United States District Court, D. Hawaii
DENNIS R. SCIOTTO et al., Plaintiffs,
ASSOCIATION OF APARTMENT OWNERS OF HANALEI BAY RESORT, Defendant.
ORDER (1) GRANTING DEFENDANT'S MOTION TO DISMISS,
AND (2) DISMISSING THE COMPLAINT WITHOUT LEAVE TO
DERRICK K WATSON UNITED STATES DISTRICT JUDGE
a dispute about available parking spaces in a shared parking
lot. Defendant has moved pursuant to Fed.R.Civ.P. 12(b)(1) to
dismiss this action for lack of subject matter jurisdiction,
contending that: (1) Plaintiffs claims must be resolved in
arbitration; and (2) the Court has neither diversity nor
federal question jurisdiction over this case. Dkt. No. 10.
Although Plaintiffs have indicated a willingness to engage in
arbitration, they contend nothing requires that they do so,
much less that this Court must dismiss this action to allow
for arbitration to take place. See Dkt. No. 14-2 at
Court need not decide whether arbitration is required because
this Court lacks jurisdiction under either 28 U.S.C. Section
1331 or 1332. Accordingly, Defendant's motion is GRANTED,
and this case is DISMISSED WITHOUT PREJUDICE.
& PROCEDURAL BACKGROUND
Dennis R. Sciotto and Carol Ann Sciotto are the Trustees of
the Dennis R. Sciotto and Carol Ann Sciotto Community
Property Trust and residents and citizens of the State of
California. Dkt. No. 1, ¶ 8. Plaintiffs Edward E.
Colson, III and Karen Jeanne Colson are Trustees of the
Colson Family Trust and are residents and citizens of the
State of California. Id. at ¶ 9. The Sciottos
and Colsons are joint owners of Commercial Unit 16A at the
Hanalei Bay Resort (the Resort), a condominium project
located in Princeville, Hawaii. See Id. at
¶¶ 8-10. The tenants in Unit 16A are the Bali Hai
Restaurant (Bali Hai) and Happy Talk Lounge (Happy Talk).
See Id. at ¶ 12. Defendant Association of
Apartment Owners of Hanalei Bay Resort (AOAO) is an
association of apartment owners, acting by and through its
Board of Directors. Id. at ¶ 10.
The Underlying State Court Action and Arbitration
September of 2016, the Sciottos, the Colsons, and HBR
Enterprises, LLC d/b/a Bali Hai and Happy Talk (HBR) jointly
filed suit in Hawaii state court. Dkt. No. 10-7. In the
complaint, Plaintiffs and HBR alleged that the AOAO had
“illegally” permitted residential units at the
Resort to be split into two or three separate units, referred
to as “lockouts, ” and as a result, there was a
higher demand for parking than the Resort was designed to
accommodate. See Dkt. No. 10-7, ¶¶ 15-19.
Following a July 1, 2011 fire at the Resort, which severely
damaged the Bali Hai and Happy Talk, the AOAO Board decided
to install a parking gate system and implement valet parking
at certain times. See Dkt. No. 1, ¶¶
13-14; Dkt. No. 10-7, ¶¶ 20-21, 29-30. According to
Plaintiffs and HBR, the parking gate prevented patrons and
employees of Unit 16A from accessing a large number of the
common element parking spaces at the Resort, and the AOAO
required Unit 16A to cover at least some of the valet parking
costs. Dkt. No. 1, ¶ 14; see Dkt. No. 10-7,
¶¶ 14-15; Dkt. No. 10-4 at 26-27.
the AOAO's parking measures, Plaintiffs and HBR sought
declaratory, injunctive, and monetary relief and asserted the
following seven claims: (1) Breach of Contract, Breach of
Governing Documents and Protective Covenants, Conditions and
Restrictions; (2) Breach of Fiduciary Duty and other Common
law Duties; (3) Violation of Haw. Rev. Stat. Sections 514A,
514B; (4) Negligence; (5) Gross Negligence; (6) Organized
Crime and Racketeering in Violation of Haw. Rev. Stat.
Section 842-2; and (7) Unfair Competition in Violation of
Haw. Rev. Stat. Section 480. Dkt. No. 10-7 at 7-10. The
parties ultimately stipulated to dismiss all claims without
prejudice and participate in arbitration. Dkt. Nos. 10-10,
arbitrator, now-Judge Mark Bennett of the Ninth Circuit Court
of Appeals, issued a Final Arbitration Order on March 30,
2018. Dkt. No. 10-4 at 72. The arbitrator, in relevant part,
ruled as follows:
(1) “[T]he parking plan, ” i.e., the
gate and valet measures, is “unreasonable and
inconsistent with and/or not allowed by the governing
documents of the Resort” because the plan
“unfairly, unreasonably, and inappropriately
disadvantaged commercial Unit 16A” by restricting
common element parking available for Unit 16A patrons. Dkt.
No. 10-4 at 5, 9, 11, 13-14.
(2) An injunction was issued in favor of the “the
owners of Unit 16A, ” prohibiting the AOAO from using
the “current parking gate system, ” but the AOAO
Board “may, however, establish a valet parking system,
as long as all valet parking charges are charged strictly as
common area maintenance to all owners, according to their . .
. common area maintenance/common interest percentage.”
Id. at 5-6, 17-20.
(3) The Sciottos and the Colsons were awarded damages for the
valet charges they paid. Id. at 6, 28. The other
damages claimed by Plaintiffs and HBR were
“speculative, unproven, or unavailable, and
rejected.” Id. at 6; see Id. at
(4) The AOAO's “lien” for the unpaid valet
parking costs and interest imposed on the owners of Unit 16A
“is unenforceable and void.” Id. at 27.
The other fines or assessments imposed on Unit 16A for a sign
opposing the parking situation, awning(s), a construction
container, and Christmas lights are “unreasonable and
unenforceable” and the AOAO was ordered to expunge the
associated liens. Dkt. No. 10-4 at 7, 37-45, 47-48.
(5) The unpaid assessments imposed on Unit 16A for
landscaping and insurance premiums were valid and the AOAO
was awarded damages in the form of a setoff against the
amounts awarded to the Sciottos and the Colsons. Id.
at 7, 45-46, 48-49.
(6) By instituting the parking policy, the AOAO
“breached a fiduciary duty” owed to the owners of
Unit 16A, but no additional damages were awarded.
Id. at 60.
(7) Plaintiffs and HBR failed to establish that they were
“entitled to any relief with regard to the
lockouts.” Id. at 6, 34-36.
(8) The AOAO is not required to “provide for or build
additional parking.” Id. at 7, 51-53.
(9) Plaintiffs' and HBR's claims for negligence,
gross negligence, organized crime/racketeering, and unfair
competition, failed because there was either no legal basis
for the claim or the claim was unsupported by the facts.
Id. at 7, 61-62.
each party prevailed on some issues, the arbitrator found
that “on balance” the Sciottos and the Colsons
(the owners of Unit 16A) were the prevailing parties, and
thus, the arbitrator required the AOAO to pay the
attorneys' fees for the Sciottos and the Colsons. Dkt.
No. 10-4 at 8, 70-71.
parties then jointly requested an order confirming the Final
Arbitration Award in state court, Dkt. No. 10-13, and
subsequently filed a notice acknowledging complete
satisfaction of the monetary amount awarded by the
arbitrator. Dkt. No. 10-14. On September 20, 2018, the state
court entered judgment. Dkt. No. 10-15. No. appeal was filed.