Ass'n of Apartment Owners of Newtown Meadows ex rel. Bd. of Dirs. v. Venture 15, Inc.

Citation115 Haw. 232,167 P.3d 225
Decision Date31 July 2007
Docket NumberNo. 26637,26637
PartiesThe ASSOCIATION OF APARTMENT OWNERS OF NEWTOWN MEADOWS, by its BOARD OF DIRECTORS, Plaintiff-Appellant/Cross-Appellee, v. VENTURE 15, INC., Royal Contracting Co., Ltd., A.W. Associates, Inc. dba Geolabs Hawaii, and R.H.S. Lee, Inc., Defendants-Appellees/Cross-Appellees, and S. Horita Contracting & Building Supplies, Ltd., and Does 4-100, Defendants; Venture 15, Inc., Third-Party Plaintiff-Appellee, v. S. Horita Contracting & Building Supplies, Ltd., Third-Party Defendant; Geolabs Hawaii, Defendant and Additional Third-Party Plaintiff-Appellee, v. Community Planning, Inc., Additional Third-Party Defendant, and Venture 15, Inc., Royal Contracting Company, Additional Third-Party Counterclaim Defendants-Appellees, and S. Horita Contracting & Building Supplies, Ltd., Additional Third-Party Counterclaim Defendants; S. Horita Contracting & Supplies, Ltd., Defendant and Additional Third-Party Plaintiff v. Liu Construction, Inc., Additional Third-Party Defendant-Appellee/Cross-Appellant
CourtHawaii Supreme Court

115 Haw. 232
167 P.3d 225

The ASSOCIATION OF APARTMENT OWNERS OF NEWTOWN MEADOWS,
by its BOARD OF DIRECTORS, Plaintiff-Appellant/Cross-Appellee,
v.
VENTURE 15, INC., Royal Contracting Co., Ltd.,
A.W. Associates, Inc. dba Geolabs Hawaii,
and R.H.S. Lee, Inc., Defendants-Appellees/Cross-Appellees,
and S. Horita Contracting & Building Supplies, Ltd.,
and Does 4-100, Defendants;

Venture 15, Inc., Third-Party Plaintiff-Appellee,
v.
S. Horita Contracting & Building Supplies, Ltd., Third-Party Defendant;

Geolabs Hawaii, Defendant and Additional Third-Party Plaintiff-Appellee,
v.
Community Planning, Inc., Additional Third-Party Defendant,
and Venture 15, Inc., Royal Contracting Company, Additional Third-Party Counterclaim Defendants-Appellees,
and S. Horita Contracting & Building Supplies, Ltd.,
Additional Third-Party Counterclaim Defendants;

S. Horita Contracting & Supplies, Ltd., Defendant and Additional Third-Party Plaintiff
v.
Liu Construction, Inc., Additional Third-Party Defendant-Appellee/Cross-Appellant

No. 26637

Supreme Court of the State of Hawaii

As Corrected on Denial of Reconsideration September 20, 2007
July 31, 2007


115 Haw. 232, 167 P.3d 225

*238

Myles T. Yamamoto, Terrance M. Revere, and Jacqueline E. Thurston, Honolulu, on the briefs, for plaintiff-appellant/eross-appellee AOAO Newtown Meadows.

Dean E. Ochiai, Brenda Moms, Shannon L. Wack, Honolulu, and Randall Y. Kaya, on the briefs, for defendant-appellee/third-party plaintiff-appellee Venture 15, Inc.

Gary W.K. Au Young, on the briefs, for defendant-appellee Royal Contracting Company, Ltd.

Michael H. Tsuchida (of Miyagi, Nohr & Myhre), Honolulu, on the briefs, for defendant-appellee R.H.S. Lee, Inc.

Wesley H.H. Chin, Sheree A. Kon-Herr-era, and Lois H. Yamaguchi (of Fukunaga, Matayoshi, Hershey & Ching), Honolulu, on the briefs, for additional third-party defendant-appellee Liu Construction, Inc.

Randall K. Schmitt and Paul B.K. Wong (of McCorriston Miller Mukai & MacKinnon), Honolulu, on the record, for defendant-appel-lee/cross-appellee Geolabs Hawaii, Inc.

MOON, C.J., LEVINSON, NAKAYAMA, and DUFFY, JJ.; ACOBA, J., concurring and dissenting separately.

Opinion of the Court by

MOON, C.J.

The instant appeal and cross-appeal arise out of the alleged defective construction of the Newtown Meadows Condominium Project (Newtown Meadows or the Project) located in Waimalu, O'ahu, State of Hawai'i. Plaintiff-appellant/cross-appellee Association of Apartment Owners of Newtown Meadows by its Board of Directors (the AOAO) initiated the underlying action against several entities involved in the development and con-struetion of Newtown Meadows, including defendants-appellees/cross-appellees Venture 15, Inc. (Venture 15), the developer; Royal Contracting Co., Ltd. (Royal), the site development general contractor; R.H.S. Lee, Inc. (Lee), the soils compaction subcontractor; A.W. Associates, Inc. dba Geolabs Hawai'i (Geolabs), the soils engineer;1 and defendant-appellee/cross-appellant Liu Construction, Inc. (Liu), the masonry subcontractor [hereinafter, collectively, the Appellees]. The AOAO basically claims that, as a result of "severe ground settlement" and "defective concrete floor slabs," the buildings and foundations at Newtown Meadows have "shifted, settled, and cracked."

The AOAO appeals from the Circuit Court of the First Circuit's May 21, 2004 amended judgment, the Honorable Eden Elizabeth Hifo presiding, entered pursuant to Hawai'i Rules of Civil Procedure (HRCP) Rule 54(b) (2007) (relating to judgment upon multiple claims or involving multiple parties). On appeal, the AOAO challenges twenty-three orders granting summary judgment in favor of the Appellees and three orders denying reconsideration of several of the circuit court's oral rulings granting summary judgment in favor of the Appellees. Essentially, the AOAO contends that the circuit court erred in dismissing its claims of unfair or deceptive acts or practices, breach of express and/or implied warranties, negligent and intentional misrepresentation, breach of contract, negligence, strict products liability, and claims for punitive damages.

Liu cross appeals, challenging the circuit court's denial of several of its motions for partial summary judgment. Essentially, Liu contends that there are additional bases to affirm the circuit court's amended judgment in its favor.

*239

For the reasons discussed below, we affirm in part and vacate in part the circuit court's May 21, 2004 amended judgment.

I. BACKGROUND

A. Factual Background

The relevant facts of the instant case involve the pre-construction, construction, and post-construction events pertaining to New-town Meadows. Newtown Meadows is a residential townhouse condominium comprised of 152 units within ten two-story buildings (referred to as Buildings 1 through 10), located on approximately five acres next to the Waimalu Stream.

1. Pre-Construction Events

On March 12, 1981, Venture 15 retained Geolabs to conduct a soil engineering investigation of the future site of Newtown Meadows. On April 14, 1986, Geolabs issued an "Updated Soil Engineering Investigation" report to Venture 15, essentially concluding that the site was suitable for a proposed multi-family cluster development, provided that Geolabs' recommendations were followed. The report also concluded that "slab-on-grade foundations can be utilized for the residential building construction."

At some point, Venture 15 contracted with third-party defendant Community Planning, Inc. (Community Planning) as the civil engineer and defendant S. Horita Contracting & Building Supplies, Ltd. (S. Horita) as the general contractor for the Project. Venture 15 also retained Howard Lau of Shigemura, Lau, Sakanishi, Higuchi and Associates, Inc. (Shigemura Inc.) as the structural engineer "for the design, development and construction" of Newtown Meadows. At some point after being retained, S. Horita entered into a sub-contract with Liu for, inter alia, the construction of concrete slabs for the New-town Meadows buildings.

On February 19, 1987, Venture 15 contracted with Royal as the site development general contractor for the Project. Royal was responsible for, inter alia, grading and constructing roadways, parking areas, and drainage, sanitary sewer, and water systems for Newtown Meadows. Royal, in turn, entered into a subcontract with Lee to perform certain work at the project site.2 '

2. Construction of Newtown Meadows

Site work and grading operations were performed by Royal and/or Lee, see supra note 2, under Geolabs' observation from October 9, 1986 to December 3, 1987. Meanwhile, on May 8, 1987, the Real Estate Commission of the State Department of Commerce and Consumer Affairs (the real estate commission) issued the final report on Newtown Meadows, entitled "The Condominium Public Report on Newtown Meadows" (the Condominium Public Report).3

Prior to offering a condominium project for sale[,] the developer is required to notify the real estate commission ..., [Hawai'i Revised Statutes (HRS)] § 514A-31, which may inspect the project. HRS § 514A-33.... The [real estate] commission may issue a final report prior to completion of construction of a condominium project only if the developer has filed with the [real estate] commission all of the information and documents required by HRS § 514A-40. The developer is prohibited from entering into a contract or agreement for the sale of an apartment which is binding on a prospective buyer until a copy of the [real estate] commission's final report has been delivered to the purchaser. HRS § 514A-62.

*240

Subsequent to the completion of the site work and grading operations, problems arose relating to soil settlement beneath Building 3 during the construction of the ten buildings.4 On January 17, 1988, Humphrey Asher, the owner of unit 3F1 in Building 3, sent a letter to S. Horita, reiterating his earlier oral complaints that cracks had surfaced throughout his entire unit and that "[i]t appear[ed] that [his unit's] foundation [was] shifting and[,] as a result[,] serious damages have occurred[.]" Asher also mentioned that his doors "cannot close and the sliding doors are about to fall out of their frames." Asher stated that the units next to him have sustained similar damages. Asher further stated in his letter that:

On December 23, 1987[,] I telephoned Mr. Harry Horita[, president and general manager of S. Horita,] and I attempted to seek out answers in regards to the occurred damages to my [u]nit[.] Mr. Harry Horita responded by telling me that he had spoken to Mr. Matsui[, the onsite project supervisor,] and they concluded that it appeared to be a compactual [sic] ground problem. Mr. Harry Horita further stated that he was trying to get in touch with the contractor and engineers that were responsible for compacting the ground properly that my [u]nit is resting on.

• • • •

On December 25, 1987[,] I received a telephone call from Mr. Charles Honma (Project Mgr., Newtown Meadows) and he stated as follows, "Mr. Asher, I just wish to apologize for what has happened to your [u]nit that you moved in.... It appears to be a soil problem and perhaps the ground was not properly compacted."

In response to Asher's complaints, Royal retained Geolabs to perform sub-surface grouting5 "to attempt to strengthen the subsoils to reduce the potential for further settlements and damage to the strueture[,]" i.e., Building 3, sometime in January or February 1988.

On Febiuary 18, 1988, Geolabs issued a report, entitled "Subsurface Grouting, Building 3, Newtown Meadows" [hereinafter, the Grouting Report], to Royal and sent a copy of the Grouting Report to Venture 15. The Grouting Report provided in relevant part:

The purpose of our work on the project was to inject neat cement grout under pressure at selected depths within the settlement affected area of Building 3 to attempt to strengthen the subsoils to reduce the potential for further settlements and damage to the structure.

The scope of our work included the drilling of 37 holes to...

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