Brown v. Hyatt Corp., No. CIV. 98-00964ACK.

• Citation: 128 F.Supp.2d 697
• Decision Date: 14 December 2000
• Docket Number: No. CIV. 98-00964ACK.
• Parties: Dr. Stuart BROWN and Isabel Brown, Plaintiffs, v. HYATT CORPORATION, dba Hyatt Hotels Hawaii, Defendant.
• Court: Hawaii Supreme Court

128 F.Supp.2d 697

Dr. Stuart BROWN and Isabel Brown, Plaintiffs, v. HYATT CORPORATION, dba Hyatt Hotels Hawaii, Defendant.

No. CIV. 98-00964ACK.

United States District Court, D. Hawai`i.

December 14, 2000.

Laura Stone-Jeraj, Law Offices of Richard Turbin, Honolulu, HI, for Stuart Brown, Dr., Isabel Brown, plaintiffs.

Ryan M. Akamine, Roeca Louie & Hiraoka, Honolulu, HI, for Hyatt Corporation dba Hyatt Hotels Hawaii, Doe Entities 1-9, defendants.

ORDER DENYING PLAINTIFFS' MOTION TO MODIFY ARBITRATION AWARD AND TO AWARD PRE-AND POST-JUDGMENT INTEREST AND COSTS

KAY, District Judge.

BACKGROUND

This case arises from a slip and fall on December 19, 1996. In the instant motion, Plaintiffs seek to modify an arbitration award. They also ask the Court to award pre- and post-judgment interest.

Dr. Stuart Brown was injured when he slipped and fell ascending a flight of wooden stairs leading from the pool area to the top of a water slide at the Hyatt Regency Kaua`i. Dr. Brown and his wife, Isabel Brown, (collectively "Plaintiffs") sued Hyatt Corporation, dba Hyatt Hotels Hawaii ("Defendant"), alleging negligence and loss of consortium. The complaint sought special damages, general damages, attorneys' fees, prejudgment interest, costs, and any other allowable damages.

The case was scheduled to go to trial before this Court on March 2, 2000. On February 28, 2000, the parties stipulated to a stay of trial pending completion of binding arbitration. See Mot., Ex. B. The extent of the written contract governing their arbitration was a March 14, 2000 letter from Defendant's claims representative to Plaintiffs' counsel stating:

This letter will serve to confirm our mutual agreement to have the [Brown v. Hyatt] action resolved by Binding Arbitration. It was agreed that the arbitration will have parameters of $25,000-$150,000, and that prior to the arbitration, we will have the opportunity to have your client examined by a doctor of our choosing, should we so desire. Lastly, you will provide us with the information necessary to subpoena the records relating to your client's disability insurance claim.

Mot., Ex. D (emphasis added). The instant dispute concerns what matters were agreed to be in the scope of arbitration. Specifically, Plaintiffs contend that the parties agreed to arbitrate only liability and damages (leaving costs, attorneys' fees, and pre- and post-judgment interest to the Court), while Defendant argues that the parties agreed to resolve all issues through arbitration.

A panel of three arbitrators heard the case in August and September of 2000. On September 28, 2000, the arbitrators found liability in favor of Plaintiffs and served a copy of the arbitration award. Plaintiff was awarded special damages in the amount of $10,132.76, general damages in the amount of $75,000.00, and loss of consortium damages in the amount of $7,500.00. See Mot., Ex. A. The arbitration award also included the line, "Costs to the Prevailing Party." The entry reads, "$-0-." See id.

Plaintiffs filed the instant motion to modify arbitration award and award pre-and post-judgment interest and costs on November 6, 2000. Defendant filed its opposition on November 22, 2000.¹ Plaintiffs filed their reply on November 30, 2000. The matter came before the Court for a hearing on December 11, 2000.

DISCUSSION

I. TIMELINESS OF THE MOTION TO MODIFY ARBITRATION AWARD

The parties agree that Hawaii law governs the substantive question of whether the arbitration award may or should be modified — both parties cite only Hawaii law, on the topic.² However, before the Court turns to the substantive question, it must decide whether Plaintiffs' motion is timely.

The arbitration award was issued on September 28, 2000. Plaintiffs filed the instant motion thirty-nine (39) days later on November 6, 2000. Defendant argues that the motion is not timely under H.R.S. § 658-11, which states, in relevant part:

Notice of a motion to vacate, modify, or correct an award, shall be served ... upon the adverse party or the adverse party's attorney within ten days after the award is made and served.

H.R.S. § 658-11 (emphasis added). Conversely, Plaintiffs argue that the applicable deadline is found in the Federal Arbitration Act ("FAA"), 9 U.S.C. § 12. See Reply, at 2 ("In this diversity lawsuit, Hawaii law governs the substantive aspects, federal law governs the procedural."). The FAA states in relevant part:

Notice of a motion to vacate, modify, or correct an award must be served upon the adverse party or his attorney within three months after the award is filed or delivered.

9 U.S.C. § 12 (emphasis added). The timeliness of Plaintiffs' motion hinges on which statute governs.

The Court disagrees with Plaintiffs' argument and finds that Hawaii arbitration law applies, including the filing deadline in § 685-11. Plaintiffs' error is that they argue as if the FAA applies to all actions in federal court in the same way, for example, as do the Federal Rules of Evidence or Civil Procedure. It does not. While the FAA applies to a broad scope of cases in federal courts, it does not apply to all. The FAA applies only to written arbitration provisions in "contract[s] evidencing a transaction involving commerce" and "maritime transactions." See 9 U.S.C. § 2. The basic purpose of the FAA is to overcome courts' refusals to enforce agreements to arbitrate. See Allied-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265, 270, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995). "If the [FAA] is applicable, federal law governs the enforcement of and challenges to an arbitration award, even in diversity cases ...." Foster v. Turley, 808 F.2d 38, 40 (10th Cir.1986) (emphasis added). Section 2 provides that a "written provision in any maritime transaction or contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." Id., 513 U.S. at 272, 115 S.Ct. 834 (emphasis added); see also Portland Gen. Elec. Co. v. U.S. Bank Trust Nat'l Ass'n, 218 F.3d 1085, 1089 (9th Cir.2000) ("The FAA governs any written provision in a `contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract.'"); Prasad v. Investors Assocs., Inc., 82 F.Supp.2d 365, 367 (D.N.J.2000) ("The FAA applies to arbitrations involving interstate commerce — such as the securities transactions involved here.").

Conversely, when contracts are held to not involve a maritime transaction or interstate commerce, they do not fall within the ambit of the FAA. See, e.g., Bernhardt v. Polygraphic Co. of America, 350 U.S. 198, 200-02, 76 S.Ct. 273, 100 L.Ed. 199 (1956) (employment contract where there was no showing that person was working "in" commerce, was producing goods for commerce, or was engaging in activity that affected commerce could not have its arbitration clause enforced under the FAA's predecessor, the United States Arbitration Act). Moreover, some contracts are specifically written out of the FAA's purview. See, e.g., Herring v. Delta Air Lines, Inc., 894 F.2d 1020, 1023 (9th Cir.1989) (airline pilots' claim that airline was required to arbitrate seniority dispute under FAA was erroneous because, inter alia, the statute specifically excludes from coverage "contracts of employment"); see also 9 U.S.C. § 1 (defining "marine transactions" and "commerce" and setting forth exceptions).

The Court finds that the FAA is inapplicable to the instant case. Plaintiffs assert a tort claim that involves neither a "maritime transaction" nor "a contract evidencing a transaction involving commerce." Instead, it involves an unfortunate injury to a man who slipped and fell on Defendant's premises. Moreover, the FAA is concerned with enforcing arbitration agreements that are written into contracts before a dispute arises, not with regulating agreements to go to arbitration that are made after a dispute is alive. See Allied-Bruce, 513 U.S. at 272, 115 S.Ct. 834 (the FAA holds valid, irrevocable, and enforceable "written provision[s] ... to settle by arbitration a controversy thereafter arising out of such contract or transaction") (emphasis added). Accordingly, the Court finds that the FAA does not govern the instant case.

Because the FAA does not apply, the Court applies Hawaii's arbitration statute. A motion to modify an arbitration award must be filed within ten days of the award. See H.R.S. § 658-11. The statute "expressly mandates that notice of a motion to vacate, modify, or correct an award shall be served within ten days after the arbitration award is entered and served." Sousaris v. Miller, 92 Hawai`i 505, 993 P.2d 539, 548 (2000). The Sousaris court strictly adhered to the mandate in § 658-11 when it held that § 658-11 would not permit a motion for reconsideration of a motion to vacate to be filed which added new, previously unavailable facts if the ten day period had expired. See id at 547-48. The court emphasized the need to be true to "the underlying policy of encouraging arbitration as an efficient means of reaching finality in resolving disputes." Id. Other Hawaii courts have been equally adamant about the need to be strict with the deadline in § 658-11. See, e.g., Excelsior Lodge Number One v. Eyecor, Ltd., 74 Haw. 210, 847 P.2d 652, 657-58 (1992). The ten day deadline starts running when the arbitration award is made and served. See H.R.S. § 658-11. Applying this deadline to the instant case, the Court finds that Plaintiffs' motion is untimely.

Plaintiffs' claim that the ten day period has not yet started to run because the arbitration award does not conform to the requirements of H.R.S. § 658-8 is meritless. According to the statute, in relevant part,

The award shall be in writing and acknowledged or proved in like manner as a deed...