Title: United Public Workers, AFSME, Local 646 v. Dawson International, Inc. Dissenting Opinion by J. Acoba [pdf].

State: hawaii

Issuer: Hawaii Supreme Court

Document:

LAW LIBRARY

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IN THE SUPREME COURT OF THE STATE OF HAWAI‘T
== 000 ---

 

UNITED PUBLIC WORKERS, APSCME, LOCAL 646,
AFL-CIO, Applicant-Appellee,

vs.

DAWSON INTERNATIONAL, INC., Respondent-Appellant.

 

wo, 27105

APPEAL FROM THE FIRST CIRCUIT COURT
(8. P. NO. 04-1-0119)

DECEMBER 18, 2006

€0:2 Hd 81 9309002

 

MOON, C.J., LEVINSON, NAKAYAMA, AND DUFFY, JJ.;
ACOBA, J., DISSENTING

OPINION OF THE COURT BY MOON, C.J.

Respondent-appellant Dawson International, Inc.

(Pawson) appeals from the January 6, 2005 final judgment of the

Circuit Court of the First Circuit, the Honorable Bert I. Ayabe

presiding, confirming an amended arbitration award in favor of
applicant-appellee United Public Workers, AFSCME, Local 646, AFL~

CIO hereinafter, UPW). Briefly stated, the instant case

involves a prepaid legal service plan implemented by UPW,

 
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pursuant to Hawai'i Revised Statutes (HRS) chapter 488, for the
benefit of UPW’s members. UPM, as plan sponsor, entered into a
two-year contract with Dawson, as the plan aduinistrator.? Nine
months into the contract, UPW terminated the contract, demanding
that Dawson return the balance of prepaid premiums that Dawson
held in reserve. In response, Dawson maintained, inter alia,
that UPW had breached the contract by its unilateral termination,
thereby entitling Dawson to damages. Pursuant to the dispute
regclution provisions contained in their contract, the parties
proceeded to arbitration, which initially resulted in an
arbitration award in favor of Dawson in the amount of $25,074.00,
plus the right to retain the balance of the monies held in
reserve, amounting to $87,240.08. Thereafter, UPW filed a motion
to modify or correct the arbitration award in the Circuit Court
of the First Circuit, the Honorable Dexter D. Del Rosario
presiding, on the ground of an evident mathematical
miscalculation. Dawson, on the other hand, moved for
confirmation of the award. Persuaded by the arguments advanced

by UPW, the circuit court remanded the case to the arbitrator and

 

> was § 488-1(3) (1593) defines “prepaid legal service plan’ as

vice plan in which the cost of the

 

« group legal
fare prepaid by the group menber or by sone other pe
Organization in the mesber’s behalf. A group legal
plan ie a plan by which legal services are rendered to
Individual nombere of a group identifiable in terms of sone
common interest

  

+ “Plan administrator" means “those persone who have discretionary
authority for the management of the plan or for the collection, management, o
Giebursement of plan moneys." HRS §486-1(2) (1993)

 

 
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stayed the circuit court proceeding until the arbitrator ruled on

 

the alleged mathematical miscalculation. Ultimately, the
arbitrator reversed himself, issuing an amended award in favor of
UPW in the amount of $169,924.00. Thereafter, the circuit court
confirmed the amended arbitration award, denied Dawson’s motion
to vacate the amended award and confirm the original award
(Dawson's motion to vacate), and entered final judgment in favor
of UPW on January 6, 2005.

on appeal, Dawson challenges the circuit court’s
confirmation of the amended arbitration award and denial of
Dawson’s motion to vacate. Specifically, Dawson maintains that,
because HRS chapter 658 (1993) [hereinafter, HRS chapter 658 or
the old arbitration law] -- as opposed to HRS chapter 658A (Supp.
2005) [hereinafter, HRS chapter 658A or the new arbitration law]
-+ governs the instant case, the circuit court erred in remanding
the case to the arbitrator to consider UPW’s motion to modify or
correct the original arbitration award.

Based on the discussion infra, we hold that: (1) HRS
chapter 658 governe the instant case; and (2) under HRS chapter
658, the circuit court did not have the authority to remand the
case to the arbitrator. Accordingly, we vacate the circuit
court‘s January 6, 2005 final judgment and remand this case for

further proceedings consistent with this opinion.
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BACKGROUND

 

A. tual Backaround
‘The following facts are substantially taken from the
original arbitration award, dated March 18, 2004, in light of the

view of the

 

deference required to be shown to the arbitrator’
facts. See United Paperworkers Int’ Union v. Misco, Inc., 484
U.S. 29, 37-38 (1987) ("Because the parties have contracted to
have disputes settled by an arbitrator chosen by them rather than
by a judge, it is the arbitrator’s view of the facts and of the
meaning of the contract that they have agreed to accept.") -
1. The Agreement Between UPW and Dawson

on February 24, 2000, UPW entered into a two-year
contract with Dawson [hereinafter, the Plan Agreement]* under
which Dawson was to administer a prepaid legal service plan (the
Plan) for the benefit of approximately 11,000 to 12,000 state and
county employees in collective bargaining Units i and 10.‘ The

Plan was established to provide eligible unit employees

> section 4.01 of the Plan Agreement specifically provides that the
agreement

 

hall remain in effect for two (2) years unless modified by
ynutual agreement. Te shall be reneved thereafter for two
(2) year periods unless it ie terminated after subsission of
a written notice of termination at least ninety (90) days a
Gavance of the termination by the UPW or [Dawsca)

 

 

 

+ unit 2 employees are non-cupervisory blue collar public workers,
including garbage nen and Janitore. Unit 20 employees are blue collar public
{net tutional, health, and correctional workers, including state hospital
workers and prison guards. Employers of Unit 1 and Unit 10 employees are the
Beate of liawals and the counties. UPW ip the exclusive bargaining
Eepresentetive for Unit 1 and Unit 10 worker

 
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thereinafter, the covered employees] access to certain free or
discounted legal services.

Specifically, Dawson agreed, inter alia, to “select a
qualified referral panel of licensed attorneys,” and UPW agreed
to make monthly premium payments to Dawson. Premiums were to be
paid by the state and county employers to UPW, and, in turn, UPW
was to transfer the premiums to Dawson. Upon receipt, Dawson was
required to place the prepaid premiums in a segregated account
(the reserve) to be disbursed at its discretion to pay for the
Plan's attorneys, operation of the Plan, legal education,
research, and other uses, such as increasing benefits to the
covered employees.

‘The Plan Agreement also contained the following dispute
resolution procedures (hereinafter, the dispute resolution
provisions] :

5.01
Should either party allege a violation of this
agreement, the party alleging the violation shall
notify in writing the other party of the
Violation within thirty (30) days of the
Vislatson or within enirty (90) days of
alleged violation.

 

 

Violation Resolution,
Should the violation not be resolved within thirty
(Go) days after notification of the violation(,] the
Feeolution procedure aa provided in Section s.03 shall
apply.

‘The parties shall subait the violation to mediation
before resorting to arbitration. The mediator (s)
shall be selected by mutual agreement of the parties,
in the event the violation is not resolved in
Bediation{,] the vielatien shall be submitted to
Sibitration, Within eifteen (18) days after the
Conclusion of mediation|,] the parties shall select an
Arbitrator by mutual agreement." Negotiations,
‘mediation or arbitration shall be conducted on O'ahu,
Hawai'i.

 

 

 

 
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(underscored and bold emphases in original.) The Plan Agreement
became effective on April 3, 2000 and was to expire on March 31,

2002.
Termination of the Plan Agreement

 

on January 2, 2001, nine monthe into the twenty-four
month contract, UPW notified Dawson that the Plan was
“terminated” effective December 31, 2000 “because the
employer [s’] contribution that funded the . . . Plan [vas]
terminated,” ice., the employers had ceased to contribute the
premiums necessary for the viability of the Plan.’ Although UPW
indicated it would pay Daveon for any operational expenses
incurred through December 31, 2000, UPW demanded that the balance
of the funds in the reserve be returned to UPW.

on January 5, 2001, Dawson informed UPW of ite position
that UPW was in breach of the Plan Agreement inasmuch as the
agreement did not provide the right to unilaterally terminate the

contract. Dawson further advised UPW that: (1) the unused

 

balance of premiums would remain in the r

operating costs

 

delivery of “legal services, education programs,
and other financial obligations for the term of the contract”
(internal quotation marke omitted); and (2) “[it] will continue

to provide legal services to covered employees until such time a

Stn ite anowering Brief, UPW proffers a different reason as to why it

terminated the Plan Agreement, i.e., because it ‘believed that the (P}lan was
Primarily benefiteing Dawoon and ‘not the Unit 1 and Unit 10 employees.”

 
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resolution is reached by approval of both parties* (internal
quotation marks and original brackets omitted). Correspondence
between the parties revealed that UPW continued to maintain its
position that Dawson comply with the termination notice while
Dawson maintained ite position that, because the contract had a
two-year minimum term, it would continue to comply with ite
contractual obligations.
B. Broce:
1. The Arbitration Proceeding

Inasmuch as the parties made no progress toward
resolution, Dawson demanded, on March 21, 2001, that Dispute
Prevention & Resolution, Inc. (the DPR) begin the resolution
procedure set forth in section 5.03 of the Plan Agreement, i.e.,
the mediation/arbitration process. For reasons that are unclear
from the record, the alternative dispute resolution process was
never completed

Two years later, on April 17, 2003, UPW suggested that
the parties submit the dispute to arbitration.’ on August 25,
2003, the parties selected attorney James T. Paul ap the

arbitrator. Three days later, on August 28, 2003, UPW executed

 

   

© Several developments -- not relevant to the disposition of thi
appeal -- inpacted the pace of the resolution of the parties’ dispute, such as
a criminal proceeding against the then-director of UPW, Cary W. Rodrigues, and
the medical condition of Davson’s principal, Donald Dawson,

 

  

not indicate whether the parti
Aiepute to mediation prior to resorting to arbitration, as required by section
5.03 of the Plan Agreenent. The parties, hovever, do not dispute that the
Plan Agreement contained a provision for’ binding arbitration

 

7 me record dot

 

   

 

 
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an “Agreement to Participate in Binding Arbitration"

(hereinafter, the DPR Arbitration Agreement], which provides in

its entirety:

 

By agreement of the parties set forth below, [the DPR] /Janes
Paul, Eeq. have agreed to conduct a binding arbitration of
the mattere in controversy betw

 
 
 
 

 

the parties on an inpartial bes:
ae a noutral(,] the Arbitrator will not act as attorney or
‘The parties, DPR. and Janes Paul.

Sdvocate for any party,
Erocedures & Brotocoia. ap entablished by [thel DPR.

Unless the parties’ agreement provides otherwise, the
Arbitrator mist cetersine all issues submitted to arbitrator
by the parties and may grant any and all remedies that the
Rebitrator determines to be Just and appropriate under the
Jew. In the Award of Arbitrator, the arbitrator shall issue
2 "overnination on the issue of all arbitration-related fees
Gnd costs, including: Arbitrator’s compensation and

expenses; (the) DPR'e fees and expenses; and, if provided
foe parties’ agreenent or the Submission to
arbitration, attorney's fees and costs

 

    

 

‘the DPR/Arbitrator fee ie $275.00/hour, plus GET, plus any
ut tnitially the’ parties a
Feaponalbie for the Dra/acbitrator's ees and out of pocket

a (the) DPR shall collect
Scpocite from che partie in advance for all fees and
expenses to be incurred in thie matter. All funds deposited
with [the] DPR shall be held in trut- (The) DPR vill love
Payment to the Arbitrator at the conclusion of this matter
End in accordance with this Agreement.

     

 

    

 

(Emphasis added.) Dawson, however, did not execute the DPR

Arbitration Agreement until January 30, 2004, after UPW agreed to
anticipated fees of

 

advance Dawson's share of the arbitrator’

 

$6,000

+ apparently, on January 27, 2004, the DPR advieed the partic
unless Davaon paid ox UPW advanced the $6,000 initial deposit for the
Grbitrator's anticipated arbitration fen and Dewson returned ite counter-
Signed copy of the BPR Arbitration Agreement, the DPR intended to cancel the
arbitration hearings. The same day, UPW informed the DPR that it was "willing
to aleo pay Dawson's $6,000 share in order to keep the azbitration hearings in
place snd to have this matter finally resolved.”

that,

 

 

 

<8.
———_$_§_§_§_-

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on February 12, 2004, the parties filed their

cespective avbitration briefs with the DPR. Dawson essentially
claimed that UPW breached the Plan Agreenent and, therefore, owed
paweon an additional $1,388,674 in plan premiums (equivalent to
premiums for the remaining fifteen months of the two-year
contract). UP, on the other hand, asserted that it rightfully
terminated the agreement, and, in any event, Dawson had a duty to
mitigate ite damages. UPW maintained that it was entitled to the
return of the balance of prepaid funds being held in reserve by
pawson ae of the date UP# terminated the Plan Agreement, iiss,
December 31, 2000.
2. ‘the Original arbitration Award

After a three-day arbitration hearing, which was held
on February 18, 19, and 20, 2004, the arbitrator issued hie
arbitration award on March 18, 2004 (the original award). The
arbitrator found that UPW's early termination was a breach of the
plan Agreement and that, therefore, Dawson was entitied to all of
ite administrative fees anticipated to be paid under the two-year
agreenent, plus its out-of-pocket expenses, subject to Dawson’ s
gpligation to mitigate those expenses. In determining the amount
of damages, the arbitrator relied upon Dawson's Plan Income
geatenent and other financial records, which reflected, inter

alia, the following:

 
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SSS

Premiums received from UPH ........... $799,326.00
Total expenses paid from the Reserve .. -719.023.60

Subtotal ee eeeeeeeeee eevee 80,302.40
Interest/Investment Gain +6.937.68

  

Il glartzao%oe

Ultimately, the arbitrator (1) permitted Dawson to retain the

TOTAL Balance in Reserve.

 

balance in the reserve, i.e., $87,240.08, and (2) required UPR to
Pay Dawson an additional $25,074.00 for fees and expenses
incurred and anticipated to be paid over the two-year contract
period, ice., from April 3, 2000 to March 31, 2002.

UPW's Motion to Modify or Correct the Original
Award and the Amended Arbitration Award

 

Immediately after the entry of the original award, UPW
ent a letter, dated March 22, 2004, to the arbitrator, seeking
corrections of the amounts awarded based upon an alleged evident
mathematical miscalculation. UPW essentially argued that the

double payment of fees."” The

 

original avard constituted
letter apparently was sent pursuant to Rule 31 of the DPR

Arbitration Rules (DPRAR), which provides that “[plarties may
apply to the [a)rbitrator(s) to modify, correct or clarify an
la}ward, pursuant to the procedures specified in the [Revised

Uniform Arbitration Act (RUAA)], Section 20." “Section 20,"

 

* As previously indicated, the arbitrator decided that Dawson was
entitled to all of ite administrative fen anticipated to be paid under the
Ewonyear agreenent, plus ite out-of-pocket expenses, subject to Dawson's
obligation to mitigate those expenese. At the art
maintained that it had utilized a portion of ite aduinietrative fe
for the expenses of continuing to Gperate the Plan. The alleged
payment of fees" centers around the arbitrator having apparently credited to
Baveon, ‘administrative fees ~~ the amount utilized to pay expenses. but
also avarded all of the administrative fees anticipated to be pala under the

     

 

 

 

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oe
ies, HRS § 6584-20 (Supp. 2005)," allows a party to request the

arbitrator to correct evident mathematical miscalculations in an
arbitration award.”

on March 23, 2004, the arbitrator informed both parties
that, ‘absent an agreement by both parties to re-open this
matter, or unless ordered by the [circuit clourt, the
[alrbitrator no longer has jurisdiction in this matter.” By

letter dated March 30, 2004 to the arbitrator, Dawson “object [ed]

 

to any attempt by UPW to reopen the [a]rbitration hearings

wns § 658-20, entitled “change of avard by arbitrator,” provides in
relevant part:

(2) on motion to an azbitrator by a party to an
arbitration proceeding, the arbitrator may modify oF correct
iS} upon a ground stated in section 658A-24(a) (2) oF
Nr
(2) Bechuge the arbitrator has not made a final and
Sefinite award upon = claim subaitted by the
parties to the arbitration proceeding; or
() Fo'clarity the award.

HRS § 65@A-24 (a) (1) (Supp. 2005) provides

 
 

movant receiv
Geena or within ninety days afte
wethce of a modified or corrected evard pursuant to section
Besac3o, the court shall modify or correct the award if
ti) chere was an evident mathematical miscalculation
Gran evident mistake in the description of «
Pecsop thing, or property referred to in the

 

on the sane day, Daweon sexved, but did not file, a motion to
confira the original award, pursuant to, jnter alia, HRS § 658A-22 (Supp.
2008). HRS § 650A-22 provides:

 

After a party to an arbitration proceeding receives
notice of an avard, the party nay fake a motion to the court
for an order cenfitming the award at which time the court
Shui tseve a confizming order unless the avard is modified
SbeLb tected pursuant. te section 6584-20 or ESEA-24 oF 18
Siested pursuant. to section 6568-23)

 

--
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SSS

Additionally, via a letter dated April 5, 2004 to the arbitrator,
Dawson argued that HRS chapter 658 (the old arbitration law)
applied because (1) HRS § 658A-3 (Supp. 2005) of the new
arbitration law provides in relevant part that “this chapter
governs an agreenent to arbitrate made on or after July 1, 2002,"
(emphases added) and (2) the Plan Agreement was made on February

24, 2000. Also, under the old arbitration law, specifically, ERS

 

§ 658-10 (1993), quoted infra, the court -- not the arbitrator -
is authorized to modify or correct an arbitration award.

UPH, however, maintained that:

 

(t]he old arbitration [aw] does not apply to thie issue
because the parties expressly agreed to abide by. [the DFRAR]
when signing DPR's *hgreenent to Participate. in’ Binding
Arbitration(,1* ((executed by UPW on August 28,2003, and by
Dawson on January 30, 2004)]- Rule 31 of [the DPRAR] “allows
UPW to request that {the arbitrator] modify, correct oF,
clarity the Award pursuant to procedures epecified in the
new arbitration [law.]

 

On April 8, 2004, DPR, through ite president and CEO, Keith w.

Hunter, informed the parties that:

Pursuant to HRS [chapter] 658 and baced on the parties"
earlier understanding that this matter vas governed und
HRS [chapter] 658, the (alzbitrator in this matter, James
Pout, ie (2) Abeent an order from an

functus officio.
appro (cloure, M- Paul lacks authority to act on the

request for reconsideration (.]

    

 

 

2 on erat 4 of Dizectors of octation of
apa 3 73 Haw. 201, €30-P.24 503
(i992) (hereinafter, Jefferal, thie court, in describing "dunctus officio, ©

stated.

hen an award has been made, the authority of the arbitrator
comes to an end. He becomes functus officio. Under general
principles of arbitration law(,] he cannot in any way change
or explain his award unlese his authority ie reinstated in
writing by all parties, or the matter is returned to him by
the apsropriate court.

 

 

Ad, at 207, 830 P.24 at 507 (format altered) (citation onitted)

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eee
im the meantime, UPW filed a motion with the circuit

court to modify or correct the original award, pursuant to HRS
§5 658A-20 or -24(a) (1), oF, in the alternative, HRS § 658-10
(hereinafter, UPW's motion to modify] on March 29, 2004.
specifically, UPW requested that the circuit court remand the
matter to the arbitrator for a determination as to whether a
correction of the original award was warranted based upon an
alleged evident mathematical miscalculation. on April 8, 2004,
pawson moved the circuit court to confirm the original award
Ihereinafter, Dawson's motion to confirm], pursuant to HRS
§ 658-8 (1983). In addition, Dawson filed its menorandum in
opposition to UPi’s motion to modify on May 12, 2004, reiterating
its position that: (1) HRS chapter 658 was applicable, thereby
rendering a remand to the arbitrator inappropriate; and (2) there
was no “evident miscalculation of figures” in the original award.
noth motions were scheduled for hearing on May 19,
2004, Prior to commencing the hearing, the circuit court held a
chambers conference and asked Dawson whether it was willing to

agree to UPW's request to have the arbitrator decide UPW's motion

 

0 RS § €58-8 provides in pertinent part

‘At any tine within one year after the avard is made and
Derved, any party to the arbitration may apply to the
Circuit court specified in the agreement, or if none is
Specified, to the circuit court of the judicial circuit in
Ghicn the arbitration was had, for an order confirming the
Gerd. Thereupen[,] the court shall grant such an ord
Gniesa che award 42 vacated, modified, or corrected,
preseribed in sections 658-9 and 658-10.

 

   

on August 21, 2004, Dexson withdrew its motion to confirm the original award.

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SS

to modify, Dawson cbjected on grounds that (1) the original
award was not ambiguous on its face and (2) the arbitrator had no
jurisdiction to decide a motion under HRS § 658-10 because UPW's
motion must be decided by the court. The circuit court,

therefore, proceeded with the hearing on UPW’s motion to modify

 

and Dawson's motion to confirm.

 

ring, UPW argued that

 

During the h

[rIhere’e no question [that] in September 20031] the
old [arbitration law) applied to these proceedings because
the proceedings arise out of a contract that contained an
arbitration provision that predates the effective date of
the statute, the new arbitration [law], So no questicn
(ehat,] absent an agreenent to the concrary(,] the ola
[arbitration law] applies.

 

‘But circumstances changed in January 2008. January

2004.1. Dawson ‘signed a record, a written agreement to
Participate in binding arbitration in which they agreed to
the Dem rules{,] including Rule 31 which eaye the arbitrator

 

ccan modify and’ correct an arbitration award under the new
statute's delineated provisions. Sot agree, yee, at one
Tine there vas no agreenent, but then the parties changed
their position and there waa an agreement.

 

 

 

UPW also asserted that the original award resulted in a double
recovery for Dawson.

Dawson argued that the old arbitration law applied and
pointed to the arbitrator's refusal to consider UPW's March 22,
2004 request for correction unless ordered by the court as
evincing the fact that the arbitrator also believed that the old

arbitration law applied. Dawson also maintained that there was

 

no mistake in the original award, arguing that:

 

[We're not talking about an evident miscalculation. We're
talking about a substantive issue that thie court ought not
desl with when we're talking about an arbitrator's sward
The fact is they are in fact challenging those findings of
fact and basically complaining that Daweon should not
recover danages because the factual findings are wrong

 

 

nie
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Ae the conclusion of the hearing, the circuit court stated:

tive reviewed the pleadings and considered the arsunents of
aye ese ica ene authorities cited, and the initial
‘vomand’ this matter back £0

(der the substantive sesve of whether
[RE SEPitrator’e award should be confirmed.

bitrator © prpersusded by the argunent and the
author ees tited by UP that this matter be remand
Uplerater, so the court will re
Sibitrater’ for ite consideration
eaity, correct, or clarify the

 

   

on June 2, 2004, the circuit court issued ite written order,

which specifically stated:

pw's request for the [clourt to renand/resubmit UPW's
wequeetr to manlty, correct of clarity the (origina) 2]vard
rocuest te Sr igence Tr. Paul, Eeq. for his consideration and
go Arbétretes Jgneed. Further hearing on this matter 8
decision $5 2ii after the lalrbitrater hae ieaued his
Secision

 

on August 30, 2004, the arbitrator issued an amended
arbitration award (the anended award), apparently agreeing with
pw regarding the alleged duplicative danage award. Ae & result,

the arbitrator recalculated the avard and concluded that Paxson

reinburse UPH the anount of $189,924.00 (as opposed to his Prior
decision that allowed Dawson to retain the balance in the

reserve, plus receive an additional $25,074.00 from UPN) -

4. UPW’s Motion to Confirm and Dawson’ s Motion to Vacate
the Amended Award

on Septenber 2, 2004, UPN filed with the circuit court
a motion for an order confirming the amended award (hereinafter
p's motion to confirm), pursuant to HRS § 658A-22, oF,
alternatively, HRS § 658-8. Thereafter, on Septenber 9, 2004,
pawson moved in the cixcuit court to vacate, modify, correct OF
clarify the amended award (hereinafter, Dawson's motion to

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a

vacate], pursuant to HRS §§ 658A-23 (Supp. 2005),"* -20(4) (2)
through (3), and -24(a) (1), or, alternatively, HRS §§ 658-9
(2993), quoted infra, and -10 (1993). specifically, Dawson
argued, inter alia, that: (1) under HRS chapter 658, the circuit
court had no authority to remand the matter to the arbitrator and

 

that the arbitrator exceeded hie authority by reopening the
hearing; (2) it was error to impose a duty to mitigate; and (3)
the arbitrator committed a miscalculation in revising the

original avard.

MARS § 6584-23 provides in relevant part:

Vacating award. (a) Upon motion to the court by «
party to an arbitration proceeding, the court shall vacate
an award sade in the arbitration proceeding if
(1)"The award wae procured by corruption, fraud, or
ether undue means;
(2) There wane
(a) " Evident partiality by an arbitrator
appointed as a neutral arbitrater,

(®) Corruption by an arbitrator; or

(©) misconduct by an arbitrator prejudicing
the Fights of a party to the arbitration
proceeding;

(3) An arbitrator refused to pos
lupon showing of sufficient cal
postponement, refused to consider evidence
Materiel to the controversy, or otherwise
Conducted the hearing contrary to section 658A:
15, #0 as to prejudice substantially the rights
ofa party to the arbitration proceeding;

(4) An arbitrator exceeded the arbitrator’ e powers;

(5) There was no agreement to arbitrate, unless the
person participated in the arbitration
Proceeding without raising the objection under
Section 6584-15 (c) not later than the beginning
of the arbitration hearing; oF

(6) The arbitration wae conducted without proper
notice of the initiation of an arbitration as
required in section 656A-9 so a2 to prejudice
jubetantially the rights of a party £0 the
arbitration proceeding.

 

 

pone the hearing
‘gor

  

 

(old emphasis in original.)

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That same day, September 9, 2004, Dawson filed a
separate motion in the arbitration proceedings, requesting the
arbitrator to modify, correct, or clarify the anended award
(hereinafter, Dawson's motion to modify]. The parties
subsequently entered into discussions regarding a stipulation to
the arbitrator's jurisdiction to review Dawson's motion to
modify, Ina letter to UPW's counsel, dated October 15, 2004,

Dawson's counsel wrote:

 

Xam enclosing a signed copy of the {stipulation in
the format approved by you and sent over yesterday for my,
Signature. "Ab confirmed on a couple of occasions by the
[alrbitrator, a1] proceedings prior to this date were
conducted by'the {alrbitrator pursuant to HRS [c)hapter 658.
That's why he se requiring s etipulation by the parties to
allow the current motion(, i.g., Dawson's notion to modify,]
fo be reviewed by him pursuant to HRS [c]hapter 658A.
althoush vou have not_sareed to include express mutual non
waiver languace in the (eltiowlation. if ie abilL-our

el inten 2

 

Etinulation only be applied prospectively. Our clienti ial
hot waiving oF releasing env claims defenses ar positions’
with tespect to prior proceedings sid decisions.

(Emphasis added.) On October 18, 2004, the parties stipulated
that the arbitrator shall have jurisdiction, pursuant to DPRAR
Rule 31 and HRS §§ 656A-20(a) (1) through (3), to consider and
decide Dawson's motion to modify. After briefing and a hearing,

motion to modify via his written

 

the arbitrator denied Dawson
order filed in the arbitration proceedings on November 8, 2004.
on November 9, 2004, Dawson filed a memorandum in

opposition to UPW’s motion to confirm, wherein Dawson reiterated

that

 

{clorrecting or modifying the amount of the avard by the
(s]ebitrator is not peraitted. (UJader Hewes law
governing chapter 658 arbitrations, the (clourt cannot,

  

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delegate ite statutory authority to correct or modify a
SSnetary award to an [alrbitrator, nor does the [al rbitrator
have the jurisdiction to reopen the arbitration and hold a
Rearing on @ motion filed under HRS § 658-10.

Daweon further argued that

‘2 finding that the original (avard) was ‘patently ambiguous
tunljg a condition precedent to the (circuit clourt’s
apiaity'to remand to an arbitrator for “clarification.*
-V"adtustment Co.,) 72 Haw. (41, 44-46, 605
Fred dds, 4se-47 (4991/1. Therefore, the June 2, 2008 Order
Feversing and modifying the original (award) from a judgment
in favor of the winter, (Dawson), to a judgment in favor of
the loser, UP, waa clearly a situation where the remand
Fron the (clout was dnvalid and the (a]ybitrator alee
Gxcweded hia power and lavéul Jurisdiction. Moreover, thes
wae no finding of ambiguity in the original avard as a basis
for remand, ee Jeffers, (aunral

Lastly, Daweon asserted that the arbitrator erred in (1) treating

 

 

 

 

mitigation of damages as an affirmative claim, as opposed to an
affirmative defense and (2) disregarding the law of contract
damages, which prevents a breaching party from recovering damage:
againet a non-breaching party.

on the same day, November 9, 2004, UPW filed its
memorandum in oppoaition to Dawson's motion to vacate. UPW
argued that no ground to vacate the amended award existed
Anasmuch ae "Dawson's motion does not allege any fraud, evident
partiality, corruption, misconduct, or misbehavior by the
[alrbitrator, or that the [alrbitrator exceeded his powers, did
not allow evidence, or give proper notice of the proceedings,” as
required under BRS § 658A-23 and HRS § 658-9. Thereafter, UPW
also filed ite memorandum in support of its motion to confirm,
contending, inter alia, that:

[2.1 Davaon's menorandus in support of ite motion te
vacate, filed Rovenber 9, 2004, for the first time alles
Btatutory grounds fer vacating the (amended) avard. Dawson

 

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epecifically cites to HRS § 658-9(a) (4) vaxbstrators
specifically oitfowers’ and argues, for the first time on
exceeding tobe that [ene arbitrator] excesded Bis powers
Noverber eccing the original avard[,) A motion under HRS
PME SGTES Vacate must Be Drought within 20 daye efter the
§ 656-9 So MGcred. gaa HRS § 658-11. Dawson's motion to
guard 40 red apen HRE'E €50-9(a) (4) is, therefore, too late
2) Bowsen ie judicially estopped [érom)
rmaklind] th {e above] argunent After having soved in the
mak ling) ch Seocecdinge pursuant to [DPRAR] Rule 31 to
Ged) gward, and after the [a]rbitrator then
ree ed bawson's motion, Dawson cannot be
es dered sot Gn that the, [a)zbicrator lacks the power to
hoard to covaccide whether to correct his avard.
eee eee Teyourt, by virtue of (the June 2, 2008
order} ‘iteady determined that [the arbitrator] aid have
Sate se ioe tnd power to consider UPN s wotion to correct
JBEseatcrnel award, That (older is law of the ct
ie ere Shoang reject Dewaon's efforts to have thle clourt
AGURShay reconsider che prior [olrder

 

 

   

 

 

wotwithetanding the above, UPW also contended that the arbitrator
aia not exceed his authority because, under DPRAR Rule 31, the
arbitrator is permitted to correct an evident mathematical
miecalculation in the award and that the circuit court
specifically remanded the matter to the arbitrator for
determination. UPW further maintained that the arbitrator’ s
correction of the original avard did not constitute a reopening
of the arbitration proceedings.

‘A hearing was held on the parties’ motions on November

 

17, 2004, tn ite written order, issued on January 6, 2005, the
cizcuie court granted UPW's motion to confirm and denied Dawson’ s
motion to vacate, concluding that *[tJhe previous (j]udge had
already issued a rulingl,) renanding this matter to the
[alebitrator to correct or modify the avard. There being no
cogent reasons to overturn the previous [Judge's ruling, thie

[clourt finds that the [a]zbitrator did not exceed his scope of

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SS

authority.” On the same day, the circuit court entered judgment

 

in favor of UPW and against Dawson in the amount of $189,924.00.
On February 7, 2005, Dawson timely filed its notice of appeal.

m. s7 1S 01

A. Arbitration

Te is well established that this court has “confined
judicial review of arbitration avarde to the strictest
possible limiea.” Mas ru Tropical
Eaters. 511Haw. 332, 395, 460 Pad 317, S19 (ise) This
ia Pecause "of the legielative policy encouraging
arbitration end thereby discouraging litigation.” Gada v.
Halley, €6 Wav, 431, 441, 667 P.24 251, 288 (2963) (ereing

Mare Contructorg, $1°Haw.\ac 336, 460'Pead at 319) |
82 hawai's 57,

See alag.
65, $19 P.ad 969, 981 (1996). Thus, “review of arbitration
ds by the citcuit and appellate courte is limited by the

 

 

 

 

 

Provisions of the arbitration statute
51 law. at 335, 460 P.2g at 219." See Kalast
90 Wawas't 167, 293, 997 F.2d 17e, 102

Hawai ine co.
(2990); Weffers). 73 Haw. (at]’ 204, 630 F.2d [at] s07l.)

Gepava v. State Farm Mut. Auto. Ing. Co., 94 Hawai'i 362, 365, 14

P.3d 1043, 1046 (2000) (internal brackets and ellipsis omitted).

 

 

 

Further, *[wle review the circuit court's ruling on an
arbitration award de novo, but we also are mindful that the
circuit court’s review of arbitral awards must be extrenely
narrow and exceedingly deferential. et 1 99
Hawai'i 226, 233, 54 P.34 397, 404 (2002) (internal brackets,
quotation marks, and citations omitted).
B 1 eta

“The standard of review for statutory construction is

well-settled. The interpretation of a statute is a question of

Jaw which this court reviews de nove." Liberty Mut, Pire Ine.
So, wv. Dennison, 108 Hawai‘i 380, 384, 120 P.3d 1115, 2119 (2008)

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in West’s Hawai'i Reports and the Paci
(quoting Labrador v, Liberty Mut, Group, 103 Hawai'i 206, 211, 61
P.3d 386, 391 (2003)) (internal quotation marks omitted).

111, DISCUSSION

fon appeal, Dawson specifically argues that the circuit
court erred in remanding UPH'# notion to modify because: (1) the
court did not have the authority to delegate to the arbitrator
the decision regarding UPW's motion to modify under HRS § 658-10;
(2) the court did not make the requisite factual finding that the
original avard wae patently ambiguous prior to ite renand to the
arbitrator; and (3) the basis for modification did not meet the
definition of ‘evident miscalculation of figures" contained in
HRS § 658-10(1), quoted infra. Dawson further contends that the
circuit court erred in (1) not finding that the arbitrator
exceeded his jurisdiction under Hawaii's judicially created
exception to the functus officio doctrine, (2) concluding that
there were no cogent reasons to overturn the previous decision to
renand UPH's motion to modify, and (3) not vacating the amended
award where the arbitrator exceeded hie powers and acted in
manifest disregard of the law and in violation of public policy
by (a) treating mitigation of danages as an affirmative claim, as
opposed to an affirmative defense, and (b) manifestly
@isregarding the law of contract damages, which prevents a
breaching party fron recovering damages against a party who was
not in breach and who waa not otherwise found liable for damages

on any affirmative claims. Inasmuch as Dawson’s contentions are

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premised on ite belief that HRS chapter 658 -- and not HRS
+ we must first decide

 

chapter 658A -- applies to the instant c

whether the old or new arbitration law govern the instant case.

A. The Applicability of HRS Chapter 658 Versus HRS
Chapter 6588

1. The Enactment of Chapter 656A
In 2001, HRS chapter 658 was replaced by a modified

version of the Uniform Arbitration Act. 2001 Haw. Seas. L. Act
265, 5§ 5, @ at 620. As originally promulgated, HRS § 6S6A-3

(Supp. 2001) specifically provided that:

 

When chapter applies. (a) Except
jubsection (ec), this chapter governs an agr’
Gebitrace made on or after duly 1, 2002

{b) This chapter governs an’ agreenent to arbitrate
made before July 1, 2002, if all the parties to the
Soreenent or to the arbitration proceeding so agree ins

record
ic) after gune 30, 2004, thie chapter governs an

agreement to arbitrate vhenever made

the legislature amended

   

(Bold emphasis in original.) In 2002,

HRS § 658A-3 by adding an additional gentence to subsection 3(b),

which provides that:

If the parties to the agreesent or to the arbitration do not
co agree ins record, an ssreenent to arbitrate that is made
before Juiy 1, 2002, hall be governed by the law specified
in the agreement to'arbitrate or, if none is specified, by
the state lav in effect on the date ven the arbitration
began or cn June 30, 2002, whichever first occurred.

 

2002 Haw. Sess. L. Act. 50, § 1 at 186. In amending
subsection 3(b), the legislature specifically stated that:
‘the purpose of this measure is to clarify the

applicability of the State's Revised Uniform Arbitration
Ret, codified last year as chapter éSBA(.1

 

 

 

Your ccmmittes finds that the measure addresses an
caisson in the Revised Uniform Arbitration Act which
governs arbitration agreenenta made prior to the effective

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date of chapter 658A, MRS, Af agreed to by the parties to
the agreenant or to the arbitration procesding. However,
the Revived Uniform Arbitration Act ie silent as to waich
Law governs if the parties do nct agree, This measure will
enable the use of the provision in the previous arbitration
aw, which has Since been repealed, when warranted.

 

Sen. Stand. Comm, Rep. No. 3169, in 2002 Senate Journal, at 1511;

see also Sen. Stand. Comm. Rep. No. 2850, in 2002 Senate Journal,

at 1378-79; Hse. Stand Comm. Rep. No. 260, in 2002 House Journal,

 

at 1331." Accordingly, the current version of HRS § 658A-3

(Supp. 2005) provides in its entirety:

 

hen chapter applies. (a) Except as provided in
subsection (c), thie chapter governs an agreement to
arbitrate made on or after July 1, 2003.

(b) Thie chapter governs an’ agreement to arbitrate
nade before July 1, 2002, if all the parties to the
agreenent or to the arbitration proceeding so agree in a
Tecord. If the parties to the agreement or to the
arbitration do net 0 agree in a record, an agreement to
srbitrate that is nade before July 1, 2002, shall be
Governed by the lav specified in the agreement to arbitrate
er, if none ie specifies, by the state law in effect on the
Sate when the arbitration began oF on June 30, 2002, °
whichever fire occurred.

(c} After June 30, 2004, thie chapter governe an
agreement to arbitrate whenever made.

 

 

 

 

 

  

 

(Bold emphasis in original.)

We have repeatedly announced that:

Im construing statutes, a court’ primary objective ie to
ascertain and give effect to the intention of the
legislature ae gleaned primarily from the language contained
in the statute itself. Accordingly, it is well settled that
this court is bound by the plain, clear(,]. and unabiguoue
language of a statute[,] unless the literal construction
would proguce an absurd and unjust result, and would be
Clearly inconsistent with the purposes and policies of the

 

 

 

 

 

CARL Corp, v. State of Hawai'i, Dep't of Educ., 85 Hawai'i 432,
459, 946 P.2d 1, 29 (1997) (internal quotation marks, ellipses,

\ specifically, the amendnent to HRS § 650A-3 was considered by the
committees of Judiciary and Hawaiian Affairs, Judiciary, and Labor.

 

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original brackets, and citations omitted) (format altered)
Furthermore, *we aust read statutory language in the context of
the entire statute and construe it in a manner consistent with
ite purpose." Courbat v. Dahana Ranch, Inc., 111 Hawai‘i 254,
260, 141 P.3d 427, 433 (2006) (citations omitted). Bearing the
foregoing principles in mind, we now examine the language of HRS
5 656A-3 ae it applies to the instant case

2, The Application of HRS § 656A-3(a) to the Instant
case

Subsection 3(a) clearly directs that, “except as
Anfxa, the new
chapter "governs an agreement to arbitrate made on or after Jy

 

provided in subsection (c)," gee section III.A.

1.2002." HRS § 650A-3(a) (emphasis added). Here, it ia
undisputed that (1) UPW and Dawson entered into the Plan
Agreement, which contained the dispute resolution provisions, on
February 24, 2000, prior to the enactment of HRS chapter 658A and
(2) UPW and Dawson executed the DPR Arbitration Agreement on
August 23, 2003 and January 30, 2008, respectively, which
agreenent explicitly provides that “(t]he parties, DPR, and Janes
Paul, Beg. agree to follow and abide by the DPR Arbitration
Rules(.]” Further, the parties do not dispute that, prior to
Dawson's signing of the DPR Arbitration Agreenent on January 30,
2004, they conducted discovery under the old arbitration law.**
rbitrator, dated september 8, 2003,

‘UPW cenceded that "the of@ arbitration
(continued...)

Mtn URWe letter to th
concerning certain divcovery 4

 

 

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on appeal, Dawson maintains that HRS chapter 658 is
applicable inasmuch as the Plan Agreement was entered into prior
to the enactment of HRS chapter 656A. Specifically, Dawson
argues that the DPR Arbitration Agreement does not contain
language that expressly alters the statutory jurisdiction that
the parties have followed since the counencement of the

arbitration proceeding and throughout the discovery period.

 

Dawson maintains tha

when it signed [the DPR Arbitration Agreenent,] to pay
[Dawson] had no intention of changing the statutory
juriediction of the [alrbitrator or abandoning the version
Of the DPRIAR] that the parties and the arbitrator were
following up until that tine. Woreover, the statenente made
by UP\'s counsel after UPW signed the DPR form acknowledge
that the proceedings were under Chapter 650 and acknowledge
that the Saly arbitration agreenent between the parties that
fuottere de the one contained in the Plan (agreement). UP
goes eo far as co state that DPR'e agreement ie just a
Sformality= to provide ‘additional provectione for, [the]
par related to responsibility for paying (the) DPR and the
(alzbitrater,

 

(Pootnote omitted.) In sum, Dawson essentially maintains that
the DPR Arbitration Agreement does not constitute a new and
enforceable arbitration agreement nor displaces or overrides the
dispute resolution provisions of the Plan Agreement.

Conversely, UPW argues that, when Dawson signed the DPR
Arbitration Agreement on January 30, 2004, it agreed to be bound
by the DPRAR, including DPRAR Rule 31. At that time, Rule 31
provided that: "Parties may apply to the Arbitrator(s) to
modify, correct or clarify an Award, pursuant to the procedures

(continued)
atatute, iis chapter 658, a8 opposed to the new arbitration statute, Chapter

658A, should seply.”

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specified in the RUAA, Section 20[, i.e., HRS § 656A-20]." HRS
5 658A-20 expressly permite the arbitrator to act on a party’s

request to make mathematical corrections or clarify an

 

arbitration award. Consequently, UPW contends that “Dawson!
argument that it is somehow not bound by [the DPRAR] flies in the
face of its express agreement to the contrary when signing [the

DPR Arbitration Agreenent].” UPW further contends that:

 

Dawson's extrinsic evidence of alleged secret undocunented
intentions of Dawson when signing the DPR [arbitration]
Agreement. (18) not supported by the record (no affidavit by
Dawson) and vere properly not considered by the circuit
court. The plain language of the (DPR) Arbitration
Agreement controls over what Dawson may have secretly
intended vhen it signed the agreement

Based upon the respective positions of the parties, the inquiry
is whether the DPR Arbitration Agreement constitutes a new valid
and enforceable agreement to arbitrate, thereby, euperseding the
Gispute resolution provisions of the Plan Agreement and
triggering the applicability of HRS chapter 658A.

Preliminarily, we recognize the well-settled principle
that
should not draw inferences from a contract regarding
the parties’ intent when the contract is definite and
unambiguous. “In fact, contractual terns should be
interpreted according to their plain, ordinary seaning and
accepted use in comen speech. “The Court should look ‘no

farther than the four comers of the document to determine
whether an ambiguity existe.

 

 

 

 

State Farm Fire & Cas = 2, 90 Hawai'i
315, 324, 978 P.2d 753, 762 (1999) (citations omitted). Where a
writing is found to be clear and unambiguous and “represents the

final and complete agreement of the parties," the parol evidence

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a

rule bare evidence “of prior contemporaneous negotiations and
agreements that vary or alter the terms of a written instrument."
du (citation omitted). ‘Thus, "[o]nce the parties execute an
Jnstrument which contains their whole agreesent, their previous
negotiations and agreenents are legally ineffective and evidence
relating to those previous negotiations or agreements is
irrelevant regardless of who offers it.* Akamine @ Sons. Ltd. v.
‘Am._Sec, Bank, 50 Haw. 204, 310, 440 P.2d 262, 266 (1968).
However, it is equally well-settled that, because the
parol evidence rule presupposes a valid agreement, it will not
prohibit evidence showing that there was no agreement or no

enforceable agreement. See B. Allan Farnsworth, Contracts

 

$5 7.3-7-4, at 239-47 (3d ed. 2004) ;"" gee algo 11 Williston on
Contracts, § 33:17 at 632-40 (4th ed. 1999); Restatement (Second)

of Contracts § 210, emt. b (1981) ("[A] writing cannot of itself

 

provide ite own completeness, and wide latitude must be allowed

for inquizy into circumstances bearing on the intention of the

section 7-4 provides in relevant part:

 

If the
a lnteer writtes
Jesotiations, it fellowe that the rule does not come into
Deg Gatil the existence of an enforceable written agreement
Rit‘becn shown. Bvidence of the negotiations between the
Rafeies chould therefore be admissible to show that no
parbenent waa reached of that the agreenent reached vas
SGalla, The parol evidence rule doee not speak to these
questicas.

     

‘agreenent has

  

 
 

 

Jd $7.4, at 40 (footnotes omitted) ; soe alee ide § 7-2, st 239 (1(8) ince
Ta; S2oSjenmee a valid written agreenent, it does not exclude evidence to
the tnae there wae no agreement or that the agreenent van invalid.*
{rootnote omitted.)).

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parties."). In other words, the parol evidence rule “only
applies to enforceable contracts and thus extrinsic evidence
should be considered in assessing defenses to contract
formation.* Boskoff v. Yano, 217 F. Supp. 2 1077, 1086 (D. Haw.

2001) (citation omitted); see also State Farm Fire & Cas. Co., 90

Hawai'i at 324, 978 P.2d at 762 ("absent fraud, duress, mistake

or ambiguity, extrinsic evidence is excluded once it is

determined that a contract ie fully integrated") (citations

on, Iné jescher, 105

 

omitted) (emphasis added!
F.3d 1278, 1260 (9th Cir. 1997) (the rule ‘only applies when the
court is interpreting a contract that is enforceable") (citation
omitted)

Intrinsic to finding the existence of an agreement is

wit is an elementary rule

 

finding the intention of the partie
of contract law that there must be a meeting of the minds on all
essential elements or terms in order to create a binding
contract {.J* Mose v. Am, Int’] Adjustment Co., 66 Hawai'i 59,
63, 947 P.2d 371, 375 (1997) (citation, internal quotation marks,
and original brackets omitted) (holding that the parties failed

to enter into a binding arbitration agreement because there was

no meeting of the minds); see algo $. Foods Group, L.P. v, state
of Hawai'i, Dep't of Educ., 89 Hawai'i 443, 457, 974 P.2d 1033,

1047 (2999) (*[CJontracting is a sentient process. There must be
objective proof of a meeting of the minds. The prospective
contracting parties are not expected to engage in telepathy.

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‘There must be a confluence of assent around specific term
(citation omitted.)).

‘The existence of mitual assent or intent to accept se
determined by an sbjective standard. A parey'e worde oF
tote are judged under a standard of resscnabieneae in
Setermining whether he has manifested an objective intention
to agree, All reasonable neanings will be imputed ae
representative of a party's corresponding objective
intention. Unexpressed intentions are mugstory when the
problen is to ascertain the legal relations, if any, between
two parties.

Earl M. Jorgensen Co, v. Mark Constr... Inc., 56 Haw. 466, 470-71,

540 P.2d 978, $82 (1975) (citations omitted). It follows then

 

 

 

that, “[a]n arbitration agreement, like any contract, must be
construed to give effect to the intention of the parties.”
Wayland Lum Constr., Inc, v, Kaneshige, 90 Hawai'i 417, 422, 978
P.2d 855, 860 (1999) (citation omitted).

In our view, the record on appeal in the instant case
evinces that there was no "meeting of the minds" between the
parties to create a new binding contract to arbitrate that would
replace or supersede the dispute resolution provisions contained
im the Plan Agreement. UPW, in a letter dated January 27, 2004
to the DPR regarding Dawson's failure to make the $6,000.00
initial deposit for the arbitration proceedings, expressly

maintained that:

‘eto Dawson’s failure to sisn the Agreement £0
Porticivate in bindine Arbitration, we respectfully assert
‘Shat_Daxaonia signature in but a mere formality and is not

a 2. SSaweon originally
initiated thie arbitration back in 2001, and, thereafter,

has since participated by selecting the arbitrator,
Subsitting 2 statement of Claim, submitting an Anaver to
UPW'a Statesent of the Case, exchanging documenta responsive
to discovery requests, and appearing/arguing in several
‘scheduling and discovery telephone conferences with

 

 

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Arbitrator Jin Paul. wweon_alzel

gisned the underlying contract at issue in this matter which
included ‘bavscn’s agreement to -teaolve-amy contract disputes

‘ihe br Arbitration Agreement| nexely provides additional
protection for Dik'e and the srbitrator's fees, but is now
‘puneceusary because UP is willing to advance all of these

fess.
(emphases added.) Thereafter, on January 30, 2004, Dawson signed

the DPR Arbitration Agreement.
under these cizcunstances, it cannot reasonably be said
that Dawson “manifested an objective intention to agree,” Earl M.
Jorcensen Co., 56 Haw. at 470, 540 P.2d at 962, that the DPR
arbitration Agreenent constituted a new agreement to arbitrate.
‘See Restatement (Second) of Contracts § 20 ("There is no
manifestation of mutual assent to an exchange if the parties
attach materially different meanings to their manifestations and
(a) neither party knows or has reason to know the meaning
attached by the other; or (b) each party knows or each party has
reason to know the meaning attached by the other."). Moreover,
uPi's statements in its January 27, 2004 letter that (1) "Dawson
already signed the underlying contract,” (2) the ‘arbitration
provision [in that contract] was the basis for initiating these
arbitration proceedings with DPR,” and (3) ‘Dawson is already

bound by an arbitration agreement” demonstrate that UPW, itself,

 

id not coneider the DPR Arbitration Agreement as a new agreement
to arbitrate that would displace the dispute resolution

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provisions of “the underlying contract,” i.e., the Plan
Agreement

Rather, we believe the DPR Arbitration Agreement
complied with section 5.03 of the Plan Agreement. As previously
quoted, section 5.03 sets forth the parties’ agreement to
arbitrate any dieputes and also provides that "the parties shall
select an Arbitrator by mutual agreement." The DPR Arbitration
Agreement clearly evinces the parties’ mutual assent to (1) James
Paul, Eeq. as their arbitrator, (2) the scope of the arbitrator's
authority in determining the dispute, and (3) the arbitrator’s
compensation and expenses. In other words, the DPR Arbitration
Agreement merely menorializes, in writing, the parties “mutual
agreement” regarding the selection of an arbitrator, as required
by section 5.03 of the Plan Agreement. Indeed, as UPW’s letter
of January 27, 2004 indicates, “Dawson is alxeady bound by an
arbitration agreement [(i.e., section 5.03 of the Plan
Agreenent),]* and, therefore, the post-July 1, 2002 DPR
Arbitration Agreement is not a "new" arbitration agreement that
would dictate the application of HRS chapter 658A to the

arbitration proceedings. Accordingly, inasmuch as the Plan

 

Agreenent was executed on February 24, 2000, HRS § 658A-3(a) i

 

inapplicable to the instant case. See algo section IIT.A.

Angxa.

 

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3. The Application of HRS § 656A-3(b) to the Instant Case

‘The fact that the Plan Agreement was executed prior to
July 1, 2002, however, does not necessarily foreclose the
application of the new arbitration law -- HRS chapter 658A -- to
the instant case under HRS § 658A-3(b), quoted supra. Based on
the first sentence of subsection 3(b), the new chapter may govern
an arbitration agreenent made before July 1, 2002, as long as the
parties to the agreenent or the proceedings “so agree ina
ecord.* HRS § 658A-3(b) (emphasis added). If the parties
cannot agree, the second sentence of subsection 3(b) states that
the law specified in the agreement shall govern; but, if no
governing law is specified in the agreement, the arbitration
shall be governed by the law in effect “on the date when the
arbitration becan or on June 20, 2002, whichever occurred fixet.”
HRS § 658A-3(b) (emphases added) .

As previously stated, UPW maintains that, by signing
the DPR Arbitration Agreement, Dawson agreed to be bound by the
DPRAR, which references HRS chapter 658A and that, therefore, the

the “record” for purposes of

 

DPR Arbitration Agreenent i
subsection 3(b). However, notwithstanding the fact that the
parties agreed to "follow and abide" by the DPRAR, the DPR
Arbitration Agreement does specifically reference which version
of the DPRAR would be followed, i.e., those promulgated during
the time when HRS chapter 658 was effective or those promulgated
after the effective date of HRS chapter 658A, We, therefore,

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a
veject UPw'e argument that the DPR Arbitration Agreement ie the

srecord* evincing the parties’ agreement that the new arbitration

law would apply to the arbitration proceeding,

In the absence of an agreement by the parties “in a
record” to the application of ERS chapter 658A, the second
sentence of subsection 3(b) mandates the governing law to be that
which is "specified in the aax: to arbitrate or, if none is
specified, by the state law in effect on the date when the
arbitration began or on June 20, 2002, whichever first occurred."
RS § 658A-3(b) (emphases added). As previously discussed, the
DPR Arbitxation Agreement is not a new agreement to arbitrate;
thus, the Plan Agreement entered into on February 24, 2000
controls, ‘The dispute resolution provisions of the Plan
Agreement, however, do not specify or make reference to the law
that would govern an arbitration proceeding pursuant to the Plan
Agreement. ‘Thus, we look to the alternative enunciated in the

cond sentence of subsection 3(b), i.e., the date when the

 

arbitration began. The arbitration proceeding in the instant
case commenced on February 18, 2004 -- after June 30, 2002.
consequently, pursuant to the plain reading of the alternative

stated in the second sentence of HRS § 658A-3(b), the governing

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SSS

law ie that which was in effect on June 30, 2002, i.e., HRS

 

chapter 658

‘The Application of HRS § 658A-3(c) to the Instant
case

 

As previously stated, HRS § 658A-3(a) provides that the
new arbitration law applies to all agreements entered into after
Duly 1, 2002 “except as provided in subsection (c)." Subsection
3(c) provides that, after June 30, 2004, the new arbitration law
"governs an agreement to arbitration whenever made." HRS § 6S8A-
3(c) (emphasis added). In other words, a plain reading of
subsection 3(c) indicates that, after June 30, 2004, HRS chapter
658A applies whether an arbitration agreement was made before or

after July 1, 2002. However, being mindful that ‘we must read

 

statutory language in the context of the entire statute
Gourbat, 111 Hawai'i at 260, 141 P.3d at 433, we mist examine the
apparent conflict between HRS §§ 65@A-3(b) and -3(c).

Under subsection 3(c), after June 30, 2004, the new
arbitration law would apply regardless whether an arbitration
Proceeding may be ongoing. In other words, in cases where a pre-
July 1, 2002 arbitration agreement did not specify the governing
Jaw and the arbitration began at any time between July 1, 2002

and June 30, 2004, the second sentence of subsection 3(b)

 

Moreover, by signing the DPR Arbitration Agresnent, Dawson agreed to
“follow and abide" by the DPRAR. However, as previously discussed, the DPR
arbitration Agreenent does not opacity which version of the DPRAR would be
‘applicable. Consequently, the aiternative enunciated in the second sentence
Of subsection 3(b) ie triggered

 

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controls, that is, the old arbitration law would apply because
une 30, 2002 occurred first; but, if the proceeding is not
completed by June 30, 2004, the new arbitration law is triggered
on July 1, 2008, However, inasmuch as “a rational, sensible, and
practicable interpretation of a statute is preferred to one which
ip unreasonable or impracticable,” Kinkaid v. Bd, of Review of
city & County of Honolulu, 106 Hawai'i 318, 323, 104 P.3d 905,
920 (2004) (internal quotation marks, brackets, and citation
omitted), we presume that the legislature would not have intended
the absurd result of having parties to an arbitration be
subjected to a change of rules while in the midst of an ongoing
arbitration proceeding. Sea id, (stating that "the legislature
must be presuned not to intend an absurd result, such that
legislation will be construed to avoid, if possible,
inconsistency, contradiction, and illogicality” (internal
quotation marks, brackets, and citation onitted)). Changing the
rules mid-stream could impact prior rulings made by the
arbitrator under a different scheme, cause confusion, create

delays, and increase the expenses of the parties. Such a result

 

would be inconsistent with the general proposition that “parties
resort to arbitration to settle disputes more expeditiously and
inexpensively than by a court action(.]" Daiichi Hawai'i Real

e Corp. v. Lichter, 103 Hawai'i 325, 339, 82 P.3d 411, 425
(2003) (citation omitted). Indeed, it would also be inconsistent
with the purposes of the Uniform Arbitration Act. See Sen.

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Stand. comm. Rep. No. 1467, in 2002 Senate Journal, at 1514
("Your Committee finds that arbitration is a desirable
alternative to litigation. Your Committee believes that this
bill will facilitate arbitration as an effective means of
resolving contractual disputes without the need for litigation by

3 Sen. Stand. Comm.

 

augmenting procedures to meet modern needs.
Rep. No. 1248, in 2002 Senate Journal, at 1420 (Your Committee
finds that arbitration has becone a more viable alternative to

Litigation Thus, in our view, “the rationale, sensible, and

 

practicable interpretation” of HRS § 658A-3(c) is that it does
not apply to an ongoing arbitration proceeding, but to
arbitration proceedings commenced after June 20, 2004. stated
Gifferently, under subsection 3(c), arbitration proceedings

commenced after June 30, 2004 are governed by the new arbitration

made.

 

law regardless of when the arbitration agreement wai
Accordingly, inasmuch as the arbitration proceeding in this cas
commenced prior to June 30, 2004, HRS § 658A-3(c) is inapplicable
to the instant case. Consequently, we hold that, under the
circumstances of this case and the plain language of HRS

§ 658A-3(b), the governing law applicable to the arbitration

proceeding in this case is HRS chapter 658.”

 

% The disent concludes that the DPR Arbitration Agreement i (1) an
agreement to arbitrate made after July 1, 2002 under HRS § e46h-3(a) and (2) a
"record" chat dictates the application of HRS chapter ¢S@A pureuant. to HRS
4 G58A-3(b). According to the dissent, *(rlegardless of what Dawecn’s
subjective intent or UPA’s may have becn prior to the execution, once the DPR
Arbitration Agreement wae signed... by UPW and Davacn ‘there plainiy

(continved..")

 

 

 

 

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We now turn to the dispositive issue on appeal --
whether the circuit court’s remand to the arbitrator was proper

under Chapter 658.7

 

8. continued)
was a necting of the minds manifested by the instrument. The DPR Arbitration
Agreenent constituted an express manifestation of the parties’ “agreement, to)
arbitrate’ under its terms." (Citetion omitted.) (gnphasie in original.)

We, however, cannot agree with the diseent’s contention. To conclude, aa the
Gigsent does, that the parties’ mere execution of the DPR Arbitration
Agreement created a New and Valid agreement to arbitrate would viclete the
"elementary rule of contract lev that, in order to creste » binding
agreenent,| there must be a meeting of the minds" as to the essential terms

Moss, "86 Hawai'i at 63, 947 P24 at 375 (citation and internal quotation marks
omitted). “Ae previously discussed, there vas no meeting of the minds between
Dawson aiid UPW vith respect to the essential term that the DPR Arbitration
Agreement constituted a new agreement to arbitrate. The critical question, in
this case, in whether the SOR Arbitration Agreement constitutes a new valid
and enforceable agreement to arbitrate, thereby  superseding the dispute
Fesolution provisions in the Plan Agreenent, and triggering the application of
HRS chapter 6S€A. In answering the critical question, courts are permitted,
fas discussed gupta, to resort to extrinsic evidence, £.g., the January 27,
Bova letter, which clearly denonotrater that the pactice did not ineend ¢o
Greate a new agreenent to arbitrate

 

 

 

  

 

   

 

 

 

 

 

* UPW asserts that Davscn should have appealed the circuit court's
June 2, 2008 renand order within thirty days because euch order vas analogous
to an order compelling arbitration on the evident mathematical miscalculation
iseue and that, therefore, Dawson's challenge on appeal ie untimely. However,
Pw does not provide any authority for the propoeition that the remand to ene
arbitrator for recalculation of damages is an appesiable order similar to an

Order to coapel arbitration. We note that HRS s 6Se-12 (1993) provides that:

Upon the granting of an order, confirming, modifying,
oF correcting an award, the same shall be filed in the
office of the clerk of the circuit court and thie shall
Constitute the entry of judgment. Ana =
‘xen such iudament as hereinafter set forth.

(Bephasis added.) HRS § 658-15 (2993) indicates that:

Unless the agreement for avard provides that no appeal may

be taken{,] an appeal may be taken from an order vacating an
auard, or from 9 judgnent entered nen an award ag trons
‘grdex “ox Tudamsnt in an action, otherwise no appeal nay be
bad

(imphasis added.) Moreover, this court hae previously held that an appeal
fron a final judgnent “brings up for review all interlocutory erdere net
appealable directly ae of right which deal with ieaves in the case.” ecka v.
Sivmanski, 107 Hawai 386, 396, 114 P.34 892, 902 (2008) (internal. quotation
marks and citation omitted). Here, the circuit court's final Judgment
Confirming the anended arbitration evard ‘brings up for review (ene circuit
court's renend order that was] not appealable directly as of right(.]* Jd. at
(continued. ".)

 

 

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B. The Propriety of the Circuit Court’s Remand to the
Arbitrator Under HRS Chapter 658

Initially, we note that, in remanding the matter to the
arbitrator, the circuit court specifically indicated it was
persuaded by the argument and the authorities cited by UPW,"

which cited-authority included HRS § 658A-20. However, inasmuch

 

as we have held that HRS chapter 658A does not govern this ca:
UPW’s arguments based upon HRS chapter 658A are inapplicable. We
must, nevertheless, examine whether the circuit court’s remand

order was authorized under HRS chapter 658 and, therefore, the

 

ion is limited to the parties’ arguments as they

 

following discu
relate to HRS chapter 658 and not chapter 658A.*

 

35(.. continued)
396, 124 F.3d at 962 (internal quotation marke and citation omitted) ; s2e

alee falua'v, Pin sec. Ins. Cou, 69 Haw. 427, 431, 745 7.24 290, 293 (1987)
(orders denying vacation, modification of correction of ah arbitration avard,

though not themaclves appeslable under Wks chapter 58, are reviewable on
‘appeal from an order confirming the award). Consequently, UPW's untinel ines
aFgument te without merit

we note that UPW also argues that Dawson is judicially estopped from
challenging {1} the cizcuit court's authority to venand the matter to che
arbitrator and (2) the arbitrator's power to correct the original avard, based
{pon the October 18, 2004 stipulation, wherein the parties agreed to the
arbitrator's Juriediction to consider and decide Dawsons motion to modify the
Guended arbitration avard. Specifically, UPW contends that

 

only after bawecn moved and then stipulated that (the
arbitrator] had the power to consider Dawson's own motion to
modify] the [amended avard] and then [the arbitrator]
denied Dawson's motion, did Dawson claim that [the
arbitrator] lacked power to correct [the original] award in
the first place ‘Dawson is judicially estopped to
invoke [the arbitrator’s] power and then to claim he has no
uch power (hus, ) Dawson cannot be heard to
complain that [the arbitrator] lacks the power to consider
and decide whether to correct (the original) avard.

 

 

  

However, a# previously stated, Davson, in entering into the October 18, 2008
stipulation, ‘clearly reserved its right to pursue "any claims, defenses or

positions vith respect to prior proceedings and decisions." In other word
(wont inued.)

    

 

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a
Dawson argues that “[t]here is nothing in Chapter 658

_ that gives the [circuit clourt authority to delegate to the
[alrbitrator its statutory jurisdiction and authority to modify
fan award under HRS § 656-10." UPM, on the other hand, contends
that, even under the old arbitration law, the circuit court has
the power to remand the award to the arbitrator under the well-
recognized conmon law exception to functus officio, which permits
the arbitrator to review the award upon instructions from the
court

we have previously etated in the context of HRS chapter

 

650 that *[t]he [circuit] court cannot act except as allowed by
"Bateman Constr., Inc. v. Haitsuka Brog., 77

Hawai'i 401, 484, 889 P.2d 58, 61 (2995). In that regard, HRS

that {c]hapter

§ 658-8 mandates that the circuit courte “shall grant . . . an

order [confirming an arbitration award) unless the award is

 

vacated, modified, or corrected, as prescribed in sections 658-9
and 658-10." HRS § 658-8; see also Norrigon-Knudeen Co. va
Makahuena Corp., 66 Haw. 663, 672, 675 P.2d 760, 767 (2983) ("HRS
§ 656-8 contemplates a judicial confirmation of the award issued
by the arbitrator, unless the award is vacated, modified, or

corrected in accord with HRS §§ 658-9 and 658-10." (Internal

citation and quotation marks omitted.)). We have also stated

A1(.. scontinued)

the stipulation -- as Dawson's counsel pointed out -- ‘only applied
sae geiEiveiy." Thus, UPw'e judicial estoppel argunent is without merit

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that “HRS § 658-9 provides only four specific grounds upon which
an award can be vacated, while HRS § 658-10 provides only three
grounds for modifying or correcting an award.” Labrador
Liberty Mut. Group, 103 Hawai'i 206, 212, 61 P.3d 386, 392 (2003)
(footnote, citation, and internal quotation marks omitted) .
Under HRS § 658-9, the four specific grounde for vacating an

award ar

 

(2) Where the avard wae procured by corruption, fraud, oF

 

evident partiality or corruption in
the arbserstors, ar any of them,

(3) there the axbitratore were guilty of misconduct, in
refusing to postpone the hearing, upon sufficient
‘cause chown, or in refusing co hear evidence,
pertinent and naterial to the controversy; oF of any
Sther misbehavior, by which che righte of any party
have been prejudiced

(4) Where the arbitrators exceeded their povers, or 20
imperfectly executed thes, chat « mitual, final, and
Gefinite avard, upon the subject matter submitted, was
ot made.

@

 

 

grounds for modifying or

 

And, under HRS § 658-10, the thré

correcting an award are:

(2) Where there vas an evident mi
or an evident mistake in the
person, thing, or property,

(2) Mere the arbitrators have awarded upon a matter not
Gubsicted to then, unless it se a matter not affecting
the serite of the decision upon the matters submitted,

(3) tihere"the award te inperfect in a matter of form, net
Sffecting the merite of the controversy

 
 
 

 

Clearly, none of the above enumerated grounds includes the
authority to remand the award to the arbitrator for any purpose,
let alone remanding for a determination whether modification of

the original award is warranted.

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Moreover, as previously noted,

l avard hae been made, the
arbitrator cones Lean end. He becones

Snder general principles of arbitration lawi,] be cannot in
any way change or explain his avard unless nis authority ie
Feinetated in writing by all parties, or the matter ia
returned to his by the appropriate court.

 

 

Jeffers, 73 Haw. at 207, 630 P.2d at 507 (format altered)
(citation omitted) (emphases added). The authority of “the
appropriate court” to return a case to the arbitrator, however,
is Limited.

In Labrador, this court acknowledged two judicially
recognized exceptions to confirmation: “one, to allow remand to
the arbitrator to clarify an ambiguous avard; an(d] another, to
allow vacation of an arbitration award clearly violative of
public policy.” 103 Hawai'i at 212, 61 P.3d at 392 (citation and
internal quotation marks omitted) (emphases added). Thus, remand
to the arbitrator by the circuit court would be proper where an

ambiguous arbitration award requires clarification

 

“Clarification” of an ambiguous award, however, is
distinguishable from a court’s vacation, modification, or
correction of an award in that “the clarification [canJnot . .
deffers, 73 Haw. at 214, 830

 

change] the amount of the award.
P.2d at 511 (emphasis added) (holding that the appellees in
Jeffers were actually seeking a modification or correction of the
award "in the guise of a clarification” because the requested
clarification would ‘substantially change the amounts the parties
could receive from [the appellants] ”)

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In the instant case, UPW concedes that the circuit
court renanded the case to the arbitrator “to consider whether
there was an evident mathematical miscalculation, not to clarity
any ambiguity." Accordingly, by UPW's om admission, the circuit
court's remand does not fall within the judicially recognized
exception of allowing renand for purposes of clarifying an
ambiguous award that would not result in a substantial change in
the amounts awarded.

In examining UPH’s motion to modify, the circuit court
is confined to acting only within the authority conferred by HRS
55 658-9 and -10 and the judicially recognized exceptions set
forth in Labrador. Inasmuch as the requisite finding of
anbiguity was not made by the circuit court and, because HRS
chapter 658 does not authorize the circuit court to remand the
case to the arbitrator to modify or correct the award, we hold
that, based on the cixcunstances of thie case, the circuit court
erred in renanding the matter to the arbitrator.”

* 1m support of its assertion that the circuit court hae the power to
remand the matter tothe arbicracor,, OPW relies upon several federal ca
Ambleration act. (PaAl, Section l(a) permits’ the federal Slateict court to
odlty or correct an award *{ujnere there was an evideat material

Recalculation of figurea[_I"" $.0-5.6.8 ‘UpW argues that Laurin
Supp. 24 645 (5.5.8.

1599), Geinbare v.-Silbar, 140 F. Sopp’ 2a Tia (-D. Tex 200%), and Saaa
2378 F.2d $77 (2d Che.

967), stand for the proposition that, even though the FAA does not contain
any provisions dealing with renand of arbitration awards to the arbitrator,
the Courts have renanded the avard to the arbitrator to correct an evident
miscalculation of figures, Thes
Contentions and are readily dis
the federal court indicated, prior to renanding the matter to the arbitrator,
that the miscalculation 1 squarely to the nerita of the parties”
(continued...)

 

 

 

   

 

   

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In light of our holding today, we need not addr

 

of the remaining contentions raised by Dawson.
IV. coNcLusroN

Based on the foregoing, we vacate the circuit court's

January 6, 2005 final judgment and remand thie case for further

proceedings consistent with thie opinion.

On the briefe: Gr*
John R. Dwyer, Jr. (of Dwyer Stra hrinson

Schraff Meyer Grant & Green),

\
and Blake W. Bushnell (of Mose © Tate aren
Bushnell & Miller), for Pew ~
respondent appellant Deals.

James E. T. Koshiba,
Charles A. Price, and
Andrew D. Stewart (of
Koshiba Agena & Kubota),
for applicant-appellee

 

 

 

++ continued)
Gispute, ‘and resolution of the merits is for the arbitrators, not for the
Iclourt:*" 36 F. Supp. 2d at 652. In Neinberg, the court renanded the
award to the arbitrator for clarification under the exception that

fard may be remanded. 140 F.Supp. 24 at 723-23. Ang, finally,
the basis for the circuit court's renand in Saxig to allow the arbitrator Co
correct a mistake in the computation of the award ie unclear. 375 Pid at S82
B.4. Nevertheless, it is well-recognized that courts are authorized to remand
matters to the arbitrators for clarification where the award is ambiguove.
Bee 7 Inc., 400 F.3d 822 (20th Cir. 2005) (setting
forth's coliection of cases from other circuite where renand to arbitrator for
clarification of ambiguous permitted); nea also

i Wolders. erat fs Local 24, 357 F.3d S40,
553 (sth ‘Cir, 2004), Ae previously discussed, the circuit Court's remand to,
the arbitrator in thie cage uae not authorized by HRS chapter €5¢ and was made
without the requisite finding of ambiguity. Thus, the cases relied upon by
UpW are inapposite.

 

 

 

   

 

 

  

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