Opinion ID: 6491588
Heading Depth: 2
Heading Rank: 6

Heading: The Appeal and the ICA’s Published Opinion and Fees and Costs Order

Text: The Dorans appealed, pro se, alleging twenty-five points of error, the relevant portions of which can be distilled into the following two contentions: (1) the Dorans are not obligated to pay assessments to KHHA because the Declaration and First Amended Declaration do not mention KHHA and do not impose an obligation upon lot owners to pay assessments; and (2) the circuit court erred in awarding attorneys’ fees and costs pursuant to HRS § 421J-10 because KHHA does not meet the HRS chapter 421J definition of “association.” With respect to the first issue, the ICA affirmed the circuit court’s November 26, 2002 judgment, holding that “under the circumstances of this case, the Dorans implicitly contracted and agreed to pay the assessments authorized under KHHA’s Charter and By-[L]aws. The Do-rans were bound by an implied obligation to pay them share of the costs incurred by KHHA in providing services that benefitted the Subdivision.” KHHA I, 112 Hawai'i at 363, 145 P.3d at 906. In regard to the second issue, the ICA vacated that portion of the circuit court’s judgment awarding fees and costs to KHHA and remanded for redetermination of the appropriate amount of fees and costs. Id. at 365-67, 145 P.3d at 908-10. The ICA reasoned that KHHA was not entitled to fees and costs under HRS § 421J-10 because KHHA did not meet the HRS § 421J-2 definition of “association” inasmuch as there were no recorded instruments that granted KHHA the authority to impose on units or on the owners or occupants of the lots, any mandatory payment of money. Id. The ICA rejected KHHA’s argument that the First Amended Declaration—because it required a lot owner seeking architectural approval for planned improvements from KHHA to bear all costs incurred in connection with the review and approval process, and authorized KHHA to bring a civil action to enforce land use and architectural restrictions against a lot owner who violated such restrictions and to recover damages and attorney’s fees in such an action—created such authority in KHHA. Id. at 366, 145 P.3d at 909. Specifically, the ICA stated: We agree with the Dorans that KHHA’s ability to require a lot owner to pay the costs associated with architectural approval for desired improvements to his or her own lot does not demonstrate that KHHA had the authority to impose on lot owners a “mandatory payment of money as a regular annual assessment or otherwise” under the HRS § 421J-2 definition of “declaration.” Nor is the statutoiy definition satisfied by KHHA’s ability to collect damages or attorney's fees in a civil suit to enforce land use and architectural restrictions. Under the First Amended Declaration, as assigned, KHHA did not have the authority to impose a “mandatory payment” on lot owners because KHHA could not compel lot owners to pay any money. Only the particular lot owner who sought architectural approval for desired improvements or who violated a restrictive covenant was obligated to pay. As we construe the HRS § 421J-2 definition of “declaration,” the recorded instruments must give the association the power to require lot owners, on a collective basis, to pay for the services rendered by the association. The ability to demand payment from an individual lot owner for a specific service requested by that lot owner or as a sanction for that lot owner’s violation of the restrictive covenants is not enough. Otherwise, the statute’s use of the plural form of the term “units” in referring to “the authority in the assoeiation to impose on units” and the statute’s use of the term “mandatory” to describe the “payment of money” would be superfluous. See Camara v. Agsalud, 67 Haw. 212, 215-16, 685 P.2d 794, 797 (1984) (“It is a cardinal rule of statutory construction that courts are bound, if rational and practicable, to give effect to all parts of a statute, and that no clause, sentence, or word shall be construed as superfluous, void, or insignificant if a construction can be legitimately found which will give force to and preserve all the words of the statute.”). Although KHHA’s unrecorded Charter and By-[L]aws provided that KHHA had the authority to impose mandatory payments of money on lot owners, the instruments that had been recorded against the Subdivision lots did not. Id. (footnotes omitted) (emphases in original). The ICA entered its judgment on appeal on November 3, 2006. On November 14, 2006, KHHA filed a request for attorneys’ fees and costs incurred on appeal, noting that HRS § 607-14 provided a basis for an award of fees to KHHA. KHHA also asserted that because it was a “planned community association” for purposes of HRS § 607-14, its fee award was not subject to HRS § 607-14’s cap of twenty-five per cent of the judgment. KHHA reasoned that, “whether or not KHHA is a planned community association for the purposes of [HRS] [cjhapter 421J ... is irrelevant to its entitlement to an award of all of its reasonable attorneys’ fees and costs pursuant to [HRS] § 607-14” because the definition of “planned community association” in HRS § 607-14 was significantly broader than the definition in HRS chapter 421J. On December 29, 2006, the ICA granted in part KHHA’s request for fees and costs pursuant to HRS § 607-14 and Hawaii Rules of Appellate Procedure Rule 39, but capped KHHA’s award of fees at twenty-five per cent of the judgment based on its conclusion, without discussion, that KHHA was not a “planned community association” as defined by HRS § 607-14.