Opinion ID: 2630997
Heading Depth: 4
Heading Rank: 3

Heading: challenges to certain justified payments

Text: Hawaii Ventures contests a number of specific payments that the Special Master found justified, arguing that the Special Master improperly determined that these payments were permissible based on trust and fiduciary obligations senior to the Lender's adjudicated first lien. Specifically, Hawaii Ventures argues that: The Special Master justified [the] payment[s] reasoning that the cash or proceeds in these amounts were not an asset of the Estate. This includes, for example, safe fees ($18,643), in-room movies ($9,219) and advance deposits ($151,450). This category represents a total of $179,312. But these amounts correspond to fees and services used by Otaka during the pre-receivership period, not by the Receiver. The cash was not segregated and there is no record of what gave rise to the conclusion that the Estate had obligations to those creditors. [The] Lender's first lien covered cash transferred to the Estate and all revenues from the Hotel. Any payment made by the Receiver for safe fees and for in-room movies were taken from [the] Lender's collateral. Similarly, any advance deposits were paid to Otaka, not the Receiver. Thus, the Receiver did not hold advance deposits in trust[,] she did not hold advance deposits at all. She held cash subject to the Lender's lien. . . . The Special Master concluded that the Receiver was to pay amounts equal to taxes withheld from the employees by Otaka and not remitted. These amount[s] included, for example, employee withholding taxes ($60,122) and other payroll related withholding ($24,895). This category represents a total of $84,017. These sums were received and held by Otaka, not the Receiver. Yet any payment made for these liabilities were taken from [the] Lender's collateral. The Receiver did not receive or hold these amounts and cannot be considered a fiduciary of these unsecured creditors. With respect to payments made because the amounts were held in trust, the Special Master reasoned as follows: (13) Safe fees of $18,643 ( Justified ) The payment was . . . for hotel room safes for July 2000 under a shared revenue arrangement. Accordingly, under the shared revenue arrangement[,] this amount was justifiably held in trust and rightfully due to Elsafe[, i.e., the company providing the safes]. . . . . (15) In-room movies of $9,219 ( Justified ) The payments were for in-room movie services in August under a revenue sharing arrangement between the Hotel and On Command. Accordingly, under the shared revenue arrangement[,] this amount was justifiably held in trust and rightfully due to On Command. . . . . (29) Advance Deposits of $151,387 ( Justified ) The advance deposits consists primarily of $117,450 in rooms, food and beverage deposits and $33,937 in tenant security deposits which were held in trust and were not an asset of the Estate. (Emphases in original.) With respect to payments made by the Receiver as a fiduciary, the Special Master explained: (26) Payroll Taxes Withholdings of $90,517 ( $60,122 Justified and $30,395 Estate Receivable ) The $90,517 of payroll taxes withheld consists of $60,122 in income and payroll taxes withheld from employees and $30,395 of employer assessed payroll taxes. The $60,122 employee withholding taxes paid are appropriate. The Receiver was only acting as a fiduciary to remit the taxes withheld from employees' salaries. The payment of the taxes withheld did not create any additional economic burden on the Estate. The $30,395 of employers' payroll taxes should not have been paid and should be treated as a pre-receivership liability paid receivable, since it was an obligation junior to that of [Hawaii Ventures] and not necessary to maintain or preserve the Estate. (27) Other Payroll Related Withholding of $24,894 ( Justified ) These payroll accruals are predominantly withholdings from employees' wages for union dues, 401k plan contributions, etc. and represent the payment of a fiduciary obligation of the Estate. (Emphases in original.) Other than its conclusory statements that (1) these payments were made from Hawaii Ventures' collateral, (2) the Receiver did not hold these amounts in trust, and (3) Receiver Park cannot be considered a fiduciary, Hawaii Ventures provides no support or explanation contrary to the Special Master's findings that: (1) the above payments were justified because the amounts were held in trust and not an asset of the Estate; and (2) the payments for payroll taxes withholdings were justified as a fiduciary obligation of the Estate. In other words, Hawaii Ventures fails to provide any discernible arguments in support of its position. As such, an appellate court is not obliged to address matters for which the appellant has failed to present discernible arguments. HRAP Rule 28(b)(7) (the opening brief must exhibit [t]he argument, containing the contentions of the appellant on the points presented and the reasons therefor, with citations to the authorities . . . relied on); Norton v. Admin. Dir. of the Court, 80 Hawai`i 197, 200, 908 P.2d 545, 548 (1995) (observing that this court may disregard [a] particular contention if the appellant makes no discernible argument in support of that position) (citation and footnote omitted). Thus, we decline to address this matter further. Moreover, as we concluded supra, the Special Master was provided with sufficient information to reach his conclusions and make his recommendations, and Hawaii Ventures fails to demonstrate otherwise.