Case Title: Schmidt v. Pacific Benefit Services, Inc. S.Ct. Order of Correction, filed 07/06/2006 [pdf]. S.Ct. Order Denying Defendant-Appellant Pacific Benefit Services, Inc.s Motion for Reconsideration, filed 07/06/2006 [pdf], 111 Haw. 114. S.Ct. Order Denying Appellee's Motion to Dismiss Appellant's Notice of Appeal for Lack of Appellate Jurisdiction and for an Award of Reasonable Attorney's Fees and Costs, filed 04/30/2003 [pdf]. S.Ct.Order Denying Appellee's Motion to Dismiss Appellant's Notice for Lack of Appellate Jurisdiction and for an Award of Reasonable Attorney's Fees and Costs, filed 07/03/2003 [pdf].

Citation: 113 Haw. 161

Docket Number: 

State: hawaii

Court: Hawaii Supreme Court

Date: 2006-05-31T00:00:00Z

Document:
*** FOR PUBLICATION *** y
a

 

J.P. SCHMIDT, in his capacity as Liquidator and
Trustee of the Pacific Group Medical Association
Liguidating Trust, Plaintiff-Appellee,

 

PACIFIC BENEFIT SERVICES, INC., Defendant-Appellant,
and

HENRY AKIU, JR. ; RANDOLPH KO; BRYON GRAVES, JR. ;
EDWIN RAMOS; WILLIAM A. WILLIAMS (also known as William
0. Williams or Billy Williams); RICHARD STILES; MARK
HOPKINS; HAROLD Y. KUWAHARA; JUAN MARTIN GONZALES; MIKE
CLEARE; WATSON WYATT & COMPANY; WIKOFF COMBS & CO., CPA’S;
FOUR WINDS RSK, INC.; AULI'I, INC.; TORAL-VAHEY & ASSOCIATE:
BRIDGEPORT BENEFITS, INC., a foreign corporation;
NEVADA EQUITY & GROWTH MANAGEMENT, a foreign corporation;
PGMA, INC., a Hawai'i corporation; WAYNE BLASMAN;
DOUG ROLEFSON; TERRY CONLAN; LEE ANN KIM;

DONALD WAKEMAN; JAMES R. LINDSEY; JOHN DORS 1-50;
JANE DOES 1-50; DOE CORPORATIONS 1-50; DOE PARTNERSHIPS
1-50, AND DOE ENTITIES 1-50, Defendants.

 

 

and
HENRY AKIU, JR. and EDWIN RAMOS, Third-Party Plaintiffe,

 

PACIFIC BENEFITS SERVICES, INC., a Hawai'i corporation,
‘Third-Party Defendant-Appellant,

and

PETER PO SING WONG; SUSAN WONG; LING FONG WONG; GEORGE
MINGO; BRENDA MINGO; PACIFIC EQUITY GROWTH & MANAGEMENT,
INC., a Hawai'i corporation; PACIFIC EQUITY FACTORS, INC.,

‘a Hawai'i corporation; PACIFIC EMPLOYEE LEASING, INC.,

a Hawai'i corporation; HAWAII DENTAL PLAN, INC., a Hawai'i
corporation; P.S. WONG, LTD., a Hawai'i corporation;
PO SANG CORP., a foreign corporation; NISHTHAMA & KISHIDA,
PA'S, INC., a Hawai'i corporation; JOHN J. D'AMATO;
D’AMATO & MALONEY, a Hawai'i law partnership; JOHN DOES

qa
*** FOR PUBLICATION ***

Se

1-10; JANE DOES 1-10; and DOE CORPORATIONS 1-10,
‘Third-Party Defendants.

   

Civ, No. 99-4504

J.P. SCHMIDT, in his capacity as Liquidator and

Trustee of the Pacific Group Medical Association
Liquidating Trust, Plaintiff-Appellee,

PACIFIC BENEFIT SERVICES, INC,, Defendant-Appellant,
and

PETER PO SING WONG; WATSON WYATT WORLDWIDE; WATSON WYATT
& COMPANY; THE WYATT COMPANY; WIKOFF COMBS & CO. CPA'S,

INC. ; NISHIHAMA & KISHIDA, CPA'S, INC., a Hawai'i corporation;
PACIFIC EQUITY GROWTH & MANAGEMENT, INC., a Hawai'i corporation;
PO SANG CORP., a foreign corporation; HAWAII DENTAL HEALTH
PLAN, INC. (also known as Hawai'i Dental Plan, Inc.), a Hawai‘
corporation; FOUR WINDS RSK, INC., a Hawai'i corporation;
TORAL-VAHEY & ASSOCIATES; WAYNE BLASMAN; DOUG ROLEFSON;
BRIDGEPORT BENEFITS, INC., a foreign corporation; NEVADA
EQUITY & GROWTH MANAGEMENT, 4 foreign corporation; SUSAN WONG;
LING FONG WONG; P.S. WONG, LTD,, a Hawai'i corporation,
PACIFIC EMPLOYEE LEASING, INC., a Hawai'i corporation;
PACIFIC EQUITY FACTORS, 'INC.,'a Hawai'i corporation;
PGMA, INC., a Hawai'i corporation; PGMA DENTAL, a Hawai‘i
corporation; TERRY CONLAN; LEE ANN KIM; DONALD WAKEMAN;
JAMES R. LINDSEY; JOHN DOES 1-50; JANE DOES 1-50; DOE
CORPORATIONS 1-50; DOE PARTNERSHIPS 1-50, AND
DOE ENTITIES 1-50, Defendants.

SS

 

No. 25755

APPEAL FROM THE FIRST CIRCUIT COURT
(CIV. NO. 97-5273-12 RWP & 99-4504-12 RWB)

MAY 32, 2006
MOON, C.J., LEVINSON, NAKAYAMA, AND ACOBA, JJ. ;
CIRCUIT JUDGE AUGUST, ASSIGNED BY REASON OF VACANCY

OPINION OF THE COURT BY MOON, C.J.

 
*** FOR PUBLICATION ***

 

‘The instant appeal involves an arbitration award issued
on November 25, 2002 (Award) in favor of plaintiff-appellee J.P.
Schmidt, in his capacity as Liquidator and Trustee of the Pacific
Group Medical Association Liguidating Trust! (hereinafter,
Schmidt] and against defendant-appellant Pacific Benefit Services
(PBS). PAS appeals from the Circuit Court of the First
Circuit's combined order, filed on March 10, 2003, (1) denying
PES‘s Motion to Vacate Arbitration Award (notion to vacate),
(2) granting Schnidt’s Motion for Order Confirming Arbitration
Decision and Award (motion to confirm), and (3) dismissing
Schmidt’s Motion to Strike PBS's Motion to Vacate Arbitration
Award (motion to strike) .

on appeal, PBS asserts that the circuit court
erroneously concluded that its motion to vacate was untimely and,
therefore, erred in confirming the Award in total disregard of
the merits of ita motion to vacate. Specifically, PBS contends

that the Award did not conform to the statutory requirements

 

+ the case was originally brought under the name of the previous
Insurance Commissioner, Wayne C. Metcalf, IIT, in his capacity as Liquidator
land Trustee of the Pacific Group Medical Association Liquidating Trust. J.P
Schaide, Zeq. succeeded Metcalf ae the Insurance Comissioner and was
substituted ae plaintife pursuant to Haval't Revised statutes (HRS) § 432:25-
309(a) (1993). Section 431:15-307 a) provides in pertinent part:

 

An order to Liguidate the business of a domestic
ineurer Niseioner and the
somissioner-a guccesiors in office Liquidator, and hall
Girect the liquidator forthwith to take possession of the
Astete of the ingurer and to administer then under the
General supervision of the court

 

(Emphasis added.)

+ the Honorable Richard ¥. Pollack presided over the instant case.

 
*** FOR PUBLICATION ***

under HRS § 658-8 (1993), quoted infra. Based on the following,

 

we affirm the circuit court’s march 10, 2003 order confirming the
Award.
1. BACKGROUND

On June 8, 2002, Metcalf, in his capacity as then-
Liquidator and trustee of the PGMA Trust [hereinafter, Schmidt,
see supra note 1] filed his Second Amended Complaint against,
Anter alia, PBS.’ Schmidt and PBS reached a settlement in which
they agreed to submit Schmidt’s claims against PBS, as alleged in
the second amended complaint, to binding arbitration to be
conducted by James F. Ventura, Esq. The parties agreed that the
sum of one hundred thousand dollars ($100,000), less the
arbitrator's fees, was to be awarded to the prevailing party.‘
The arbitration hearing took place on November 6, 2002. On
Novenber 25, 2002, the arbitrator issued his decision as set
forth in the Award. In a letter accompanying the Award, the

arbitrator stated in pertinent part:

 

® the Second Anended Complaint named nunerous defendants and requested

Chat the court hold them jointly and severally liable for damages relating to
unpaid insurance clains ana debts reeuiving from eighty-one different couse,
alleging, inter alia, unfair and deceptive trade acte cr pract ic

hegligence, unjust enrichment, negligent msrepreseatation, breach of
Fiduciary duties, and tortious conduct. Schmict eertied his claims againet
the other defendants, Therefore, the inetant suit involves only the claims
against Pas

 

 

 

 

“Schmidt notes in his answering brief that $100,000 represents the
amount in iapute between the parties. Schmidt also notes that wthe amount ie
Currently held in an escrow account and resulted fron the auction of cestaia
office equipment in the liquidation special proceeding.”

 
*** FOR PUBLICATION ***

 

 

melosed ie my decision and award in this matter. T
have not declared before @ notary that this ie my decision.
fand that this ig no longer required, If you need a
My bill for this arbitration is
240.00 or a total of $6,240.00.

 
 

In the Award, the arbitrator stated in pertinent part that:

I have reviewed all briefe subsitted between the parties,
Listened to the ive testimony and reviewed all of the
extibits submitted. Based on all of the abovel,] the
following is my deciaion and award... Thereby find
that [schmidt] is entitled to the sun of $100,000 minus my
arbitration fees, 1 therefore award to the Liquidator the
$100, 000 minus my arbitration fee

 

on December 10, 2002, Schmidt filed his motion to
confirm the Award. The Award, as well as the arbitrator's
accompanying letter, was attached as Exhibit “B" to the motion to

confirm. The declaration of Schmidt’s counsel stated that,

 

“[alttached hereto as Exhibit ‘B’ is a true and correct copy of

the Arbitrator’s Decision And Award. The Arbitrator’s Decision
and Award wae served on [Schmidt] on November 26, 2002." on
January 15, 2003, PBS submitted a memorandum opposing the
confirmation of the Award, asserting that the Award failed to
conform to the formal requirements of HRS § 658-8, which provides
in pertinent part:

‘The avard shall be in writing and acknowledaed or

ivered £9 ene. aries oF the party's
axtorney Ae any tina within one-year after the
ward ie nade and served, any party to the arbitration may
apply... for an order confirming the award. Thereupon’
the Gout ghali grant such an order, unless the award ie
Vacated, nodified, oF corrected, as prescribed in sections
50-9. and €50-10

 

(gmphases added.) Specifically, PBS contended that,

[senmide'e motion to confirm) {8 predicated on an unverified
writing (and, u]nder ehe statute in effect and
Governing the arbitration in this instance, an award
Sheolutely mist be acknowledged or proved “in like manner 2
a deed for the conveyance of real estate.” (HRS) § 656:

 

 

 

 
*** FOR PUBLICATION ***
SS

PRS further contended that the requirement that the Award be
acknowledged “goes to the heart of what went terribly wrong with
the proceedings conducted by the arbitrator.’ In its memorandum,
PBS criticized the arbitrator for not taking his duties seriously
and for dismissing PaS’s contention that one of Schnidt's
witnesses had presented misleading testimony.

on January 17, 2003, in response to PBS's opposition,
the arbitrator notarized a copy of the Award. Later that sane
day, Schmidt filed a reply memorandum in support of his motion to
confirm, stating that “[t]he Award issued by the [alrbitrator has

been acknowledged and is no longer in technical violation of HRS

 

[8] 658-8." According to Schmidt’s reply memorandum, PBS's “sole
argument" was rendered moot by the notarization. Schmidt also
argued that PBS’s arguments regarding misconduct were barred by
HRS §§ 658-9, -10, and -11 (1993), quoted infra, because PBS did
not file a motion to vacate, modify, or correct the award within
10 days after it was “made and served.”
On January 22, 2003, PBS filed its motion to vacate,

Pursuant to HRS § 658-9, arguing that the decision “exceeded the

authority of the arbitrator, which wai

 

Limited to claims against

PBS in the Second Amended Complaint, and/or as having been

 

Procured by corruption, fraud, and/or undue means.” On the same
day, Schmidt moved to strike PBS’s motion to vacate.
As previously indicated, on March 10, 2003, the circuit

court entered its order (1) denying PBS’s motion to vacate, (2)

 
*** FOR PUBLICATION ***

 

granting Schnidt’s motion to confirm, and (3) dismissing
Schmidt's motion to atrike as moot. Therein, the circuit court

stated that:

Here, the ten days (allowing for a motion to vacatel began
Tunning upon the date counsel for PBS received the award
that had Been forwarded to him with Mr. Ventura’s letter of
Novenber 25, 2002. Ae the coure has stated, there is
othing before the court to indicate that counsel for PBS
Gig noe recelve this letter in the tine frame of normal
Gelivery. (Schmidt's) counsel indicates that he received
Ehe letter on Novenber 26, 2002- In Light of the fact that
There is no contrary evidence before the court, the court
Wil assume counsel for PRE received the avard on or about
the sane date ae [Schmidt's] counsel. Accordingly, the
motion to vacate was required to be filed before Decenber 9,
2oo2 at the latest. Instead the motion was not filed until
Sanuary 22, 2003.

For the foregoing reasons, the court finds that the
tine to file a motion to vacate the arbitrat: ed
Gapited before PRE filed their motion. Beca @ motion
ESrvacate the arbitration award was untimely filed, it is
Genied. Accordingly, the Court does not look to the merite
Sf  [Sehmide's] arguments on vacating the award. [Schmide’s)
Motion to confirm the arbitration avard is granted.
Tsehnidt's) motion to strike [P85)"s motion to vacate
arbitration filed January 22, 2003 is moot in light of the
Gourt' denial of the motion to vacate for untinelin

 

 

  

   

 

 

  

 

(capital letters altered.) PBS filed its Notice of Appeal on
April 8, 2003.

on April 24, 2003, prior to the transmission of the
record on appeal to thie court, Schmidt moved to dismiss PBS's
appeal for lack of appellate jurisdiction and also requested an
award of reasonable attorney's fees and costs (motion to
dismiss). Schmidt argued that this court lacked jurisdiction

(2) appeals may not be taken from a

 

over the appeal because:
denial of a notion to vacate an arbitration avard, but only from
(a) an order vacating an award, or (b) from a judgment entered

upon an award, @.g., a confirmation of an award; and (2) a party

may not appeal the confirmation of an award unless the party has

 
*** FOR PUBLICATION ***
eee

previously filed a timely motion under HRS § 658-9 (grounds for
vacating an award) or § 658-10 (grounds for modifying or
correcting an award). On April 30, 2003, this court denied the
motion to dismiss “without prejudice to [Schmidt] filing a
statement contesting jurisdiction in accordance with (Hawai'i
Rules of Appellate Procedure] Rule 12.1 (2003)! or a subsequent
motion to dismiss after the record on appeal is transmitted.*
‘The record on appeal was thereafter filed on June 9, 2003. on
une 12, 2003, Schmidt filed his second motion to dismiss PBS's
appeal for lack of appellate jurisdiction and again for an award
of reasonable attorney's fees and costs. On June 19, 2003, PES
filed its memorandum in opposition to Schmidt‘s second notion to
dismiss. Therein, PBS contended that it was entitled to appeal
the confirmation of the Award because the circuit court erred in
confirming the Award based on an erroneous conclusion that its
motion to vacate was untimely. On July 3, 2003, this court
denied Schmidt’s second motion to dismiss “without prejudice to
(schmidt] presenting any argument in the answering brief.”

Ir, STANDARDS OF REVIEW
A. Review of an Arbitration Award

Judicial review of an arbitration award is limited by

the following precepte:

 
 

sWithin 10 days after the record on appeal
is filed each app appellant shail file a statenent of
Jurindiction. Any appellee contesting jurisdiction aay file a eeatenent
Contesting jurisdiction within the sane period.

   

 
*** FOR PUBLICATION ***

 

Firat, beca
arbitration and thereby discourage litigation,
have broad discretion in resolving the dispute. Upon
mubmiseion of an issue, the arbitrator has authority to
Getermine the entire question, including the legal
Construction of terme of a contract or lease, as well as the
Gieputes facts. In fact, where the parties agree to
arbitrate, they thereby assume all the hazards of the
arbitration process, including the risk that the arbitrators
‘nay take mistakes in the application of lav and in their
findings of fact

Second, correlatively, judicial review of an
avbitration avard is confined to the strictest possible
Limite. An arbitration award may be vacated onty on the
four grounda specified in HAS § 658-9 and modified and
corrected only on the three grounds specified in HRS § 658-
fo. Moreover, the courts have no butiness weighing the
merits of the award.

‘Third, HRS G5 658-9 and -10 algo restrict the
authority of appellate courte to review jucgnents entered by
Circuit courte confirming or vacating the arbitration
awards:

e of the legislative policy to encourage
arbitrators

 

 

 

 

 

   

 

 

 

a: ii Real Eotate 103 Hawai'i 325,
336, 82 P.3d 411, 422 (2003) (internal quotation marks, brackets,
ellipses points, and citations omitted).

Findings of Fact and Conclusions of Law

(This coure} review(s] a trial court’s findings of
fact under the clearly erroneous standard. A finding of
fact le clearly erroneous wien, despite evidence to support
the finding, the appellate court is left with the definite
and firm conviction in reviewing the entire evidence that «
ihletake hse been comitres

Hawai'i appellate courte’ review conclusions of law de
nove, Under the right/wong standard. Under the right/weong
Standard, this court examines the facts and answers the
question without being required to give any weight to the
Geial court's answer to ie.

 

 

  

 

 

Id. at 337, 82 P.2d at 423 (brackets, internal quotation marks,
and citations omitted) .

III. DISCUSSION
A, Jurisdiction

1. Whether PBS May Appeal the Denial of its Motion to
vacate the Avard

HRS § 658-15 (1993) provide:

 
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Uniese the agreenent for award provides that no appeal
may be taken(,] an appeal may be taken from an order
Yacating an avard, or from a judgment entered upon an award,
a5 fron an order or judgment in an action, otherwiee no

 

 

 

Schmidt contends that HRS § 658-15 precludes an appeal from an
order denying a motion to vacate an arbitration award because it
only allows for appeals from (1) an order vacating an award or
(2) judgment upon the award, ije., a confirmation. PBS
counters that the intent of HRS § 658-15 is to avoid pieceneal
appeals and that “the [clircuit [c]ourt’s decision to deny

vacating the (Alward was an integral step in the proce:

 

leading
to the confirmation" of the Award. PBS further posits that, once
there is a final order confirming the Award, the correctness of
the underlying order denying the motion to vacate may be
addressed on appeal according to the very case cited by Schmidt
for the opposite contention. We agree with PBs.

“othe right of appeal is purely statutory and exists
only when given by sone [c]onstitutional or statutory
provision.’* Salud v. Fin, Sec. Ins. Co., 69 Haw. 427, 423, 745
P.2d 290, 292 (1987) (quoting Chambers v. Leavey, 60 Haw. 52, 57,
587 P.2d 807, 810 (1978)). Under HRS § 641-1(a) (1993), “appeals
[shall be] allowed in civil matters from all final judgments,
orders, or decrees of circuit . . . courts . . . to the suprene
court or to the intermediate appellate court, except as otherwise
Provided by law[.J* As previously stated, HRS § 658-8 permits
any party to an arbitration *[alt any time within one year after

the award is made and served, . . . [to] apply to the circuit

 

-10-
*** FOR PUBLICATION ***

 

court . . . for an order confirming the award. Thereupon{,] the
court shall grant such an order, unless the award is vacated,

modified, or corrected, as prescribed in sections 658-9[*] and

658-10["]." A party seeking to vacate, modify, or correct

 

+ wes § 658-9 provides:

in any of the following cases, the court may make an
order vacating the award, upon the application of any party
fo the arbitration:
(Gy Vnere ‘the award was procured by corruption,
fraud, oF undue means;
(2) Where’ there was evident partiality or corruption
In the arbicrators, or any of them
(2) here the arbitrators were guilty of misconduct,
In refusing to postpone the hearing, upon
aueficient cause shown, or in refusing to hear
idence, pertinent and material to the
controversy; or Of any other misbehavior, by
hich the Fights of any party have been
prejudicea:
(4) fihere the arbitrators exceeded their povers, oF
0 imperfectly executed then, that a mutual,
final, and definite award, upon the eubject
water subaitted, was not made.
where an award is vacated and the tine, within which
tthe agreement required the award to be made, ‘has not
expired, the court may in ite discretion direct a rehearing
by the arbitrators

 

 

 

 

> ars § 651

 

-10 provides:

 

In any of the following cases, the court may make an
order sodifying or correcting ene avard, upon the
application of any party to the arsitraticn
(2) Where there was an evident miscalculation of
figures, or an evident mistake in the
description of any person, thing, or property,
Feferred to in the awards
(2) here the arbitrators have awarded upon a matter
ot submitted to them, unless it ie a matter not
affecting the merits of the decision upon the
snatters submitted;
(2) there the avaré 18 imperfect in a matter of
form, not affecting the merits of the
controversy

(continued...)

s1n-
 

*** FOR PUBLICATION *

an award must serve notice upon the adverse party or the party's

attorney “within ten days after the award is made and served.
RS § 658-11 (1993).

In Salud, this court was presented with the question
whether an appeal may be taken from an order denying a motion to
vacate an award. In ruling that there was no such right, this
court stated that:

When van order confirming, modifying, or correcting an
award is granted, the relevant statute directs that "the
Same shall be filed in the office of the clerk of the
circuit court and this shall constitute the entry of
Judgment." RSS 658-12, And "an appeal nay be’ ta

Such judgeent as set forth thereafter in chapter £5
But nothing wet forth thereafter allows an appeal. trom an
order denving a motion to vacate an award; HRS § €50°15
proclaims instead in unmistakable teres that ‘an appeal may
be taken from an order vacating an award, or from a judgnent
entered upon an avard, otherwise no appeal may be had.”

‘Still, thie does not mean that the denial of a motion
to vacate ah award by the circuit court neceseariiy
forecloses an appeal sanctioned by MRS § 658-15. the
unsuccessful novant’s recourse would then be a motion co
Confirm the avard. Since the circuit court has already
Feviewed the award and decided no grounds exist for vacating
it, a confirmation shoula follow. The movant could then
perfect an appeal and obtain appellate review of the order
confirming the award.

‘The foregoing procedure would also make it possible
for soneone whose sation for modification or correction of
fan arbitrator's award has been denied to seck appellate
Feview of the circuit court's ruling. And where
confirmation of the avard is sought to facilitate an appeal
in either situation, the movant would not, of couree, be
estopped from urging the vacation, modification, cr
Correction of the award on appeal.

im from

 

 

 

 

    

   

 

Id, at 430-31, 745 P.2d at 292-93 (brackets, footnotes, and

ellipses points omitted) (emphases in original).* Further, in

 

*(..-continuea)

‘The order may modify and correct the award, so as to

effect the intent thereof, and pronote justice between the
parties

 

Excelsior Ledse Number one. Independent Order of odd Fellows ve
174 Haw. 210, 847 p.2a 652 (1992) (hereinafter, Bxceleior iadse) ,
this court made a contrary statement in a footnote, that

(continued...)

-12-
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nheimer v. AIG Hawai'i Insuranc | 77 Hawai'i 88, 881 P.2d
1234 (1994), this court discussed the holding in Salud, stating

that:

Because the statutory provisions governing judicial review
Of arbitration awards precluded an appeal from an order
Genving a notion to vacate an arbitration avard, we held in
Gaiud that this court lacked jurisdiction. However,
{mplicie in our ruling in galud is that, by virtue of mrs
s'e5ei2, an order confirming an arbitration avard is a
Exnal judgeent from which an appeal may be taken. Salud, 69
Baws ag 401, 745 P.2d at 293.

Id. at 92, 061 P.2d at 1237 (footnote omitted) (emphasis added).
Thus, an order denying a motion to vacate an arbitration award is
not a final judgment that may be directly appealed.

Here, the award was confirmed in the same order that
denied P8S's motion to vacate. As such, there is no issue of
finality here. However, inasmuch as HRS § 658-15 directs that
the circuit court “shall” confirm an order that is not vacated
prior to confirmation, we now examine the circumstances under
which a party may urge vacation of an award at confirmation and

on appeal.

 

"Cs continued)
RS § 658-25 will continue to be available to partie
tho have previously brought (motions under HRS $§ 658-9 and

 

Gee-10). "these parties will have the option of either
Sor ese: on or af pga trial couse’ =

fubssqusnt confixmation order, though that appeal will be
{aited toa consideration of the seven specific grounds
Einely railed under HRS §§ 658-3 and 658-10.

a. at 227 n.16, 847 P.2d at 660 n-16 (emphases added). Inasmuch as the issue
Before the court was the scope of an appeal of a confirmation award, and not
tbe appeal of « denial of s motion to vacate, sadify, or correct an award, the
Statement wes not essential to the holding in that case and, based on the
Subsequent case law, was not intended eo overrule Salud.

 

 

o13-
 

*** FOR PUBLICATION *
eS

2, Whether PBS has the Right to Appeal the Confirmation of
the Award under HRS § 658-15

In Excelsior Lodge, this court expressly held that an

appeal under HRS § 658-15 from a confirmation of an arbitration

 

award is restricted to the grounds set forth in a timely motion
to vacate, modify, or correct an award under HRS §§ 658-9 and
658-10, Id, at 227, 647 P.2d at 660. In reaching its
conclusion, this court summarized the policies underlying HRS
chapter 658:

Tt i generally considered that parties resort to
arbitration to settle disputes more expeditiously and
inexpensively than by 2 court action, it must be deemed
Phat! the primary purpose of arbitration ie to avoid
Litigation

In furtherance of this objective, our legislature
enacted the Arbitration and Awarde Statute, MRS Ch. 653.

‘This court has decided to confine judicial review of
awards under the statute to the stricte

   

 

     

legislative cbject ive
Sm the enactment of the Arbitration and Awards statuce,

Id, at 225-26, 647 P.24 at 659-60 (quoting Mare Constructors.
Inc. _v. Tropical Enters.. Ltd., $1 Haw. 332, 334-35, 460 P.2d
327, 218-19 (1969) (brackets, ellipses points and block quote
format omitted). This court further noted that its holding was
based on the principle that “allow[ing) a party a second chance
at Litigation after it has conspicuously failed to comply with
the specific statutory provisions available for challenging an
award would frustrate the clear policy of facilitating the
legislative objectives behind the arbitration and award statute.”

Ed, at 227, 847 P.2d at 660. Therefore, PBS would be entitled to

nae
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appeal the circuit court’s March 10, 2003 order only if its
motion te vacate was timely filed.

a. whether PRS’s motion to vacate was timely

As previously noted, HRS § 658-11 requires a party
seeking the vacation of an arbitration award to file notice of
such motion “within ten days after the award is made and served.”
PBS contends that the ten-day provision does not begin to run
until an arbitration award is made and served in compliance with
the statutory requirements under HRS § 658-8. Schmidt argues
that the award did conform to the requirements under HRS § 658-8
and that PBS’s motion to vacate was, therefore, untimely.

Schmidt argues in the alternative that an award need not comply
with all the statutory requirements in order to be final.

HRS § 658-8 states that an award “shall be in writing
and acknowledged or proved in like manner as a deed for the
conveyance of real estate, and delivered to one of the parties or
the party’s attorney.” (Emphasis added.) Here, the award was
signed by the arbitrator and sent by ordinary mail. It is
undisputed that the award was not “acknowledged” at the time it

was firet issued. Thus, the question is whether it was “proved

 

in like manner as a deed."

 

HRS § 502-S0(a) (1993) dé

 

jcribes the manner of proving
an unacknowledged deed for recordation in the bureau of

conveyances.

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Except as otherwise provided, to entitle any conveyance or
‘other instrunent to be recorded, it ghall be acknowledged by
the person or persons executing the same, before .
notary public Of the State. If .. . for any reason either
Proper certification nor = new acknowledgeent can be
Secured, the instrument nay be entered as of record on proof
of ite éxecution ub ne bei
. If all the subscribing witnesses to the

Conveyance or other instrusent are dead or our of the state,

 

 

‘roving the handwriting of the person execiting the sane and
anvaubscribing witness... -

(Bmphases added). The language above indicates that the time for
proving a deed occurs at the time the deed is recorded. as
indicated in Markham v, Markham, 80 Hawai‘i 274, 909 P.2d 602
(app. 1996), an unacknowledged deed is valid as between the
parties and affects only its ability to be recorded. tn Markham,
the Intermediate Court of Appeals (ICA) held such an award valid
between the parties and set forth the purpose behind the
acknowledgment requirement, noting that:

Bach instrument presented for recording mst contain «
certificate of acknowiedgeent verifying the identity of the

 

 

person executing the instrument. HRS § 502-41 (1993). “Zhe
a fas ne ard

vas Bxecuting & deed
that it is executes for the uses and purposes. it
« yo i8 Haw.

 

expresses.
258, 300 (2908)

it has also been held that even without recordation,
“* [a] eed apparentiy valid upon its face carries with ie a
presumption of validity’" aa between the parties toa decd,

Chew wun Chew Kee, 49 Haw. 62, 71, 422° 7.20
326, 332 (i966) (quoting McElxcy v. Calhoun, 177 Okla. 38
57 B.2a 827, 828 (2936))-" “Even if the deed had no

 

facknowledgeent, or ite equivalent, at all, it would still be
Good between the parties. As Detueen the parties
acknowledgnent of a deed ic not necessary.” Meheula va

1, 37 Maw. 56, 50 (1908) (citing Laasaiv,
Buchu, 2 Faw. 181 (1859)). See algo 2 6 Faw.
Gos, 620 (1923); Aiauv. Kupau, 4 waw. 84, 385 (ie61)
(holding that recording Is sotice to one bound to search the
record):

 

 

Ad, at 281-82, 909 P.2d at 609-10 (some brackets omitted)
(emphasis added). ‘Thus, an award need not be acknowledged to be

ois.
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valid and may be proved at the time of confirmation "in like
manner as a deed.” An unacknowledged award is, therefore, valid
and not a “nullity” for purposes of triggering the time to file a
motion to vacate the award.

Here, the Award was in writing and signed by the
arbitrator at the time it was issued on November 25, 2003.
Moreover, PBS never questioned the authenticity of the Award or
the arbitrator’s signature upon it. Therefore, the lack of an
acknowledgment did not affect the validity of the Award as
between the parties and did not affect the ten day time period in
which PBS was required to file its motion to vacate the award.

Even assuming arguendo that an unacknowledged award is
not in final form, the relevant case law supports the conclusion
that such a defect is not fatal to the award. Although PBS cites
to Ockrant v. Railway Supply and Manufacturing Co., 160 N.5.2¢
435 (Ohio Ct. Com. Pleas 1959), and Goeller v. Liberty Mutual
Insurance Co,., 568 A.2d 176 (Pa. 1990), in which those courts
held an award invalid for failure to strictly comply with the
formal statutory requirements, such cases are distinguishable.

held that it

 

In Ockxant, the Ohio Court of Common Pl
Aid not have jurisdiction to confirm an arbitration award because
the applicable statute required, inter alia, that an award *muat
designate the county in which Je was made,” 160 N.E.2d at 435,
and the award did not so state. However, nine years later in

entice Funeral Loe: 82) 1 Union of

 

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Operating Engineers, 241 N.E.2d 285 (Ohio Ct. App. 1968), the

Court of Appeals of Ohio confirmed an award with the identical

defect -- failure to designate the county in which the award was
made -- because a letter attached to the award had indicated the
vequisite information. Id, at 287-88. In Prentice Puneral Home,

the court expressly rejected Ockrant as authority.

In Goeller, the Supreme Court of Pennsylvania declared
that an award that was signed by only one of the two arbitrators
joining the award, rather than both as required by the applicable
statute, was a “nullity." Id. at 545. However, the court went
on to hold that there was a more substantive reason that the
award was a nullity because one of the arbitrators was “denied
his opportunity to deliberate," in contravention of the principle
that, “[wJhen an arbitrator . . . is denied access to the
deliberations of the other arbitrators, their decision is not a
decision." Id, Moreover, the Court of Appeals of Oregon
addressed a similar award in Tendrella v. Kaiser Permanente, 921
P.2d 361 (Or. Ct. App. 1996), that was not signed by all the
joining arbitrators and held that the defect did not render the
award a nullity, noting that, in Goeller, *[tJhe (Pennsylvania
Suprene Court] treated the failure to allow full participation of
all arbitrators as a more fundamental defect in the award than
the missing signature." Id, at 362 n.1. In reaching its

decision, the court reasoned that:

 
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eee

Inleversal is not required under the circumstances of this
case. sere, there ig no question that the arbitrators held
Shearing, Considered the evidence, and reached a decision
There is no question that the 1992 (improperly signed
Gecision, svard, and additional findings} accurately state
their decision, Neither the statute nor, so far as we are
Sware, the arbitration agreement establishes any tine period
Within which the arbitrators must make their decision.
Plaintiffs, in fact, knew what the decision was shortly
After the arbitrators reached it; any delay in executing a
formal avara has not prejudiced them.

  

 

 

‘ne arbitrators, however, have already corrected the award by
Their affidavite to the court im response to plaintiff
Sxeeptions. That correction was before che court (even aseuming
thet it was not formally *filea") when it ruled on the exceptions
There ie, thus, no purpose in a remand to correct « technical
crror that has’ already been corrected. whether the trial court
Based ite ruling on the 1982 documents or on the 1994 [properly

iGned copy of the award] does not affect our decision; the record
iove that the arbitratore have made a proper award and that the
Guard supporta the trial court's Judgment.

 

 

   

Id, at 362 (footnote omitted).
‘The two cases cited by PBS involved the strict
application of the formal requirements of an award. However, the

statutes in Ockrant and Goeller did not provide an alternative

 

means of satisfying such a requirement, whereas, in the instant
case, either acknowledgment or proof is permitted. Moreover, as
Indicated, other courts have declined such strict application of
formal requirements. Although this court has not yet ruled

directly on the instant issues, this court’s ruling in Brennan v.
Stewarts’ Pharmacies, Ltd., 59 Haw. 207, 579 P.24 673 (1978),

coupled with the United States District Court for the District of

128 F.

 

Hawaii's application of that case in Brown v, Hyatt Corp.
Supp. 2d 697 (D. Haw. 2000), seem to support the elevation of
substance over form in upholding the validity of arbitration

awards.

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SSS
In Brennan, this court declined to address the

 

ity of formal acknowledgments, and instead focused on the
substantive requirement of finality of the arbitrator's decision.

In that case, this court det

 

mined that an unacknowledged award
was not a final award because the conduct of the arbitration
panel's chairman “led [appellant] to believe that the arbitration
in question was not (final]* until the issuance of 2 subsequent
award. 59 Haw. at 222, $79 P.2d 673 at 681. Brennan involved a
dispute over the lease rents for a shopping center. After a
hearing and discussions by the three-member arbitration panel,
the chairman of the panel drafted a memorandum with which one
other arbitrator concurred and signed. The third arbitrator,
however, wrote a concurrence to the decision, noting that he
disagreed with the memorandum but deferred to the majority Id.
at 218, 579 P.2d at 680. Thereafter, the chairman did not send a
copy of the memorandum of award to either party to the
arbitration, but sent it to the property manager and did not
include a copy of the concurrence. Id, Subsequently, the
chairman met with the shopping center's managing partner and
informed him of the conclusion reached by the panel. The

appellant alleged that the chairman then took the following

 

actions: (1) in respon:

 

to the manager's disagreement with the
memorandum, the chairman stated that “the matter was not final
and no decision had been made"; (2) he held a meeting with one of

the other arbitrators and representatives of the parties to

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discuss the interpretation of the 1 (3) at the parties’

 

suggestion, he met with an impartial attorney to discuss the
lease interpretation; (4) he later stated that he had decided to
reconvene the arbitration panel; and (5) he signed a final award
sent by one of the parties with 2 notice that the party would
thereafter move to confirm the award. Id, at 219-21, 579 P.2d at
660-81. In affirming the trial court’s ruling, this court stated
that:

‘The record contains sufficient evidence in support of
the trial court's finding that the conduct of [the panel
Chairman] Jed [appellant] to believe that the arbitration in
Guestion was not finalized until the May eward.

‘The lasue, therefore, 19 not whether formal
acknowledgrents are necessary oF not though i is
Sovious thet the January avard did not technically comply
With the provisions of HRS § 658-8 ‘The question
herein which was determined by the trial court is whether
the arbitrators had concluded their consideration of the
[esue submitted to them and reached a resolve by the
nenorandum of award of January of By the arbitration award
of May.

 

Id. at 222, 579 P.2d at 681 (footnote omitted). Concluding that
a majority of the arbitrators exceeded their powers and failed to
decide a question submitted to them and that the concurring
arbitrator failed the impartiality requirenent within the meaning
of HRS § 658-9, this court affirmed the trial court’s order
vacating the arbitration award. Id, at 223, 579 P.2d at 682.

As previously mentioned, the United States District
court for the District of Hawai'i relied on Brennan in Brown.
‘The district court's ruling in Brow is relevant to this
Aiscussion inasmich as it directly addressed the validity and

effect of an unacknowledged award. tn that case, as in the

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instant case, the plaintiffs claimed that the ten-day period to
file a motion to vacate had not started to run because the
arbitration award did not conform to the requirements of
acknowledgment and delivery under HRS § 658-8. zd. at 701. The
@istrict court disagreed, stating that:

Plaintiffs’ claim that the ten day period has not yet
started to run because the arbitration award Goce not
Conform to the requirements of Hine § 450-8 ie

meritless. .\. . Defendant’s counsel{] stated in the
declaration he attached to the opposition chat he received
the arnitration award on Septenber 28, ite date of
issuance. Moreover, Plainei¢fi

copy of che arbiti

Seelaration wrote Buhibit "A ie @ true
fand correct copy of the arbitration award.” ‘The auard ie
signed by ail three arbitrate:

 

 
  

     

 

 

have been any confusion o impropriety about wien che award
was issued. Sea (Brennan, 59 Haw.

679-681]. tt is true that the signatures are nov notarized.
Yet, even in Brennan, the suprene Court of Hawai'i
Gowplayed the requiresant of an acknowledgment. The
Brennan court stated that “the issue... ia not whether
formal acknowledgnents are necessary or not,” but instead
is, "whether the arbitrators had concluded thei?
consideration of the ieue gubmitted to then and reached
resolve by the memorandum of award." “id, ae eel. “there fe
no serious contention that the arbitrators have not
Concluded their consideration of the iss The. (eloure
finds that the award of Septanber 23, 2000 wae sufficient
under Brennan:

Id. Although the federal court dismissed the formal requiremente

 

 

 

 

 

 

under HRS § 658-8 pursuant to thie court’s holding in Brennan, it
acknowledged that the holding in that case relied on an
alternative ground other than technical noncompliance with the
statutory requiremente of an award.

Although Brennan did not resolve the instant issue, the
proper focus of inquiry under Brennan is whether an award was
final; not whether formal acknowledgment had occurred. Moreover,

the statutory language under HRS § 658-2 and relevant case law

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i
indicate that formal acknowledgment or proof does not affect an
award’s validity as between the parties and may take place at any
time prior to or at confirmation. Furthermore, its subsequent
acknowledgment cured the defect prior to confirmation. Thus, the
proper focus of inguiry under Brennan is whether the award was
final.

b. whet Not 25 ward was

In the instant case, PSS’s counsel compared PBS's
situation to Brennan at the hearing on its motion to vacate the
Award, contending that the arbitrator’s letter accompanying the
Award gave him the impression that the Award was not final. In
the letter, the arbitrator noted, “[e]nclosed is my decision and
award in this matter, I have not declared before a notary that
this is my decision. 1 understand that is no longer required.
If you need a notary, please advise." PBS’s counsel argued that
the arbitrator's letter left him confused, similar to the parties
in Brennan, ae to when the award became final, stating:

[When 1 received that award, T focused immediately on the

Gover letter which said what it said. I understand this

fone required. Acknowledgnent isn't required. But if you

fC acknowledgaent, just tell m
it caly acknowledgment is required, and, I fully

expected that they would cone =~ (Schmidt ‘e] attorney would
Cone immediately to the arbityator and say you got to get
Enis acknovledged, Your Honor, it’s just so unfair to have
the contusion, co have any doubt as to when this award is
{o subject to the ten days running and hold that confusion
against a person. Tread that letter. 1 aid to
yeclf, of course, it's necessary. That will have to be

Gone. ‘When that's done, the time (to file a motion to
vacate) will start to run.

 

 

 

 

 

 

 

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Se

PBS’s counsel also declared that, “I took no action pending the

 

 

Arbitrator’s providing the acknowledgement [sic] he had offered
in his letter.”

As previously stated, under Brennan, an arbitration
award ig final when the arbitrator has concluded his
consideration of the issues and reached a resolution. 59 Haw. at
221, $79 P.2d at 681. Additionally,

[a) though es

 

fe {s no requirement that the avard be self-

executing, and although "it is not faulty seemuse litigation
je tn enforcing it," 6'CiJ.8. Arbitration § 2118

it should be “sufficiently definite thst caly

ial acts of the parties are needed to carry 1t into

effect," Mereury O12) # ‘ll worker

nt i, 187 F.2d 980, 982 (10th Cir, 1952); eee

Auge 6 C.J-8. arbitration § 115 (1975), and. “clear encughees

indicate ‘unequivocally what each party’ ie require co do,"

Martin Donke, racion § 28:04 (Rev.

Bd. 1364)" (Donke) =

Strickland v. Seiple, 5 Haw. App. 168, 171, 680 P.2d 533, 535

(1984). If the award is *‘incomplete, uncertain, and indefinite

 

  

 

it cannot be sustained.'* Id. at 173, 680 P.2d at 536 (quoting 5
Am. Jur. 2d Arbitration and Award § 141 at 622 (1962).

Unlike the situation in Brennan, the facts here do not
Support PES’s contention that the arbitrator's conduct was
misleading. Rather, the arbitrator's letter clearly states that
he had concluded his consideration of the issues and reached a
decision. He also included a bill for his services and stated
that, in his understanding, no further action would be necessary.
According to the letter, any further ministerial action to be
taken would only be at the request of the partie:

foregoing, it cannot be said that the arbitrator’s statement that

Based on the

 

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he would acknowledge the Award at the request of the parties left
any doubt that the issues had been finally concluded. Therefore,
the Award was final

the ss on Sel
gxiggering the time limit for a motion to vacate

PBS contends that the Award was never “delivered”

 

within the meaning of the statute because it was not delivered

“personally or by registered or certified mail,” pursuant to the

 

requirements of HRS § 658-8. Schmidt contends that the statute
does not require such delivery and that the original Award was in

fact delivered to each of the parties.

RS § 658-8 states that, “(tlhe award shall be
delivered to one of the parties or the party's attorney. A copy

of the award shall be served by the arbitrators on each of the
ether parties to the arbitration, personally or by registered or
certified mail." (Emphases added.) Based on its plain language,

the statute clearly contemplates that only one original of the

 

avard is prepared and served upon one of the parties; all other
parties are served with a copy of the original award. the
atatute also clearly states that the arbitrator may serve copies
of the award “personally or by registered or certified mail.”
The statute, however, states only that “(t]he award [(i.e., the
original)] shall be . . . delivered to one of the parties or the
party's attorney.” Thus, if this court were to follow the
cirouit court's ruling that ordinary mailing constitutes

“delivery” under the statute, then the requirements for service

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eee

of the original would be less stringent than the requirements for
service of a copy, which is absurd. See AOAO of Maslaea Kai,
Inc. v. Stillgon, 108 Hawai'i 2, 27, 116 P.3d 644, 669 (2005)
(applying the rule that, "because the legislature is presumed not
to intend an absurd result, legislation should be construed to
avoid, if possible, inconsistency, contradiction, and
illogicality*) (citation omitted)). Consequently, the reference
to “delivered” can only mean “personal or hand delivery" of the
original of the award

Here, the record does not indicate whether the Award
that was mailed to PBS was an original or a copy. In either
case, ordinary mailing would not have satisfied the statutory
service requirenents. Nevertheless, the purpose of the statute
-> that is, to ensure that the parties actually receive the
arbitrator's written decision -- was met. At no time did PBS's
counsel claim that he did not receive the arbitrator's written
decision. In fact, he confirmed his receipt thereof at the
February 13, 2003 hearing, as evinced by the following portion of
the transcript:

{eps's Counsel}: okay. If the copy, 1 mean {f the
ayard, ‘the original of che award, presumably, the original,
if the original award ia delivered to me,

   

THE COURT: Mich it was.
(P8s's Counsel]: No, i wasn’t. It was nailed
THE COURT: ALL right.

Moreover, as previously noted, PBS's counsel declared that, when

he received the unacknowledged award, he did not take any action.

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thus, the record indicates that PBS and its counsel did, in fact,
receive either the original or a copy of the arbitrator's written
award; however, the date upon which service was perfected is
unclear.

As previously indicated, Schmidt’s counsel indicated
that he received the Award on November 26, 2002, the day after it
was issued. Thus, the circuit court assumed that PES received
the Award on the same day as Schmidt and concluded that the ten-
day statutory time to file a motion to vacate expired on Decenber
9, 2002.° The circuit court ruled that PES’s motion, filed on
January 22, 2003, was untimely.

ven assuming arguendo that PBS never received the
Award through ordinary mail service, it is undisputed that PBS
received a copy of the Award, at the latest, on December 9, 2002,
as evinced by the certificate of service attached to Schmidt's
motion to confirm, which was served on that date, and to which a
werue and correct” copy of the Award was attached as Exhibit °B.”
‘Thus, even if the circuit court had given the benefit of the
doubt to PBS and utilized December 9, 2002 as the triggering
date, PBS's motion would had to have been filed by December 19,
2002; PBS did not file ite motion to vacate until over one month
later on January 22, 2003. ‘Therefore, as the facts illustrate,

PBS did not take appropriate action to preserve its right to

 

+ qe should be noted that the circuit court, for reasons not explained,
excluded weekends. from the ten-day calculation. However, even if excluding
Scckends wes in error, such error was Beneficial to PES inasmuch as it
provided additional time

 

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Se

appeal. Had PBS's counsel immediately moved to vacate the Award
oF requested that the arbitrator acknowledge the Award rather
than waiting for Schmidt to do so, PBS could have preserved its
right to move to vacate the Award. Instead, PBS decided to take
ne action following receipt of the Award even though it assumed
that acknowledgment was required and did not question the
authenticity of the arbitrator’s signature on the Award.
Accordingly, we hold that the circuit court did not err in
concluding that PBS's motion to vacate filed on January 22, 2003,
was untimely, and that this court is without jurisdiction to
review the Award.

iV. CONCLUSION

Based on the foregoing, we affirm the circuit court’s

Gp
Charles S. Lotsof, PER Linwae—

for defendant appellant Pests Ceeynnee

Pacific Benefit Services,
Ine.

clistord K. tiga, wendert Be
J. Puji, Lanson &. Kupau, Ts
and Duane C. Seabolt (of Vek 6 Dagenet—

Kobayashi, Sugita & Goda),
for plaintiff-appellee

J.P. Schmidt, in his capacity
as Liquidator and Trustee of
the PGMA Liguidating Trust

March 10, 2003 order.

on the briefs

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