Furuya v. Ass'n of Apartment Owners of Pac. Monarch, Inc., SCWC–30485.

• Decision Date: 02 May 2016
• Docket Number: No. SCWC–30485.,SCWC–30485.
• Citation: 375 P.3d 150,137 Hawai'i 371
• Parties: Clarence O. FURUYA and Lona Lum Furuya, Petitioners–Respondents/Plaintiffs–Appellees/Cross–Appellants, v. ASSOCIATION OF APARTMENT OWNERS OF PACIFIC MONARCH, INC.; James Dozier ; Greta Withers; Elwin Stemig; Foil Craver; Kazuo Sawada, Respondents–Petitioners/Defendants–Appellants/Cross–Appellees.
• Court: Hawaii Supreme Court

137 Hawai'i 371

375 P.3d 150

Clarence O. FURUYA and Lona Lum Furuya, Petitioners–Respondents/Plaintiffs–Appellees/Cross–Appellants,

v.ASSOCIATION OF APARTMENT OWNERS OF PACIFIC MONARCH, INC.; James Dozier ; Greta Withers; Elwin Stemig; Foil Craver; Kazuo Sawada, Respondents–Petitioners/Defendants–Appellants/Cross–Appellees.

No. SCWC–30485.

Supreme Court of Hawai‘i.

May 2, 2016.

George W. Van Buren, and John B. Shimizu, Honolulu, for petitioners-respondents.

Matt A. Tsukazaki, Honolulu, for respondent-petitioner.

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

Opinion of the Court by WILSON, J.

Petitioners–Respondents/Plaintiffs–Appellees/Cross–Appellants Clarence O. Furuya and Lona Lum Furuya (the Furuyas) and Respondents–Petitioners/Defendants–Appellants/Cross–Appellees, Association of Apartment Owners of Pacific Monarch, Inc. (AOAO) both filed applications for writ of certiorari. The applications concerned various issues related to the Furuyas' interests in an apartment unit located at the Pacific Monarch Condominium (Pacific Monarch) and 106 parking stalls which are appurtenant to the unit. We accepted both applications for writ of certiorari. Below, we address the arguments raised in the Furuyas' application for writ of certiorari and for the reasons discussed herein, we affirm the Intermediate Court of Appeals' (ICA) judgment on appeal. We do not address the arguments raised by AOAO in its application for writ of certiorari, as AOAO failed to demonstrate that the ICA erred.¹

I. Facts

A. Background

The Pacific Monarch is a condominium project located in Honolulu, Hawai‘i. The AOAO of the Pacific Monarch was created to "provide the management, maintenance, protection, preservation, control and development" of the Pacific Monarch. AOAO is governed by its Board of Directors (Board). In 1979, apartment unit 3206 and the parking stalls were conveyed by Hasegawa Komuten (USA), Inc., the developer of the Pacific Monarch, to the initial lessees, via the Pacific Monarch Condominium conveyance document. The Furuyas acquired the leasehold interest to apartment unit 3206 at the Pacific Monarch for $560,000 through a foreclosure sale in July 1985. Pursuant to the original conveyance document, unit 3206 was conveyed to the original owners with several appurtenant easements, including an exclusive appurtenant easement to parking stalls 1 through 106 of the condominium. The Furuyas acquired the leasehold interest in apartment unit 3207 in December 1989.

B. AOAO's Purchase of the Leased Fee Interest in the Condominium and the Furuyas' Execution of the DROAs

In 1995, AOAO, through the Board, sought to purchase the leased fee interest² in the condominium from the lessor to offer the owners the opportunity to own the leased fee interests in their units. To proceed with the purchase, the Board amended its Bylaws. Article III of the amended November 14, 1995 Restated Bylaws conferred certain "powers and duties" to AOAO's Board, including, "Implementation of the Acquisition of the Leased Fee Interest in the Land from Lessor." The Board was authorized and had the power to do all things it deemed necessary to enable the lessor to sell the leased fee interest to AOAO and/or its members. The Bylaws further stated that on behalf of AOAO, the Board was authorized to purchase all or any portion of the leased fee interest in the land from the lessor and expressly authorized to transact any and all other matters relating to the acquisition. The Board was also required to obtain agreement from owners who represented at least 75% of the common interest to (1) ratify AOAO's purchase of the leased fee interest, and (2) commit to and contract for the purchase of their leased fee interest.

As noted, the Furuyas owned a leasehold interest in unit 3206 and the appurtenant easement to the 106 parking stalls, as well as a leasehold interest in unit 3207. The Board sent the Furuyas a survey dated April 23, 1996 asking them to indicate whether they intended to purchase the leased fee interests in their two units and the parking stalls.³ The Furuyas signed the document, checking off a pre-printed line that stated, "YES, I plan to purchase my leased fee interest in Unit # 3206 at $28,756.85, Unit # 3207 at $28,756.85 and 106 Parking Stalls at $459,131.19."

On or around October 16, 1996, the Furuyas executed a document titled "Pacific Monarch Leased Fee Interest Sales Contract Deposit Receipt Offer and Acceptance" (DROA), in preparation for the bulk sale of a number of units in the condominium. The Furuyas filled out and signed the portion of the DROA titled "Offer." The Furuyas handwrote "3206" following the section stating, "[t]he buyer is buying the leased fee interest to the following apartment or commercial unit in the Pacific Monarch project." Attached to the DROA was an exhibit indicating the prices for the various units. Units 3206 and 3207 were priced at $28,756.85. The 106 parking stalls were also included in the attached exhibit and priced at $459,131.19. The portion of the DROA titled, "Acceptance" stated, "The Association agrees to sell the Property to the Buyer or its designee at the price and upon the terms set forth herein, including the Additional Terms attached hereto." The "Acceptance" portion provided a line for AOAO to sign as "Acceptance" of the DROA. The DROA in the record was not signed by AOAO and there is no evidence in the record that AOAO ever signed the "Acceptance" portion of the DROA. The Furuyas also signed a DROA for unit 3207.⁴

The DROAs for units 3206 and 3207 set the closing date for the acquisition of the leased fee interest for the two units as December 9, 1996. In accordance with the instructions in the DROA, the Furuyas sent $1,000 per unit to open escrow for both units 3206 and 3207. The purchase of the leased fee interest in unit 3207 closed with the bulk sale of the leased fee interests in a number of other units in the condominium on December 27, 1996.⁵

Although escrow was opened for the purchase of the leased fee interest in unit 3206 and the Furuyas deposited $1,000 into escrow with Title Guaranty of Hawai‘i (Title Guaranty) for the unit, the sale of the leased fee interest in unit 3206 was never closed. The record does not contain a fully executed contract between the Furuyas and AOAO for the purchase of unit 3206 and/or the parking stalls. The Furuyas did not fund the escrow account with payment of $28,756.85 for unit 3206 or $459,131.19 for the 106 parking stalls.

C. AOAO Retains Ownership of Unit 3206 and the Parking Stalls and Negotiations Regarding Sale of the Leasehold Interest in the Parking Stalls

The heart of the dispute in this case is whether there was an enforceable contract for the purchase of the leased fee interest in unit 3206 and the parking stalls, and whether following the signing of the DROA, the Furuyas elected not to purchase the leased fee interest in the parking stalls. The record indicates—and the Circuit Court of the First Circuit (circuit court) found—that very soon after the Furuyas signed the DROA for unit 3206, they informed AOAO that they did not want to purchase the leased fee interests in the parking stalls. However, the Furuyas dispute this finding, and argue that AOAO refused to close because it determined it wanted to control the parking. The relevant evidence regarding this issue is discussed herein.

Several AOAO representatives testified that well before the closing date set on the DROA, December 9, 1996, Clarence Furuya (Furuya) informed AOAO Board members and Caesar Paet (Paet), a consultant at Cadmus Properties hired by AOAO to assist in the purchase of the leased fee interest from the lessor, that he no longer wanted to purchase the leased fee interest in the 106 parking stalls.⁶ James Dozier (Dozier), AOAO treasurer, testified that "almost immediately Mr. Furuya indicated he would buy the fee to both Units 3206 and 3207 but would not buy the fee for the parking stalls." Dozier also testified that after Furuya indicated he did not want to purchase the parking stalls the Board decided it would be in its best interest to "buy the fee rather than sell it, to buy the parking stalls rather than sell [them]." Henry Foil Craver (Craver), an AOAO Board member, also testified that the Furuyas indicated they did not wish to purchase the leased fee interest in the parking stalls, and that he heard this information from Dozier. Specifically, Craver stated that Dozier spoke to Furuya, who told Dozier that he had "changed his mind and decided he didn't want to buy the fee" in the parking stalls. Similarly, Paet testified that Furuya informed him that he no longer wanted to buy the parking stalls, but he could not recall the timeframe of this communication.

AOAO representatives also testified that after signing the DROA, the Furuyas informed AOAO that they wanted to sell the leasehold interest to the 106 parking stalls to AOAO. Craver testified that Furuya "decided that he wanted to sell the parking stalls" and Paet stated that Furuya made an offer to AOAO to sell the parking stalls. The record contains written offers to sell the parking stalls to AOAO from Furuya's agent. On or around October 29, 1996—around two weeks after Furuya signed the DROA—Jason Lum (Lum), Furuya's real estate broker, sent a written offer to AOAO to sell the Furuyas' leasehold interest to 81 parking stalls for $1,215,000. Around two weeks later, on November 15, 1996, Lum sent a second written offer to the Board to sell all 106 stalls to AOAO for $1,166,000, and provided specific financing terms for the sale of the parking stalls. At trial, however, Furuya disclaimed his involvement in the written offers sent from Lum to AOAO and testified that he never wanted to sell the parking stalls.⁷

The record indicates that because the Furuyas decided not to purchase the leased fee interest in the parking stalls, AOAO determined that it was in its interest to retain ownership in the parking stalls and purchase...