Opinion ID: 2630997
Heading Depth: 3
Heading Rank: 3

Heading: The Otaka Defendants' Contentions

Text: The Otaka Defendants  in their cross-appeals in appeal Nos. 25344 and 26820  advance a single point of error, namely, that the Special Master erred in recommending that $394,787.00 (consisting of $189,560.00 accounts payable, $174,832.00 GET and TAT, and $30,395.00 employer payroll taxes) should be deemed a receivable from Otaka and HWB. According to the Otaka Defendants, the Special Master's recommendation ignores the express provisions of the [appointment] order, which authorized the Receiver to pay expenses that arose during the [r]eceivership period (although they may have been incurred earlier), and [that were] ordinarily incurred by owners, managers and operators of similar properties, business and enterprises. In his report, the Special Master reviewed the authority given to the Receiver in the appointment order and acknowledged that Receiver Park was instructed in relevant part to: 1. Manage, protect, care for, preserve, and maintain the Estate Property; 2. Pay taxes and assessments for the Estate incurred during the period of the [r]eceivership; 3. Pay for such expenses as are necessary or appropriate for the care, preservation and maintenance of the Estate within the limitations of the appoint[ment o]rder; [and] 4. Pay any expenses (including for example, rent, utilities, taxes, payroll and debts to vendors) which arise during the [r]eceivership and which are necessary or appropriate for the care, preservation and maintenance of the Estate[.] As previously demonstrated, the Special Master, in finding certain payments for services and/or expenses justified, explained that they were used by or benefitted the Estate; conversely, certain payments for services and/or expenses were deemed receivable because they were not essential to maintaining or preserving the Hotel. For example, the Special Master found that payment for laundry in the amount of $3,474.00 should be considered a receivable because [t]hese services were consumed prior to the [r]eceivership period, and therefore did not benefit the Estate. The Special Master also specifically found that $30,395 of employer payroll taxes should not have been paid because it was an obligation junior to that of [Hawaii Ventures] and not necessary to maintain or preserve the Estate. With respect to the GET and TAT in the amount of $174,832.00, the Special Master considered the sum to be a receivable because Hawaii Ventures held a senior lien on the Hotel, and therefore had priority over the State of Hawai`i for the outstanding general excise and transient accommodations taxes assessed against [Otaka]. The non-payment of the taxes could result in the State of Hawai`i filing a tax lien on the Hotel pursuant to HRS [§]231-45, however, the tax lien would be junior to [Hawaii Ventures'] lien and [Otaka] would remain responsible for taxes attributable to the pre-receivership period. The [c]ourt authorized the Receiver to pay taxes and assessments that were incurred during the period of the [r]eceivership. Besides their bald assertion that the payments totaling $394,787.00 were appropriately paid by the Receiver inasmuch as they arose during the receivership period, the Otaka Defendants fail to provide any support or documentation that these payments were for expenses and/or services incurred or utilized by the Estate during the receivership. They merely identify in the record where the Special Master explained the reason for his recommendation. The Otaka Defendants, however, argue with respect to the GET and TAT portion of the $394,787.00 that, [a]lthough the [appointment order] specifically directed the Receiver to pay taxes arising during the period of the [r]eceivership [p]eriod [sic], the Special Master concluded that payment of $174,832 in [GET] and [TAT] was not justified because [Hawaii Ventures'] lien had priority over any tax lien. As the Receiver pointed out, however, the liability for GET and TAT arose September 1, 2000, after the Receiver's appointment. The Special Master's conclusions appear to be based on assumptions or analyses which are not apparent from the [r]eport, and draw arbitrary distinctions with respect to certain categories of operating expenses of the Hotel. Ultimately, it was well within the Receiver's discretion, pursuant to the express terms of the [appointment order], to pay for the ordinary business expenses of the Hotel from the revenues of the Hotel. (Citations to the record and internal quotation marks omitted.) Nonetheless, the Otaka Defendants fail to substantiate that argument, citing only to where Receiver Park stated in her response to the Special Master's report that the amounts were incurred during the receivership. The Otaka Defendants do not point to anything in the record or provide any analysis that would guide this court in determining the validity of their contention. As previously stated, this court is not obligated to sift through the voluminous record to verify an appellant's inadequately documented contentions. Lanai Co., 105 Hawai`i at 309 n. 31, 97 P.3d at 385 n. 31 (citations omitted); see also Miyamoto v. Lum, 104 Hawai`i 1, 11 n. 14, 84 P.3d 509, 519 n. 14 (2004) (stating that this court is not required to sift through the record for documentation of a party's contention). Therefore, the Otaka Defendants have failed to demonstrate that the Special Master erred in recommending or that the circuit court erred in adopting the recommendation that $394,787.00 of the payments made by Receiver Park be shown as a receivable from Otaka and HWB. [20] In sum, giving deference to the superior position of the Special Master to consider credibility and to draw inferences from the testimonial evidence, Sequoia Dist. Council, 568 F.2d at 632, and Hawaii Ventures' and the Otaka Defendants' failures to demonstrate how the circuit court erred in adopting the Special Master's report or how the Special Master erred in making his recommendations, we can see no error committed by the circuit court in approving the Special Master's report.