Furuya v. Association of Apartment Owners of Pacific Monarch, Inc.
137 Haw. 371
| Haw. | 2016Background
- The AOAO (Association of Apartment Owners) purchased the leased‑fee interest in the Pacific Monarch condominium complex and offered unit leased‑fee interests to lessees in 1996 via a DROA form that lessees (including the Furuyas) returned with deposits.
- The Furuyas signed DROAs for units 3206 and 3207 and deposited $1,000 per unit; unit 3207’s leased‑fee purchase closed, but unit 3206 (and an appurtenant 106 parking stalls interest) did not close and AOAO never executed the DROA’s acceptance line for 3206.
- AOAO records and witness testimony show that, shortly after signing, Clarence Furuya told AOAO he did not want to buy the 106 parking stalls and instead sought to sell the parking leasehold to AOAO; AOAO then retained the parking leased‑fee and levied an assessment to finance acquisition.
- The Furuyas sued asserting breach of contract, specific performance, promissory estoppel, declaratory and injunctive relief, ultra vires, and related claims; the trial court dismissed several claims after a bench trial and issued findings concluding the Furuyas had decided not to purchase the parking stalls and thus were not ready, willing, and able to perform.
- The ICA affirmed, reasoning the DROA required AOAO’s acceptance to be binding, AOAO never accepted the 3206 DROA, and the Furuyas’ promissory‑estoppel and equitable claims failed due to lack of reasonable reliance; the Hawai‘i Supreme Court granted certiorari and affirmed the ICA.
Issues
| Issue | Plaintiff's Argument (Furuya) | Defendant's Argument (AOAO) | Held |
|---|---|---|---|
| Was the DROA an enforceable contract for unit 3206 and the 106 parking stalls? | Signing and returning the DROA was acceptance of AOAO’s offer; escrow opening and deposit show a contract. | The DROA was an offer that required AOAO’s signature/acceptance; AOAO never accepted the 3206 DROA. | Held: No enforceable contract — AOAO did not accept and trial evidence shows Furuyas withdrew from buying parking stalls. |
| Were the Furuyas entitled to specific performance or damages for breach? | They were ready, willing, and able to close and AOAO improperly refused to close. | Furuyas were not ready/willing: they decided not to buy parking stalls, failed to fund escrow; they caused the failure to close. | Held: Denied — plaintiffs were not ready, willing, and able; their decision not to buy stalls caused non‑closing. |
| Did AOAO violate its Bylaws or act ultra vires by retaining the leased‑fee interest rather than selling to lessees? | Bylaws required AOAO to offer/sell leased‑fee interests to lessees; retaining violates bylaws and statute. | Bylaws grant Board discretion to acquire/hold and to sell "in the sole discretion"; AOAO acted within its authority, especially after lessee declined stalls. | Held: AOAO did not act ultra vires — Bylaws permit acquisition/holding and the court found AOAO’s retention permissible. |
| Does promissory estoppel apply (did Furuyas reasonably rely on AOAO promises)? | Furuyas relied to their detriment on AOAO’s representations and DROA; enforcement is necessary to avoid injustice. | Reliance was unreasonable because Furuyas voluntarily decided not to purchase stalls and thus could not reasonably rely. | Held: Promissory estoppel fails — reliance was not reasonable and enforcement is not necessary to avoid injustice. |
Key Cases Cited
- Ikeoka v. Kong, 386 P.2d 855 (Haw. 1963) (doctrine preventing a promisor from taking advantage of a condition precedent he caused to fail; waiver).
- PR Pension Fund v. Nakada, 809 P.2d 1139 (Haw. App. 1991) (plaintiff seeking specific performance must show readiness, willingness, and ability to close).
- Molokai Ranch v. Morris, 36 Haw. 219 (Haw. Terr. 1942) (mutuality and readiness to perform relevant to equitable relief).
- Stanford Carr Dev. Corp. v. Unity House, Inc., 141 P.3d 459 (Haw. 2006) (party responsible for breach cannot recover for that breach).
- Kalinowski v. Yeh, 847 P.2d 673 (Haw. App. 1993) (specific performance requires readiness and ability to perform).
- Adair v. Hustace, 640 P.2d 294 (Haw. 1982) (equitable maxims such as laches and doing equity apply to specific performance and injunctions).