Opinion ID: 2632547
Heading Depth: 4
Heading Rank: 1

Heading: whether PBS's motion to vacate was timely

Text: As previously noted, HRS § 658-11 requires a party seeking the vacation of an arbitration award to file notice of such motion within ten days after the award is made and served. PBS contends that the ten-day provision does not begin to run until an arbitration award is made and served in compliance with the statutory requirements under HRS § 658-8. Schmidt argues that the award did conform to the requirements under HRS § 658-8 and that PBS's motion to vacate was, therefore, untimely. Schmidt argues in the alternative that an award need not comply with all the statutory requirements in order to be final. HRS § 658-8 states that an award shall be in writing and acknowledged or proved in like manner as a deed for the conveyance of real estate, and delivered to one of the parties or the party's attorney. (Emphasis added.) Here, the award was signed by the arbitrator and sent by ordinary mail. It is undisputed that the award was not acknowledged at the time it was first issued. Thus, the question is whether it was proved in like manner as a deed. HRS § 502-50(a) (1993) describes the manner of proving an unacknowledged deed for recordation in the bureau of conveyances: Except as otherwise provided, to entitle any conveyance or other instrument to be recorded, it shall be acknowledged by the person or persons executing the same, before . . . a notary public of the State. If . . . for any reason neither proper certification nor a new acknowledgment can be secured, the instrument may be entered as of record on proof of its execution by a subscribing witness thereto before the judge . . . . If all the subscribing witnesses to the conveyance or other instrument are dead or out of the State, the same may be proved before any court in the State by proving the handwriting of the person executing the same and any subscribing witness. . . . (Emphases added). The language above indicates that the time for proving a deed occurs at the time the deed is recorded. As indicated in Markham v. Markham, 80 Hawai`i 274, 909 P.2d 602 (App.1996), an unacknowledged deed is valid as between the parties and affects only its ability to be recorded. In Markham, the Intermediate Court of Appeals (ICA) held such an award valid between the parties and set forth the purpose behind the acknowledgment requirement, noting that: Each instrument presented for recording must contain a certificate of acknowledgment verifying the identity of the person executing the instrument. HRS § 502-41 (1993).  The main object of a certificate of acknowledgment is to guard the public against false impersonation and to make sure that the grantor executed the deed. . . . Executing a deed implies that it is executed for the uses and purposes it expresses. Hawaiian Trust & Inv. Co. v. Barton, 16 Haw. 294, 300 (1904) . . . . It has also been held that even without recordation, `[a] deed apparently valid upon its face carries with it a presumption of validity' as between the parties to a deed. Chun Chew Pang v. Chun Chew Kee, 49 Haw. 62, 71, 412 P.2d 326, 332 (1966) (quoting McElroy v. Calhoun, 177 Okla. 38, 57 P.2d 827, 828 (1936)). Even if the deed had no acknowledgment, or its equivalent, at all, it would still be good between the parties. As between the parties acknowledgment of a deed is not necessary. Meheula v. Pioneer Mill Co., 17 Haw. 56, 58 (1905) (citing Laanui v. Puohu, 2 Haw. 161 (1859)). See also In re Nelson, 26 Haw. 809, 820 (1923); Aiau v. Kupau, 4 Haw. 384, 385 (1881) (holding that recording is notice to one bound to search the record). Id. at 281-82, 909 P.2d at 609-10 (some brackets omitted) (emphasis added). Thus, an award need not be acknowledged to be valid and may be proved at the time of confirmation in like manner as a deed. An unacknowledged award is, therefore, valid and not a nullity for purposes of triggering the time to file a motion to vacate the award. Here, the Award was in writing and signed by the arbitrator at the time it was issued on November 25, 2003. Moreover, PBS never questioned the authenticity of the Award or the arbitrator's signature upon it. Therefore, the lack of an acknowledgment did not affect the validity of the Award as between the parties and did not affect the ten day time period in which PBS was required to file its motion to vacate the award. Even assuming arguendo that an unacknowledged award is not in final form, the relevant case law supports the conclusion that such a defect is not fatal to the award. Although PBS cites to Ockrant v. Railway Supply and Manufacturing Co., 160 N.E.2d 435 (Ohio Com.Pl. 1959), and Goeller v. Liberty Mutual Insurance Co., 523 Pa. 541, 568 A.2d 176 (1990), in which those courts held an award invalid for failure to strictly comply with the formal statutory requirements, such cases are distinguishable. In Ockrant, the Ohio Court of Common Pleas held that it did not have jurisdiction to confirm an arbitration award because the applicable statute required, inter alia, that an award must designate the county in which it was made, 160 N.E.2d at 435, and the award did not so state. However, nine years later in Prentice Funeral Home Co. v. Local No. 821 International Union of Operating Engineers, 16 Ohio App.2d 29, 241 N.E.2d 285 (1968), the Court of Appeals of Ohio confirmed an award with the identical defect  failure to designate the county in which the award was made  because a letter attached to the award had indicated the requisite information. Id. at 287-88. In Prentice Funeral Home, the court expressly rejected Ockrant as authority. In Goeller, the Supreme Court of Pennsylvania declared that an award that was signed by only one of the two arbitrators joining the award, rather than both as required by the applicable statute, was a nullity. Id. at 545, 568 A.2d 176. However, the court went on to hold that there was a more substantive reason that the award was a nullity because one of the arbitrators was denied his opportunity to deliberate, in contravention of the principle that, [w]hen an arbitrator . . . is denied access to the deliberations of the other arbitrators, their decision is not a decision. Id. Moreover, the Court of Appeals of Oregon addressed a similar award in Tenderella v. Kaiser Permanente, 911 P.2d 360 (Or.Ct.App.1996), that was not signed by all the joining arbitrators and held that the defect did not render the award a nullity, noting that, in Goeller, [t]he [Pennsylvania Supreme Court] treated the failure to allow full participation of all arbitrators as a more fundamental defect in the award than the missing signature. Id. at 362 n. 1. In reaching its decision, the court reasoned that: [R]eversal is not required under the circumstances of this case. Here, there is no question that the arbitrators held a hearing, considered the evidence, and reached a decision. There is no question that the 1992 [improperly signed decision, award, and additional findings] accurately state their decision. Neither the statute nor, so far as we are aware, the arbitration agreement establishes any time period within which the arbitrators must make their decision. Plaintiffs, in fact, knew what the decision was shortly after the arbitrators reached it; any delay in executing a formal award has not prejudiced them. . . . . . . . The arbitrators, however, have already corrected the award by their affidavits to the court in response to plaintiffs' exceptions. That correction was before the court (even assuming that it was not formally filed) when it ruled on the exceptions. There is, thus, no purpose in a remand to correct a technical error that has already been corrected. Whether the trial court based its ruling on the 1992 documents or on the 1994 [properly signed copy of the award] does not affect our decision; the record shows that the arbitrators have made a proper award and that the award supports the trial court's judgment. Id. at 362 (footnote omitted). The two cases cited by PBS involved the strict application of the formal requirements of an award. However, the statutes in Ockrant and Goeller did not provide an alternative means of satisfying such a requirement, whereas, in the instant case, either acknowledgment or proof is permitted. Moreover, as indicated, other courts have declined such strict application of formal requirements. Although this court has not yet ruled directly on the instant issues, this court's ruling in Brennan v. Stewarts' Pharmacies, Ltd., 59 Haw. 207, 579 P.2d 673 (1978), coupled with the United States District Court for the District of Hawaii's application of that case in Brown v. Hyatt Corp., 128 F.Supp.2d 697 (D.Haw.2000), seem to support the elevation of substance over form in upholding the validity of arbitration awards. In Brennan, this court declined to address the necessity of formal acknowledgments, and instead focused on the substantive requirement of finality of the arbitrator's decision. In that case, this court determined that an unacknowledged award was not a final award because the conduct of the arbitration panel's chairman led [appellant] to believe that the arbitration in question was not [final] until the issuance of a subsequent award. 59 Haw. at 222, 579 P.2d 673 at 681. Brennan involved a dispute over the lease rents for a shopping center. After a hearing and discussions by the three-member arbitration panel, the chairman of the panel drafted a memorandum with which one other arbitrator concurred and signed. The third arbitrator, however, wrote a concurrence to the decision, noting that he disagreed with the memorandum but deferred to the majority Id. at 218, 579 P.2d at 680. Thereafter, the chairman did not send a copy of the memorandum of award to either party to the arbitration, but sent it to the property manager and did not include a copy of the concurrence. Id. Subsequently, the chairman met with the shopping center's managing partner and informed him of the conclusion reached by the panel. The appellant alleged that the chairman then took the following actions: (1) in response to the manager's disagreement with the memorandum, the chairman stated that the matter was not final and no decision had been made; (2) he held a meeting with one of the other arbitrators and representatives of the parties to discuss the interpretation of the lease; (3) at the parties' suggestion, he met with an impartial attorney to discuss the lease interpretation; (4) he later stated that he had decided to reconvene the arbitration panel; and (5) he signed a final award sent by one of the parties with a notice that the party would thereafter move to confirm the award. Id. at 219-21, 579 P.2d at 680-81. In affirming the trial court's ruling, this court stated that: The record contains sufficient evidence in support of the trial court's finding that the conduct of [the panel chairman] led [appellant] to believe that the arbitration in question was not finalized until the May award. The issue, therefore, is not whether formal acknowledgments are necessary or not . . . though it is obvious that the January award did not technically comply with the provisions of HRS § 658-8. . . . The question herein which was determined by the trial court is whether the arbitrators had concluded their consideration of the issue submitted to them and reached a resolve by the memorandum of award of January or by the arbitration award of May. Id. at 222, 579 P.2d at 681 (footnote omitted). Concluding that a majority of the arbitrators exceeded their powers and failed to decide a question submitted to them and that the concurring arbitrator failed the impartiality requirement within the meaning of HRS § 658-9, this court affirmed the trial court's order vacating the arbitration award. Id. at 223, 579 P.2d at 682. As previously mentioned, the United States District Court for the District of Hawai`i relied on Brennan in Brown. The district court's ruling in Brown is relevant to this discussion inasmuch as it directly addressed the validity and effect of an unacknowledged award. In that case, as in the instant case, the plaintiffs claimed that the ten-day period to file a motion to vacate had not started to run because the arbitration award did not conform to the requirements of acknowledgment and delivery under HRS § 658-8. Id. at 701. The district court disagreed, stating that: Plaintiffs' claim that the ten day period has not yet started to run because the arbitration award does not conform to the requirements of HRS § 658-8 is meritless. . . . Defendant's counsel[ ] stated in the declaration he attached to the opposition that he received the arbitration award on September 28, 2000, its date of issuance. Moreover, . . . Plaintiffs' counsel[ ] attached a copy of the arbitration agreement . . . and in his declaration wrote Attached hereto as Exhibit `A' is a true and correct copy of the arbitration award. The award is signed by all three arbitrators and, unlike the Brennan v. Stewarts' Pharmacies, Ltd ., case, there does not appear to have been any confusion or impropriety about when the award was issued. See [ Brennan, 59 Haw. at 217-221, 579 P.2d at 679-681]. It is true that the signatures are not notarized. Yet, even in Brennan, the Supreme Court of Hawai`i downplayed the requirement of an acknowledgment. The Brennan court stated that the issue . . . is not whether formal acknowledgments are necessary or not, but instead is, whether the arbitrators had concluded their consideration of the issue submitted to them and reached a resolve by the memorandum of award. Id. at 681. There is no serious contention that the arbitrators have not concluded their consideration of the issues. The [c]ourt finds that the award of September 28, 2000 was sufficient under Brennan. Id. Although the federal court dismissed the formal requirements under HRS § 658-8 pursuant to this court's holding in Brennan, it acknowledged that the holding in that case relied on an alternative ground other than technical noncompliance with the statutory requirements of an award. Although Brennan did not resolve the instant issue, the proper focus of inquiry under Brennan is whether an award was final; not whether formal acknowledgment had occurred. Moreover, the statutory language under HRS § 658-8 and relevant case law indicate that formal acknowledgment or proof does not affect an award's validity as between the parties and may take place at any time prior to or at confirmation. Furthermore, its subsequent acknowledgment cured the defect prior to confirmation. Thus, the proper focus of inquiry under Brennan is whether the award was final.