Ass'n of Apartment Owners of the Palm Villas at Mauna Lani Resort v. ConstRX, Ltd.

Decision Date31 January 2022
Docket NumberCAAP-17-0000161
Citation150 Hawai'i 446,504 P.3d 1034
Parties ASSOCIATION OF APARTMENT OWNERS OF the PALM VILLAS AT MAUNA LANI RESORT, BY AND THROUGH ITS BOARD OF DIRECTORS, Claimant-Appellee/Cross-Appellee, v. CONSTRX, LTD., Respondent-Appellee/Cross-Appellant, and Knox Hoversland Architects, Respondent-Appellant/Cross-Appellee
CourtHawaii Court of Appeals

On the briefs:

Randall K. Schmitt and Jordan K. Inafuku, Honolulu (McCorriston Miller Mukai MacKinnon LLP) for Respondent-Appellant/Cross-Appellee Knox Hoversland Architects, Ltd.

Jeffre W. Juliano, Kelvin H. Kaneshiro, and Lahela H.F. Hite, Honolulu (O'Connor Playdon Guben & Inouye LLP) for Respondent-Appellant/Cross-Appellant ConstRX, Ltd.

Terrance M. Revere and Malia R. Nickison-Beazley, Kailua (Revere & Associates, LLLC) for Claimant-Appellee/Cross-Appellee Association of Apartment Owners of the Palm Villas at Mauna Lani, by and through its Board of Directors

WADSWORTH, PRESIDING JUDGE, AND NAKASONE, J., AND McCULLEN, J., DISSENTING

OPINION OF THE COURT BY WADSWORTH, J.

This appeal arises out of a dispute concerning two arbitration awards, which were issued in favor of Respondent-Appellant/Cross-Appellee Knox Hoversland Architects, Ltd. (KHA ) and Respondent-Appellee/Cross-Appellant ConstRX, Ltd. (CRX ) (collectively, Respondents ) and against Claimant-Appellee/Cross-Appellee Association of Apartment Owners of the Palm Villas at Mauna Lani Resort (AOAO ). KHA appeals and CRX cross-appeals from the April 3, 2017 Amended Findings of Fact, Conclusions of Law and Order (Amended FOF/COL/Order ), entered in the Circuit Court of the First Circuit1 (Circuit Court ), which: (1) granted AOAO's October 31, 2014 motion to vacate the September 16, 2014 Interim Arbitration Award (Interim Award ); (2) granted AOAO's April 1, 2015 motion to vacate the February 9, 2015 Final Arbitration Award (Final Award ); and (3) denied CRX's February 13, 2015 motion to confirm the Final Award, which KHA joined on March 10, 2015.

On appeal, Respondents contend that the Circuit Court erred in vacating the Interim Award and the Final Award (collectively, the Arbitration Awards ) due to evident partiality. In particular, Respondents contend that the Circuit Court erred in concluding that: (1) the arbitrator, Judge Riki May Amano (Ret.) (the Arbitrator or Judge Amano ), failed to make reasonable inquiries and failed to make full and appropriate disclosures of her relationships with the parties and counsel prior to and during the arbitration; and (2) AOAO did not waive its right to object to the Arbitrator.2

We hold that under the circumstances of this case, the Arbitrator's failure to timely disclose to the parties that she recently had been appointed as an arbitrator in another matter, involving an attorney who also had been involved in the present matter, could reasonably have been perceived as likely to affect the Arbitrator's impartiality in the arbitration underlying this appeal. Thus, the Circuit Court did not clearly err in ruling that a reasonable impression of partiality, and thus evident partiality, was established on this ground. We further hold that the Circuit Court did not clearly err in ruling that AOAO did not waive its right to challenge the Arbitrator on this ground. Accordingly, we affirm the Amended FOF/COL/Order.

I. Background

The following findings of fact by the Circuit Court are unchallenged on appeal and are thus binding on the parties and this court, see State v. Rodrigues, 145 Hawai‘i 487, 494, 454 P.3d 428, 435 (2019) :

6. On April 18, 2012, [AOAO] and Respondents entered into a Remediation Agreement to complete [certain] repairs. ...
7. Pursuant to Article 13 of the Remediation Agreement, any dispute arising thereunder that could not be resolved via the Initial Decision Maker (the Owner's/[AOAO's] Representative) or mediation was to be submitted to Dispute Prevention & Resolution, Inc. ("DPR") for binding arbitration. ...
8. CRX performed remediation work from July 2012 to September 2013.
9. A dispute arose regarding payment under the Remediation Agreement.
10. On October 24, 2013, this matter came before Keith Hunter, President and Chief Executive Officer of DPR, for mediation.
11. Attorney [Jeffre W.] Juliano (O'Connor Playdon) could not attend the October 24, 2013 mediation and asked his partner, Cid Inouye, Esq., to prepare for and attend the mediation on Attorney Juliano's behalf [for CRX].
12. Attorney Inouye billed 11.3 hours in this matter to prepare for and stand in for Attorney Juliano at said mediation.
13. The mediation was unsuccessful and on October 28, 2013, [AOAO] emailed DPR its demand for arbitration against Respondents.
14. Also on October 28, 2013, CRX filed a demand for arbitration with DPR.
15. On November 14, 2013, using the strike-off method, DPR appointed Judge Amano to serve as arbitrator.
....
....
17. On November 18, 2013, Judge Amano, through Kelly Bryant, Case Manager at DPR, provided the following disclosure by email addressed to Attorneys [Terrance M.] Revere [(for AOAO)] and Juliano:
I know counsels Terry Revere, Cid Inouye and Jeff Juliano, and I have worked with other lawyers in their respective law firms, in my capacity as a former state court judge between 1992-2003 or in my post-retirement years as an arbitrator or mediator with DPR; I do not know Malia Nickison-Beazley.
I have no other professional, social or personal interactions with anyone involved in this case.
There are no relationships or interests, past or present that would affect my neutrality as an arbitrator in this case.
18. In the same email, Ms. Bryant advised that:
The Judge has made a diligent effort to disclose all relevant matters. If any party has additional information that should be disclosed but has not been, or you have any comments or objections, please submit them in writing to DPR by November 21, 2013. (Emphasis in original.)
19. Ms. Bryant copied Attorney Inouye (O'Connor Playdon), Alison Shigekuni, Esq. (O'Connor Playdon), Mea Mitchell, Esq. (Revere & Associates), and Attorney Nickison-Beazley (Revere & Associates) on the November 18, 2013 email containing Judge Amano's initial disclosure.
20. No party submitted comment or objection to Judge Amano serving as arbitrator in response to her November 18, 2013 initial disclosure.
21. In January 2014, CRX's insurer retained Attorneys [Roy F.] Hughes and [Samantha] Storm of Hughes Storm to litigate CRX's defense claims, while Attorneys Juliano and [Lahela H.F.] Hite of O'Connor Playdon continued to litigate CRX's affirmative claims against [AOAO].
22. In February 2014, KHA's insurer retained Attorney [Randall K.] Schmitt of McCorriston Mukai to litigate its claims against [AOAO].
23. A summary of the parties and counsel who appeared before Judge Amano for the subject arbitration is as follows:
[AOAO] Revere & Associates
Terrance Revere, Esq.
Malia Nickison-Beazley, Esq.Respondent CRX O'Connor Playdon (affirmative claims)
Lahela Hite, Esq.
Jeffre Juliano, Esq.
Hughes Storm (defense claims)
Roy Hughes, Esq.
Samantha Storm, Esq.
Respondent KHA McCorriston Mukai
Randall Schmitt, Esq.
....
24. On March 25, 2014, Judge Amano issued the following supplemental disclosure by email through Ms. Bryant:
I do not know nor have I had any affiliation past or present with [KHA.] I know counsel Randy Schmitt from my work as a former state court judge between 1992-2003 and/or in my post-retirment [sic] work as an arbitrator or mediator with DPR; I have also worked with other lawyers in his law firm, McCorriston Miller, in the capacities I have identified herein; I have no social or personal relationships with Mr. Schmitt or anyone in his law firm [sic] I am currently the Claims Administrator in a settled case in which Mr. Schmitt represented a named defendant; my present duties require me to seek and pay qualified class plaintiffs from settlement monies already paid; I do not have contact with Mr. Schmitt in this regard although he will be receiving a copy of my reports as the legal representative for a party to the case [sic]
I have no other professional, social or personal relationships or interactions with anyone involved in this case [sic]
I continue to believe that my neutrality as an arbitrator in this case is unaffected [sic]
25. No party submitted comment or objection to Judge Amano serving as arbitrator in response to her March 25, 2014 supplemental disclosure.
....
28. On May 1, 2014, counsel for all the parties herein attended a pre-arbitration conference before Judge Amano at DPR's office.
29. At said pre-arbitration conference, Attorney Juliano disclosed that Attorneys Inouye and Maxwell K. Kopper (previously an associate at O'Connor Playdon) were before Judge Amano the day before, April 30, 2014, arguing an unrelated motion for summary judgment.
30. In said unrelated matter, unbeknownst to [AOAO], Ms. Bryant had confirmed on November 6, 2013, that Judge Amano was selected as the arbitrator, eight days before Judge Amano was selected as arbitrator in this matter.
31. There was no objection made at the May 1, 2014 pre-arbitration conference with respect to Judge Amano serving as arbitrator in this matter.
32. Beginning May 5, 2014, the arbitration took place at the office of McCorriston Mukai on May 5, 6, 7, 8, 9, and 12.
....
35. On May 16, 2014, Ms. Bryant sent an email to Attorneys Hughes, Nickison-Beazley, Juliano, Revere, Mitchell, Shigekuni, Inouye, Schmitt, and Storm, among others who had not appeared before Judge Amano in this matter, to disclose that Judge Amano had been appointed by the court to serve as a discovery master in a matter in which Attorney Schmitt represented a party.
....
....
37. On September 16, 2014, Judge Amano issued an Interim Arbitration Award against [AOAO] and in favor of CRX for $205,539.49, representing the unpaid balance owed by [AOAO] and $431,462.47 in retainage, pursuant to the Remediation Agreement. Judge Amano denied CRX's remaining affirmative claims against [AOAO]. ....
39. On September 23, 2014,
...

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