Opinion ID: 2632547
Heading Depth: 2
Heading Rank: 1

Heading: jurisdiction

Text: HRS § 658-15 (1993) provides: Unless the agreement for award provides that no appeal may be taken[,] an appeal may be taken from an order vacating an award, or from a judgment entered upon an award, as from an order or judgment in an action, otherwise no appeal may be had. Schmidt contends that HRS § 658-15 precludes an appeal from an order denying a motion to vacate an arbitration award because it only allows for appeals from (1) an order vacating an award or (2) a judgment upon the award, i.e., a confirmation. PBS counters that the intent of HRS § 658-15 is to avoid piecemeal appeals and that the [c]ircuit [c]ourt's decision to deny vacating the [A]ward was an integral step in the process leading to the confirmation of the Award. PBS further posits that, once there is a final order confirming the Award, the correctness of the underlying order denying the motion to vacate may be addressed on appeal according to the very case cited by Schmidt for the opposite contention. We agree with PBS. `The right of appeal is purely statutory and exists only when given by some [c]onstitutional or statutory provision.' Salud v. Fin. Sec. Ins. Co., 69 Haw. 427, 429, 745 P.2d 290, 292 (1987) (quoting Chambers v. Leavey, 60 Haw. 52, 57, 587 P.2d 807, 810 (1978)). Under HRS § 641-1(a) (1993), appeals [shall be] allowed in civil matters from all final judgments, orders, or decrees of circuit . . . courts . . . to the supreme court or to the intermediate appellate court, except as otherwise provided by law[.] As previously stated, HRS § 658-8 permits any party to an arbitration [a]t any time within one year after the award is made and served, . . . [to] apply to the circuit court . . . for an order confirming the award. Thereupon[,] the court shall grant such an order, unless the award is vacated, modified, or corrected, as prescribed in sections 658-9[ [6] ] and 658-10[ [7] ]. A party seeking to vacate, modify, or correct an award must serve notice upon the adverse party or the party's attorney within ten days after the award is made and served. HRS § 658-11 (1993). In Salud, this court was presented with the question whether an appeal may be taken from an order denying a motion to vacate an award. In ruling that there was no such right, this court stated that: When an order confirming, modifying, or correcting an award is granted, the relevant statute directs that the same shall be filed in the office of the clerk of the circuit court and this shall constitute the entry of judgment. HRS § 658-12. And an appeal may be taken from such judgment as set forth thereafter in chapter 658. Id. But nothing set forth thereafter allows an appeal from an order denying a motion to vacate an award; HRS § 658-15 proclaims instead in unmistakable terms that an appeal may be taken from an order vacating an award, or from a judgment entered upon an award, otherwise no appeal may be had. Still, this does not mean that the denial of a motion to vacate an award by the circuit court necessarily forecloses an appeal sanctioned by HRS § 658-15. The unsuccessful movant's recourse would then be a motion to confirm the award. Since the circuit court has already reviewed the award and decided no grounds exist for vacating it, a confirmation should follow. The movant could then perfect an appeal and obtain appellate review of the order confirming the award. The foregoing procedure would also make it possible for someone whose motion for modification or correction of an arbitrator's award has been denied to seek appellate review of the circuit court's ruling. And where confirmation of the award is sought to facilitate an appeal in either situation, the movant would not, of course, be estopped from urging the vacation, modification, or correction of the award on appeal. Id. at 430-31, 745 P.2d at 292-93 (brackets, footnotes, and ellipses points omitted) (emphases in original). [8] Further, in Oppenheimer v. AIG Hawai`i Insurance Co., 77 Hawai`i 88, 881 P.2d 1234 (1994), this court discussed the holding in Salud, stating that: Because the statutory provisions governing judicial review of arbitration awards precluded an appeal from an order denying a motion to vacate an arbitration award, we held in Salud that this court lacked jurisdiction. However, implicit in our ruling in Salud is that, by virtue of HRS § 658-12, an order confirming an arbitration award is a final judgment from which an appeal may be taken. Salud, 69 Haw. at 431, 745 P.2d at 293. Id. at 91, 881 P.2d at 1237 (footnote omitted) (emphasis added). Thus, an order denying a motion to vacate an arbitration award is not a final judgment that may be directly appealed. Here, the award was confirmed in the same order that denied PBS's motion to vacate. As such, there is no issue of finality here. However, inasmuch as HRS § 658-15 directs that the circuit court shall confirm an order that is not vacated prior to confirmation, we now examine the circumstances under which a party may urge vacation of an award at confirmation and on appeal.
In Excelsior Lodge, this court expressly held that an appeal under HRS § 658-15 from a confirmation of an arbitration award is restricted to the grounds set forth in a timely motion to vacate, modify, or correct an award under HRS §§ 658-9 and 658-10. Id. at 227, 847 P.2d at 660. In reaching its conclusion, this court summarized the policies underlying HRS chapter 658: It is generally considered that parties resort to arbitration to settle disputes more expeditiously and inexpensively than by a court action. It must be deemed that the primary purpose of arbitration is to avoid litigation. In furtherance of this objective, our legislature enacted the Arbitration and Awards Statute, HRS Ch. 658. This court has decided to confine judicial review of awards under the statute to the strictest possible limits. We believe an extensive judicial review of arbitration awards would frustrate the intent of the parties to avoid litigation and would also nullify the legislative objective in the enactment of the Arbitration and Awards statute. Id. at 225-26, 847 P.2d at 659-60 (quoting Mars Constructors, Inc. v. Tropical Enters., Ltd., 51 Haw. 332, 334-35, 460 P.2d 317, 318-19 (1969)) (brackets, ellipses points and block quote format omitted). This court further noted that its holding was based on the principle that allow[ing] a party a second chance at litigation after it has conspicuously failed to comply with the specific statutory provisions available for challenging an award would frustrate the clear policy of facilitating the legislative objectives behind the arbitration and award statute. Id. at 227, 847 P.2d at 660. Therefore, PBS would be entitled to appeal the circuit court's March 10, 2003 order only if its motion to vacate was timely filed.
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.
In the instant case, PBS's counsel compared PBS's situation to Brennan at the hearing on its motion to vacate the Award, contending that the arbitrator's letter accompanying the Award gave him the impression that the Award was not final. In the letter, the arbitrator noted, [e]nclosed is my decision and award in this matter. I have not declared before a notary that this is my decision. I understand that is no longer required. If you need a notary, please advise. PBS's counsel argued that the arbitrator's letter left him confused, similar to the parties in Brennan, as to when the award became final, stating: [W]hen I received that award, I focused immediately on the cover letter which said what it said. I understand this isn't required. Acknowledgment isn't required. But if you want acknowledgment, just tell me. Not only acknowledgment is required, and, I fully expected that they would come  [Schmidt's] attorney would come immediately to the arbitrator and say you got to get this acknowledged, Your Honor, it's just so unfair to have the confusion, to have any doubt as to when this award is  is subject to the ten days running and hold that confusion against a person. . . . I read that letter. I said to myself, of course, it's necessary. That will have to be done. When that's done, the time [to file a motion to vacate] will start to run. PBS's counsel also declared that, I took no action pending the Arbitrator's providing the acknowledgement [sic] he had offered in his letter. As previously stated, under Brennan, an arbitration award is final when the arbitrator has concluded his consideration of the issues and reached a resolution. 59 Haw. at 221, 579 P.2d at 681. Additionally, [a]lthough there is no requirement that the award be self-executing, and although it is not faulty because litigation may ensue in enforcing it, 6 C.J.S. Arbitration § 111b (1975), it should be sufficiently definite that only ministerial acts of the parties are needed to carry it into effect, Mercury Oil Refining Co. v. Oil Workers International Union, 187 F.2d 980, 982 (10th Cir. 1951); see also 6 C.J.S. Arbitration § 115 (1975), and clear enough to indicate unequivocally what each party is required to do. Martin Domke, Domke on Commercial Arbitration § 28:04 (Rev. Ed.1984) (Domke). Strickland v. Seiple, 5 Haw.App. 168, 171, 680 P.2d 533, 535 (1984). If the award is `incomplete, uncertain, and indefinite it cannot be sustained.' Id. at 173, 680 P.2d at 536 (quoting 5 Am.Jur.2d Arbitration and Award § 141 at 622 (1962)). Unlike the situation in Brennan, the facts here do not support PBS's contention that the arbitrator's conduct was misleading. Rather, the arbitrator's letter clearly states that he had concluded his consideration of the issues and reached a decision. He also included a bill for his services and stated that, in his understanding, no further action would be necessary. According to the letter, any further ministerial action to be taken would only be at the request of the parties. Based on the foregoing, it cannot be said that the arbitrator's statement that he would acknowledge the Award at the request of the parties left any doubt that the issues had been finally concluded. Therefore, the Award was final.
PBS contends that the Award was never delivered within the meaning of the statute because it was not delivered personally or by registered or certified mail, pursuant to the requirements of HRS § 658-8. Schmidt contends that the statute does not require such delivery and that the original Award was in fact delivered to each of the parties. HRS § 658-8 states that,  [t]he award shall be . . . delivered to one of the parties or the party's attorney. A copy of the award shall be served by the arbitrators on each of the other parties to the arbitration, personally or by registered or certified mail. (Emphases added.) Based on its plain language, the statute clearly contemplates that only one original of the award is prepared and served upon one of the parties; all other parties are served with a copy of the original award. The statute also clearly states that the arbitrator may serve copies of the award personally or by registered or certified mail. The statute, however, states only that [t]he award [( i.e., the original)] shall be . . . delivered to one of the parties or the party's attorney. Thus, if this court were to follow the circuit court's ruling that ordinary mailing constitutes delivery under the statute, then the requirements for service of the original would be less stringent than the requirements for service of a copy, which is absurd. See AOAO of Maalaea Kai, Inc. v. Stillson, 108 Hawai`i 2, 27, 116 P.3d 644, 669 (2005) (applying the rule that, because the legislature is presumed not to intend an absurd result, legislation should be construed to avoid, if possible, inconsistency, contradiction, and illogicality) (citation omitted)). Consequently, the reference to delivered can only mean personal or hand delivery of the original of the award. Here, the record does not indicate whether the Award that was mailed to PBS was an original or a copy. In either case, ordinary mailing would not have satisfied the statutory service requirements. Nevertheless, the purpose of the statute  that is, to ensure that the parties actually receive the arbitrator's written decision  was met. At no time did PBS's counsel claim that he did not receive the arbitrator's written decision. In fact, he confirmed his receipt thereof at the February 13, 2003 hearing, as evinced by the following portion of the transcript: [PBS's Counsel]: Okay. If the copy, I mean if the award, the original of the award, presumably, the original, if the original award is delivered to me,  THE COURT: Which it was. [PBS's Counsel]: No, it wasn't. It was mailed. THE COURT: All right. Moreover, as previously noted, PBS's counsel declared that, when he received the unacknowledged award, he did not take any action. Thus, the record indicates that PBS and its counsel did, in fact, receive either the original or a copy of the arbitrator's written award; however, the date upon which service was perfected is unclear. As previously indicated, Schmidt's counsel indicated that he received the Award on November 26, 2002, the day after it was issued. Thus, the circuit court assumed that PBS received the Award on the same day as Schmidt and concluded that the ten-day statutory time to file a motion to vacate expired on December 9, 2002. [9] The circuit court ruled that PBS's motion, filed on January 22, 2003, was untimely. Even assuming arguendo that PBS never received the Award through ordinary mail service, it is undisputed that PBS received a copy of the Award, at the latest, on December 9, 2002, as evinced by the certificate of service attached to Schmidt's motion to confirm, which was served on that date, and to which a true and correct copy of the Award was attached as Exhibit B. Thus, even if the circuit court had given the benefit of the doubt to PBS and utilized December 9, 2002 as the triggering date, PBS's motion would had to have been filed by December 19, 2002; PBS did not file its motion to vacate until over one month later on January 22, 2003. Therefore, as the facts illustrate, PBS did not take appropriate action to preserve its right to appeal. Had PBS's counsel immediately moved to vacate the Award or requested that the arbitrator acknowledge the Award rather than waiting for Schmidt to do so, PBS could have preserved its right to move to vacate the Award. Instead, PBS decided to take no action following receipt of the Award even though it assumed that acknowledgment was required and did not question the authenticity of the arbitrator's signature on the Award. Accordingly, we hold that the circuit court did not err in concluding that PBS's motion to vacate filed on January 22, 2003, was untimely, and that this court is without jurisdiction to review the Award.