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Narayan v. The Ritz-Carlton Development Co., Inc.

Intermediate Court of Appeals of Hawaii

August 23, 2013

KRISHNA NARAYAN; SHERRIE NARAYAN; VIRENDRA NATH; NANCY MAKOWSKI; KEITH MACDONALD AS CO-TRUSTEE FOR THE DKM TRUST DATED OCTOBER 7, 2011; SIMON YOO; SUMIYO SAKAGUCHI; SUSAN RENTON, AS TRUSTEE FOR THE RENTON FAMILY TRUST DATED 12/3/09; STEPHEN XIANG PANG; FAYE WU LIU; MASSY MEHDIPOUR AS TRUSTEE FOR MASSY MEHDIPOUR TRUST DATED JUNE 21, 2006; G. NICHOLAS SMITH; TRISTINE SMITH; RITZ 1303 RE, LLC, A COLORADO LIMITED LIABILITY COMPANY; AND BRADLEY CHAFFEE AS TRUSTEE OF THE CHARLES V. CHAFFEE BRC STOCK TRUST DATED 12/1/99 AND THE CLIFFORD W. CHAFFEE BRC STOCK TRUST DATED 1/4/98, Plaintiffs-Appellees,
v.
THE RITZ-CARLTON DEVELOPMENT COMPANY, INC.; THE RITZ-CARLTON MANAGEMENT COMPANY, LLC; JOHN ALBERT; EDGAR GUM, Defendants-Appellants, MARRIOTT INTERNATIONAL, INC.; MAUI LAND & PINEAPPLE CO., INC.; EXCLUSIVE RESORTS, LLC; KAPALUA BAY, LLC; ASSOCIATION OF APARTMENT OWNERS OF KAPALUA BAY CONDOMINIUM; CAROLINE PETERS BELSOM; CATHY ROSS; ROBERT PARSONS; RYAN CHURCHILL; AND JOHN DOES 1-10, Defendants-Appellees

NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER

APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUIT (CIVIL NO. 12-1-0586(3))

On the briefs:

Lisa W. Cataldo R. John Seibert (McCorriston Miller Mukai MacKinnion) and Bert T. Kobayashi, Jr. Lex R. Smith, Joseph A. Stewart (Kobayashi, Sugita & Goda) for Defendants-Appellants.

Terence J. O'Toole, Judith Ann Pavey Andrew J. Lautenbach (Starn O'Toole Marcus & Fisher) for Plaintiffs-Appellees.

Foley, Presiding J., Reifurth and Ginoza, JJ.

MEMORANDUM OPINION

Defendants-Appellants The Ritz-Carlton Development Company, Inc.; The Ritz-Carlton Management Company, LLC; John Albert; and Edgar Gum (Defendants) appeal from the August 28, 2012 "Order Denying Defendants The Ritz-Carlton Development Company, Inc., The Ritz-Carlton Management Company, L.L.C., John Albert and Edgar Gum's Motion To Compel Arbitration And To Dismiss, Or Alternatively, Stay Proceedings Pending Arbitration" entered in the Circuit Court of the Second Circuit[1] (circuit court). On appeal, Defendants contend the circuit court erred in denying their motion to compel arbitration.

I. BACKGROUND

This appeal arises out of a dispute concerning the development of The Ritz-Carlton Residences at Kapalua Bay (Project), a residential development project in Lahaina, Maui. Plaintiffs-Appellees Krishna Narayan, et al. (Plaintiffs) are individual owners of whole ownership units at the Project. On June 7, 2012, Plaintiffs filed a complaint in the circuit court against Defendants and several other defendants who are not a party to this appeal. Plaintiffs' complaint alleged the Defendants defaulted on loans encumbering the Project, left the Project and its owners' association underfunded, and failed to adequately respond to Plaintiffs' requests for information. Plaintiffs asserted claims against all Defendants for (1) breach of fiduciary duty, (2) denial of access to the owners' association's books and records, and (3) injunctive and declaratory relief.

On July 5, 2012, Defendants filed their "Motion To Compel Arbitration And To Dismiss, Or Alternatively, Stay Proceedings Pending Arbitration." Defendants argued that certain written arbitration provisions mandated sending Plaintiffs' claims to arbitration. The "Declaration of Condominium Property Regime of Kapalua Bay Condominium" (Declaration) states, in pertinent part:

XXXIII. ALTERNATIVE DISPUTE RESOLUTION.
In the event of the occurrence or claim arising out of, or related to, this Declaration . . . ("dispute"), if the dispute cannot be resolved by negotiation, the parties to the dispute agree to submit the dispute to mediation[.]. If the dispute is not resolved through mediation, the dispute shall be resolved by arbitration pursuant to this Article and the then-current rules and supervision of the American Arbitration Association. The duties to mediate hereunder shall extend to any officer, employee, shareholder, principal[.]
Issues of arbitrability shall be determined in accordance with the federal substantive and procedural laws relating to arbitration; all other aspects of the dispute shall be interpreted in accordance with . . . the substantive laws of the State of Hawaii.

The circuit court held a hearing on the Motion to Compel Arbitration on August 8, 2012, orally denied the motion at the hearing's conclusion, and entered its order denying the motion on August 28, 2012. Neither the hearing transcript nor the written order states the circuit court's grounds for its decision. ...


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