The opinion of the court was delivered by: J. Michael Seabright United States District Judge
ORDER (1) DENYING SEVEN SIGNATURES GENERAL PARTNERSHIP'S MOTION TO COMPEL ARBITRATION; AND
(2) GRANTING RESPONDENT ) MOTION TO DISMISS PETITION FOR ORDER COMPELLING MEDIATION/ARBITRATION, OR,
IN THE ALTERNATIVE, FOR SUMMARY JUDGMENT
ORDER (1) DENYING SEVEN SIGNATURES GENERAL
PARTNERSHIP'S MOTION TO COMPEL ARBITRATION; AND
(2) GRANTING RESPONDENT IRONGATE AZREP BW LLP'S MOTION TO DISMISS
PETITION FOR ORDER COMPELLING MEDIATION/ARBITRATION, OR, IN THE ALTERNATIVE, FOR
On July 22, 2011, Petitioner Seven Signatures General Partnership ("Seven Signatures") filed a Petition in the First Circuit Court of the State of Hawaii seeking to compel Respondent Irongate Azrep BW LLC ("Irongate") to engage in mediation and/or arbitration regarding Irongate's purported termination of the parties' agreement for Seven Signatures to purchase Unit 3509 at the Trump International Hotel & Tower at Waikiki Beach Walk (the "Trump Hotel").
Irongate subsequently removed the Petition to this court.
Currently before the court is Seven Signatures' Motion to Compel Arbitration, and Irongate's Motion to Dismiss and/or for Summary Judgment. The parties' Motions raise the same basic issue -- whether the parties' dispute must be arbitrated. Based upon the following, the court finds that the parties' dispute is not subject to arbitration and therefore DENIES Seven Signatures' Motion to Compel Arbitration and GRANTS Irongate's Motion to Dismiss and/or for Summary Judgment.
Whether the parties agreed to arbitrate their dispute implicates two different agreements between the parties.
On November 10, 2006, the parties executed a Sales Contract for Irongate to sell and Seven Signatures to purchase Unit 3509 at the Trump Hotel for a total purchase price of $2,909,465. See Doc. No. 11-2, Resp't Ex. A. Unit 3509 was one of 166 units that Seven Signatures contracted to purchase from Irongate with the intent to immediately resell at a profit. See Doc. No. 11-1, Jason Grosfeld Aff. ¶ 6. Seven Signatures' resale purchaser for Unit 3509 was Toranomon Kikaku LLC, Doc. No. 15-4, Pet'r Ex. 3, which is headed by Masaaki Shintaku ("Mr. Shintaku"). Id. ¶ 6.
The Sales Contract for Unit 3509, drafted by Irongate, see Doc. No. 15-1, Yoichiro Nakano Decl. ¶ 7, provides for Seven Signatures to make two deposits, and then pay the remaining balance either sixty days before the scheduled or anticipated Closing Date, or, if paying a portion through a mortgage lender, then two business days before the scheduled Closing Date. See Doc. No. 11-2, Resp't Ex. A at 4 ¶ C. In Section D.10, the Sales Contract describes that Irongate may choose the Closing Date:
The Closing Date shall be that date selected by Seller, in Seller's sole and absolute discretion; provided, however, that the Closing Date shall not be prior to the completion of construction of Purchaser's Unit as certified by the Project Architect. On the Closing Date, Seller and Purchaser shall be required to perform their respective obligations to sell and purchase the Unit under this Sales Contract. The parties agree that the Seller may extend the Closing Date in its sole discretion. . . .
The Sales Contract further defines "Closing" versus "Closing Date:" "CLOSING" shall mean the transfer of the Unit from Seller to Purchaser by way of the filing of the Unit Deed upon payment by Purchaser to Seller of the Total Purchase Price. "CLOSING DATE" shall mean the date selected by Seller, as described in Section D.10 of this Sales Contract, upon which Purchaser and Seller shall perform their respective obligations to purchase and sell the Unit.
In the event of default by Seven Signatures, the Sales Contract provides:
Seller shall provide Purchaser with written notice of such default or breach and the opportunity for purchaser to remedy such default or breach within twenty (20) days after the date of receipt of such notice. If Purchaser has not remedied such default or breach within such twenty (20)-day period, Seller shall be entitled to any remedy available in law or equity including, without limitation,
(I) specific performance of this Sales Contract and the terms and conditions set forth therein; or (II) termination of this Sales Contract upon written notice to purchaser . . . .
Finally, the Sales Contract includes an Alternative Dispute Resolution Clause (the "ADR Clause"). But the ADR Clause also explains that actions or claims between the parties regarding the subject matter of the Sales Contract which occur before the Closing Date need not be resolved through ADR:
39. Purpose and Exclusivity. The purpose of these dispute notification and resolution procedures (the "procedures") is to provide [the parties] with a mechanism to resolve disputes that may develop in the future concerning the subject matter of this Sales Contract. The parties agree that these procedures shall be the exclusive method to resolve all disputes and that the goal of the parties in agreeing to these procedures is to ensure that all disputes are resolved in the most expeditious and inexpensive manner possible. All provisions of these procedures are to be interpreted with this purpose in mind.
a. Definition. "Disputes" means and includes any and all actions, claims or disputes by, between or among the parties . . . . Notwithstanding anything else in this section D.39 to the contrary, any action or claim by or between Seller and Purchaser arising out of or incident to this Sales Contract that is raised or otherwise asserted before the Closing Date need not be submitted to alternative dispute resolution provided herein, and Seller and Purchaser shall be free to pursue such action or claim as otherwise provided herein, in proceedings before any court of competent jurisdiction. Purchaser and Seller agree that any judicial proceedings initiated under the preceding sentence shall be conducted in Honolulu, Hawaii.
Doc. No. 11-2, Resp't Ex. A, ¶¶ 39, 39(a) (emphasis added).
2. The Parties' Attempts at Closing and Negotiations of a Master Settlement Agreement Irongate originally scheduled the Closing Date for Unit 3509 on
December 10, 2009. See Doc. No. 11-1, Grosfeld Aff. ¶ 7; Doc. No. 11-3, Resp't Ex. B. The parties subsequently agreed to move the Closing Date to the summer of 2010. See Doc. No. 11-1, Grosfeld Aff. ¶ 9; Doc. No. 22-4, Pet'r Ex. 37.
By spring of 2010, Unit 3509 was not the only unit that had not closed and the parties therefore began negotiating the terms of a "Master Settlement Agreement" ("MSA") regarding all of the units with outstanding issues.*fn1 In these negotiations, Irongate insisted that the sales contracts on most units at issue --including Unit 3509 -- be terminable at Irongate's sole discretion. For example, on May 31, 2010, Irongate's representative, Casey Federman, explained in an email:
Jason [Grosfeld of Irongate] spoke with Yo [Nakano of Seven Signatures] this weekend and they agreed that this letter agreement must cover all [Seven Signatures] units and all units, except for the 20 listed in #4 below [which does not include Unit 3509], that do not close in accordance with the procedure specified in the purchase contracts (upon closing notice being given) shall immediately be terminable in Irongate's sole discretion in accordance with the purchase contracts ...