LAW L|BRAF?Y
NOT FOR PUBLICATION IN WEST'S HAWAI‘I REPORTS AND PACIFIC REPORTER
NO. 29ll8
MY?
IN THE INTERMEDIATE COURT OF APPEALS
.»....5
OF THE STATE OF HAWAFI
§“’i
33=9 HV SZ’AVHBIHZ
CASTLE FAMILY LLC, a Hawaii Limited Liability Company,
Plaintiff-Appellee,
v.
THE KAILUAN INC., a Hawaii Corporation,
Defendant-Appellant,
and
and DOE ENTITIES l-20,
JOHN DOES 1-20, JANE DOES 1-20,
Defendants-Appellees
APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CIVIL NO. 08-1-OOl2)
SUMMARY DISPOSITION ORDER
C.J., Foley and Ginoza, JJ.)
(By: Nakamura,
Defendant-Appellant The Kailuan, Inc. (TKI) appeals
from the "Rule 54(b), HawaFi Rules of Civil Procedure, Final
Judgment" filed on April l, 2008 in the Circuit Court of the
First Circuit1 (circuit court).
On appeal, TKI contends
the circuit court improperly granted the request
(l)
for preliminary injunction filed by Plaintiff-Appellee Castle
LLC (Castle);
58 and 66 through 68 of
(2) Conclusions of Law
the circuit court'S February 1l}
Conclusions of Law, and Order Granting in Part and Denying in
(COLS)
Family,
2008 "Findings of Fact,
Part Plaintiff'S Motion for Temporary Restraining Order,
Preliminary Injunction, and writ of Ejectment Filed on 1/7/O8"
(FOFs/COLS/Order) are wrong;
1 The Honorable Glenn J. Kim presided.
NOT FOR PUBLICATION IN WEST'S HAWAI‘I REPORTS AND PACIFIC REPORTER
(3) COLS 62 and 63 of the FOFs/COLs/Order are wrong;
and
(4) the circuit court erred in granting Castle's
January 3l, 2008 Motion for Summary Judgment.
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, as
well as the relevant statutory and case law, we conclude that
TKI's appeal is without merit.
This appeal turns on TKI's argument that the circuit
court improperly read HRS § 514C-2 (2006 Repl.) to require an`
"agreement" between the seller and buyer to trigger the right of
first refusal. TKI contends that because Castle at one point in
time had, and may still have, an intent to sell the fee interest
under The Kailuan, TKI's right of first refusal is triggered
under § 5l4C-2.
HRS § 5l4C-2 provides:
§514C~2 Right of first refusal. When the leased fee
interest in land under a condominium project or cooperative
project or any part thereof is to be sold to any party other
than the association of owners or the cooperative housing
corporation, the seller shall first provide the board of
directors of the association of owners or the cooperative
housing corporation with written notice delivered or mailed
by registered or certified mail, return receipt requested,
postage prepaid, to any two of the president, vice-
president, or managing agent (if any), of its intent to sell
that interest, together with a complete and correct copy of
the purchaser“s written offer, which offer shall contain the
full and complete terms thereof. The association of
apartment owners or cooperative housing corporation shall
have a right of first refusal to purchase that leased fee
interest for the same price as is contained in the written
purchase offer, `
(Emphases added.)
We review the circuit court's interpretation of HRS
§ 514C-2 de novo. Sierra Club v. Dep't of Transp. of State of
HaWaii, 120 HawaFi l8l, l97, 202 P.3d l226, l242,
reconsideration denied, 2009 WL l567327 (2009). As a principle
of statutory interpretation, where statutory language is plain
and unambiguous, we give effect to this plain meaning of the
NOT FOR PUBLICATION IN WEST'S HAWAI‘I REPORTS AND PACIFIC REPORTER
statute. ;Q; Our foremost obligation is to recognize and give
effect to the legislature's intent. Bhakta v. CountV of Maui,
109 HawaFi l98, 208, 124 P.3d 943, 953 (2005). We also must
read statutory language in the context of the entire statute and
construe it consistently with the statute's purpose. Hawaii Home
Infusion Assocs. v. Befitel, 114 HawaiH.87, 9l, 157 P.3d 526,
530 (2007).
Applying these principles, we read HRS § 5l4C-2 to
require more than a subjective intent by the seller to sell at
some point in time. Rather, an ongoing intent by the seller to
sell under terms set forth in a complete written offer from a
purchaser are necessary to trigger the right of first refusal.2
We note that the plain language of the statute expressly requires
the seller to give written notice of intent to sell when "the l
leased fee interest in land under a condominium project or
cooperative project or any part thereof is to be sold."
(Emphasis added.) Read in isolation, this language could suggest
that the seller's intention to sell alone obligates the seller to
give notice pursuant to the right of first refusal. However, the
seller also must provide "a complete and correct copy of the
purchaser's written offer, which offer shall contain the full and
complete terms thereof." (Emphasis added.) Read together, these
parts indicate that the right of first refusal hinges on both the
seller's ongoing intent to sell coupled with a satisfactory offer
from the buyer. Only the buyer's offer, not the seller‘s intent,
can contain the "full and complete terms thereof." We therefore
conclude that a right of first refusal under HRS § 514C-2
requires (a) the seller's ongoing intent to sell under (b) terms
satisfactory to the seller set forth in a written offer from the
buyer.
2 while the trial court referred to this situation as an "agreement,"
it is technically not yet a binding agreement. Rather, it is more precisely a
situation where the seller wishes to sell on satisfactory terms presented by a
purchaser, subject to the statutory right of first refusal.
3
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This reading of HRS § 5l4C-2 is consistent with the
circuit court's COL 62, which provides, in part:
The plain language of HRS § 5l4C-2 requires as a
prerequisite, an agreement to sell and to buy between the
owner of the property and the third-party purchaser before
the cooperative housing corporation's right of first refusal
is triggered. The plain language of the statute requires a
specific written offer to buy the property from the
purchaser which must contain the full and complete terms of
the offer to purchase.
Other jurisdictions similarly hold. §§§ Hartzheim v.
ValleV Land & Cattle Co., 153 Cal. App. 4th 383, 389 (Cal. Ct.
App. 2007) (internal quotation marks and citation omitted;
emphasis added) ("The right [of first refusal] does not become an
option to purchase until the owner of the property voluntarily
decides to sell the property and receives a bona fide offer to
purchase it from a third party."); Jeremv's Ale House Also, Inc.
v. Joselvn Luchnick Irrevocable Trust, 22 A.D.3d 6, 9-10 (N.Y.
App. Div. 2005) (emphasis added) ("The right of first refusal
requires the owner, when and if he decides to sell, to
offer the property first to the [holder] so that he may meet §
third-party offer or buy the property at some other price set by
a previously stipulated method."); Stephens v. Trust for Public
L§gQ, 479 F. Supp. 2d l34l, 1349 (D.C.N.D. Ga. 2007) (The right
of first refusal in an underlying contract did not require seller
to give notice upon forming the subjective desire to sell the
property.).
Here, it is uncontested that Castle at one point
included The Kailuan among a group of apartment buildings for
which a request for proposals was conducted to find potential
buyers for the properties. Irrespective of what proposals may
have been obtained, it is also uncontested that Castle later
removed The Kailuan from the properties to be sold. Under these
circumstances, the right of first refusal was not triggered.
Therefore,
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The "Rule 54(b), Hawafi Rules of Civil Procedure,
Final Judgment" filed on April l, 2008 in the Circuit Court of
the First Circuit is affirmed.
DATED: Honolulu, Hawai‘i, May 25, 20l0.
On the briefs:
Gerard A. Jervis
Joseph A. Gomes
for Defendant-Appellant.
Chief Judge
Rosemary T. Fazio
Francis P. Hogan
Connie C. Chow
(Ashford & Wriston) _ 0;> ¢::_
for Plaintiff-Appellee. . '
Associate Judge
asu/sq
Associate Judge