Excelsior Lodge No. One, Independent Order of Odd Fellows v. Eyecor, Ltd.

• Decision Date: 15 December 1992
• Docket Number: 15658,Nos. 15435,s. 15435
• Citation: 847 P.2d 652,74 Haw. 210
• Parties: EXCELSIOR LODGE NUMBER ONE, INDEPENDENT ORDER OF ODD FELLOWS, a Hawaii eleemosynary corporation, Applicant-Appellee, v. EYECOR, LTD., a Hawaii corporation, Respondent-Appellant, and Atkinson Tower, Inc., a Hawaii corporation, Respondent. EXCELSIOR LODGE NUMBER ONE, INDEPENDENT ORDER OF ODD FELLOWS, a Hawaii eleemosynary corporation, Applicant-Appellee, v. EYECOR, LTD., a Hawaii corporation, and Atkinson Tower, Inc., a Hawaii corporation, Respondents-Appellants.
• Court: Hawaii Supreme Court

Page 652

847 P.2d 652

74 Haw. 210

EXCELSIOR LODGE NUMBER ONE, INDEPENDENT ORDER OF ODD

FELLOWS, a Hawaii eleemosynary corporation, Applicant-Appellee, v. EYECOR, LTD., a Hawaii corporation, Respondent-Appellant, and Atkinson Tower, Inc., a Hawaii corporation, Respondent.

EXCELSIOR LODGE NUMBER ONE, INDEPENDENT ORDER OF ODD

FELLOWS, a Hawaii eleemosynary corporation, Applicant-Appellee, v. EYECOR, LTD., a Hawaii corporation, and Atkinson Tower, Inc., a Hawaii corporation, Respondents-Appellants.

Nos. 15435, 15658.

Supreme Court of Hawai'i.

Dec. 15, 1992.

Syllabus by the Court

1. Under Hawaii's Arbitration and Award statute, Hawaii Revised Statutes (HRS), chapter 658, a party is not barred from asking for a clarification of an arbitrator's award at a § 658-8 confirmation hearing, even though that party had failed to bring a timely motion under either HRS §§ 658-9 or 658-10.

2. The notice provision of HRS § 658-11 applies when a party wishes to change the substance or the amount of an award, but not when a party merely asks for clarification of an ambiguous award.

3. A request for clarification of an arbitration award, which does not seek to change the substance or amount of that award, can avoid the ten-day service requirement of HRS § 658-11.

4. In order to change an award under HRS chapter 658, a party must timely move either to vacate the award under HRS § 658-9 or to modify or correct it under HRS § 658-10.

5. Appellate courts reviewing a § 658-8 confirmation award under HRS § 658-15 are restricted to a consideration of the seven specific grounds included in HRS §§ 658-9 and 658-10.

6. A party who seeks to change an arbitration award, but fails to follow the specific statutory provisions for challenging the award by timely bringing a motion under either §§ 658-9 or 658-10, is foreclosed from subsequently appealing a § 658-8 confirmation order under HRS § 658-15.

7. Orders compelling arbitration under HRS § 658-3 are appealable orders within the contemplation of HRS § 641-1(a).

8. There exists a small class of orders, including those under HRS § 658-3, which finally determine claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated.

9. A reviewing court shall not consider an unappealed § 658-3 order compelling arbitration on an appeal from a final judgment in the same case.

G. Stephen Elisha, Philip L. Lahne and Richard S. Ekimoto, Dinman, Nakamura, Elisha & Lahne, Honolulu, for respondents-appellants Eyecor, Ltd. and Atkinson Tower, Inc.

Rosemary T. Fazio and Keith Yonamine, Ashford & Wriston, Honolulu, for applicant-appellee Excelsior Lodge Number One, Independent Order of Odd Fellows.

Before LUM, C.J., MOON and LEVINSON, JJ., YIM, Circuit Judge in place of WAKATSUKI, J., deceased, and SPENCER, Circuit Judge in place of KLEIN, J., recused.

MOON, Justice.

Petitioner-appellee Excelsior Lodge Number One, Independent Order of Odd Fellows (Excelsior) and respondent-appellant Eyecor, Ltd. (Eyecor) are lessor and lessee, respectively, of a parcel of land underlying 419A Atkinson Drive in Honolulu. Respondent-appellant Atkinson Tower, Inc. (Tower) is a cooperative housing corporation and Eyecor's sublessee. As the result of a rental dispute between Excelsior and Eyecor, an arbitration proceeding provided for in the lease agreement was held, resulting in an award in favor of Excelsior. Excelsior then moved for confirmation of the arbitration award by the circuit court. The motion was granted.

Eyecor, joined by its sublessee Tower, appealed the circuit court's confirmation of the arbitration award, along with several other orders issued by the court. On appeal, Eyecor essentially claims that the arbitration award should not have been confirmed because the arbitrators had failed to apply Hawaii Revised Statutes (HRS) § 519-3(a)(2) (1985), which governs the amount of lease rent payable by cooperative housing corporations (hereinafter, Eyecor's § 519-3(a)(2) claim/issue). Excelsior contends that HRS § 519-3(a)(2) was not applicable to the dispute in issue; however, even if it were, Excelsior maintains that Eyecor's § 519-3(a)(2) claim was not timely raised under HRS chapter 658, the arbitration and award statute.

The Intermediate Court of Appeals (ICA) held ¹ that HRS § 519-3(a)(2) was applicable to the dispute and that Eyecor had properly raised the § 519-3(a)(2) issue in its appeal. Therefore, the ICA vacated the trial court's order confirming the award and remanded the case for a determination as to whether the arbitrators had, in fact, applied the statute. We granted Excelsior's application for a writ of certiorari to review the ICA's decision.

We conclude that Eyecor failed to timely challenge the arbitration award under the arbitration and award statute, HRS chapter 658. We also conclude that because of such failure, Eyecor was precluded from raising the § 519-3(a)(2) issue in its appeal. We therefore reverse the decision of the ICA and affirm the trial court's confirmation of the arbitration award.

I. BACKGROUND

Excelsior owns the land underlying 419A Atkinson Drive in Honolulu. On March 20, 1957, Excelsior and Eyecor's predecessor-in-interest entered into a written lease with a fixed rental rate for the first twenty years. The lease further provided that, following the initial twenty-year period, the rent for each subsequent ten-year period would be by agreement. If the parties were unable to agree, the lease provided that each shall

choose an appraiser and these two shall choose a third appraiser. All such appraisers shall be recognized and qualified appraisers.... The appraisers shall deduct from the value found by them the total amount of buildings erected by the Lessees and also any improvement assessments or charges which shall have been levied against the demised premises and paid by the Lessees or for which the Lessees are required to reimburse the Lessor under the terms of this lease. The value found by a majority of the appraisers, less said deductions, shall be deemed the "appraised value" for the purposes of their determining the rental [under the lease].

On October 10, 1958, Eyecor's predecessor-in-interest subleased the property to Atkinson Building, Inc. On October 10, 1960, Atkinson Building assigned its sublessee interest to Tower, a cooperative housing corporation. Excelsior consented in writing to each of these transactions.

The sublease between Eyecor and Tower provided for a profit to Eyecor for the first twenty years. Following that period, the sublease provided that Tower would pay to Eyecor the amount negotiated under the master lease between Eyecor and Excelsior, and that Eyecor would then pay that amount to Excelsior. Eyecor was to make no profit on the sublease after the first twenty years. Additionally, pursuant to the terms of the sublease, Eyecor irrevocably appointed Tower its agent for all subsequent rent negotiations with Excelsior on the master lease.

Meanwhile, in 1982, the Hawaii State legislature enacted HRS § 519-3, which, among other matters, imposed a ceiling on the amount of rent payable by a lessee or sublessee that is a cooperative housing corporation.

When the time for setting the rent between Excelsior and Eyecor for the period 1987-1997 arrived, the parties conducted lengthy lease rent negotiations, but were unable to agree on an amount. Excelsior then attempted to invoke the arbitration procedure provided for in the master lease; however, Eyecor objected and refused to proceed through such arbitration. Therefore, Excelsior, pursuant to HRS § 658-3, ² moved for an order to compel arbitration according to the agreement contained in the master lease. In opposition to the motion, Eyecor ³ maintained that the rent ceiling requirement of HRS § 519-3(a)(2) applied because of its sublessee Tower's status as a cooperative housing corporation. ⁴ Excelsior, on the other hand, argued that the statute did not apply to rent negotiations under the lease between Excelsior and Eyecor because Eyecor is not a cooperative housing corporation. On April 3, 1990, the court granted Excelsior's motion and entered an order compelling the parties to follow the master lease arbitration procedure. Eyecor did not appeal this order, and the arbitration process went forward.

A year later, on April 4, 1991, Eyecor filed a motion seeking a ruling that HRS § 519-3(a)(2) precluded the arbitrators from setting a rental amount in excess of "the amount derived by multiplying the 'owner's basis' by the original percentage rate." HRS § 519-3(a)(2). On April 24, 1991, the trial court ruled "by way of clarification and for the limited purposes of the arbitration between Excelsior Lodge and Eyecor, that [the rent ceiling requirement of] HRS § 519-3 is not applicable" (hereinafter, the § 519-3(a)(2) order).

On April 26, 1991, the arbitrators awarded Excelsior an annual rent of $169,200. On that same day, Excelsior moved for an order confirming the arbitration award pursuant to HRS § 658-8. ⁵ On May 6, 1991, Eyecor filed a motion for reconsideration of the trial court's § 519-3(a)(2) order. Eyecor concurrently filed a notice of appeal ⁶ regarding the order compelling arbitration and the § 519-3(a)(2) order. We subsequently dismissed that appeal because: 1) the order compelling arbitration was untimely appealed; ⁷ and 2) the appeal of the § 519-3(a)(2) order was premature because the trial court had yet to rule on Eyecor's motion for reconsideration.

On June 10, 1991, the trial court entered an order confirming the April 26, 1991 arbitration award (confirmation order). On June 24, 1991 Eyecor timely appealed this confirmation order. ⁸ On October 1, 1991, the trial court denied Eyecor's motion for reconsideration of the § 519-3(a)(2) order (reconsideration order). On October 15, 1991...