NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS OR THE PACIFIC REPORTER

NO. CAAP-20-0000536

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI#I

CHRISTINA D. COOK, BUBBY & YUKO LLC, E.J. TROSCLAIR, 

YUKO DONLEY, KARI A. THOMPSON-STUEBER, AND 

JEREMY E. CHELLIN, Plaintiffs-Appellants, v.

THE ASSOCIATION OF APARTMENT OWNERS OF MT. TERRACE,

Defendant-Appellee,

and

JOHN DOES 1-10; JANE DOES 1-10; DOE PARTNERSHIPS 1-10;

DOE CORPORATIONS 1-10; DOE ENTITIES 1-10; Defendants

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT

(CIVIL NO. 1CC181000125)

SUMMARY DISPOSITION ORDER

(By: Wadsworth, Presiding Judge, and Nakasone, and McCullen, JJ.)

This appeal arises out of a dispute concerning the

repair and replacement of windows at the Mt. Terrace condominium

project in Hawai#i Kai, and the decision by the Board of

Directors for the Association of Apartment Owners of Mt. Terrace

(the Board) to treat the window project as a common expense to be

charged to unit owners. Plaintiffs-Appellants Christina D. Cook,

Bubby & Yuko, LLC, EJ Trosclair, Yuko Donley, Kari A. ThompsonStueber, and Jeremy E. Chellin (Plaintiffs) own units in Mt.

Terrace. They appeal from the July 31, 2020 Final Judgment,

entered in favor of Defendant-Appellee Association of Apartment

Owners of Mt. Terrace (the Association) and against Plaintiffs by

the Circuit Court of the First Circuit (Circuit Court). 

Plaintiffs also challenge the following orders entered by the

Circuit Court: 

Electronically Filed

Intermediate Court of Appeals

CAAP-20-0000536

30-SEP-2024

01:59 PM

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(1) the October 25, 2018 "Order Denying Plaintiffs'

Motion for Partial Summary Judgment Regarding Plaintiffs['] Count

I (Declaratory Relief) of the Complaint, Filed on January 24,

2018, Filed on July 17, 2018"; 

(2) the October 25, 2018 "Order Granting

[Association's] Cross-Motion for Partial Summary Judgment on

Plaintiffs' Complaint, Filed on January 24, 2018, Filed on

August 13, 2018" (October 25, 2018 Order Granting Association's

XMPSJ);

(3) the February 27, 2020 "Order Granting

[Association's] Motion for Partial Summary Judgment on the Breach

of Fiduciary Duty Claim (Count III) in Plaintiffs' Complaint

Filed on January 24, 2018, Filed on November 21, 2019"; and 

(4) the March 17, 2020 "Order Granting [Association's]

Motion for Partial Summary Judgment on Plaintiffs' Claims for

Declaratory and Injunctive Relief (Count I), Breach of Contract

(Count II), and Failure to Fund Reserves (Count IV) Filed on

January 3, 2020."1/

On appeal, Plaintiffs contend that the Circuit Court

erred in: (1) denying Plaintiffs' July 17, 2018 MPSJ, and

granting the Association's August 13, 2018 cross-motion for

partial summary judgment (August 13, 2018 XMPSJ), "because the

[c]ourt failed to properly apply the holding in Harrison v. Casa

De Emdeko[, Inc.]," 142 Hawai#i 218, 418 P.3d 559 (2018); (2)

granting the Association's November 21, 2019 MPSJ on Plaintiffs'

breach of fiduciary duty claim "because [the] legislature has

acknowledged that the relationship between an association and its

members is fiduciary in nature and that individuals are entitled

to seek relief from the court"; and (3) granting the

Association's January 3, 2020 MPSJ regarding Plaintiffs'

remaining claims "because [Hawaii Revised Statutes (HRS)] Chapter

1/ The Honorable Keith K. Hiraoka entered the October 25, 2018 order

denying Plaintiffs' July 17, 2018 motion for partial summary judgment

(July 17, 2018 MPSJ) and the October 25, 2018 Order Granting Association's

XMPSJ. The Honorable John M. Tonaki entered the February 27, 2020 order

granting the Association's November 21, 2019 motion for partial summary

judgment (November 21, 2019 MPSJ), the March 17, 2020 order granting the

Association's January 3, 2020 motion for partial summary judgment ( January 3,

2020 MPSJ), and the July 31, 2020 Final Judgment. 

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514B provides Plaintiffs standing to bring contractual and

statutory claims against the [Association] for its failure to set

aside reserves."

After reviewing the record on appeal and the relevant

legal authorities, and giving due consideration to the issues

raised and the arguments advanced by the parties, we resolve

Plaintiffs' contentions as follows:

(1) Plaintiffs contend that the Circuit Court erred in

concluding that the "Mt. Terrace Declaration provides the

[Association] the authority to treat common elements the same as

limited common elements and in holding that the [Association] had

the authority to charge owners the cost of maintaining the

windows as a common expense."2/ Plaintiffs argue that the windows

are "limited common elements," and HRS § 514B-41(a) requires that

the expenses of maintaining limited common elements be charged to

the unit owners to which the limited common element is

appurtenant. 

"Generally, the declaration and bylaws of a condominium

serve as a contract between the condominium owners and the

association, establishing the rules governing the condominium. 

Harrison, 142 Hawai#i at 226, 418 P.3d at 567 (citing Ass'n of

Apartment Owners of Maalaea Kai, Inc. v. Stillson, 108 Hawai#i 2,

9, 116 P.3d 644, 651 (2005)). If the governing condominium

documents are unclear, the court looks to applicable statutory

provisions. Id. at 227, 418 P.3d at 568. 

The Declaration of Horizontal Property Regime of Mt.

Terrace was recorded on March 23, 1972, and later restated. The

Third Restatement of Declaration of Horizontal Property Regime of

Mt. Terrace (the Declaration) was recorded on December 12, 1995. 

On March 20, 2007, owners holding more than a majority of the

common interest in the Mt. Terrace condominium project approved

the Amendment to the Declaration of the Association of Apartment

2/ In the October 25, 2018 Order Granting Association's XMPSJ, the

Circuit Court concluded in relevant part: "As a matter of law, the expenses

related to common elements and limited common elements are treated as common

expenses under the Governing Documents, and therefore, the cost for the repair

and replacement of perimeter windows of the Mt. Terrace condominium building

are to be treated by the [Association] as common expense and charged to the

owners based on their percentage of common interest." 

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Owners of Mt. Terrace (the Amendment). The Amendment, which was

recorded on April 10, 2007, added, among others, a new provision

stating, "This Project shall be governed by the provisions of

Hawai#i Revised Statutes Chapter 514B, as amended to the fullest

extent permitted by law."3/ See HRS § 514B-23 (2018) (permitting

an amendment to the governing documents "of any condominium

created before July 1, 2006 . . . to achieve any result permitted

by this chapter, regardless of what applicable law provided

before July 1, 2006" where the amendment is "adopted by the vote

or written consent of a majority of the unit owners"). 

The Declaration addresses the responsibility of unit

owners for common element expenses, but does not discuss who is

responsible for the expenses related to limited common elements.4/

3/ At an October 4, 2018 hearing on the parties' pending crossmotions for partial summary judgment, the Association, when asked by the

Circuit Court, did not dispute that the Declaration was so amended in 2007. 

4/ Paragraph B(3) states:

COMMON INTEREST. Each apartment shall have

appurtenant thereto an undivided percentage interest of

.793+ in all common elements of the Project (herein called

the "common interest") and the same proportionate share in

all common profits and expenses of the Project. 

Paragraph H states:

COMMON EXPENSES. All charges, costs and expenses

whatsoever incurred by the Association for or in connection

with the administration of the Project, including without

limitation, the operation thereof, any maintenance, repair,

replacement and restoration of the common elements and any

additions and alterations thereto, any labor, services,

materials, supplies and equipment therefor, any liability

whatsoever for loss or damage arising out of or in

connection with the common elements or any accident, fire or

nuisance thereon, and any premiums for hazard and liability

insurance herein required with respect to the Project and

the cost of all utility services, including water,

electricity and gas, garbage disposal and any other similar

services unless separately metered shall constitute common

expenses of the Project for which all apartment owners shall

be severally liable in proportion to their respective common

interests. The Board shall from time to time assess the

common expenses against all the apartment owners in their

respective proportionate shares, and the unpaid amount of

such assessments against any apartment shall constitute a

lien against such apartment which may be foreclosed by the

Board or Managing Agent as provided by said Condominium

Property Act, provided that 30 days' prior written notice of

intention to foreclose shall be mailed, postage prepaid, to

the Trustees and all other persons having any interest in

(continued...)

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See Harrison, 142 Hawai#i at 227, 418 P.3d at 568 (reviewing

substantially similar language in a condominium declaration and

concluding that the declaration did not discuss who was

responsible for limited common element expenses). The

Restatement of By-Laws of the Association Of Apartment Owners Of

Mt. Terrace (By-Laws), recorded on April 10, 1992, are similarly

silent on this issue. 

We therefore turn to the provisions of HRS Chapter

514B. HRS § 514B-41(a) (2018) states:

Common profits and expenses. (a) The common profits of the

property shall be distributed among, and the common expenses

shall be charged to, the unit owners, including the

developer, in proportion to the common interest appurtenant

to their respective units, except as otherwise provided in

the declaration or bylaws. In a mixed use project

containing units for both residential and nonresidential

use, the charges and distributions may be apportioned in a

fair and equitable manner as set forth in the declaration. 

Except as otherwise provided in subsection (c) or the

declaration or bylaws, all limited common element costs and

expenses, including but not limited to maintenance, repair,

replacement, additions, and improvements, shall be charged

to the owner or owners of the unit or units to which the

limited common element is appurtenant in an equitable manner

as set forth in the declaration.

(Emphases added.) HRS § 514B-41(c) allows a condominium board to

adopt a resolution to assess certain limited common element

expenses based on the undivided common interest appurtenant to

each unit, if the board reasonably determines that the extra cost

to separately account and charge for the limited common element 

expenses is not justified. 

Here, neither the Declaration nor the By-Laws address

the responsibility for limited common element expenses (see

supra) and it does not appear that the Board adopted a resolution

under HRS § 514B-41(c). Thus, pursuant to HRS § 514B-41(a), if

the windows at issue are "limited common elements," expenses

related to their maintenance, repair, and replacement must be

charged to the individual unit owners to which the limited common

element is appurtenant. See Harrison, 142 Hawai#i at 227-28, 418

4/ (...continued)

such apartment as shown in the Association's record of ownership.

(Emphases added.)

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P.3d at 568-69 (construing substantially similar language in

predecessor statute, HRS § 514A-15(a) (2006)). The Circuit Court

therefore erred in concluding that it was not material whether

the windows were common elements or limited common elements –

that the Declaration treats related expenses as common expenses

and, therefore, the cost for the window project was to be treated

by the Association as a common expense and charged to the owners

based on their percentage of common interest. Accordingly, the

Circuit Court erred in granting the Association's August 13, 2018

XMPSJ.

However, to the extent Plaintiffs contend that the

windows should have been deemed limited common elements as a

matter of law, they are not correct. Reviewed de novo, the

record does not reflect, i.e., there were genuine issues of

material fact, whether the windows for which expenses were

incurred are common elements or limited common elements. The

Circuit Court did not err in denying Plaintiffs' July 17, 2018

MPSJ on the declaratory relief claim.

(2) Plaintiffs contend that the Circuit Court erred in

granting the Association's November 21, 2019 MPSJ on Plaintiffs'

breach of fiduciary duty claim. Relying in part on HRS §514B106, Plaintiffs argue that Hawai#i law recognizes that a

condominium association owes a fiduciary duty to its individual

members. 

HRS §514B-106(a) (2018) provides that "officers and

members of the board shall owe the association a fiduciary duty

and exercise the degree of care and loyalty required of an

officer or director of a corporation organized under chapter

414D." (Emphasis added.) HRS §514B-106 does not support

Plaintiffs' argument that an association owes any individual

member a fiduciary duty. 

Similarly, Hawai#i case law does not support

Plaintiffs' argument. See Ass'n of Apartment Owners of 2987

Kalakaua ex. rel. Bd. Of Dirs. v. Dubois, No. 27416, 2008 WL

3199461, at *1 (Haw. App. Aug. 7, 2008) (SDO) (affirming summary

judgment in favor of a condominium association where the

counterclaimant owner "failed to provide authority for his

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position that the Association itself, as opposed to individual

directors of the board, can be held responsible for a breach of

fiduciary duty" (citing HRS § 514B-106)). In particular, none of

the Hawai#i cases cited by Plaintiffs holds that a condominium

association owes a fiduciary duty to an individual member.

Accordingly, the Circuit Court did not err in granting

summary judgment in favor of the Association on Plaintiffs'

breach of fiduciary duty claim.

(3) Plaintiffs contend that the Circuit Court erred in

granting the Association's January 3, 2020 MPSJ on Plaintiffs'

remaining claims. Specifically, Plaintiffs contend that the

Circuit Court erred in concluding they lacked standing to pursue

their claims for declaratory and injunctive relief (Count I),

breach of contract (Count II), and failure to fund reserves

(Count IV), which were based on the Association's alleged

underfunding of the reserves for the window project. 

In their Complaint, Plaintiffs alleged that the

Association failed to adequately fund the reserves for the repair

and maintenance of the windows, causing them individualized harm. 

Plaintiffs further alleged that this failure constituted a breach

of the Association's contractual duties under the Mt. Terrace

governing documents, as well as a breach of the Association's

statutory duties under HRS § 514B-148, and that Plaintiffs

suffered resulting damages. In granting the Association's

January 3, 2020 MPSJ, the Circuit Court ruled that Plaintiffs

lacked standing to bring these claims because they had not

brought them as a derivative action. 

In so ruling, the Circuit Court failed to recognize

that Plaintiffs were seeking redress for injury to them

individually. See Chambrella v. Rutledge, 69 Haw. 271, 283-84,

740 P.2d 1008, 1015 (1987)(although shareholders must bring

claims belonging to the corporation as a derivative action, they

may bring individual claims seeking redress for injury to them

individually); see also HRS § 514B-148 (2018) (mandating the

association's assessment of adequate replacement reserves and

providing that "[s]ubject to the procedures of section 514B-157 .

. . , any unit owner whose association board fails to comply with

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this section may enforce compliance by the board.").

 On this record, the Association did not establish as a

matter of law that Plaintiffs lacked standing to assert their

claims based on the Association's alleged failure to adequately

fund the reserves for the repair and maintenance of the windows. 

Accordingly, the Circuit Court erred in granting the

Association's January 3, 2020 MPSJ on Plaintiffs' claims for

declaratory and injunctive relief, breach of contract, and

failure to fund reserves.

For the reasons discussed above, we affirm in part and

vacate in part the July 31, 2020 Final Judgment, entered by the

Circuit Court of the First Circuit. The Final Judgment is

affirmed to the extent the Circuit Court entered judgment in

favor of Defendant-Appellee Association and against PlaintiffsAppellants on their claim for breach of fiduciary duty (Count

III). The Final Judgment is vacated to the extent the Circuit

Court entered judgment in favor of Defendant-Appellee Association

and against Plaintiffs-Appellants on their claims for declaratory

and injunctive relief (Count I), breach of contract (Count II),

and failure to fund reserves (Count IV). The case is remanded to

the Circuit Court for further proceedings consistent with this

opinion.

DATED: Honolulu, Hawai#i, September 30, 2024.

On the briefs:

Terrance M. Revere and

Amanda L. Dutcher

(Revere & Associates)

for Plaintiffs-Appellants.

Matt A. Tsukazaki and

Tyler A. Tsukazaki

(Li & Tsukazaki)

for Defendant-Appellee.

/s/ Clyde J. Wadsworth

Presiding Judge

/s/ Karen T. Nakasone

Associate Judge

/s/ Sonja M.P. McCullen

Associate Judge

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