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Bennett v. Chung

Supreme Court of Hawaii

October 9, 2018

BRIAN E. BENNETT and DEBRA S. BENNETT, Respondents/Plaintiffs-Appellees-Cross-Appellants,
v.
SAMUEL JONG HOON CHUNG and LINDA HYUNKONG CHUNG, Petitioners/Defendants-Appellants-Cross-Appellees.

          CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS (CAAP-16-0000784; CIVIL NO. 11-1-0882)

          Carl H. Osaki for petitioners/defendants- appellants-cross-appellees

          Robert E. Badger for respondents/plaintiffs-appellees-cross-appellants

          RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.

          OPINION

          NAKAYAMA, JUDGE

         After an arbitrator issues an arbitration award, parties to the arbitration proceeding may file motions to confirm or to vacate the award in court. Generally, a party must file a motion to vacate an arbitration award within ninety days after it receives notice of the award. Hawai'i Revised Statutes (HRS) § 658A-23 (Supp. 2001) . On the other hand, a party may file a motion to confirm the award at any time after receiving notice of the award. HRS § 658A-22 (Supp. 2001). This case presents two related questions involving these provisions: first, whether the time to file a motion to vacate an arbitration award is limited by the opposing party's filing of a motion to confirm; and second, how an order denying a motion to vacate an arbitration award can be properly appealed.

         In this case, Respondents/Plaintiffs-Appellees-Cross-Appellants Brian E. Bennett and Debra S. Bennett (collectively, "the Bennetts"), after receiving notice of an arbitrator's award in their favor, filed a motion to confirm the award in the Circuit Court of the First Circuit (circuit court). Before the ninety-day period in which Petitioners/Defendants-Appellants-Cross-Appellees Samuel Jong Hoon Chung and Linda Hyunkong Chung (collectively, "the Chungs") could file a motion to vacate the award had expired, the circuit court granted the Bennetts' motion to confirm. The Chungs then filed a motion to vacate the award within the ninety-day period. The circuit court denied their motion to vacate, and the Chungs appealed the judgment of confirmation and the order denying the motion to vacate. The Intermediate Court of Appeals (ICA) dismissed the Chungs' appeal after they failed to file a jurisdictional statement and opening brief.

         Back in the circuit court, the Chungs filed a motion to amend the previous order denying their motion to vacate because they believed that the arbitration statute barred such orders from being appealed. The circuit court agreed, and amended its order to "again confirm" the award to allow the Chungs to appeal. However, the ICA dismissed the Chungs' subsequent appeal for lack of appellate jurisdiction. On certiorari, the Chungs argue that the ICA erred in dismissing their appeal.

         We agree. As a preliminary matter, the Chungs could not have appealed from the circuit court's first order denying their motion to vacate the award because HRS Chapter 658A does not permit appeals from such orders. Therefore, the circuit court properly amended its order and judgment and reconfirmed the award to allow the Chungs to appeal. Second, because HRS § 658A-23 clearly provides that the Chungs had ninety days, not less, to file a motion to vacate, and they filed a motion to vacate within that period, the Chungs had a right to timely appeal from the circuit court's amended order and amended judgment.

         We conclude that the ICA has appellate jurisdiction to adjudicate the Chungs' appeal. Accordingly, we vacate the ICA's August 8, 2017 Order Dismissing Appeal for Lack of Appellate Jurisdiction and remand the case to the ICA to resolve the Chungs' appeal on the merits.

         I. BACKGROUND

         The Chungs and the Bennetts were involved in a dispute arising out of the sale of real property, and decided to resolve the dispute through arbitration. On February 11, 2015, an arbitrator issued a final award that awarded the Bennetts money damages and attorneys' fees and costs. On February 12, 2015, the Chungs were notified of the arbitrator's award by email.

         A. Circuit Court Proceedings - Motion to Confirm

         On February 17, 2015, five days after the Chungs were notified of the arbitrator's award, the Bennetts filed a motion in the circuit court[1] to confirm the arbitrator's award (Motion to Confirm) pursuant to HRS § 658A-22.[2]

         On March 2, 2015, the Chungs filed a memorandum in opposition to the Motion to Confirm. In their memorandum, the Chungs informed the circuit court that they "intend[ed] to file a motion to vacate under Section 658A-23 of the Hawaii Revised Statutes, [3] thus making the [Bennetts' Motion to Confirm] premature." They further explained that under HRS § 658A-23(b), they "[had] a statutory right to file a motion to vacate by May 13, 2015." The Chungs therefore requested "that the Court defer any decision on the [Bennetts' Motion to Confirm] until it can decide a motion to vacate on the merits." The Chungs did not argue any issue on the merits or provide any substantive reason to deny the Bennetts' Motion to Confirm at that time.

         A hearing was held on the Bennetts' Motion to Confirm on March 10, 2015, approximately one month after the Chungs received notice of the arbitration award. At that time, the Chungs had not yet filed a motion to vacate the award. At the hearing, the issue of whether the circuit court was required to wait to confirm the arbitration award until the Chungs filed a motion to vacate the award was discussed. First, the Chungs contended that confirming the award without waiting the requisite ninety days prejudiced them:

[THE CHUNGS' COUNSEL:] I mean, we have 90 days. And what has happened here and I guess what you could do, according to the [Bennetts], if the award comes out, you just move to confirm the next day. And it forces a party on the other side like myself and the Chungs to, like, move fast on this. ... I mean, I have the pieces, but I would like to put together a good motion to vacate and, I mean, I can't do that to beat this motion, and I don't think the way the statute is written it's intended to do that. And I think what the Court should do is just delay this decision on this motion until the motion to vacate is filed.
THE COURT: Okay. But they did move fast ... to confirm, but the award is issued February 11th, right? Motions [sic] filed six days late, February 17th. The hearing is today, so you had about 30 days to file.
[THE CHUNGS' COUNSEL:] Yes. Yes. And I have sixty more days to file. It is not my intent, Your Honor, to delay until the 90 day. ... I mean, conversely, if the Court says, "I confirm now," then the statutory right to move to vacate is meaningless. And all I'm asking for, Your Honor, is time within that statutory period to get the motion filed there and heard, and then the Court can decide.

         The Bennetts argued that any court order confirming the award at that time would not hamper the rights of the Chungs to file a motion to vacate in the future:

[A]s I read the law, the rights of the defendant or respondent in this matter are not abridged by the Court granting the motion to affirm. If [the Chungs bring] a motion which identifies a valid basis, legal and factual, upon which the Court concludes that vacating the award is appropriate under the circumstances, the Court will vacate and that will terminate and seize whatever benefits we have. . But I'm entitled to by - we're - for 658-22 says, "shall" not "may." This is one of those kinds of rules are black and white [sic]. And so I'm entitled to the affirmation of the award today without prejudice to whatever [the Chungs' counsel] thinks he has or doesn't have.

         In response, the Chungs' counsel argued that in the interest of judicial economy, it would be better for the circuit court to wait to rule on the Bennetts' Motion to Confirm until the Chungs filed their motion to vacate, even if no motion to vacate was currently pending. Specifically, the Chungs' counsel voiced his concern that an order granting the Bennett's Motion to Confirm would trigger appellate deadlines that would differ from the deadlines triggered by a subsequent order on the Chungs' motion to vacate.

         While acknowledging the Chungs' argument regarding judicial economy, the circuit court nevertheless concluded:

[T]he court is guided by 658-22. And, to me, it's very clear that it requires me [sic]. It says, "shall issue a confirming order unless the award is modified or corrected pursuant to those sections or is vacated pursuant to Section 658A-23. ["]
The award was issued February 11th. The motion was filed February 17th. The hearing is set today. [The Chungs] had about 30 days to file. If a motion to vacate had been filed and was currently pending before the Court, then I - it would be very clear to me that I would look, also, to 658A-23. And at that point the concerns of judicial economy would, to me, seem to dictate that there just be one hearing on both motions. But at this point the motion to vacate is being discussed just purely in hypothetical terms and it has not been filed yet, although [the Chungs] have represented that they are going to file one .
Given my reading of 658-22, the Court's - my decision is going to be to grant the confirmation of the award. I think I'm constrained by this particular section which I agree with the movants is very clear that I shall issue the confirming order. So for those reasons and other reasons indicated in the moving papers, the Court is going to grant the motion .

         On April 6, 2015, the circuit court entered a written order granting the Bennetts' Motion to Confirm (Order Granting Motion to Confirm), and a final judgment (Judgment of Confirmation) in favor of the Bennetts. The Chungs did not appeal the Order Granting Motion to Confirm or the Judgment of Confirmation.

         B. Circuit Court Proceedings and First Appeal - Motion to Vacate

         On May 13, 2015, the Chungs filed, within the statutory ninety-day window provided by HRS § 658A-23(b), a motion to vacate the arbitration award (Motion to Vacate).[4] Therein, the Chungs' alleged evident partiality by the arbitrator. The Bennetts filed a memorandum in opposition to the Chungs' Motion to Vacate and challenged the Chungs' claims regarding the arbitrator's evident partiality.

         The circuit court held a hearing on the Chungs' Motion to Vacate on June 26, 2015. At the hearing, the parties disputed whether the arbitrator demonstrated evident partiality. At the conclusion of the hearing, the circuit court orally denied the Chungs' Motion to Vacate. Specifically, the circuit court stated that it was not persuaded that the arbitrator demonstrated evident partiality and case law was "very clear that the Court's role is not to second-guess the arbitrator's award."

         On July 22, 2015, the circuit court entered a written order denying the Motion to Vacate (Order Denying Motion to Vacate) .

         The Chungs filed a notice of appeal from the April 6, 2015 Judgment of Confirmation and the July 22, 2015 Order Denying Motion to Vacate. The Chungs subsequently did not file a jurisdictional statement or opening brief. However, on November 2, 2015, in response to the Bennetts' motion to dismiss, the Chungs filed a memorandum noting that "there may be a jurisdictional issue." Specifically, the Chungs stated that "an appeal does not lie from an order denying a motion to vacate an arbitration award," and cited HRS § 658A-28 (Supp. 2001) .[5] Therefore, the Chungs concluded that the way to properly appeal the circuit court's Order Denying Motion to Vacate was "to have the trial court enter an amended judgment, such that an appeal can be taken which would be sanctioned by the statute[.]"

         On December 23, 2015, the ICA dismissed the Chungs' appeal pursuant to Hawai'i Rules of Appellate Procedure (HRAP) Rule 30[6] because the Chungs did not timely file a jurisdictional statement or opening brief, and did not otherwise respond to the subsequent notice of default.

         C. Circuit Court Proceedings of the Instant Appeal

         On August 15, 2016, eight months after the ICA dismissed the Chungs' first appeal, the Chungs filed a motion to enter an amended judgment in the circuit court "in order to appeal the denial of their motion to vacate arbitration award" (Motion to Amend). In their Motion to Amend, the Chungs stated that they believed they could not have appealed the circuit court's Order Denying Motion to Vacate, because denials of motions to vacate are not appealable orders under HRS § 658A-28. Therefore, they requested that an amended judgment be entered so that a proper appeal could be taken.

         On September 22, 2016, the circuit court held a hearing on the Chungs' Motion to Amend. At the hearing, the Bennetts conceded that the Chungs' Motion to Vacate was timely. However, the Bennetts appeared to argue that because the circuit court granted their Motion to Confirm, it also ruled on any motion to vacate at that time:[7]

[THE BENNETTS' COUNSEL:] But the idea that there's a second different, dispositive, segregable set of facts and law that would entitle [the Chungs] to separate and different legal rights is simply incorrect. The fact that [the Chungs' counsel] has - that he has to file - if we had filed nothing and he filed his motion in 90 days and then there was a motion to confirm afterwards, it would have been fine. But the courts would have considered the motion to confirm and reserved the motion to vacate, considered exactly the same set of facts and law, and if it didn't, it's because [the Chungs' counsel] didn't bring that information to the court's attention when the motion to confirm was argued and briefed.
THE COURT: He had 90 days to file his motion to vacate.
[THE BENNETTS' COUNSEL:] Which he did.
THE COURT: Yeah.
[THE BENNETTS' COUNSEL:] But I've never said his motion to vacate was untimely. I'm saying that the motion to vacate is the other side of the motion to confirm, the two are identical sets of facts and law.

         The Chungs' counsel disputed that the facts and law on which a party might rely in a motion to confirm were the same as the facts and law in a motion to vacate:

So when [the Bennetts' counsel] said this is the different side of the same coin, it is not the different side of the same coin. They're two different things. Because I can put together a petition to confirm an arbitration award in half an hour. I cannot put together a motion to vacate that fast. And that's why I asked for the abeyance, to hold it in abeyance, to give me what the legislature gave me, which was the 90 days, in order to prepare and present the motion to vacate, which is different, qualitatively different. And if the legislature said, oh, you know what, if a petition to confirm comes a couple days after the award is issued, well, you're out of luck then. We don't - this 90-day thing is just out the window. Legislature's not saying that. They're saying, here is the time you got to test the award. And no one's saying I didn't do that right. I did.

         The Chungs further argued that this court's decision in Salud v. Financial Security Insurance Co., 69 Haw. 427, 430, 745 P.2d 290, 293 (1987), provided the means in which a party could appeal an order denying a motion to vacate an arbitration award.

         On October 25, 2016, the circuit court filed an Amended Order Denying Defendants' Motion to Vacate Arbitration Award (Amended Order). In amending its previous Order Denying Motion to Vacate, the circuit court explained:

5. The nonappealability of an order denying a motion to vacate is consistent with case law. In [Salud], the Hawaii Supreme Court interpreted the predecessor Chapter 658, which also did not provide for a direct appeal of an order denying a motion to vacate an arbitration award.
6. The Salud Court, however, noted that the lack of a statutory right to appeal a denial of a motion to vacate, did not mean that such orders could never be reviewed.
7. Salud's holding that "a confirmation should follow" a court's denial of a motion to vacate award, is consistent with the current pertinent provision contained in HRS § 658A-23(d).
8. HRS § 658-23, entitled "Vacating award," governs a motion to vacate an award. Subsection (d) states "[i]f the court denies a motion to vacate an award, it shall confirm the award unless a motion to modify or correct the award is pending." This means that a court must confirm an award following a denial of a motion to vacate an award.
9. In this case, this court did not confirm the award after denying the motion to vacate, as required by HRS § 658A-23(d).
10. Because the award had already been confirmed prior to the filing of the motion to vacate award, it did not occur to the court, nor to any of the parties, that the award should be confirmed again, to ...

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