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RT Import, Inc. v. Torres

Supreme Court of Hawaii

April 13, 2017

RT IMPORT, INC., Respondent/Plaintiff-Appellee,


          Barry L. Sooalo for petitioner

          Robert E. Badger for respondent



          McKENNA, J.

         I. Introduction

         Jesus and Mila Torres dba Hawaiian Quilt Wholesale ("the Torreses") appeal an arbitration award between them and RT Import, Inc. ("RT Import"), raising four questions, of which only the first, relating to the circuit court's award of fees and costs, has merit. We hold that the circuit court erred by including in its judgment $4, 738.74 that was not included in the final arbitration award or otherwise allowed by law.

         II. Background

         A. Court Proceedings Prior to Arbitration

         On May 24, 2012, RT Import filed a complaint in the District Court of the First Circuit against both the Torreses and Worldwide Flight Services ("WFS") seeking $25, 000 in damages for merchandise allegedly misdelivered by WFS to the Torreses, which was then converted by the Torreses. The Torreses answered the complaint and filed a cross-claim against WFS, seeking indemnification and/or contribution in the event they were found liable to RT Import. The Torreses also filed a demand for jury trial, and the case was then transferred to the circuit court.[1]

         After discovery, RT Import filed a petition to approve a confidential good faith settlement with WFS pursuant to Hawai'i Revised Statutes ("HRS") § 663-15.5 (Supp. 2012). After the Torreses withdrew their objection, the settlement between RT Import and WFS was approved by the circuit court.

         A few weeks before the scheduled trial date, after additional pre-trial proceedings and discovery, RT Import and the Torreses agreed to resolve their dispute through binding arbitration under the auspices of Dispute Prevention and Resolution, Inc. ("DPR"), and they filed a stipulation for binding arbitration.

         B. Arbitration Proceedings

         The following facts were adduced in arbitration. Although the Torreses were to receive forty boxes of merchandise, WFS mistakenly delivered eighty-eight boxes. The mistaken delivery contained eighteen boxes belonging to RT Import, thirty-six belonging to the Torreses, and thirty-four boxes belonging to another company. The Torreses returned the thirty-four boxes belonging to the other company, but they never acknowledged receiving merchandise belonging to RT Import.

         The arbitrator ruled that although WFS's misdelivery led to the Torreses' initial receipt and possession of RT Import's merchandise, the Torreses' subsequent actions, including removing RT Import's box labels and selling the merchandise at the Aloha Stadium Swap Meet, proved that they committed the intentional tort of conversion. The Final Award of Arbitrator ("final award") awarded RT Import a total of $106, 711.62, with subtotals of $71, 663.33 for special damages and $35, 000.00 for general damages for emotional distress.[2] The arbitrator specifically found:

29. As the prevailing party, RT is entitled to the fair market value of the chattel, in addition to any special damages, including compensation for the time and money properly expended in pursuit of the property, plus emotional distress.
30. The undisputed evidence adduced establishes that the fair market retail value of the merchandise [sic] $62, 047.00.
31. The undisputed evidence adduced from RT establishes the following costs related to this converted merchandise: freight charges of $2, 777.53, customs entry services of $1, 128.80, airport fees of $35.00, business related airline travel of $2, 175.00, incidental travel expenses of $3, 500.00.[3] All other claims of expenses are denied.
32. RT is also entitled to an award of damages for emotional distress.
33. RT is entitled to be awarded its arbitration costs and expenses.
34. In light of the fact that the claims asserted by RT are tort claims, RT is not entitled to an award of attorney's fees and costs.

         The arbitrator also ordered:

The Respondents are responsible for 100% of the arbitration fees and costs. The Claimant is therefore awarded, and the Respondents shall reimburse to the Claimant directly, all arbitration related fees and costs paid by the Claimant to DPR, and shall pay said fees and costs as directed by Dispute Prevention & Resolution, Inc.

(Emphasis added.) Pursuant to this portion of the final award, DPR sent RT Import a final invoice ("DPR invoice"), directing the Torreses to immediately remit $3, 616.75 to RT Import (via their attorney) as reimbursement for arbitration fees. This amount was to reimburse RT Import for its advance toward the arbitrator's fees.

         Several weeks after DPR issued its invoice, however, RT Import sent a letter directly to the Torreses stating, "As agreed by the parties and ordered by the Arbitrator, below please find for your review and payment, the fees and costs of this Arbitration matter. All supporting invoices in regard to costs are enclosed . . . $8, 355.49." ("RT Import invoice") The RT Import invoice listed the following costs:

DPR Order/letter: $3, 616.75
Postage, Photocopying Costs: $2, 278.29
Deposition transcript of J. Torres, M. Torres, ...

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