Cnty. of Hawai‘i v. UniDev, LLC

• Decision Date: 31 August 2012
• Docket Number: 11–0000019.,Nos. 10–0000188,s. 10–0000188
• Citation: 289 P.3d 1014,128 Hawai'i 378
• Parties: COUNTY OF HAWAI‘I, a municipal corporation of the State of Hawai‘i, Plaintiff–Appellee, v. UNIDEV, LLC, A Delaware Limited Liability Company, Defendant–Appellant, and John Does 1–50; Jane Does 1–50; Doe Partnerships 1–50; Doe Corporations 1–50; Doe Non–Profit Entities 1–50; Doe Limited Liability Companies 1–50; Doe Entities 1–50, Defendants. County of Hawai‘i, a municipal corporation of the State of Hawai‘i, Plaintiff–Appellant, v. UniDev, LLC a Delaware Limited Liability Company; Unidev Hawaii, LLC, A Delaware Limited Liability Company; John Does 1–50; Jane Does 1–50; Doe Partnerships 1–50; Doe Corporations 1–50; Doe Non–Profit Entities 1–50; Doe Limited Liability Companies 1–50; Doe Entities 1–50, Defendants–Appellees.
• Court: Hawaii Court of Appeals

128 Hawai'i 378

289 P.3d 1014

COUNTY OF HAWAI‘I, a municipal corporation of the State of Hawai‘i, Plaintiff–Appellee,

v.UNIDEV, LLC, A Delaware Limited Liability Company, Defendant–Appellant,andJohn Does 1–50; Jane Does 1–50; Doe Partnerships 1–50; Doe Corporations 1–50; Doe Non–Profit Entities 1–50; Doe Limited Liability Companies 1–50; Doe Entities 1–50, Defendants.

County of Hawai‘i, a municipal corporation of the State of Hawai‘i, Plaintiff–Appellant,

v.UniDev, LLC a Delaware Limited Liability Company; Unidev Hawaii, LLC, A Delaware Limited Liability Company; John Does 1–50; Jane Does 1–50; Doe Partnerships 1–50; Doe Corporations 1–50; Doe Non–Profit Entities 1–50; Doe Limited Liability Companies 1–50; Doe Entities 1–50, Defendants–Appellees.

Nos. 10–0000188

11–0000019.

Intermediate Court of Appeals of Hawai‘i.

Aug. 31, 2012.

Paul Alston (Maren L. Calvert and J. Blaine Rogers with him on the briefs) (Alston Hung Floyd & Ing), for Defendant–Appellant in CAAP–10–0000188 and Defendants–Appellees in CAAP–11–0000019.

Laureen L. Martin (Joseph K. Kamelamela and Julie K. Mecklenburg with her on the briefs) Deputies Corporation Counsel, for Plaintiff–Appellee in CAAP–10–0000188 and Plaintiff–Appellant in CAAP–11–0000019.

John R. Lacy Claire E. Goldberg (Goodsill Anderson Quinn & Stifel) on the briefs only, for Counterclaim Defendant–Appellee Hawaii Island Housing Trust in CAAP–10–0000188.

FOLEY, Presiding Judge, REIFURTH and GINOZA, JJ.

Opinion of the Court by GINOZA, J.

In this consolidated appeal, we address two separate appeals from civil actions that were consolidated in the Circuit Court of the Third Circuit (circuit court).¹ In appeal No. CAAP–10–0000188, UniDev, LLC (UniDev) appeals from the circuit court's September 13, 2010 order expunging a lis pendens² filed by UniDev (Expungement Order), as well as the circuit court's December 1, 2010 order denying UniDev's motion for reconsideration of the Expungement Order (Reconsideration Order). UniDev contends on appeal³ that the circuit court erred in expunging its lis pendens because: (1) UniDev's counterclaim under Hawaii's Uniform Fraudulent Transfer Act (HUFTA), Hawaii Revised Statutes (HRS) Chapter 651C, provides a proper basis for a lis pendens; (2) the circuit court erroneously held that UniDev was not entitled to a lis pendens, in part, because the HUFTA provides alternative remedies, such as injunctive relief, that would not encumber property; and (3) the circuit court also erroneously expunged the lis pendens on the basis that UniDev failed to establish that it was likely to prevail on its HUFTA claim.

In appeal No. CAAP–11–0000019, the County of Hawai‘i (County) appeals from the circuit court's December 17, 2010 order granting UniDev's motion to compel alternative dispute resolution (ADR) and to stay the proceedings, as well as the circuit court's January 3, 2011 amended order (referred together as the ADR Orders). With respect to the ADR Orders, the County's points of error on appeal are that the circuit court erred: (1) by failing to rule that UniDev waived any right to compel arbitration; (2) by determining that the County was required to arbitrate pursuant to arbitration provisions contained in a Development Services Agreement (DSA) and an Amended and Restated Development Services Agreement (ADSA); (3) by determining that all of the County's claims were subject to arbitration; and (4) by determining that all of UniDev's counterclaims were subject to arbitration.⁴

For the reasons expressed below, as to UniDev's appeal, we hold that UniDev's HUFTA claim does not support the filing of a lis pendens. Thus, the circuit court did not abuse its discretion in expunging UniDev's lis pendens or in denying UniDev's request for reconsideration of the Expungement Order.

As to the County's appeal, we hold that the circuit court incorrectly compelled the County to arbitrate all claims and counterclaims under the arbitration provisions in the DSA and ADSA. The County is bound only by the DSA's arbitration provision, and its limited scope covers only a portion of the County's negligence claim and a portion of UniDev's breach of contract claim. UniDev did not waive its rights under the DSA arbitration provision.

I. Case Background

On March 2, 2006, UniDev and the County entered into the DSA, a contract in which UniDev was engaged to provide services related to the planning, pre-development, financing and construction of an affordable workforce housing project (Project) in Waikoloa in the County of Hawai‘i. The County owned the property where the Project would be developed (Property), but the DSA contemplated that the County would transfer title to the Property to a:

to-be-formed non-profit entity (the "Non–Profit"), which Non–Profit shall in turn form a non-profit subsidiary or affiliated entity to act as the borrower of the financing for the Project (the "SPE") and shall enter into a ground lease with the SPE with respect to the Site[.⁵ ]

In addition, the DSA memorialized the parties' intention that "upon the formation of the SPE, the [County] shall assign all of its rights and obligations in and under this Agreement to the SPE." The DSA contained a provision mandating alternative dispute resolution for "[a]ny dispute arising under the terms" of the DSA.

Pursuant to the DSA's terms, the County transferred title to the Property to the Hawaii Island Housing Trust (HIHT), which subsequently leased the Property to Waikoloa Workforce Housing, LLC (WWH). The County also assigned the DSA to WWH by entering into an "Assignment and Assumption Agreement" (Assignment) with WWH, dated July 26, 2006, which states in part:

1. Assignment. Assignor [County] hereby grants, conveys and assigns unto Assignee [WWH] all right, title and interest of Assignor in, to and under all of the Contracts to the fullest extent that they are legally assignable ....

2. Assumption. By accepting this Assignment and by its execution, Assignee hereby accepts the assignment of the Contracts, and assumes and agrees to perform all of the terms, covenants and conditions of the Contracts therein that would (except for this Assignment) be required to be performed on the part of Assignor thereunder from and after the date hereof and not before.⁶

On February 21, 2008, about a year and seven months after the assignment of the DSA to WWH, UniDev and WWH entered into the ADSA, which states in part that UniDev and WWH "now wish to amend the DSA to reflect certain changes in facts and circumstances that have occurred since the DSA was first executed by UniDev and the County." The parties agreed to "amend and restate the DSA" as follows:

1. Engagement.The Sponsor [ (WWH) ] hereby continues the engagement of UniDev to undertake the Services in accordance with the terms and conditions set forth in this Agreement; provided, however, that UniDev shall not begin the Services with respect to any Construction Phase of the Project until such time as it has received a written notice to proceed therefor from the Sponsor. UniDev hereby agrees to undertake such Services in accordance with the terms and conditions set forth in this Agreement.

2. Agreement. This Agreement shall consist of the matters set forth herein, including without limitation, Riders A, B, C and D (collectively, the "Riders").

(Emphasis added). Certain provisions differ between the DSA and ADSA, although the ADSA contains an arbitration provision substantially similar to the one contained in the DSA. The County was not a signatory to the ADSA.

On June 12, 2008, the County, HIHT, and WWH entered into a "Development Financing Agreement", setting forth the terms for the release of an additional $31 million to WWH which had been appropriated by the County for use in furtherance of the Project.

In April 2009, WWH notified UniDev to cease work and to submit its final invoices. The Property was thereafter returned to the County.

II. Proceedings In The Circuit Court

Following UniDev's termination from the Project, the County filed a lawsuit on July 1, 2009 in Civil No. 09–1–264K, asserting five causes of action against UniDev: (1) false claims in violation of HRS § 46–171 ; (2) intentional misrepresentation; (3) fraudulent inducement; (4) negligent misrepresentation; and (5) negligence.

On August 17, 2009, UniDev filed a Notice of Removal to the U.S. District Court for the District of Hawai‘i. However, the federal district court subsequently remanded the case back to the circuit court.

On March 29, 2010, UniDev answered the County's complaint and filed a counterclaim against the County as well as WWH and HIHT. UniDev's counterclaim asserted four counts: (1) breach of contract (against the County and WWH); (2) quantum meruit (against the County and WWH); (3) intentional interference with contract (against the County); and (4) fraudulent transfer (against HIHT and the County).

On November 23, 2010, the County filed a second complaint against UniDev in Civil No. 10–1–427K, asserting the following causes of action: (1) false claims in violation of HRS § 46–171 ; (2) unfair and deceptive practices in violation of HRS Chapters 480 and 481; (3) intentional misrepresentation; (4) fraudulent inducement; and (5) negligent misrepresentation.

The circuit court consolidated Civil No. 09–1–264K and Civil No. 10–1–427K on December 16, 2010.

A. Lis Pendens

On April 1, 2010, UniDev filed a lis pendens with respect to the Property and recorded the lis pendens in the Bureau of Conveyances on April 6, 2010. On April 15, 2010, the County filed a Motion to Dismiss Counter-Claim and to Expunge Lis Pendens or in the Alternative for Partial Summary Judgment. Following a hearing, the circuit court entered an order granting the County's motion to expunge the lis pendens, but denying the remainder of the motion. UniDev filed a motion for reconsideration of the Expungement Order, which the circuit court denied. UniDev timely appealed.

B. ADR Orders

On August 2, 2010, UniDev filed a Motion to Compel ADR and to Stay...