Opinion ID: 2805465
Heading Depth: 3
Heading Rank: 2

Heading: Documents Governing the Project

Text: Prior to the sale of individual condominium units, several documents relating to the governance of the project were recorded in the State of Hawai#i Bureau of Conveyances pursuant to the requirements of Hawai#i Revised Statutes (HRS) Chapter 514A. These documents included the Declaration of Condominium Property Regime of Kapalua Bay Condominium (condominium declaration) and the Association of Apartment Owners of Kapalua Bay Condominium Bylaws (AOAO bylaws). Additionally, the developer registered a Condominium Public Report (public report) with the Hawaii Real Estate Commission. These documents were incorporated by reference through purchase agreements that the Homeowners executed when they purchased their condominiums.
The Homeowners entered into purchase agreements with 4  FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER  the developer soon after the documents governing the project were recorded.2 The first page of the purchase agreements state: ACKNOWLEDGMENT OF RECEIPT, OPPORTUNITY TO REVIEW, AND ACCEPTANCE OF PROJECT DOCUMENTS THE FOLLOWING DOCUMENTS THAT ARE REFERRED TO IN THIS PURCHASE AGREEMENT FORM AN ESSENTIAL PART HEREOF. PURCHASER ACKNOWLEDGES THAT PURCHASER HAS RECEIVED COPIES OF EACH OF THE FOLLOWING DOCUMENTS AND THAT PURCHASER HAS HAD A FULL AND COMPLETE OPPORTUNITY TO READ, REVIEW AND EXAMINE EACH OF THE FOLLOWING DOCUMENTS. . . . . 2. the applicable state of Hawaii Condominium Public Report(s) 3. the Declaration of Condominium Property Regime of Kapalua Bay Condominium 4. the Bylaws of the Association of Apartment Owners of Kapalua Bay Condominium The purchase agreements also contain a clause entitled “Purchaser’s Approval and Acceptance of Project Documentation,” which states: Purchaser acknowledges . . . having had a full opportunity to read and review and hereby approves and accepts the following documents . . .: the Condominium Public Report(s) indicated in Section C.5, above, the Declaration, the Bylaws . . . . It is understood and agreed that this sale is in all respects subject to said documents. The Homeowners do not dispute that they received the condominium declaration, the public report, and the AOAO bylaws along with their purchase agreements. The arbitration clause at issue in this case appears in the condominium declaration, which is referenced more than twenty 2 Representative purchase agreements from two of the Homeowners were cited by the parties. These agreements appear to be identical and were signed by these Homeowners in late May of 2006. 5  FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER  times in the purchase agreements and in a variety of contexts. For example, the purchase agreements state: “Seller . . . reserves the right to utilize unassigned or guest parking spaces described in the Declaration.” The purchase agreements also state: “Purchaser agrees to purchase from Seller, in fee simple, the following property: a. The Apartment designated in Section A above and more fully described in the Declaration.” Thus, on many occasions, the purchaser is put on notice that more specific information concerning particular rights and obligations is contained in the condominium declaration. The purchase agreements contain two clauses related to dispute resolution: 47. Waiver of Jury Trial. Seller and Purchaser hereby expressly waive their respective rights to a jury trial on any claim or cause of action that is based upon or arising out of this Purchase Agreement. . . . Venue for any cause of action brought by Purchaser hereunder shall be in the Second Circuit Court, State of Hawai#i. 48. Attorneys[’] Fees. If any legal or other proceeding, including arbitration, is brought . . . because of an alleged dispute, breach, default or misrepresentation in connection with any provisions of this Agreement, the successful or prevailing party or parties shall be entitled to recover reasonable attorneys’ fees, court costs and all expenses even if not taxable as court costs, . . . in addition to any other relief to which such party or parties may be entitled. These clauses do not mention a binding agreement to arbitrate, nor do they direct the purchaser to the alternative dispute resolution clause in the condominium declaration.
The arbitration clause at issue in this case appears on 6  FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER  pages 34 and 35 of the 36-page condominium declaration. It states: XXXIII. ALTERNATIVE DISPUTE RESOLUTION. In the event of the occurrence of any controversy or claim arising out of, or related to, this Declaration or to any alleged construction or design defects pertaining to the Common Elements or to the Improvements in the Project (“dispute”), . . . the dispute shall be resolved by arbitration pursuant to this Article and the then-current rules and supervision of the American Arbitration Association. The arbitration clause contains several other relevant provisions. First, it states: “The arbitration shall be held in Honolulu, Hawaii before a single arbitrator who is knowledgeable in the subject matter at issue.” Second, it states: “The arbitrator shall not have the power to award punitive, exemplary, or consequential damages, or any damages excluded by, or in excess of, any damage limitations expressed in this Declaration.” Third, it states: The arbitrator may order the parties to exchange copies of nonrebuttable exhibits and copies of witness lists in advance of the arbitration hearing. However, the arbitrator shall have no other power to order discovery or depositions unless and then only to the extent that all parties otherwise agree in writing. Fourth, it states: “Neither a party, witness, [n]or the arbitrator may disclose the facts of the underlying dispute or the contents or results of any negotiation, mediation, or arbitration hereunder without prior written consent of all parties.” Finally, it states: No party may bring a claim or action regardless of form, arising out of or related to this Declaration . . . including any claim of fraud, misrepresentation, or 7  FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER  fraudulent inducement, more than one year after the cause of action accrues, unless the injured party cannot reasonably discover the basic facts supporting the claim within one year.
The purchase agreements also incorporate the terms of the public report and the AOAO bylaws. With respect to dispute resolution, the public report states: The Condominium Property Act (Chapter 514A, HRS), the Declaration, Bylaws, and House Rules control the rights and obligations of the apartment owners with respect to the project and the common elements, to each other, and to their respective apartments. The provisions of these documents are intended to be, and in most cases are, enforceable in a court of law. The AOAO bylaws main reference to dispute resolution is an attorney’s fees provision that awards fees and costs to the prevailing party in certain types of disputes.