April 2005, Respondent awarded UniDev a contract to

develop an affordable housing development project (the Project)

in Waikoloa Village on the island of Hawai#i.5 On March 2, 2006,

the parties entered into the DSA. Under the DSA, UniDev agreed

to construct “approximately 800 to 1,200” housing units in the

Waikoloa area. Respondent initially owned the 288 acres of land

that UniDev agreed to develop. However, pursuant to the DSA,
Respondent would “transfer title to the [Property] to a to-be-

formed non-profit entity,” and Respondent would “assign all of

its rights and obligations in and under [the DSA] to [that non-

profit entity].”

The DSA also contained a provision regarding

alternative dispute resolution. The parties agreed that if

4
The Honorable Elizabeth A. Strance presided.

5
The ICA’s decision in this case consolidated two cases, CAAP-10-
0000188 and CAAP-11-0000019.

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mediation of a dispute was not successful, the parties would

proceed to arbitration under state law:
Any dispute arising under the terms of this Agreement that
is not resolved within a reasonable period of time by
authorized representatives of [UniDev] and [Respondent]
shall be brought to the attention of the Chief Executive
Officer of [UniDev] and the Executive Director of
[Respondent] for joint resolution. Thereafter, if the
matter in dispute is still unresolved, then the parties
shall in good faith mutually appoint a mediator to mediate
the dispute, provided that if the parties cannot agree to a
mediator, then either party may petition a court of
competent jurisdiction to appoint a mediator. If the matter
in dispute is still not resolved by mediation, then the
parties shall submit the matter to arbitration as provided
in the “Uniform Arbitration Act” under State law.

(Emphases added.)

As anticipated under the DSA, Respondent transferred

title to the Property to Hawai#i Island Housing Trust (HIHT),

which subsequently leased the Property to Waikoloa Workforce

Housing, LLC (WWH). Respondent, HIHT, and WWH signed a

“Development Agreement,” which provided, in part, that HIHT and

WWH would develop the Project according to Respondent’s

requirements. Failure to do so would result in reversion of the

Property to Respondent. Respondent then entered into an

“Assignment and Assumption Agreement” (Assignment Agreement) with

WWH, which stated in relevant part that Respondent “assigns unto

[WWH] all right, title, and interest of [Respondent] in . . .

[the DSA].”

On February 21, 2008, UniDev and WWH entered into an

“Amended and Restated Development Services Agreement” (ADSA).

UniDev and WWH “wish[ed] to amend the DSA to reflect certain

changes in facts and circumstances that [had] occurred since the

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DSA was first executed by [UniDev] and [Respondent].” Although

the ADSA altered some aspects of the original agreement such as

UniDev’s compensation, the provision relating to alternative

dispute resolution remained largely unchanged.

On April 19, 2009, WWH instructed UniDev to cease all

work on the project. The Property was subsequently returned to

Respondent.
B.

Following UniDev’s termination from the Project,

Respondent filed a Complaint on July 1, 2009 with the court. The

case initiated by the Complaint was designated Civil No. 09-01-

264K. The Complaint asserted five causes of action, including

(1) false claims, in violation of HRS § 46-171 (Supp. 2001),6

(2) intentional misrepresentation, (3) fraudulent inducement,

(4) negligent misrepresentation, and (5) negligence.

On March 29, 2010, Petitioners answered Respondent’s

Complaint and filed a counterclaim against Respondent, HIHT, and
WWH. Petitioners’ counterclaim asserted four counts, including

(1) breach of contract (against Respondent and WWH), (2) quantum

6
HRS § 46-171 provides, in relevant part as follows:

§ 46-171 Actions for false claims to the
counties; qui tam actions.
(a) Any person who:
(1) Knowingly presents, or causes to be
presented, a false or fraudulent claim for
payment or approval;
. . . .
shall be liable to the county for a civil penalty of not
less than $5,500 and not more than $11,000, plus three times
the amount of damages that the county sustains due to the
act of that person.

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meruit (against Respondent and WWH), (3) intentional interference

with contract (against Respondent), and (4) fraudulent transfer

(against HIHT and Respondent).

On November 23, 2010, Respondent filed a second

Complaint, initiating a second action against Petitioners, Civil

No. 10-1-0427K. Respondent reiterated four of the five causes of

action included in its original Complaint. Respondent again
alleged causes of action for false claims pursuant to HRS § 46-

171 (Count I), intentional misrepresentation (Count III),

fraudulent inducement (Count IV), and negligent misrepresentation

(Count V). Regarding all four causes of action, the second

Complaint identified particular circumstances that constituted

the bases of Respondent’s allegations. Respondent also alleged a

new cause of action for unfair and deceptive practices (Count

II), declaring that Petitioners violated HRS §§ 480-2 (1993)7 and

481A-3 (1993) by engaging in several acts.8 On December 16,

7
HRS § 480-2 provides in relevant part as follows:

§ 480-2 Unfair competition, practices, declared unlawful.
(a) Unfair methods of competition and unfair or deceptive
acts or practices in the conduct of any trade or commerce
are unlawful.

8
HRS § 481A-3 provides in relevant part as follows:

§ 481A-3 Deceptive trade practices.
(a) A person engages in a deceptive trade practice when, in
the course of the person’s business, vocation, or
occupation, the person:
(1) Passes off goods or services as those of
another;
(2) Causes likelihood of confusion or of
misunderstanding as to the source, sponsorship,
approval, or certification of goods or services;
. . .
(12) Engages in any other conduct which

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2010, the parties stipulated to consolidate Civil No. 09-01-264K

with Civil No. 10-1-0427K.9

C.

On July 30, 2010, Petitioners filed their arbitration

motion. On December 17, 2010, the court issued an Order granting

the motion. The Order stated in relevant part as follows:
1. [Petitioners] ha[ve] established the existence of a
written agreement that requires [Respondent] and
[Petitioners] to resolve disputes by means of
alternative dispute resolution. Specifically, Section
13 of Rider A of the [DSA] and Section 13 of Rider A
of the [ADSA] both require the parties to resolve “any
dispute arising under the terms of this Agreement”
through the alternative dispute resolution process
described therein. [Respondent] concedes that it
validly executed the DSA, and as to the alternative
dispute resolution provisions, the ADSA simply
restates the DSA.
2. [Respondent’s] claims fall within the scope of the
alternative dispute resolution clause. . . .
Alternative dispute resolution clauses must be broadly
construed, and those covering claims “arising out of”
the agreement have been held to require alternative
dispute resolution of fraud-based claims concerning
the subject matter of the agreement, as do
[Respondent’s] claims.
3. [Petitioners’] counterclaims against [Respondent] are
also subject to the alternative dispute resolution
provisions of the DSA and the ADSA, as [Petitioners]
stated at the hearing. Some of the counterclaims are
expressly based on the DSA and the ADSA, and others
touch matters concerning the DSA and ADSA or arise out
of the relationship between the parties created by
those contracts.

(Emphases added.)

similarly creates a likelihood of
confusion or of misunderstanding.

9
Petitioners did not file an answer or counterclaims to the second
complaint, apparently because the court’s December 17, 2010 Order granting
Petitioner’s Motion to Compel Alternative Dispute Resolution (arbitration
motion) stayed “all proceedings in this court.”

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II.

A.

Respondent appealed to the ICA. After the parties had

filed briefs on the merits, Petitioners filed a Motion to Dismiss

on September 19, 2011, arguing that the ICA lacked subject matter

jurisdiction because the “appeal of an interlocutory order

compelling arbitration is forbidden by the [Federal Arbitration
Act (FAA)].” Petitioners acknowledged that “Hawai#i law allows

appeals from interlocutory orders compelling arbitration under

the collateral order doctrine when the issue of arbitrability is

separable from and collateral to the claims asserted in the

underlying case.” (Citing Sher v. Cella, 114 Hawai#i 263, 266-

67, 160 P.3d 1250, 1253-54 (App. 2007).) However, according to

Petitioners, “in disputes covered by the FAA -- such as this one

-- that rule cannot apply.”

In opposition, Respondent cited Volt Info. Scis., Inc.

v. Bd. of Trs., 489 U.S. 468, 479 (1989), for the proposition
that “where, as here, the parties have agreed to abide by state

rules of arbitration, enforcing those rules according to the

terms of the agreement is fully consistent with the goals of the

FAA, even if the result is that arbitration is stayed where the

act would otherwise permit it to go forward.” (Emphasis in

original.) Respondent noted that the arbitration clauses in both

the DSA and ADSA explicitly stated that Hawai#i law applied;

that, as Petitioners stated in their Answering Brief, “an

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immediate appeal of the order compelling arbitration is permitted

under Hawai#i law;” and therefore, that the ICA had jurisdiction

to hear the appeal.

On October 17, 2011, the ICA denied Petitioners’ Motion

to Dismiss. County of Hawai#i v. Unidev LLC, No. CAAP-11-

0000019, 2011 WL 4998491, at *1 (App. Oct. 17, 2011) (Unidev I).

The ICA related that under the FAA, “the courts and arbitrators
must give effect to the contractual rights of the parties, that

the parties’ intentions control, that the parties may limit the

issues that they choose to arbitrate, and that ‘parties may agree

on rules under which any arbitration will proceed.’” Id. at *3

(quoting Stolt-Nielsen, S.A. v. Animalfeeds Int’l Corp., 559 U.S.

662, 130 S. Ct. 1758, 1774 (2010)) (emphasis in original).

“Under Hawai#i state law, an order compelling arbitration is

appealable under HRS § 641-1(a) [(Supp. 2004)] and the collateral

order doctrine.” Id. at *4 (citing Sher, 114 Hawai#i at 266-67,

160 P.3d at 1253-54; Association of Owners of Kukui Plaza v.
Swinerton & Walberg Co., 68 Haw. 98, 107, 705 P.2d 28, 35 (1985);

Luke v. Gentry Realty, Ltd., 105 Hawai#i 241, 246 n. 10, 96 P.3d

261, 266 n.10 (2004); Douglass v. Pflueger Hawai#i Inc., 110

Hawai#i 520, 522 n.1, 135 P.3d 129, 131 n.1 (2006)).

Consequently, the ICA decided that it “ha[d] jurisdiction over

[Respondent’s] appeal from the December 17, 2010 order compelling

alternative dispute resolution and the January 3, 2011 amended

order compelling alternative dispute resolution.” Id.

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B.

On May 25, 2011, Respondent filed its Opening Brief

(OB) with the ICA. In pertinent part, Respondent argued (1) that

it was not “required to arbitrate pursuant to the DSA [or] the

ASDA,” and (2) that its claims were not subject to arbitration.10

Petitioners filed an Answering Brief (AB) on August 4, 2011.

Respondent filed a Reply Brief on August 24, 2011.
1.

As to its first argument, Respondent contended that

“the assignment of the DSA to WWH constituted a novation;” “the

ADSA [thus] replaced the DSA” and as a result, “the DSA was

discharged and [Petitioners could] not enforce the arbitration

provision of the DSA against [Respondent].” Also, Respondent

asserted that Respondent was not a party to the ADSA, and

moreover WWH was not its agent when WWH entered into the ADSA

because WWH possessed neither actual authority nor apparent

authority to enter into the ADSA on its behalf.
Petitioners responded in their Answering Brief that the

Assignment Agreement was an assignment, and not a novation, and

as such, did not relieve Respondent from its duties under the

DSA;11 the ADSA did not constitute a substituted contract because

10
Respondent also argued that Petitioners waived their right to
request arbitration. The ICA held that Petitioners did not waive their
arbitration rights, and neither party has challenged that holding. County of
Hawai#i v. Unidev LLC, 128 Hawai#i 378, 405, 289 P.3d 1014, 1041 (App. 2012)
(Unidev II).

11
As noted by the ICA, for the Assignment Agreement to have been a
novation, rather than an assignment, “Unidev must have agreed to the discharge
of [Respondent’s] duties under the DSA.” Unidev II, 128 Hawai#i at 396, 289

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the DSA itself contemplated amendment in that it stated “this

Agreement shall remain in force with the inclusion of any such

amendment”; and Respondent was bound under the ADSA’s arbitration

clause, despite not signing the ADSA, because Respondent

“affirmed WWH’s conduct and ratified the ADSA,” and because

Respondent “originally empowered WWH to act on its behalf.”

2.
As to its second argument, Respondent pointed out that

the arbitration clauses in the DSA and ADSA required arbitration

for “any dispute arising under the terms of this Agreement,” and

that “[c]ourts in the Ninth Circuit and Hawai#i have held [that]

similar language is ‘relatively narrow,’ and only mandates

arbitration of claims which related to the interpretation of the

contract and matters of performance.” (Citing Cape Flattery Ltd.

v. Titan Maritime LLC, 607 F. Supp 2d 1179 (D. Haw. 2009);

Mediterranean Enterprises, Inc. v. Ssangyong Corp., 708 F.2d 1458

(9th Cir. 1983); Tracer Research Corp. v. National Envtl. Servs.
Co., 42 F.3d 1292, 1295 (9th Cir. 1994).)

Next, Respondent asserted that its claims were not

based on Petitioners breaching either the DSA or ADSA, but

instead, on Petitioners making fraudulent misrepresentations.

Thus, its claims were “clearly actionable regardless of the

existence of the DSA or ADSA,” inasmuch as “the claims asserted

P.3d at 1032 (emphasis in original); see also Hawai#i Builders Supply Co. v.
Kaneta, 42 Haw. 111, 112 (Haw. Terr. 1957) (“[A] discharge of a previous
contractual duty is one of the essential elements of a novation.”).

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by [Respondent] are clearly tort claims, and, as a result, d[id]

not arise under the DSA or ADSA . . . .” Finally, Respondent

declared that Petitioners’ counterclaims were not subject to

arbitration, because those “claims necessarily rely upon

[Respondent] not being a party to the DSA or ADSA” and,

therefore, none of Petitioners’ four counterclaims “arose under

the terms of the Agreement.”
In their Answering Brief, Petitioners responded that

Respondent’s claims fell within the scope of both arbitration

clauses; for clauses that require the party to arbitrate “any

dispute arising under the terms of this Agreement” have been

consistently construed as “broad.” Thus, Petitioners asserted

that the arbitration clauses in the DSA and ADSA covered any

claims that “touch matters covered by the parties’ contract” or

that “have their roots in the relationship created by the

contract.” (Citing PRM Energy Sys., Inc., v. Primenergy, L.L.C.,

592 F.3d 830, 836-37 (8th Cir. 2010); Int’l Asset Mgmt., Inc. v.
Holt, 487 F. Supp. 2d 1274, 1288 (N.D. Okla. 2007).) According

to Petitioners, the cases cited by Respondent represented “‘a

distinct minority analysis,’” (quoting EFund Capital Partners v.

Pless, 59 Cal. Rptr. 3d 340, 341 (Cal. App. 2007)), that the

“majority of federal courts have ‘declined to follow.’” (Quoting

Battaglia v. McKendry, 233 F.3d 720, 727 (3d Cir. 2000).)

Additionally, Petitioners maintained that Respondent’s

causes of action fell within the arbitration clauses because

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either they “require[d] interpretation of [] the DSA and [ADSA]”

or because the claims would not have occurred “unless the DSA and

[ADSA] existed.” Regarding Petitioners’ counterclaims,

Petitioners claimed that their “relationship with [Respondent]

arises out of[,] and would not have existed without the DSA.”

“Thus,” Petitioners urged, “any claims related to that

relationship arise out of and are related to the DSA.”
III.

A.

The ICA held, regarding Respondent’s first argument,

that Respondent was bound by the DSA, but not the ADSA. As to

the DSA, the ICA ruled that because neither the Assignment

Agreement nor the ADSA was a novation with regard to the DSA,

Petitioners did not agree to the discharge of Respondent’s duties

under the DSA in either document. Unidev II, 128 Hawai#i at 396,

289 P.3d at 1032. Therefore, the ICA concluded that Respondent

was bound by the DSA’s arbitration provision. Id.
However, with respect to the ADSA, the ICA decided that

Respondent “was not a signatory” and Respondent neither gave WWH

the authority to bind it to the ADSA nor ratified the ADSA. Id.

at 397-98, 289 P.3d at 1033-34. Therefore, the ICA concluded

that the court “erred in determining that the ADSA arbitration

agreement applies to [Respondent].” Id.

B.

Regarding Respondent’s second argument, the ICA

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analyzed each cause of action alleged in the complaints and the

counterclaims. The ICA observed that a split in authority

existed as to whether clauses that mandated arbitration for

disputes “arising under” or “arising out of” an agreement were

broad or narrow. Id. at 399, 289 P.3d at 1035. However, the ICA

did “not decide that particular issue because the arbitration

provision ha[d] further limiting language,” specifically that
arbitration was mandatory for disputes “arising under the terms

of the agreement.” Id. (emphasis in original). According to the

ICA, “[e]ven though public policy strongly favors arbitration,

the scope of arbitration ultimately depends on the wording of the

contract.” Id. (citing Hawai#i Med. Ass’n v. Hawai#i Med. Serv.

Ass’n, 113 Hawai#i 77, 92, 148 P.3d 1179, 1194 (2006)).

The ICA explained that “[b]y choosing the specific and

clear language in the DSA arbitration provision, the parties

indicated their intent to require arbitration when a dispute

implicates or involves the terms of the DSA.” Id. (emphasis
added). Hence, “arbitration [was] required for claims that

involve construction or interpretation of the DSA’s terms, or

that require a determination of the parties’ rights and/or

obligations under the terms of the DSA.” Id. Applying its

interpretation of the DSA’s arbitration clause, the ICA held that

Respondent’s negligence claim in its first complaint was subject

to the arbitration clause, as was Petitioners’ counterclaim for

breach of contract “to the extent [that it alleged] that

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[Respondent] breached the DSA.” Id. However, the remainder of

Respondent’s claims and Petitioners’ counterclaims did not

“involve the terms of the DSA,” and therefore were not within the

scope of the DSA’s arbitration clause. Id.

IV.

In their Application, Petitioners ask (1) whether this

court’s decision in Swinerton was “nullified by the adoption of
the [Revised Uniform Arbitration Act (RUAA)], (2) whether the ICA

erred by “adopting the minority view regarding [the] ‘arising

under’ language” in the arbitration provisions and “drastically

narrow[ing] the scope of the parties’ arbitrable claims,” and (3)

whether it was grave error to exclude Respondent’s claims and

Petitioners’ counterclaims from arbitration. Respondent filed a

Response on December 31, 2012. Petitioners filed a Reply on

January 7, 2012.

V.

As an initial matter, neither party challenges the
ICA’s conclusion that Respondent is bound by the arbitration

clause of the DSA. Unidev II, 128 Hawai#i at 396, 289 P.3d at

1032. Therefore, Respondent is bound by the arbitration clause

in the DSA.12

12
Respondent did object to the ICA’s holding regarding the DSA at
oral argument. However, Respondent did not cross-appeal the holding of the
ICA or raise this issue in its Response. Thus, it has been waived. See
Hawai#i Rules of Appellate Procedure (HRAP) Rule 40.1. In any event, it
appears that the ICA correctly rejected Respondent’s arguments that neither
the Assignment Agreement nor the ADSA effected a novation and discharged
Respondent’s obligations under the DSA. As the ICA recognized, Petitioners’
assent to the discharge of Respondent’s duties under the DSA was required to
effectuate a novation. Restatement (Second) of Contracts § 280 cmt. d (“For a

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Petitioners argue that the ICA erred by holding that

Respondent was not bound by the arbitration provision in the

ADSA, because the ICA allowed “[Respondent] to use the ADSA as

both a sword and shield.”13 Respondent is “bound to arbitrate,”

Petitioners urge, because its claims “allege breaches under the

ADSA and therefore arise under . . . the ADSA.”14 This argument,

however, is unrelated to any of the questions presented for
decision by Petitioners. The first question presented, regarding

the ICA’s jurisdiction, does not address the ADSA at all. The

second and third questions presented, regarding the ICA’s

interpretation of the scope of the arbitration agreement, also

apparently do not address the ADSA, because the ICA held that

novation to take place, the obligee must assent to the discharge of the
obligor’s duty in consideration for the promise of the third party to
undertake that duty.”) (emphasis added); see also Hawai#i Builders Supply Co.
v. Kaneta, 42 Haw. 111 (Haw. Terr. 1957) (“[D]ischarge of a previous
contractual duty is one of the essential elements of a novation.”). The ICA
observed nothing in the record that indicated Petitioners agreed to discharge
Respondent from its duties under the DSA.

13
Petitioners’ Application does not explain why the question of
whether or not Respondent is bound by the ADSA is relevant to the ultimate
disposition of the case. Whether Petitioners are bound by the arbitration
clause in the ADSA may have been relevant under the ICA’s holding that
arbitration clauses in the DSA and ADSA extend only to claims requiring
“construction or interpretation” of the terms of those agreements. Unidev II,
127 Hawai#i at 399, 289 P.3d at 1035. Presumably, some of Respondent’s claims
and Petitioners’ counterclaims may have implicated the terms of the ADSA, but
not the DSA. Therefore, under the ICA’s interpretation of the scope of the
arbitration clauses in the DSA and ADSA, some claims may have been subject to
arbitration only if the Respondent was subject to the ADSA. However, as
discussed infra, the ICA erred regarding the scope of the arbitration clauses
in the DSA and ADSA.

14
Petitioners point to Count 1 of Respondent’s first complaint,
which alleged that Petitioners submitted to Respondent invoices that
Respondent was not contractually obligated to pay, and even if Respondent was
obligated to pay, those invoices “request payment for amounts that even under
the ADSA . . . would not be due to [Petitioners].” (Emphasis added.)
Petitioners claim that this citation to the ADSA “requires interpretation of
the ADSA’s payment provisions.”

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only the DSA applied to Respondent, and therefore the ICA did not

address the ADSA’s scope at all. See Unidev II, 128 Hawai#i at

398, 289 P.3d at 1034 (“We now consider whether the scope of the

DSA’s arbitration provision covers the claims and counterclaims

asserted by the parties.”) (emphasis added). Pursuant to HRAP

Rule 40.1 (d)(1), “[t]he application for a writ of certiorari

shall contain . . . a short and concise statement of the
questions presented for decision,” and “[q]uestions not presented

according to this paragraph will be disregarded.” Petitioners’

argument regarding the applicability of the ADSA is unrelated to

any of the questions presented. Hence, under Rule 40.1(d)(1)

Petitioners’ arguments are disregarded. The ICA’s holding that

Respondent is not bound by the ADSA is affirmed.

Further, Petitioners did not argue below that

Respondent was bound by the arbitration clause in the ADSA. At

oral argument, Petitioners contended that they “raised the

ratification argument” at every stage of the proceedings. To the
contrary, before the court and before the ICA, Petitioners argued

that by asserting claims under the ADSA, Respondent ratified

WWH’s signing of the ADSA as a part of an agency theory. All of

the cases cited by Petitioner related to agency status.15 The

15
See, e.g., Hawai#i County v. Purdy, 22 Haw. 272, 283 (Haw. Terr.
1914) (“A municipal corporation may ratify the unauthorized acts of its agents
or officers . . . .”) (emphasis added); Ass’n of Apartment Owners of Maalaea
Kai, Inc. v. Stillson, 108 Hawai#i 2, 30, 116 P.3d 644, 672 (2005)
(“Ratification rests on principles of agency.”).

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ICA rejected Petitioners’ ratification argument because

Petitioners could not demonstrate “that WWH entered into the ADSA

on behalf of Respondent.” Unidev II, 128 Hawai#i at 397, 289

P.3d at 1034; see also Stillson, 108 Hawai#i at 30, 116 P.3d at

672 (noting that ratification is defined as “the affirmance by a

person of a prior act which did not bind him but which was done

or professedly done on his account”) (emphasis added).
Before this court, Petitioners did not challenge the

ICA’s determination that Petitioners could not prove that WWH was

acting on behalf of Respondent. Instead, Petitioners cited cases

that suggested Respondent was bound by the ADSA’s arbitration

clause solely because Respondent asserted claims under the ADSA.

The analysis in the cases cited does not utilize an agency

theory, but instead one of estoppel.16 Thus, Petitioners raise

their estoppel theory for the first time before this court. It

is axiomatic that where a party fails to raise an argument before

the courts below, that argument may be deemed waived for purposes
of appeal. State v. Moses, 102 Hawai#i 449, 456, 77 P.3d 940,

947 (2003). Hence, we consider Petitioners’ estoppel argument

waived.

16
See, e.g., Boucher v. Alliance Title Company, Inc., 127 Cal. Rptr.
3d 440, 44 (Ct. App. 2005) (“Here, defendant relies only on equitable estoppel
principles.”)(emphasis added); Int’l Ins. Agency Services, LLC v. Revios
Reins. U.S., Inc., 2007 WL 951943 (N.D. Ill. Mar. 27, 2007) (“Because it
proves to be dispositive, the court considers only the estoppel theory.”)
(emphasis added). Estoppel and agency are two different theories which may
be used to bind a non-signatory to an arbitration agreement. See Thomson-CSF,
S.A. v. American Arbitration Ass’n, 64 F.3d 773, 776 (2d Cir. 1195).

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VI.

A.

As to the first Application question, Petitioners

contend, contrary to their position before the ICA, that Hawai#i

law does not permit interlocutory appeals from orders compelling

arbitration. According to Petitioners, this court’s decision in

Swinerton, 68 Haw. at 107, 705 P.2d at 34, which allowed
interlocutory appeals from orders denying and compelling

arbitration, is no longer applicable in light of the adoption of

the RUAA.

Petitioners maintain that at the time Swinerton was

decided, Hawai#i’s arbitration statute was “silent with regard to

appeals of orders concerning arbitration.” Thus, “the Swinerton

decision properly turned upon general principles of

appealability.” Petitioners read Swinerton as holding that under

the “collateral order doctrine,”17 the Hawai#i general appeals

statute, HRS § 641-1(a) (1993)18, allowed “interlocutory appeals

17
The collateral order doctrine allows appeals from orders “falling
in that small class which finally determine claims of right separable from,
and collateral to, rights asserted in the action, too important to be denied
review and too independent of the cause itself to require that appellate
consideration be deferred until the whole case is adjudicated.” Swinerton, 68
Haw. at 105, 705 P.2d at 35 (citations omitted).

18
At the time of Swinerton, HRS § 641-1(a) (1985 Repl.) provided as
follows:

(a) Appeals shall be allowed in civil matters from all
final judgments, orders, or decrees of circuit and district
courts and the land court, to the supreme court or to the
intermediate appellate court, except as otherwise provided
by law and subject to the authority of the intermediate
appellate court to certify reassignment of a matter directly
to the supreme court and subject to the authority of the
supreme court to reassign a matter to itself from the

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from orders denying arbitration as well as orders compelling

arbitration.” (Citing Swinerton, 68 Haw. at 107, 705 P.2d at

35.)

Petitioners state, however, that “fifteen years after

Swinerton, the Hawai#i legislature adopted the RUAA,” and under

the RUAA, “HRS § 658A-[2]8 permits appeals of orders denying

arbitration,” but “does not authorize appeals challenging orders
compelling arbitration.”19 (Emphases in original.) That

“omission is significant,” according to Petitioners, “for ‘this

court has consistently applied the rule of expressio unius est

exclusio alterius -- the express inclusion of a provision in a

statute implies the exclusion of another -- in interpreting

statutes.’” (Quoting Fought & Co. v. Steel Eng’g, 87 Hawai#i 37,

55, 951 P.3d 487, 505 (1998).) (Brackets omitted.) Therefore “it

would be contrary to the canons of interpretation to read the

grant of appellate jurisdiction in one instance but not the other

intermediate appellate court.

(Emphasis added.)

HRS § 641-1(a) was subsequently amended to require that appeals be
heard by the ICA. To reiterate, HRS § 641-1(a) now provides as follows:

(a) Appeals shall be allowed in civil matters from all
final judgments, orders, or decrees of circuit and district
courts and the land court to the intermediate appellate
court, subject to chapter 602.

(Emphasis added.)

19
Petitioners acknowledge that twice since the adoption of the RUAA,
this court has restated its holding in Swinerton that appeals are allowable
under the collateral order doctrine. (Citing Luke, 105 Hawai#i at 246, 96
P.3d at 266 n.10; Douglass, 110 Hawai#i at 522, 135 P.3d at 131 n.1 (2006).)
However, Petitioners explain that the RUAA, which applies only to contracts
made “on or after July 1, 2002,” HRS § 658A-3 (Supp. 2011), did not govern
those cases because the contracts at issue were entered into prior to 2002.

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as granting appellate jurisdiction in both.” Additionally,

Petitioners declare that “upholding Swinerton would [] contravene

the legislature’s intent since it is presumed to have known of

[this c]ourt’s decision in Swinerton when it decided to grant

appellate jurisdiction only as to orders denying arbitration.”

(Citing State v. Reis, 115 Hawai#i 79, 97, 165 P.3d 980, 998

(2007).) (Emphases in original.)
Also, Petitioners assert that the majority of

jurisdictions adopting the RUAA do not allow appeals from orders

compelling arbitration. Hence, this court must “interpret and

construe the RUAA as to effectuate [the RUAA’s] general purpose

to make uniform the laws of the states and territories which

enacted [it].” (Citing HRS § 1-24 (Repl. 2003).)20 Finally,

Petitioners maintain that allowing appeals from orders compelling

arbitration will “encourage[] delays, add[] costs, and wast[e]

judicial resources and the parties resources.”

B.
1.

Respondent responds first, that Petitioners have waived

the argument that Hawai#i law forbids appealing orders that

compel arbitration, by not raising that issue before the ICA.

“It is well established,” Respondent maintains, “that an issue

20
HRS § 1-24 provides as follows:

§ 1-24 Interpretation of uniform acts.
All provisions of uniform acts adopted by the State shall be
so interpreted and construed as to effectuate their general
purpose to make uniform the laws of the states and
territories which enact them.

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raised for the first time on appeal will not be considered by the

reviewing court.” (Citing State v. Schnabel, 127 Hawai#i 432,

478-79, 279 P.3d 1237, 1283-84 (2012); State v. Wallace, 80

Hawai#i 382, 410, 910 P.2d 695, 723 (1996).) According to

Respondent, because Petitioners asserted before the ICA that

Hawai#i law did permit an appeal, “[Petitioners] argued the

opposite of what [they] now argue.” Thus, inasmuch as HRS § 602-
5921 only allows this court to review “clearly wrong” decisions

by the ICA, and “the ICA never decided this issue . . . there is

nothing for this [c]ourt to correct.” Further, Respondent

declares that if it must proceed through arbitration and

subsequently appeal the court’s ruling compelling arbitration,

“[t]he ICA would then render the same decision” regarding the

merits of the claims, resulting in “meaningless duplication and

wasteful actions.”

2.

In answer to Petitioners’ position that the RUAA
supplants this court’s decision in Swinerton, Respondent posits

that “HRS § 641-1(a) provides additional authority for appeals.”

Respondent cites the ICA’s decision in Picardy v. Sky River

21
HRS § 602-59 provides in relevant part as follows:

(b) The application for writ of certiorari shall tersely
state its grounds, which shall include:
(1) Grave errors of law or of fact; or
(2) Obvious inconsistencies in the decision of the
intermediate appellate court with that of the supreme court,
federal decisions, or its own decision, and the magnitude of
those errors or inconsistencies dictating the need for
further appeal.

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Mgmt., LLC., No. 29824, 2009 WL 4988294 (App. Dec. 21, 2009)

(order),22 in which the defendant moved to dismiss an appeal from

an order compelling arbitration, arguing that “HRS § 658A-28 did

not permit an appeal [from such] an order. . . .” The ICA,

however, ruled that “HRS § 641-1(a) provides additional authority

for appeals and authorizes appeals from judgments, orders, or

decrees.” (Citing Picardy, 2009 WL 4988294 at *1.) (Emphasis
added.) Applying this court’s decision in Swinerton, the ICA

held that “orders granting stays of arbitration are appealable

final orders.” (Citing Picardy, 2009 WL 4988294 at *2.)

Relying on Picardy, Respondent contends that “several

other jurisdictions [] have noted [that] similar statutes . . .

do not represent an exclusive list of appealable orders.”23

Those jurisdictions recognize that “permitting appeals of orders

compelling arbitration is logical and just since ‘these claims

cannot be effectively vindicated after the party has been

compell[ed] to do that which it claims it is not required to
do.’” (Citing Kremer v. Rural Comm. Ins. Co., 788 N.W.2d 538,

549 (Neb. 2010).) Respondent explains that “delaying the appeal

until after arbitration requires the parties to engage in a

useless arbitration proceeding if the order compelling

22
Respondent argues that Picardy is a decision of this court.
Westlaw has published the opinion as from the “Supreme Court of Hawai#i.”
Picardy, 2009 WL 4988294. However, Picardy is an ICA decision.

23
Respondent cites Kremer, 788 N.W.2d at 547-48; Wein v. Morris, 944
A.2d 642, 651 (N.J. 2008); Gilliland v. Chronic Pain Assocs., Inc., 904 P.2d
73, 77 (Okla. 1995); and Collier v. Pennington, 69 P.3d 238, 240 (N.M. App.
2003).

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arbitration was improper.” (Citing Evansville-Vanderburg Sch.

Corp. v. Evansville Teacher’s Ass’n, 494 N.E. 2d 321, 322-23

(Ind. App. 1986).)24

VII.

As an initial matter, Respondent’s contention that

Petitioners have waived their argument that Hawai#i law does not

permit appeals from an order compelling arbitration is incorrect.
“If a court lacks jurisdiction over the subject matter of a

proceeding, any judgment rendered in that proceeding is invalid.”

Bush v. Hawaiian Homes Comm’n, 76 Hawai#i 128, 133, 870 P.2d

1272, 1277 (1994). Therefore, “such a question is valid at any

stage of the case.” Id. (emphasis added). In other words,

“[t]he lack of jurisdiction over the subject matter cannot be

waived by the parties.” In re Rice, 68 Haw. 334, 335, 713 P.3d

426, 427 (1986). Hence, Petitioners cannot have waived their

argument that the ICA lacked jurisdiction to hear an appeal.

Respondent also argues that “the ICA never decided” the
issue of whether the ICA had jurisdiction under Hawai#i law and

therefore, “there is nothing to correct.” However, as discussed

supra, a jurisdictional question can be raised at any point in

24
In Reply, Petitioners argue that they cannot have waived their
jurisdictional argument because “[t]he ICA’s improper exercise of appellate
jurisdiction is a grave error of law that may be raised at any time.” (Citing
Hous. Fin. & Dev. Corp. v. Castle, 79 Hawai#i 64, 76, 898 P.2d 576, 588
(1995).) Also, Petitioners reiterate that “[a]llowing only interlocutory
appeals of orders denying arbitration . . . allow[s] arbitration to proceed []
without unnecessary delay.” (Citing Gepaya v. State Farm Mut. Auto. Ins. Co.,
94 Hawai#i 362, 365, 14 P.3d 1043, 1046 (2000).)

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the proceedings. Therefore, whether or not the ICA’s opinion

contained error is not controlling; the lack of jurisdiction can

be raised for the first time before this court. Additionally,

Respondent’s assertion that the ICA “never decided th[e] issue”

is wrong. The ICA held that “[u]nder Hawai#i state law, an order

compelling arbitration is appealable under HRS § 641–1(a) and the

collateral order doctrine.” Unidev I, 2011 WL 4998491 at *4.
Finally, if a court lacks jurisdiction, “any judgment rendered in

that proceeding is invalid,” Bush, 76 Hawai#i at 133, and any

opinion in the case “is a nullity.” State by Kanbara v. Hilo

Metals Co., 53 Haw. 642, 644, 500 P.2d 743, 745 (1972) (“[T]he

district court lacked jurisdiction . . . and the district court's

judgment . . . is a nullity.”). Hence, Respondent’s claim that

the ICA’s opinion renders the issue of the ICA’s jurisdiction to

hear the case moot lacks merit, because if the ICA lacked

jurisdiction to hear the case, that opinion “is a nullity.” Id.

VIII.
A.

In HRS § 658A-28, which adopted the RUAA appeals

provision, the legislature expressly enumerated six circumstances

in which an interlocutory appeal may be taken from proceedings

related to arbitration. Although the statute specifically allows

for appeals from “[a]n order denying a motion to compel

arbitration,” it is silent as to the appealibility of orders

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granting a motion to compel arbitration. HRS § 658A-28 (emphasis

added). Under the canon of expressio unius est exclusio

alterius, “the mention of one thing implies the exclusion of

another.” Int’l Sav. and Loan Ass’n v. Wiig, 82 Hawai#i 197,

201, 921 P.2d 117, 212 (1996). However, this canon applies “only

where in the natural association of ideas the contrast between a

specific subject matter which is expressed and one which is not
mentioned leads to an inference that the latter was not intended

to be included within the statute.” Id.

There is a “natural association of ideas” between an

order denying a motion to compel arbitration and an order

granting a motion to compel arbitration, because both involve the

circuit court’s decision regarding a motion to compel

arbitration. Hence, the failure to include an order granting a

motion to compel arbitration in the list of appealable orders in

HRS § 658A-28 may suggest that the legislature did not intend to

allow such appeals. See, e.g., Chem-Ash, Inc. v. Arkansas Power
and Light Co., 751 S.W.2d 353, 354 (Ark. 1988) (interpreting an

identical statute and holding that “[c]learly, if the legislature

had intended to deny or delay arbitration by permitting an appeal

from an order compelling arbitration, it would have said so. The

act only states that an appeal can be taken from an order denying

an application to compel arbitration.”); Clark Cnty. v. Empire

Elec., Inc., 604 P.2d 352, 353 (Nev. 1980) (interpreting an

identical statute and holding that “the fact that the Legislature

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saw fit to specify in one code section the different orders and

judgment from which appeals may be taken clearly indicates, in

our opinion, an intention to restrict the appeals in such

proceeding to orders and judgment therein specified”).

However, HRS § 658A-28 and HRS § 641-1 are both

statutes regarding the courts’ jurisdiction to hear appeals. It

is well settled that “where there is a plainly irreconcilable
conflict between a general and a specific statute concerning the

same subject matter, the specific will be favored.” State v.

Hussein, 122 Hawai#i 495, 525, 229 P.3d 313, 343 (2010). If,

however, “the statutes simply overlap in their application,

effect will be given to both if possible, as repeal by

implication is disfavored.” Id. Clearly, HRS § 658A-28, which

addresses appealability in the limited context of arbitration, is

the specific statute, and HRS § 641-1, which addresses

appealability generally, is the general statute. Thus, should

the two statutes conflict, HRS § 658A-28 would control over HRS §
641-1.

Two statutes conflict where “it is not possible to give

effect to both.” Schnabel, 127 Hawai#i at 448, 279 P.3d at 1253

(2012). Under Swinerton, HRS § 641-1 permits appeals from orders

compelling arbitration, while, as discussed supra, HRS § 658A-28

may not. Thus, the two statutes may conflict if HRS § 658A-28

provides an exclusive enumeration of the issues related to

arbitration that may be appealed.

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B.

But nothing in the text of HRS § 658A-28 indicates that

its list of appealable orders is exclusive. To the contrary, the

plain meaning of the text demonstrates that HRS § 658A-28 may be

read in conjunction with the general appeals statute, HRS § 641-

1. See State v. Ribbel, 111 Hawai#i 426, 431, 142 P.3d 290, 296

(2006) (“Where the statutory language is plain and unambiguous,
our sole duty is to give effect to its plain and obvious

meaning.”). HRS § 658A-28 states that “an appeal may be taken

from” six different types of orders. HRS § 658A-28 (emphasis

added.) The word “may” is defined as “(1) to have the ability

to; (2) to have permission to; (3) to be free to.” Merriam

Webster’s Collegiate Dictionary 718-19 (10th ed. 1993). By

declaring that an appeal “may” be taken from the enumerated

statutes, then, the statute indicates that litigants “have

permission to,” inter alia, appeal the orders listed in HRS §

658A-28. There is no indication in the statutory language, then,
that the “permission” to appeal certain orders such as an order

denying a motion to compel arbitration precludes the appeal of an

order granting a motion to compel arbitration pursuant to HRS §

641-1. Therefore, “effect can be given to both” HRS § 658A-28

and HRS § 641-1. In other words, HRS § 658A-28 poses “no hurdle”

to an appeal under HRS § 641-1. See Gilliland, 904 P.2d at 78

(“[W]e view [the Uniform Arbitration Act (UAA) appeals provision]

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as no hurdle to [an appeal under the state’s final judgment

statute.”).25

C.

This interpretation of HRS § 658A-28 is consistent with

the approach followed in the majority of cases cited by

Petitioners and Respondent. As Respondent notes, several other

jurisdictions that have enacted either
the UAA or the RUAA permit appeals from orders compelling

arbitration. They view appeals statutes based on either the

UAA26 or the RUAA27 as non-exclusive, because those statutes

25
The ICA reached the same conclusion in Picardy, holding that “HRS
§ 641-1 provides additional authority for appeals, authorizing appeals to the
[ICA] from final judgments, orders, or decrees.” 2009 WL 4988294 at *1.

26
The UAA appeals section is virtually identical to the RUAA appeals
section. The UAA section governing appeals provides as follows:

§ 19 Appeals.
(a) An appeal may be taken from:

(1) An order denying a motion to compel
arbitration made under Section 2;

(2) An order granting a [motion] to stay
arbitration made under Section 2(b);

(3) An order confirming or denying confirmation
of an award;

(4) An order modifying or correcting an award;

(5) An order vacating an award without directing
a rehearing; or

(6) A judgment or decree entered pursuant to the
provisions of this act.

(b) An appeal under this section shall be taken as
from an order or a judgment in a civil action.

27
HRS § 658A-28 is adopted verbatim from the RUAA. The RUAA section
governing appeals provides as follows:

§ 28 Appeals.
(a) An appeal may be taken from:

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“lay[] no textual pretense to exclusivity in [their] application

to arbitration related appeals.” Gilliland, 904 P.2d at 77-78.

Rather, those courts treat the RUAA appeals provision as “no more

than a litany of orders -- all typically occurring in litigation

over arbitration -- which in addition to more mainstream rulings,

are to be treated as appealable.” Id. at 78 (emphasis added).28

Such jurisdictions also recognize that it would be fundamentally
unfair to “require a party who has not agreed to arbitrate a

particular dispute . . . to arbitrate it.” Kremer, 788 N.W. 2d

at 549.

Even in the majority of the decisions cited by

Petitioners, courts do not conclude that statutes based on the

UAA or RUAA are exclusive. Instead, those decisions conclude

(1) An order denying a [motion] to compel
arbitration;

(2) An order granting a [motion] to stay
arbitration;

(3) An order confirming or denying confirmation
of an award;

(4) An order modifying or correcting an award;

(5) An order vacating an award without directing
a rehearing; or

(6) A final judgment entered pursuant to this
[Act].

(b) An appeal under this section shall be taken as
from an order or a judgment in a civil action.

28
Other jurisdictions that permit appeals from orders compelling
arbitration based on an interpretation of similar provisions as being non-
exclusive are Kremer, 788 N.W.2d at 547-48; Wein v. Morris, 944 A.2d 642, 651
(N.J. 2008); and Collier v. Pennington, 69 P.3d 238, 240 (N.M. App. 2003).

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that (1) orders compelling arbitration are not listed under the

RUAA appeals provision, and (2) that the appealability of orders

compelling arbitration “must also be examined” under that

jurisdiction’s general appeals statute. Chem-Ash, 751 S.W.2d at

85 (holding that “[c]learly, if the legislature had intended to

deny or delay arbitration by permitting an appeal from an order

compelling arbitration, it would have said so,” but also holding
that “[e]ven so, the trial court's order must also be examined in

light of Rule 2(a) of the Arkansas Rules of Appellate Procedure,

which governs the appealability of lower court orders.” (emphasis

added)).29 Consequently, even the states that hold orders

29
Other cases cited by Petitioners that address both the appeals
provision in the UAA or RUAA and that jurisdiction’s general appeals statute
before holding that orders compelling arbitration are not appealable are
Powell v. Cannon, 179 P.3d 799, 803, 805-806 (Utah 2008) (holding that orders
granting arbitration could not be appealed under the RUAA’s appeals provision
only after holding that “an order compelling arbitration and staying
litigation is not final” under Utah’s final judgment statute); Harris v. State
Farm Mut. Auto. Ins. Co., 283 So.2d 147, 148-49 (Fla. App. 1973) (holding that
an “order granting a motion or application to compel arbitration is
non-appealable,” because it is not listed in the UAA arbitration provision and
because “it is not a final order”); Fayette Cnty. Farm Bureau Fed’n v. Martin,
758 S.W.2d 713 (Ky. App. 1988) (holding that an order compelling arbitration
is not appealable because it is not listed in the UAA statute and because it
is not final); Maleski v. Mutual Fire, Marine, and Inland Ins. Co., 534 A.2d
1143, 1145-46) (1993) (holding that an order compelling arbitration is not
immediately appealable because it is not final and because it is not listed in
the UAA appeals provision); T.R. Mills Contractors, Inc. v. WRH Enterprises,
LLC, 93 S.W. 3d 861, 864-65 (2002) (holding that the UAA appeals statute is a
“limited exception” to Tennessee’s general appeals statute); cf. Ginsburg v.
Pritchard, 2012 WL 4078421 (N.C. App. Sept. 18, 2012) (unpublished) (“[O]ur
Court has consistently held that ‘an order compelling the parties to arbitrate
is an interlocutory order.’”); Teufel Const. Co. v. American Aribtration
Ass’n, 472 P.2d 572, 573 (Wash. App. 1970) (holding that orders compelling
arbitration are not appealable not because of the UAA appeals provision, but
because “[i]t has been definitely settled by the Supreme Court of this state
that an order compelling arbitration is not final and therefore is not
appealable.”).

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compelling arbitration are not appealable recognize that the

RUAA’s appeals provision is non-exclusive.30

Therefore, in consonance with the decisions of the

majority of jurisdictions that have adopted either the UAA or

RUAA’s appeals provision, HRS § 658A-28 represents a non-

exclusive list of appealable orders. In that regard, HRS § 641-

1, Hawai#i’s final judgment statute, allows appeals from “all

30
At oral argument, Petitioners stated that “forty-nine”
jurisdictions have adopted the UAA or RUAA, and of those jurisdictions “about
forty-one” do not allow appeals from orders compelling arbitration.
Petitioner cited as authority the American Law Reports annotation on orders
compelling arbitration. See Annotation, Appealability of State Court’s Order
or Decree Compelling or Refusing to Compel Arbitration, 6 A.L.R.4th 652
(Originally published in 1981). Petitioner apparently was citing the
Prefatory Note to the RUAA, which stated that “forty-nine jurisdictions have
arbitration statutes, 35 of those have adopted the UAA and 14 have adopted
substantially similar legislation.” Prefatory Note to the RUAA.
But, confusion apparently exists as to which jurisdictions have
not adopted the UAA. Compare Birmingham News Co. v. Horn, 901 So.2d 27, 45
(“Presumably Alabama is the excluded 50th jurisdiction, it being self-evident
that the [Alabama Arbitration Act] is in no wise [sic] ‘substantially similar’
to the UAA”) with Committee on Arbitration, Association of the Bar of the City
of New York, et al. Report on the Revised Uniform Arbitration Act (“New York
is the one state that did not formally adopt the UAA.”); see also Stephen
Wills Murphy, Note, Judicial Review of Arbitration Awards Under State Law, 96
Va. L. Rev. 887, 891 n.15 (stating that Alabama, New Hampshire, and West
Virginia “have adopted arbitration statutes whose systems of judicial review
are not based on the Federal or Uniform Acts”). Moreover, even the
jurisdictions with “substantially similar legislation” often utilize differing
appeals provisions. For example, nine states have “adopted arbitration
statutes based on the [FAA].” Murphy, Judicial Review of Arbitration Awards
Under State Law, 96 Va. L. Rev. at 891. The FAA’s appeals provision contains
explicit language regarding orders compelling arbitration. Consequently,
Petitioner’s statement does not clarify how many states have adopted statutes
similar to HRS § 658A-28.
Second, in the ALR article identified by Petitioner, decisions
from twenty UAA or RUAA states (Arizona, Arkansas, Colorado, Florida,
Kentucky, Maine, Massachusetts, Maryland, Minnesota, Missouri, Nevada, North
Carolina, Oregon, Pennsylvania, South Carolina, Texas, Utah, Virginia,
Washington, and Wyoming) are cited as refusing to allow appeals from orders
compelling arbitration. 6 A.L.R.4th at § 3[b]-3[c]. Of those twenty states,
decisions from nineteen states (all but Nevada) are cited as “based in whole
or in part upon the consideration that the particular order lacked such
finality as to fall within the purview of a statute or rule of practice
authorizing appeals from final orders or judgments.” Id. at § 3[b] (emphasis
added). Hence, even under the authority cited by Petitioner, the clear
majority of states do not consider the UAA or RUAA appeals provision to be
exclusive.

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final judgments, orders or decrees.” To reiterate, under the

collateral order doctrine, “orders . . . compelling arbitration

are appealable final orders.” Swinerton, 68 Haw. at 107, 705

P.2d at 35 (emphasis added). In sum, after Hawai#i’s adoption of

HRS § 658A-28, orders compelling arbitration remain appealable

under Hawai#i’s final judgment statute, HRS § 641-1. Gilliland,

904 P.2d at 78. Thus, the ICA’s holding that it had jurisdiction
to hear Respondent’s appeal was not in error.

D.

The Commentary to the RUAA does not address the RUAA

section on appeals. The Prefatory Note to the RUAA does state

that the RUAA “revis[ed] the original [UAA] in light of the

increasing use of arbitration, the greater complexity of many

disputes resolved by arbitration, and the developments of the law

in this area.” Prefatory Note to the RUAA. In other words, the

RUAA is a “revision of the UAA.” Id. The Prefatory Note to the

original UAA explained that “[t]he section on Appeals is intended
to remove doubts as to what orders are appealable and to limit

appeals prior to judgment as to those instances where the element

of finality is present.” Prefatory Note to the UAA.31

It had been held that in order to ensure that the

appeals section of the UAA has the intended effect of “remov[ing]

doubts as to what orders are appealable,” that section must be

read as an exclusive list of appealable orders. See S.

31
Neither the UAA nor RUAA establishes the weight to be given to
either the Commentary or the Prefatory Note in interpreting those acts.

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California Edison Co. v. Peabody Western Coal Co., 977 P.2d 769,

774 (Ariz. 1999) (holding that the Prefatory Note indicates that

the intent of the UAA drafters was that “interlocutory orders,

including those compelling arbitration are not appealable.”).

If orders related to arbitration could also be appealed via a

general appeals statute, such as HRS § 641-1, then “doubts” would

remain as to the appealability of all orders not explicitly
identified in the RUAA.

As discussed supra, however, the plain language of HRS

§ 658A-28, i.e. “may,” indicates that the statute’s list of

appealable orders was not exclusive. “Departure from the plain

and unambiguous language of the statute cannot be justified

without a clear showing that the legislature intended some other

meaning would be given [to] the language.” Singleton v. Liquor

Comm’n, Cnty. of Hawai#i, 111 Hawai#i 234, 244, 140 P.3d 1014,

1024 (2006). The language in the Prefatory Note to the UAA was

not included in either the model RUAA or Hawai#i’s adoption of
the RUAA. There is no indication that the legislature either

considered the Prefatory Note to the UAA while adopting HRS §

658A-28 or intended it to control the interpretation of HRS §

658A-28 under the RUAA. Therefore, the Prefatory Note to the UAA

does not constitute a “clear showing” that the legislature

intended to depart from the plain meaning of HRS § 658A-28.

Moreover, this court’s decision in Swinerton is not

inconsistent with the Prefatory Note to the UAA, inasmuch as the

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Note emphasized that the purpose of the appeals provision was to

“limit appeals prior to judgment as to those instances where the

element of finality is present.” (Emphasis added.) Swinerton

explained that “what determines the finality of an order . . . is

the nature and effect of the order.” 68 Haw at 105, 705 P.3d at

33. Regarding orders compelling arbitration, Swinerton observed

that “whether [] alleged contractual violations should be
presented to an arbitrator . . . is a matter wholly separate from

the merits of plaintiff’s cause.” Id. at 106, 705 P.3d at 34

(internal quotation marks and punctuation omitted). Hence, a

ruling on an motion to compel arbitration “is a final disposition

of the claimed right.” Id. (emphasis added). This court

therefore determined that “orders . . . compelling arbitration

are [immediately] appealable,” i.e., that under HRS § 641-1, the

“nature and effect” of orders compelling arbitration demonstrated

their finality. Id. Thus, an “element of finality is present,”

Prefatory Note to the UAA, in orders compelling arbitration.
E.

Finally, Petitioners argue pursuant to HRS § 1-24, that

this court should interpret HRS § 658A-28 in a manner that is

uniform with the other states adopting RUAA. (Internal quotation

marks and brackets omitted). First, as discussed supra, the

majority of UAA or RUAA states to address this issue apparently

recognize that the appeals provision of both model statutes are

not exclusive. Hence, interpreting HRS § 658A-28 as a non-

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exclusive list is consistent with the practices of other

jurisdictions. Second, other UAA or RUAA states are not uniform

in disallowing appeals from orders compelling arbitration.

Decisions from several UAA or RUAA states, including Nebraska,

New Jersey, Oklahoma, and New Mexico permit appeals from orders

compelling arbitration. Given conflicting interpretations of the

UAA or RUAA appeals provision in other states, HRS § 658A-28 is
not being interpreted in a non-uniform manner.

VIII.

A.

Regarding the second Application question, Petitioners

first contend that the ICA erred in relying on In re Kinoshita,

287 F.2d 951, 952-53 (2d Cir. 1961), because “the majority of the

federal circuits have [] rejected Kinoshita’s reasoning” that the

phrase “arising under” should be interpreted narrowly. In its

Response, Respondent maintains that, the ICA “noted the lack of

consistency by the [federal c]ourts” on this issue, and the ICA
“did not adopt the minority position” because it “expressly

stated that it was not deciding that issue.” (Emphasis in

original.)

The language in the DSA states that “any dispute

arising under the terms of the agreement” is subject to

arbitration. Acknowledging the split in federal authority

interpreting “arising under,” the ICA stated that “[w]e need not

decide that particular issue.” Unidev II, 128 Hawai#i at 399,

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289 P.3d at 1035. The ICA determined that because the provision

also contained the phrase “the terms of the agreement,” “the

parties indicated their intent to require arbitration when a

dispute implicates or involves the terms of the DSA.” Id.

(emphasis in original). The ICA opinion thus focused on the

words “the terms of this agreement” and not the phrase “arising

under.” Id. Hence, the ICA did not decide whether the phrase
“arising under” should be construed narrowly or broadly.

B.

As to their second argument regarding the second

question, Petitioners contend that “[c]ourts that examine nearly

identical arbitration clauses [to the arbitration clause at issue

in this case] refuse to characterize the controlling language as

being narrow.” Petitioners assert that in Goldberg v. Focus

Affiliates, Inc., 152 F. Supp. 2d 978, 980-82 (N.D. Ill. 2001),

“the court held that a clause requiring arbitration for claims

‘arising under the terms of this Agreement’ was broad enough to
encompass fraudulent inducement and negligent and fraudulent

misrepresentation claims –- the same claims [Respondent] asserts

against [Petitioners].” (Emphasis added.) Petitioners also cite

Gregory v. Electro-Mech. Corp., 83 F.3d 382, 385 (11th Cir.

1996), and Campos v. Campos Family Farms, LLC, 2012 WL 2090303

(E.D. Cal. June 8, 2012), as supporting arbitration in this case.

According to Petitioners, in Gregory, the “Eleventh

Circuit held that fraudulent inducement claims were within the

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scope of an agreement requiring arbitration of ‘any dispute . . .

which may arise hereunder.’” Further, Petitioners contend that

in Campos, which dealt with an agreement “requiring arbitration

for ‘any and all disputes over the terms and implementation of

this Agreement,’” the court characterized the arbitration

agreement as “broad in scope.” (Emphasis added.) Consequently,

Petitioners argue that the DSA’s arbitration provision should be
construed “broadly.”

In response, Respondent reiterates that under Cape

Flattery Ltd., Mediterranean Enterprises, and Tracer Research,

the arbitration agreement at issue in this case is “relatively

narrow.” Respondent also cites Hamada v. Westcott, 102 Hawai#i

210, 215, 74 P.3d 33, 38 (2003) as holding that an “agreement to

arbitrate which contained ‘arising under’ language did not permit

[the] arbitrator to rule on attorney[’s] fees and costs.”32

C.

Under Hawai#i law, “any doubts concerning the scope of
arbitrable issues should be resolved in favor of arbitration.”

Lee v. Heftel, 81 Hawai#i 1, 4, 911 P.2d 721, 724 (1996).

32
In Hamada, 102 Hawai#i at 215, 74 P.3d at 38, this court held that
an “agreement to arbitrate which contained ‘arising under’ language did not
permit [an] arbitrator to rule on attorney[’s] fees and costs.” Hamada
excluded the issue of attorney’s fees and costs from the scope of an
arbitration agreement because in another contractual provision related to
early termination, the parties explicitly stated that the terminating party
would be liable for the payment of attorney’s fees. Hamada, 102 Hawai#i at
212, 74 P.3d at 35. This court therefore concluded that attorney’s fees were
not within the scope of the arbitration agreement because “[w]here the parties
intended to provide for attorney’s fees and costs in the purchase agreement,
they said so.” Id. at 215, 74 P.3d at 38. Hamada is not applicable to the
instant case, where no provisions in the DSA beyond the arbitration agreement
itself are relevant to the breadth of the arbitration agreement.

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However, “the mere existence of an arbitration agreement does not

mean that the parties must submit to an arbitrator disputes which

are outside the scope of the arbitration agreement.” Hawai#i

Med. Ass’n, 113 Hawai#i at 92, 148 P.3d at 1194 (citation

omitted). “What issues, if any, are beyond the scope of a

contractual agreement to arbitrate depends on the wording of the

contractual agreement to arbitrate.” Id. (citations omitted)
(emphasis in original). An arbitration agreement is interpreted

like a contract, and “as with any contract, the parties

intentions control.” Heftel, 81 Hawai#i at 4, 911 P.2d at 724.

Further, “we have long expressed our disapproval of interpreting

a contract such that any provision be rendered meaningless.”

Stanford Carr Dev. Corp. v. Unity House, 111 Hawai#i 286, 297,

141 P.3d 459, 470 (2006).

Those courts deciding that the phrase “arising under”

should be interpreted narrowly emphasize that the choice to use

“arising under” instead of language such as “arising out of or in
relation to” must be meaningful. See Mediterranean Enterprises,

708 F.2d at 1464. For example, in construing the phrase “arising

under” as narrow, the Ninth Circuit stated that “[t]he standard

phrase suggested in the U.S.-Korean Commercial Arbitration

Agreement contains the phrase “out of or in relation to or in

connection with the contract, or for the breach thereof.” Id.

Because the agreement before that court excluded much of that

language, and referred only to “any disputes arising hereunder,”

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the court reasoned that “[w]e have no difficulty finding that

‘arising hereunder’ is intended to cover a much narrower scope of

disputes, i.e., only those relating to interpretation and

performance of the contract.” Id.; see also Kinoshita, 287 F.2d

at 953 (holding that the parties choice to require arbitration

for disputes which “arise under” a contract, when the standard

language was “arising out of or relating to” demonstrated that
the parties intended the agreement to be narrow).

In contrast, the majority of federal courts conclude

that the policy favoring arbitration requires arbitration

provisions containing “general language,” such as the language at

issue in the instant case, be construed broadly. Sweet Dreams

Unlimited, Inc. v. Dial-A-Mattress Int’l, Ltd., 1 F.3d 639, 642-

43 (7th Cir. 1993). In Sweet Dreams Unlimited, the arbitration

clause at issue provided that “any disputes arising out of the

agreement” shall be settled through arbitration. The Seventh

Circuit ruled that “arising out of” and “arising under” both
constituted “general language” authorizing arbitration.

Therefore, should parties wish to exempt specific issues from

arbitration, they should use “specific language to identify the

types of disputes that are not subject to arbitration, thereby

limiting the reach of phrases such as ‘arising out of’ or

‘arising under.’” Id. at 643 (emphasis in original). Because

the parties in Sweet Dreams Unlimited had “not taken any steps to

narrow the reach of the [] arbitration clause,” the Seventh

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Circuit interpreted the clause’s scope broadly, and held that it

covered allegations that the contract was void due to illegality

and allegations of fraud or misrepresentation that occurred

“after the agreement expired.” Id.

Several other courts have also interpreted arbitration

provisions containing “arising under” language as “general”

arbitration clauses whose scope is broad. For example, in PRM
Energy Systems, the arbitration clause at issue “cover[ed] ‘all

disputes arising under’ the agreement.” 592 F.3d at 836. The

Eighth Circuit explained that this arbitration clause “includes

no limiting language and is generally broad in scope.” Id. at

837. It was concluded the “arising under” arbitration clause

thus applied to tort claims including fraud, misappropriation of

trade secrets, unfair competition, and tortious interference.

Id. at 832, 837; cf. Heftel, 81 Hawai#i at 2, 4, 911 P.2d at 722,

724 (concluding that an arbitration clause covering “any dispute

. . . [that] arises out of this [contract]” was a “broad
arbitration clause”).

Under the circumstances of this case, the reasoning of

the federal courts in construing similar arbitration clauses

broadly is persuasive. Respectfully, the ICA’s interpretation of

the arbitration provision’s scope, i.e., that the clause only

mandates arbitration for claims that involve “construction or

interpretation of the DSA’s terms,” appears unnecessarily narrow.

We conclude that the arbitration clause in the instant case

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constitutes a “general” arbitration clause. As discussed infra,

this application of the arbitration clause in the DSA covers the

claims and counterclaims raised by the parties in the instant

case.

Moreover, as in Sweet Dreams Unlimted and PRM Energy,

the general arbitration clause contained “no limiting language”

that could have narrowed its scope. PRM Energy, 592 F.3d at 837.
“[W]e [] look to the language of the arbitration clause to

determine whether [an] underlying dispute . . . is arbitrable.”

Koolau Radiology, Inc. v. Queen’s Medical Center, 73 Haw. 433,

447, 834 P.2d 1924, 1301 (1992); see also Rainbow Chevrolet, Inc.

v. Asahi Jyuken (USA), Inc., 78 Hawai#i 107, 113, 890 P.2d 694,

700 (App. 1995), superseded by statute as stated in, Ueoka v.

Szymanski, 107 Hawai#i 386, 114 P.3d 892 (2005) (“What issues, if

any, are beyond the scope of a contractual agreement to arbitrate

depends on the wording of the contractual agreement to

arbitrate.”). In this case, the arbitration clause employed
general language. Thus, it may be inferred from the clause that

the parties did not intend to restrict the reach of the

arbitration clause simply to claims involving construction or

arbitration of the terms of the agreement. Had the parties

intended to restrict arbitration to issues related to

interpretation of the DSA’s terms only, as the ICA suggests, it

would have been a simple matter to draft unambiguous language to

effectuate that intent. For example, the parties could have

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provided that arbitration was limited to disputes regarding

construction or interpretation of the DSA. The failure of the

parties to unambiguously limit the arbitrability of disputes

suggests that they intended a longer reach for the arbitration

clauses. Sweet Dreams Unlimited, 1 F.3d at 643. Thus,

respectfully, the ICA erred in concluding that the scope of the

arbitration agreement was limited to “claims that involve
construction or interpretation of the DSA’s terms.” Unidev II,

128 Hawai#i at 399, 289 P.3d at 1035.

IX.

A.

As to the third question raised in the Application,

Petitioners argue that all of Respondent’s claims and

Petitioners’ counterclaims are subject to arbitration. Whether a

claim falls within the scope of an arbitration agreement turns on

the factual allegations in the complaint. See Heftel, 81 Hawai#i

at 4, 911 P.2d at 724 (examining the plaintiff’s “general
allegations” to determine if a claim was arbitrable). There are

five factual bases alleged for Respondent’s claims of false

claims, unfair and deceptive practices, fraudulent inducement,

intentional misrepresentation, and negligent misrepresentation.

They are that (1) Petitioners submitted invoices that demanded

payment for services for which Petitioner had already received

payment, (2) Petitioners submitted invoices which misrepresented

that funds would be used to pay contractors, (3) Petitioners

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submitted invoices that Respondent was not required to pay, (4)

Petitioners made misrepresentations to induce Respondent to

provide funding to the Project, and (5) Petitioners made

misrepresentations to induce Respondent to award the Project to

Petitioners.

As to (1), (2), and (3), the invoices that Respondent

objects to all requested payment for work allegedly performed on
behalf of the project. Thus, the invoices that Respondent

alleges are fraudulent are covered by the general language

referring to disputes arising under the DSA inasmuch as the

payments involved Petitioners’ obligation to develop the Project

for Respondent.

Similarly, as to (4), Respondents allege that the

purpose of Petitioners’ misrepresentations was to obtain further

funding for the Project. Because the contractual relationship

created by the DSA between Petitioners and Respondent initiated

the development of the Project, these allegations also arose
under the DSA.

As to (5), Petitioner claims that the contract itself

was fraudulently induced. In Heftel, this court concluded that

“a broad arbitration clause will be held to encompass arbitration

of the claim that the contract itself was induced by fraud.” 81

Hawai#i at 4, 911 P.2d at 724. However, this court limited its

holding to cases “where no claim is made that fraud was directed

to the arbitration clause itself.” Heftel, 81 Hawai#i at 4, 911

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P.2d at 724. In the instant case, as in Heftel, Respondent’s

“general allegations were based on fraud in the inducement of the

contract as a whole, rather than fraud in the inducement of the

arbitration clause.” Id. Hence, the factual allegations that

Petitioners’ made misrepresentations to induce Respondent to

award them the Project also fall within the scope of the

arbitration agreement.
Finally, for its negligence claim in its first

complaint, Respondent alleged that Petitioners failed to abide by

the terms of the DSA, which required Petitioners to obtain prior

approval for certain consultant contracts and their expenses. In

other words, Respondent alleges that Petitioners did not meet the

contractual obligations set forth in the DSA. Thus, as the ICA

recognized, this allegation arose under the DSA.

As to Petitioners’ counterclaims, Petitioners allege

that (1) WWH breached the DSA and ADSA, (2) Respondent and WWH

were unjustly enriched because they did not pay Petitioners for
the benefits of their services, (3) Respondent interfered with

the contract between WWH and Petitioners, and (4) WWH

fraudulently transferred land to Respondent to avoid paying

Petitioners what they were owed under the ADSA. All four claims

relate to the relationship between WWH and Petitioners. The DSA

foresaw that Respondent would transfer the Property to WWH, and

that WWH would work with Petitioners to complete the Project. As

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the court recognized, then, Petitioners’ counterclaims “arise out

of the relationship between the parties” created by the DSA.

X.

Thus, Respondent’s claims and Petitioners’

counterclaims fall within the scope of the DSA arbitration

provision, and are subject to arbitration. To the extent that

the ICA held otherwise, respectfully, the ICA erred. Based on
the foregoing, the ICA’s October 17, 2011, Order Denying

September 19, 2011 Motion to Dismiss Appeal for Lack of

Jurisdiction is affirmed. In light of the reasons stated herein,

the ICA’s August 31, 2012 opinion and October 18, 2012 judgment

on appeal are vacated in part and affirmed in part. The case is

remanded to the court for further proceedings consistent with

this opinion.

Paul Alston, /s/ Mark E. Recktenwald
Maren L. Calvert,
and Claire Wong Black, /s/ Paula A. Nakayama
for petitioner
/s/ Simeon R. Acoba, Jr.
Katherine A. Garson,
Laureen L. Martin, /s/ Sabrina S. McKenna
and Joseph K. Kamelamela,
for respondent /s/ Richard W. Pollack

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