APARTMENT OWNERS v. WAILEA RESORT

• Decision Date: 29 November 2002
• Docket Number: No. 22412.,22412.
• Citation: 58 P.3d 608,100 Haw. 97
• Parties: ASSOCIATION OF APARTMENT OWNERS OF WAILEA ELUA, Plaintiff-Appellee, v. WAILEA RESORT COMPANY, LTD., a Hawai`i corporation, Defendant-Appellee, and County of Maui, Defendant-Appellant, and Wailea Development Company, a Joint Venture, John Does 1-10, Jane Does 1-10, Doe Corporations 1-10, Doe Partnerships 1-10, Doe Entities 1-10, and Doe Governmental Units 1-10, Defendants. Association of Apartment Owners of Wailea Elua, Plaintiff-Appellee, v. Wailea Resort Company, Ltd., a Hawai`i corporation, Defendant-Appellant, and County of Maui, Defendant-Appellee, and Wailea Development Company, a Joint Venture, John Does 1-10, Jane Does 1-10, Doe Corporations 1-10, Doe Partnerships 1-10, Doe Entities 1-10, and Doe Governmental Units 1-10, Defendants.
• Court: Hawaii Supreme Court

58 P.3d 608

100 Haw. 97

ASSOCIATION OF APARTMENT OWNERS OF WAILEA ELUA, Plaintiff-Appellee, v. WAILEA RESORT COMPANY, LTD., a Hawai`i corporation, Defendant-Appellee, and County of Maui, Defendant-Appellant, and Wailea Development Company, a Joint Venture, John Does 1-10, Jane Does 1-10, Doe Corporations 1-10, Doe Partnerships 1-10, Doe Entities 1-10, and Doe Governmental Units 1-10, Defendants.

Association of Apartment Owners of Wailea Elua, Plaintiff-Appellee, v. Wailea Resort Company, Ltd., a Hawai`i corporation, Defendant-Appellant, and County of Maui, Defendant-Appellee, and Wailea Development Company, a Joint Venture, John Does 1-10, Jane Does 1-10, Doe Corporations 1-10, Doe Partnerships 1-10, Doe Entities 1-10, and Doe Governmental Units 1-10, Defendants.

No. 22412.

Supreme Court of Hawai`i.

November 29, 2002.

Kelly A. Cairns, Deputy Corporation Counsel, on the briefs, for defendant-appellant/appellee County of Maui.

Michael D. Tom and Lyle M. Ishida, Honolulu, (of Tom & Petrus), on the briefs, for defendant-appellee/appellant Wailea Resort Company, Ltd.

Robert E. Rowland and Matthew V. Pietsch, Kahului, (of Mancini, Rowland & Welch), on the briefs, for plaintiff-appellee Association of Apartment Owners of Wailea Elua.

MOON, C.J., LEVINSON, and NAKAYAMA, JJ.; RAMIL, J., concurring separately, with WHOM ACOBA, J., joins.

Opinion of the Court by MOON, C.J.

Defendant-appellant/appellee County of Maui (the County) and defendant-appellee/appellant Wailea Resort Company, Ltd. (WRC) appeal several orders of the Second Circuit Court, the Honorable E. John McConnell presiding, and the circuit court's March 9, 1999 Amended Judgment entered thereon by the Honorable Artemio C. Baxa, in favor of plaintiff-appellee Association of Apartment Owners of Wailea Elua (the Association). The judgment and orders determined that: (1) the County and WRC were the "owner[s]" of drainage easements traversing the common property of Wailea Elua; (2) the County, WRC, and the Association were jointly responsible "for the current and future repair, maintenance and/or replacement" of the drainage systems, in a percentage allocation discussed herein; (3) the County and WRC were liable to the Association for $1,934.49 and $16,644.53 in damages, respectively, incurred to repair a portion of the drainage systems; and (4) WRC was not entitled to costs pursuant to Hawai`i Rules of Civil Procedure (HRCP) Rule 68 (1972) for a purported offer of judgment it made to the Association prior to trial.

In this appeal, WRC contends that the circuit court erred by: (1) granting the Association's motion for partial summary judgment against WRC, based upon its ruling that WRC owned implied easements in the drainage systems; (2) denying WRC's motion for reconsideration of the partial summary judgment ruling; (3) granting the Association's motion in limine to exclude evidence on the issue of whether drainpipes, which constitute portions of the drainage systems, were common elements of the Wailea Elua property; (4) failing to account for drainage attributable to properties not owned by WRC, or drainage attributable to time periods in which WRC was not an owner of property that contributed water to the drainage systems; and (5) denying WRC's motion for costs pursuant to HRCP Rule 68. The County contends that the circuit court erred by: (1) ruling that the County owned an express easement in the drainage systems; (2) ruling, on an alternative basis, that the County owned implied easements in the drainage system; (3) qualifying Nolan Perreira as an expert in metallurgy; (4) ruling that corrosion in the drainage systems was not caused by chemicals draining from a golf course owned by WRC; (5) allocating responsibility for a portion of the maintenance and repair of the drainage systems to the County, because either (a) Wailea Elua owners should be the sole owners of the drainage systems, or (b) the corrosion was attributable to drainage from WRC's golf course. For the reasons discussed herein, we affirm the circuit court's judgment.

I. BACKGROUND

A. Pre-Litigation Events

In the early 1970s, Wailea Development Company, Inc. (WDC) owned and developed the area known as "Wailea Resort" on the island of Maui. On April 18, 1973, WDC conveyed to the County fee simple title to "Lot 5" of Land Court Application 1804, the property on which Wailea Alanui Drive—a divided, paved, four-lane road that runs roughly parallel to the ocean in a north-south direction through the subject area in this case—is located today. At the time, Lot 5 and the surrounding area was largely undeveloped and the County quit-claimed its interest in an existing unpaved roadway in exchange for the conveyance of Lot 5. In addition to Lot 5, the deed further conveyed to the County

easements for drainage purposes over, under and across portions of the lots adjoining Lot 5, said easements to be determined and designated after construction of the improvements in Lot 5 has been completed by [WDC], and [WDC] agree[s] to promptly file a petition to designate such easements and to execute Grant of Easement documents in favor of the [County] in such form as shall be mutually agreed upon; provided that [the County] shall execute a document canceling this grant concurrently with the execution of Grant of Easement documents from the [WDC] to [the County].

This deed was accepted the following day by the County through an action of the County's Council Committee of the Whole. The same conveyance and easements were identified in Transfer Certificate of Title (TCT) No. 158106 issued by the Land Court on April 19, 1973, the only distinction being that the easement language in the TCT clearly identifies the "lots adjoining" Lot 5 as property upon which, inter alia, the present Wailea Elua condominiums are located. The number and location of the easements that WDC conveyed to the County in conjunction with the road were not identified at the time of the conveyance; instead, the easements were to be designated after WDC had developed the road.

WDC thereafter built the Wailea Elua condominiums, which are located makai¹ of Wailea Alanui Drive. WDC also subdivided and developed several properties mauka² of Wailea Alanui Drive that are located in the general vicinity "above" Wailea Elua. These include the Wailea Blue Golf Course (Golf Course) and the Wailea Fairways Subdivision (Fairways Subdivision). In addition, WDC originally owned properties in the general vicinity mauka of the road, designated as MF-8, MF-12, and MF-13, that were undeveloped as of the commencement of this litigation.

During construction of the area, an eighteen inch culvert was installed that ran under Wailea Alanui Drive from the mauka properties (north culvert). The culvert drains water into a twenty-four inch drainpipe that runs underground through the Wailea Elua property. This twenty-four inch pipe then merges with a fifty-four inch pipe, discussed infra, at which point the merged pipes empty onto a grassy swale³ on the Wailea Elua property near the beach. Further south along Wailea Alanui Drive, two thirty-six inch culverts (south culverts) were installed under the road that empty into a concrete catch basin. From this catch basin, water flows into a fifty-four inch drainpipe that runs underground through the Wailea Elua property, draining generally towards the sea but also eventually turning northerly and merging with the aforementioned twenty-four inch pipe, which then empties onto the grassy swale.

On June 3, 1977, WDC filed its horizontal property regime declarations for Wailea Elua.⁴ The declarations stated that WDC reserved the right to designate various easements "over, under and across" the Wailea Elua property for "utilities, sanitary and storm sewers," and other similar purposes. On July 1, 1977, WDC filed a petition in the land court designating the location of three easements associated with its conveyance of Wailea Alanui Drive to the County. The petition included a map showing the location of the easements and designating them as Easements 61, 62, and 63. The easements are located within Wailea Elua property. Easement 62 is located adjacent to Wailea Alanui Drive in the area where the north culvert meets the twenty-four inch drainpipe. Easement 63 is located adjacent to the road in the area where the catch basin from the two south culverts drains into the fifty-four inch underground pipe. Finally, Easement 61 is located in the grassy swale area into which the two converged drainage systems empty. WDC's designation was approved by the land court on or about July 8, 1977.

Thereafter, during the late 1970s, WDC offered apartment units at Wailea Elua for sale to individual owners. The original apartment deeds to Wailea Elua owners specifically noted that individual apartments were conveyed subject to Easements 61, 62, and 63, which, as noted, are appurtenant to Wailea Alanui Drive. In addition, the original deeds from WDC to individual Wailea Elua apartment owners excepted and reserved easements unto WDC and its assignees

for electrical, gas, communications and other utility facilities and purposes and for sewer, drainage, and water facilities and purposes over, under, along, across and through [Wailea Elua], together with the right in its sole discretion to designate such easements by filing a petition in the Land Court of the State of Hawaii without notice to and/or joinder of the Grantee and to grant to ... [any] appropriate governmental agency or to any public utility or other corporation, without notice to and/or consent of the Grantee, easements for such purposes over, under, across, along and though [Wailea Elua] under the usual terms and conditions required by the grantee of such easement rights ...; PROVIDED, HOWEVER, that such easement rights must be exercised in such manner as not to unreasonably interfere with the use of [Wailea Elua] by the Grantee, ... and, in connection with the installation,

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