MAUI MUSCLE SPORTS CLUB KAHANA, LLC v. ASSOCIATION OF APARTMENT OWNERS OF VALLEY ISLE RESORT

NOT FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER

MEMORANDUM OPINION

Plaintiff-Appellant Maui Muscle Sports Club Kahana, LLC (Maui Muscle) appeals from the:

(1) "Order Granting Defendant Association of Apartment Owners of Valley Isle Resort's Motion for Summary Judgment," filed March 28, 2012 (Summary Judgment Order);

(2) "Order Denying [Maui Muscle's] Motion for Preliminary Injunction," filed December 13, 2012 (Preliminary Injunction Order);

(3) "Order Granting Defendant Association of Apartment Owners of Valley Isle Resort's Motion for Order to Show Cause Why [Maui Muscle] and John G. Horak, Esq. Should Not Be Held in Contempt for Violation of the Court's Oral Ruling on December 6, 2012," filed February 7, 2013 (Contempt Order);

(4) "Order Amending February 7, 2013 Order Granting Defendant Association of Apartment Owners of Valley Isle Resort's Motion for Order to Show Cause Why [Maui Muscle] and John G. Horak, Esq. Should Not Be Held in Contempt for Violation of the Court's Oral Ruling on December 6, 2012," filed March 28, 2013 (Amended Contempt Order); and

(5) "Order Granting in Part and Denying in Part Association of Apartment Owners of Valley Isle Resort's Motion for Mandatory Injunction," filed April 26, 2013 (Mandatory Injunction Order). All orders were filed in the Circuit Court of the Second Circuit1 (circuit court).

Maui Muscle contends the circuit court erred by:

(1) adjudicating the merits of the case in the Preliminary Injunction Order without giving parties notice;

(2) misconstruing the Preliminary Injunction Order as enjoining Maui Muscle from making representations to County of Maui officials (County);

(3) imposing sanctions on Maui Muscle based upon the misconstrual via the Contempt Order;

(4) concluding that Hawaii Revised Statutes (HRS) Chapter 514B clearly and ambiguously governed the parties' governing documents;

(5) concluding that no genuine issue of material fact existed regarding the extent of the parties' ownership interests in subject properties;

(6) concluding Defendant-Appellee Association of Apartment Owners of Valley Isle Resort (AOAO) was responsible for "common elements" of the properties; and

(7) concluding AOAO had the sole right and responsibility to perform repairs, maintenance, rebuilding, and reinstatement of those common elements.

I. BACKGROUND

This appeal arises out of a dispute concerning the extent of the parties' respective ownership and control over a two-story building located in the vicinity of the Valley Isle Resort Condominium Project (Project). The Project is situated on land that was submitted to a condominium property regime, and defined in the Second Restatement of Declaration of Horizontal Property Regime for the Valley Isle Resort Condominium, as amended (Declaration).

The Project was built in 1973 and consists of a twelve story building with 120 living units (the Tower), a two-story commercial facilities building covering 10,745 square feet, (the Commercial Unit), a covered walkway area, a parking lot, and other service areas, all located at 4327 Lower Honoapi`ilani Road, Lahaina.

The Declaration was recorded on December 1, 1994 in the State of Hawai`i Bureau of Conveyances as Document No. 94-197003, as thrice amended.2

Maui Muscle's business is located in the Commercial Unit building. Under section 4 of the Declaration, the entire two-story building is considered "one commercial apartment[.]" Section 4(a) of the Declaration specifies:

The Declaration includes an easement for owners of residential apartments in the Commercial Unit:

(Emphasis added.)

Administration of the Project is vested in the "Association of Unit Owners" (Association) and each owner of a residential apartment is a member of the Association.

Section 6 of the Declaration provides:

Under section 7 of the Declaration, parts of the "common elements" are designated "limited common elements" and are set aside and "reserved for the exclusive use of the [Tower] and the [Commercial Unit]." The "limited common elements" set aside for the Commercial Unit are specified as:

Maui Muscle became the fee owner of the Commercial Unit pursuant to a Warranty Deed and Assignment of Sublease to Maui Muscle from Leon Roger Richards and Mary Virginia Richards, recorded on January 7, 2000 (Warranty Deed). Maui Muscle is a public gym and fitness center, organized as a limited liability corporation and manager-managed by Dale L. Smith (Smith).

Maui Muscle's Warranty Deed was subject to the Declaration and the Restatement of Bylaws of the Association (Bylaws) recorded on November 16, 1992. Article V, section 4 of the Bylaws provides:

(Emphasis added.)

On July 7, 2011, Maui Muscle, AOAO, and others entered into a settlement agreement (Settlement Agreement) disposing of claims litigated in Maui Muscle Sports Club Kahana, LLC v. Association of Apartment Owners of Valley Isle Resort, et al., Civ. No. 09-1-0321(1) and Association of Apartment Owners of Valley Isle Resort v. Maui Muscle Sports Club Kahana, LLC, et al., Civ. No. 07-1-0452(2). The Settlement Agreement defines the Commercial Unit as the "commercial facilities building covering approximately 10,745 square feet . . . identified as [TMK] (2) 4-3-010-004 and as more particularly described in the Declaration.

On September 3, 2012, a fire destroyed much of the Commercial Unit. The instant case arises from disputes concerning which party could control the demolition and rebuilding of the Commercial Unit.

By letter dated October 2, 2012, AOAO wrote to Maui Muscle and Robert H. Joslin (Joslin), Maui Muscle's insurance claims adjuster, to assert in part AOAO's obligation to repair and maintain common and limited common elements in the Commercial Unit and its right to access units for such purpose.

By letter dated October 4, 2012, AOAO's authorizing agent notified the County Department of Public Works (DPW) and Environmental Management that Michael Wright & Associates, Inc. (MWA) was authorized to act on AOAO's behalf for all necessary permit applications and supporting documentation in reference to TMK (2) 4-3-010:004 (the Commercial Unit).

On November 14, 2012, AOAO obtained a demolition/building permit, Permit No. B 2012-1417 (Permit 1417), from the County for the Commercial Unit.

On November 26, 2012, Maui Muscle filed a complaint alleging AOAO was trespassing on Maui Muscle's property, the Commercial Unit, and requested declaratory and injunctive relief. On November 27, 2012, Maui Muscle filed a motion for a preliminary injunction to enjoin AOAO from obtaining a demolition/building permit from the County to complete work on the Commercial Unit and entering the Commercial Unit. Maui Muscle alleged that AOAO and its representatives had repeatedly entered the Commercial Unit after the fire loss, removed Maui Muscle property, and brought contractors onto the site to perform demolition work. These actions, according to Maui Muscle, would impair efforts to preserve evidence for insurance adjustment purposes and thus result in irreparable harm to "Maui Muscle's rights to recover for their considerable loss from the blaze." Maui Muscle further alleged that the burnt premises had been "deemed hazardous due to asbestos content and may only be disturbed by . . . trained and licensed hazmat crews." AOAO's contractors are allegedly not licensed to remediate asbestos and therefore AOAO's "improper demolition" exposed Maui Muscle to liability.

A declaration by Smith was attached to the preliminary injunction motion. Smith declared he witnessed AOAO, under the direction of its on-site management firm, Hawaiian Management, and their contractors dismantling protective fencing that Maui Muscle installed around the burnt property and performing contracting work, including demolition work.

A declaration by Joslin was also attached to Maui Muscle's preliminary injunction motion. Joslin stated Smith had contacted him on the morning of the September 3, 2012 fire and that evening the Maui County Fire Department relinquished the commercial building site to Maui Muscle and Joslin's employer, Hawai`i Public Adjusters.

The circuit court granted Maui Muscle's motion and issued a temporary restraining order (TRO). The TRO ordered AOAO and its representatives, pending the hearing on Maui Muscle's preliminary injunction motion, be restrained from

On December 4, 2012, AOAO filed their opposition to Maui Muscle's preliminary injunction motion, to which AOAO attached six declarations and exhibits A through X. AOAO's opposition requested Maui Muscle's preliminary injunction motion be denied and the TRO be dissolved. AOAO stated it had informed Joslin that it had engaged a licensed asbestos contractor, but Joslin still objected to AOAO's efforts to perform any work without Maui Muscle's approval.

At the December 6, 2012 hearing on Maui Muscle's preliminary injunction motion, Maui Muscle's counsel, John Horak (Horak), asserted that Maui Muscle needed

Maui Muscle did not call any witnesses to testify at the December 6, 2012 hearing. Horak stated that there was "enough supporting documentation in the moving papers with the attachments and the opposition to the motion and the exhibits for the [circuit court] to make its ruling on a preliminary injunction." Horak inquired into the necessity of taking direct testimony from witnesses to admit exhibits that were attached to motions and submitted with declarations because those exhibits and declarations were already on the record and before the circuit court.

The circuit court stated it was "used to hearing evidence from witnesses and so on and so forth" in preliminary injunction hearings and

Presumably, the circuit court's reference to AOAO's "motion to dismiss" referred to AOAO's opposition to Maui Muscle's preliminary injunction motion. The circuit court also dissolved the TRO against AOAO. These actions apparently constitute the circuit court's December 6, 2012 oral order (Oral Order), which is at issue in this case.

On December 6, 2012, subsequent to the hearing, Horak and Joslin met, and according to a declaration by Horak, Joslin was going to meet with the County's permitting department processing Maui Muscle's commercial tenant improvements in the same parcel location and building subject to AOAO's demolition and alteration permits. AOAO's permit depicted partial demolition and alteration at the parcel identified as TMK 24-3-010:004-0121. Horak and Joslin met with County officials that day and according to Horak's declaration he "understood that the County was going to review the various permits for the commercial building."

In a declaration submitted by Joslin, he stated that as an agent for Maui Muscle, he was required to determine the scope of work necessary to rebuild Maui Muscle's commercial building according to current standards, ordinances, and laws, including those of the County. At the December 6, 2012 meeting, Joslin asked the DPW Director (Director), to identify the responsible party in a permit application for construction activities. Joslin declared the Director's response was that property owners are required to authorize such permit applications and must submit a Property Owner's Authorization letter to DPW. DPW then determined Maui Muscle and not AOAO was the proper applicant for Permit 1417.

A declaration from Michael Wright (Wright) of MWA stated the Director contacted him on December 6, 2012 regarding AOAO's Permit 1417. Wright declared he was advised that Joslin and Horak "represented that the AOAO had no authority to apply for Permit 1417 without [Smith's] written authorization because [Maui Muscle], not the AOAO, was the owner of the property for which Permit 1417 was obtained[.]" According to Wright, Joslin and Horak's statements caused the Director to become concerned that Permit 1417 was improperly issued and therefore the County intended to rescind the permit.

On December 7, 2012, the County posted a stop-work warning sign that stated Permit 1417 was suspended until further notice. By letter dated January 3, 2013, the County also denied Maui Muscle's permit application, citing failures to conform to building code provisions and to obtain energy code certification.

On December 10, 2012, Maui Muscle objected to AOAO's proposed order denying Maui Muscle's motion for preliminary injunction. On December 13, 2012, the circuit court entered the order as proposed by AOAO, which provided: (1) AOAO was not prohibited from entering upon commercial improvements owned by Maui Muscle "if such entry is in accordance with that certain [Declaration]"; (2) AOAO was not restrained from obtaining a demolition and/or building permit from the County to complete work on the premises; (3) written approval from Maui Muscle was not required for AOAO to take the aforementioned actions unless required by the Declaration; and (4) AOAO would be awarded attorney's fees and costs.

On December 17, 2012, AOAO filed an answer to Maui Muscle's November 26, 2012 Complaint, denying all allegations. On December 19, 2012, AOAO filed a motion for an order to show cause why Maui Muscle and Horak should not be held in contempt of court (Motion for Order to Show Cause). On January 16, 2013, Maui Muscle filed its opposition to AOAO's Motion for Order to Show Cause. On January 24, 2013, the circuit court held a hearing on AOAO's Motion for Order to Show Cause and orally granted the motion stating:

(Emphases added.) The circuit court further stated that Horak would be sanctioned $1,000 for each day after the hearing that he failed to undo the stop work warning from the County.

On February 7, 2013, the circuit court filed its Contempt Order, holding Maui Muscle and its counsel, Horak, in contempt of court. The Contempt Order, stated in part:

The Contempt Order further ordered that Maui Muscle and Horak would be sanctioned $1,000 for every calendar day that the AOAO was "prevented from commencing work under [Permit 1417] due to [Maui Muscle and Horak's] failure to cause the County to rescind the Stop Work Warning."

On March 12, 2013, the circuit court held a hearing on AOAO's January 23, 2013 motion for summary judgment and Maui Muscle's February 25, 2013 motion for leave to file an interlocutory appeal from the Preliminary Injunction Order. The circuit court found Maui Muscle's motion for leave to file an interlocutory appeal was untimely and that appeal of the Preliminary Injunction Order would cause further unnecessary delay and denied the motion. The circuit court also sua sponte issued findings clarifying its Contempt Order. On March 28, 2013, the circuit court entered its Summary Judgment Order and its Amended Contempt Order.

The Amended Contempt Order provided: (1) Maui Muscle produced sufficient evidence that it had taken actions to cause the County to retract and/or rescind the stop-work order on February 7, 2013, thirteen days after January 24, 2013; (2) the total sanction amount against Maui Muscle would be $13,000; (3) the $13,000 should be paid to AOAO's counsel; and (4) Maui Muscle and Horak were jointly and severally liable for the sanction amount.

On April 26, 2013, the circuit court filed its Mandatory Injunction Order, granting in part and denying in part AOAO's motion for mandatory injunction and ordering inter alia that Maui Muscle remove its personal and/or business property from the Commercial Unit or it should be deemed abandoned. Maui Muscle filed a notice of appeal from five of the circuit court's interlocutory orders that same day.

II. DISCUSSION

AOAO contends this court lacks jurisdiction over Maui Muscle's appeal because the circuit court has not entered a final judgment and Maui Muscle failed to obtain leave to pursue appeal of the interlocutory orders. We conclude we have appellate jurisdiction only with regard to the appeal from the Amended Contempt Order.

There is no final judgment pursuant to Jenkins v. Cades Schutte Fleming & Wright, 76 Haw. 115, 869 P.2d 1334 (1994), and thus we have no appellate jurisdiction unless an exception to the finality requirement applies. Three exceptions to the finality requirement are: (1) if the circuit court allows an appeal to be taken from an interlocutory order pursuant to HRS § 641-1(b) (1993); (2) the collateral order doctrine; or (3) the Forgay doctrine. See HRS § 641-1(b); Abrams v. Cades, Schutte, Fleming & Wright, 88 Haw. 319, 321, 966 P.2d 631, 633 (1998) (regarding the collateral order doctrine); Forgay v. Conrad, 47 U.S. 201 (1848); Ciesla v. Reddish, 78 Haw. 18, 20, 889 P.2d 702, 704 (1995) (addressing the Forgay doctrine).

The circuit court did not certify any of the interlocutory orders for an appeal, and thus there is no appellate jurisdiction pursuant to HRS § 641-1(b).

Further, the Forgay doctrine does not apply. See Ciesla, 78 Hawai`i at 20, 889 P.2d at 704 ("The Forgay doctrine is an exception to the finality requirement for appeals and it allows an appellant to immediately appeal a judgment for execution upon property, even if all claims of the parties have not been finally resolved.").

The collateral order doctrine, however, applies with respect to the Amended Contempt Order. Under the collateral order doctrine, appellate jurisdiction extends to interlocutory orders that "finally determine claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated." Abrams, 88 Hawai`i at 321, 966 P.2d at 633 (citations and internal quotation mark omitted) (block quote format altered). Orders fall under the collateral order doctrine if they: "[1] conclusively determine the disputed question, [2] resolve an important issue completely separate from the merits of the action, and [3] be effectively unreviewable on appeal from a final judgment." Abrams, 88 Hawai`i at 322, 966 P.2d at 634 (citations and internal quotation mark omitted) (block quote format altered).

In Harada v. Ellis, 60 Haw. 467, 480, 591 P.2d 1060, 1070 (1979), the Hawai`i Supreme Court held that an interlocutory order not directly related to the merits of the case that directed payment of an assessed sum and was immediately enforceable through contempt proceedings satisfied the requirements of an appealable collateral order. The Amended Contempt Order in this case concerned Maui Muscle's conduct in obstructing the AOAO's permit from the County and allegedly disobeying the circuit court's rulings, rather than addressing the merits regarding ownership and control of the damaged property. Further, the Amended Contempt Order assessed $13,000 in sanctions against inter alia Maui Muscle, to be paid on or before 4:30 p.m. on April 12, 2013, and thus Maui Muscle was in immediate jeopardy of being found in contempt of court if it did not comply. The Amended Contempt Order thus satisfies the requirements for an appealable collateral order.

We therefore restrict our review to Maui Muscle's contentions regarding the Amended Contempt Order.

AOAO contends Maui Muscle violated the circuit court's Oral Order issued on December 6, 2012. On December 6, 2012, the circuit court granted AOAO's "motion to dismiss" Maui Muscle's preliminary injunction motion, dissolved the TRO against AOAO, and invited AOAO to file for attorney's fees and costs. AOAO's opposition to Maui Muscle's preliminary injunction motion requested Maui Muscle's preliminary injunction motion be denied and the TRO be dissolved.

In its Contempt Order, the circuit court found contemptible actions taken by Maui Muscle and its representatives that "cause[d] the [DPW] to issue a Stop Work Warning" in violation of the circuit court's Oral Order and Preliminary Injunction Order. Maui Muscle's alleged contemptible actions occurred on December 6, 2012, however, and therefore could not have violated the December 13, 2012 Preliminary Injunction Order. AOAO did not claim that Maui Muscle violated the Preliminary Injunction Order. Instead, AOAO's Motion for Order to Show Cause, which gave rise to the Amended Contempt Order, specified that Maui Muscle and Horak should be held in contempt of the circuit court's Oral Order. Both the Contempt Order and the Amended Contempt Order specify that Maui Muscle and Horak should be held in contempt of the Oral Order.4

The Amended Contempt Order included findings that Maui Muscle had not "cure[d] their contempt" until February 7, 2013, thirteen days after the January 24, 2013 hearing on AOAO's motion for the contempt order. We review the circuit court's Amended Contempt Order under an abuse of discretion standard. LeMay, 92 Hawai`i at 620, 994 P.2d at 552.

LeMay, 92 Hawai`i at 625, 994 P.2d at 557 (citations omitted and emphases added).

The Oral Order dissolved Maui Muscle's TRO and granted AOAO's motion to dismiss Maui Muscle's preliminary injunction motion. "[T]o hold a party in civil contempt, there must be a court decree that sets forth in specific detail an unequivocal command that the contemnor violated, and the contemnor must be able to ascertain from the four corners of the order precisely what acts are forbidden." LeMay, 92 Hawai`i at 625, 994 P.2d at 557 (citations and internal quotation marks omitted). The December 6, 2012 Oral Order was not reduced to a written document with "four corners" until the circuit court filed its Preliminary Injunction Order on December 13, 2012. Id.

Parties point to no authorities in this jurisdiction indicating that an "oral order" may satisfy the requirements of a "clear and unambiguous" order under LeMay. Id. Assuming arguendo that the transcript of the Oral Order constitutes an order with "four corners" under LeMay, we proceed to review the remaining LeMay requirements. LeMay, 92 Hawai`i at 625, 994 P.2d at 557.

The Oral Order's denial of Maui Muscle's preliminary injunction motion meant the circuit court found Maui Muscle did not carry its burden of meeting the standard for a preliminary injunction, but such a conclusion did not clearly and unambiguously constitute an order that Maui Muscle refrain from asserting its allegations of ownership to the Commercial Unit.

The Oral Order dissolving the TRO did not prevent Maui Muscle from raising a dispute as to whether AOAO was the proper permit applicant to County officials. Dissolution of the TRO allowed AOAO to apply for a County demolition and/or building permit on the subject property. The Oral Order dissolving the TRO did not "clear[ly] and unambiguous[ly]" enjoin Maui Muscle and its representatives from alleging to the County that its ownership rights in the Commercial Unit should prevent AOAO from entering that property.

There was no "clear and convincing" proof of Maui Muscle's noncompliance with the Oral Order. LeMay, 92 Hawai`i at 625, 994 P.2d at 557. The circuit court stated that "apparently [Maui Muscle] met with the [Director] of the [DPW] or someone of authority at the [DPW] for the [County]," and that it was apparent Maui Muscle "made misrepresentations" to the Director that they were the owner of the Commercial Unit property. The circuit court "guess[ed that] this resulted in the County putting this stop work order. . . ."

The Oral Order did not order Maui Muscle to refrain from alleging its ownership rights in the commercial property. The circuit court's finding that Maui Muscle violated the Oral Order constituted an abuse of discretion that is reversible on appeal.

Because we conclude the circuit court abused its discretion by determining that AOAO clearly and convincingly established the first two LeMay factors, and because AOAO was required to establish all three factors, we need not determine whether AOAO established that Maui Muscle had "not diligently attempted to comply in a reasonable manner." LeMay, 92 Hawai`i at 625, 994 P.2d at 557.

III. CONCLUSION

For the foregoing reasons, Maui Muscle's appeal from the following orders of the Circuit Court of the Second Circuit is dismissed for lack of appellate jurisdiction:

(1) "Order Granting Defendant Association of Apartment Owners of Valley Isle Resort's Motion for Summary Judgment," filed March 28, 2012;

(2) "Order Denying Maui Muscle Sports Club Kahana, LLC's Motion for Preliminary Injunction," filed December 13, 2012;

(3) "Order Granting Association of Apartment Owners of Valley Isle Resort's Motion for Order to Show Cause Why Maui Muscle Sports Club Kahana, LLC and John G. Horak, Esq. Should Not Be Held in Contempt for Violation of the Court's Oral Ruling on December 6, 2012," filed February 7, 2013; and

(4) "Order Granting in Part and Denying in Part Association of Apartment Owners of Valley Isle Resort's Motion for Mandatory Injunction," filed April 26, 2013.

We also vacate the Circuit Court of the Second Circuit's "Order Amending February 7, 2013 Order Granting Defendant Association of Apartment Owners of Valley Isle Resort's Motion for Order to Show Cause Why Plaintiff Maui Muscle Sports Club Kahana LLC and John G. Horak, Esq. Should Not Be Held in Contempt for Violation of the Court's Oral Ruling on December 6, 2012," filed March 28, 2013, and remand this case for proceedings consistent with this opinion.