United States District Court, D. Hawai'i
A-1 A-LECTRICIAN, INC.; H.Q. INCORPORATED, dba Aloha Products; GP ROADWAY SOLUTIONS, INC. (formerly Sun Industries, Inc.); HAWAIIAN ISLAND TIRE CO., INC., dba American Tire Company; ISLAND LIGHTING CO., INC.; JACK ENDO ELECTRIC, INC.; MARK LURIA; MEGA CONSTRUCTION, INC.; MUTUAL PLUMBING SUPPLY CO., INC.; PACIFIC JOBBERS WAREHOUSE, INC.; ROYAL CONTRACTING CO., LTD.; THE SOLARAY CORPORATION (formerly Inter-Island Solar Supply); TRITON MARINE CONSTRUCTION CORP.; UNITED TRUCK RENTALS AND EQUIPMENT LEASING, INC.; WALKER-MOODY CONSTRUCTION CO., LTD.; and RALPH S. INOUYE CO., LTD., Movants,
COMMONWEALTH REIT; SELECT INCOME REIT; MASTERS PROPERTIES LLC; ROBIN 1 PROPERTIES LLC; TSM PROPERTIES LLC; and SIR REIT, Respondents
For CommonWealth REIT, Select Income REIT, Respondents: Allon Kedem, LEAD ATTORNEY, Skadden Arps Slate Meagher & Flom LLP, Washington, DC; Bruce D. Voss, David R. Major, LEAD ATTORNEYS, Bays Lung Rose & Holma, Honolulu, HI; Clifford M. Sloan, LEAD ATTORNEY, PRO HAC VICE, Skadden, Arps, Slate, Meagher & Flom LLP, Washington, DC.
For Masters Properties LLC, TSM Properties LLC, Respondents: Allon Kedem, LEAD ATTORNEY, Skadden Arps Slate Meagher & Flom LLP, Washington, DC; Bruce D. Voss, David R. Major, LEAD ATTORNEYS, Bays Lung Rose & Holma, Honolulu, HI; Clifford M. Sloan, LEAD ATTORNEY, PRO HAC VICE, Skadden, Arps, Slate, Meagher & Flom LLP, Washington, DC; Joel D. Kam, Jonathan Harry Steiner, LEAD ATTORNEYS, McCorriston Miller Mukai MacKinnon LLP, Honolulu, HI; Ke-Ching Ning, LEAD ATTORNEY, Michael A. Lilly, Ning Lilly & Jones, Honolulu, Hi.
For Robin 1 Properties LLC, Respondent: Allon Kedem, LEAD ATTORNEY, Skadden Arps Slate Meagher & Flom LLP, Washington, DC; Bruce D. Voss, David R. Major, LEAD ATTORNEYS, Bays Lung Rose & Holma, Honolulu, HI; Clifford M. Sloan, LEAD ATTORNEY, PRO HAC VICE, Skadden, Arps, Slate, Meagher & Flom LLP, Washington, DC; Joel D. Kam, Jonathan Harry Steiner, LEAD ATTORNEYS, McCorriston Miller Mukai MacKinnon LLP, Honolulu, HI.
For A-1 A-lectrician, Inc., Walker-Moody Construction Co., Ltd., Truck Rentals And Equipment Leasing, Inc., Triton Marine Construction Corp., Solaray Corporation, The, formerly doing business as Inter-Island Solar Supply, Royal Contracting Co., Ltd., Pacific Jobbers Warehouse, Inc., Mutual Plumbing Supply Co., Inc., Mega Construction, Inc., Mark Luria, Jack Endo Electric, Inc., Island Lighting Co., Inc., Hawaiian Island Tire Co., Inc., doing business as American Tire Company, GP Roadway Solutions, Inc., formerly doing business as Sun Industries, Inc., H.Q. Incorporated, doing business as Aloha Products, Movants: Corey Y.S. Park, LEAD ATTORNEY, Law Offices of Corey Y.S. Park, LLLC, Honolulu, HI; Margery S. Bronster, Rex Y. Fujichaku, LEAD ATTORNEYS, Bronster Hoshibata, Attorneys at Law, A Law Corporation, Honolulu, HI.
For Ralph S. Inouye Co., Ltd., Movant: Rex Y. Fujichaku, LEAD ATTORNEY, Bronster Hoshibata, Attorneys at Law, A Law Corporation, Honolulu, HI.
ORDER STAYING PROCEEDINGS TO ALLOW FOR LIMITED DISCOVERY
Alan C. Kay, Sr. United States District Judge.
For the following reasons, the Court STAYS proceedings in this action and in the underlying arbitrations, so that the parties may undertake limited discovery as to whether the original parties to the leases either (1) intended to permit consolidation or (2) later amended their agreements to permit consolidation.
Lessees are sixteen small business tenants who have ten years remaining on separate long-term leases for lots in an Oahu industrial estate. (Motion To Compel
(" MTC" ) at 1.) The twenty-four leases (some Lessees rent more than one lot) are between Lessees and three landlords, Masters Properties LLC, Robin 1 Properties LLC, and TSM Properties LLC. (Motion To Dismiss (" MTD" ) at 8; Reply re MTD at 2.) There are other tenants in the same industrial estate who are not a party to this action; Lessees comprise roughly one-third of the tenants on the estate. (See MTC Ex. 39.)
Lessees (or their predecessors-in-interest) entered into the leases with the Damon Estate, the previous owner of the land, between November 1972 and April 1973 (except one lease which was executed in 1994). (MTC at 1.) CommonWealth REIT (then operating under a different name) bought the land from the Damon Estate in 2003. (Id.) The interests in the various lots were later transferred to the three current landlords, Masters, Robin, and TSM, which are affiliates of CommonWealth. (Id. at 6.) The three landlord companies have only one " member," SIR REIT, which is a wholly-owned subsidiary of Select Income REIT. (Doc. No. 4 at 4.) Select is a majority-owned subsidiary of CommonWealth. (Id. at 3.) For convenience, the Court will refer to Masters, Robin, TSM, CommonWealth, SIR, and Select as, collectively, " Lessors."
The leases in question contain largely identical terms and conditions, including an identical provision regarding the periodic setting of new rents. (See, e.g., MTC Ex. 1 at 12-13.) Rents are to be redetermined every ten years. (Id. at 2.) If the parties fail to agree on the new rent, one party will choose one real estate appraiser, and the other party will choose another appraiser. (Id. at 12.) Those two appraisers will then together choose a third appraiser, or will ask the state circuit court to choose the third appraiser if they cannot agree. (Id. at 12-13.) The three appraisers will determine a " fair and reasonable" annual rent, in a decision which will be " final, conclusive and binding upon the parties." (Id. at 13.)
The rent for the final ten-year period, from 2013 to 2022, is now at issue. The parties' negotiations over the new rent have failed. (MTD at 9.) Lessees therefore initiated appraisal proceedings under each individual lease and are now engaged in twenty-four separate proceedings, though appraisals apparently have not yet begun. (Id.; see MTC at Ex. 40.) Lessees seek to consolidate all twenty-four appraisals into one proceeding. (MTC at 2.) Lessors want the appraisals to proceed separately. (MTD at 14-15.) Lessees have presented evidence that during the 1980s and 1990s the Damon Estate negotiated rents collectively with a tenants' association, and that in 1992-1993 it engaged in a consolidated arbitration as to the rents for a neighboring industrial estate. (See Opp'n to MTD, Decls. & Exs. 3-6.) Lessees assert that the evidence they have presented shows the requisite intent to allow consolidation, but have also requested the opportunity to conduct limited discovery regarding the intent of the original parties to the leases.
Lessees originally filed a motion to consolidate the appraisals in state court. (See Doc. No. 1 & Exs.) On November 9, 2012, Lessors timely removed the action to this Court, invoking ...