February 17, 2012
ASSOCIATION OF APARTMENT OWNERS OF LIHUE TOWNHOUSE, Plaintiff-Appellant
McGRATH PROPERTIES I, LLC, a Hawaii Limited Liability Company; John and Jane Does 1-10, Doe Partnerships, Doe Corporations, Doe Governmental Agencies and Doe Entities 1-20, Defendants-Appellees.
This decision has been designated as "Unpublished disposition." in the Pacific Reporter. See HI R RAP RULE 35
Appeal from the Circuit Court of the Fifth Circuit (Civil No. 08-1-0202).
Philip S. Nerney, on the briefs, for Plaintiff-Appellant.
Jonathan S. Durrett, Adrian W. Rosehill, Alan J. Ma, (Stubenberg & Durrett), on the briefs, for Defendants-Appellees.
Dorothy Sellers, Solicitor General, on the briefs, for amicus curiae State of Hawaii.
FOLEY, Presiding J., FUJISE and LEONARD, JJ.
Plaintiff-Appellant Association of Apartment Owners of Lihue Townhouse (the Association) appeals from the " Order 1) Continuing Hearing on Plaintiff's Motion for Summary Judgment and for Default Judgment Filed May 12, 2009; 2) Granting Motion to Set Aside Entry of Default; and 3) Re: Arbitration per [Hawaii Revised Statutes (HRS) ] Section 514B-14S" (Order) entered by the Circuit Court of the Fifth Circuit  (circuit court) on December 9, 2009. On appeal, the Association contends that the circuit court erred when it ordered the Association and Defendant-Appellee McGrath Properties I, LLC (McGrath) to arbitration.
On September 4, 2008, the Association made a demand for payment on McGrath for an outstanding debt of $2,995.28. On October 17, 2008, the Association filed a Complaint to foreclose against McGrath.
On December 1, 2008 Suzanne McGrath-Kitamura (Kitamura) presented a personal check to the Association in the amount of $5,000. The Association refused to accept the check. On January 23, 2009, Kitamura presented a cashier's check in the amount of $5,000 to the Association, which the Association again refused to accept. On July 17, 2009, the Association informed McGrath that the outstanding debt owed was $17,216.90
On April 1, 2009, the Association requested " Entry of Default as to [McGrath]," which the circuit court entered on the same day. On May 12, 2009, the Association filed its " Motion For Summary Judgment and for Default Judgment" (Motion). The circuit court continued the Association's Motion several times. On October 22, 2009, the circuit court held a hearing on the Motion. During the hearing, the circuit court required counsel for McGrath to write a $10,000 check from counsel's client trust account to the Association. The circuit court clarified that it would not be requiring McGrath to pay the full amount claimed to begin mediation, as is generally required under HRS § 514B-146 (2006 Repl.). Id. On December 9, 2009, the circuit court entered its written Order, stating in part:
3. Plaintiff and Defendant McGrath Properties I, LLC shall arbitrate their respective claims and/or defenses, pursuant to [HRS] Section 514B-146; provided that Defendant McGrath Properties I, LLC shall pay the sum of $10,000.00 to Plaintiff by no later than October 30, 2009, and provided further that all deadlines in this case are suspended pending further order of the Court; and
4. Said arbitration shall commence by December 11, 2009.
The Association filed its Notice of Appeal on January 4, 2010.
II. STANDARDS OF REVIEW
A. Abuse of Discretion
An abuse of discretion occurs if the trial court has " clearly exceeded the bounds of reason or disregarded rules or principles of law or practice to the substantial detriment of a party litigant." Amfac, Inc. v. Waikiki Beachcomber Inv. Co., 74 Haw. 85, 114, 839 P.2d 10, 26 (1992).
B. Statutory Interpretation
Statutory interpretation is reviewed de novo by [the appellate] court. When construing a statute, our foremost obligation is to ascertain and give effect to the intention of the legislature, which is to be obtained primarily from the language contained in the statute itself. Moreover, it is a cardinal rule of statutory interpretation that, where the terms of a statute are plain, unambiguous and explicit, we are not at liberty to look beyond that language for a different meaning. Instead, our sole duty is to give effect to the statute's plain and obvious meaning.
Bhakta v. Cnty. of Maui,
124 P.3d 943
The Association contends that the circuit court did not have the authority to order the parties to arbitration. " Even though arbitration has a favored place, there still must be an underlying agreement between the parties to arbitrate. Without an agreement to arbitrate, a court may not force parties to engage in arbitration." Douglass v. Pflueger Hawaii, Inc., 110 Hawaii 520, 531, 135 P.3d 129, 140 (2006) (citation and internal quotation marks omitted). " A party cannot be required to submit to arbitration any dispute which he has not agreed so to submit. To warrant compelling arbitration, there must be an underlying agreement between the parties[.]" In re United Public Workers, AFSCME, Local 646, AFL-CIO, 124 Hawaii 372, 379, 244 P.3d 609, 616 (App.2010) (internal quotation marks, citations, brackets, and emphasis omitted).
In the instant case, there simply was no arbitration agreement. McGrath does not dispute the lack of an arbitration agreement. Nothing in the record or in the briefs suggests that an arbitration agreement existed.
Hawaii law requires an arbitration agreement in order for a court to compel arbitration. HRS § 658A-7(c)(Supp.2010). The circuit court ordered the parties to " arbitrate their respective claims and/or defenses, pursuant to [HRS] § 514B-146[.]" HRS § 514B-146(d) provides in pertinent part:
A unit owner who pays an association the full amount claimed by the association may file in small claims court or require the association to mediate to resolve any disputes concerning the amount or validity of the association's claim. If the unit owner and the association are unable to resolve the dispute through mediation, either party may file for arbitration under section 514B-162[.].
HRS § 514B-162 (2006 Repl.) states in relevant part:
(a) At the request of any party, any dispute concerning or involving one or more unit owners and an association, its board, managing agent, or one or more other unit owners relating to the interpretation, application, or enforcement of this chapter or the association's declaration, bylaws, or house rules adopted in accordance with its bylaws shall be submitted to arbitration. The arbitration shall be conducted, unless otherwise agreed by the parties, in accordance with the rules adopted by the commission and of chapter 658A[.]
The " Order 1) Continuing Hearing on Plaintiff's Motion for Summary Judgment and for Default Judgment filed May 12, 2009; 2) Granting Motion to Set Aside Entry of Default; and 3) Re: Arbitration per [HRS] Section 514B-146" filed in the Circuit Court of the Fifth Circuit on December 9, 2009 is vacated and remanded with respect to Paragraphs 3 and 4.