Harrison v. Casa De Emdeko, Incorporated.Harrison v. Casa De Emdeko, Incorporated.
*** FOR PUBLICATION IN WEST’S HAWAIʻI REPORTS AND PACIFIC REPORTER ***
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-15-0000744; CIV. NO. 13-1-153K)
I. Introduction
LaVonne Harrison, Trustee of LaVonne’s Family Trust, a Revocable Living Trust Agreement Dated September 28, 1989 (“Harrison”), an owner of two commercial apartments within a mixed-use development project managed by Casa de Emdeko, Incorporated, a Hawaiʻi nonprofit corporation, also known as Casa De Emdeko Association of Apartment Owners (“Casa”), filed a complaint in the Circuit Court of the Third Circuit1 (“circuit court”) on March 4, 2013, alleging she was improperly assessed for expenses that should have been charged only to residential apartment owners. Specifically, Harrison asserts she should not have been assessed for expenses related to elevators, lanai railings, drains, cable television, and pest control, because these expenses are attributable solely to residential apartments.
In the circuit court, Harrison moved for summary judgment. In its memorandum in opposition, Casa asserted that based on case law allowing entry of summary judgment for a non-moving party where there are no genuine issues of material fact, the circuit court should grant summary judgment in its favor. The circuit court treated Casa’s memorandum as a cross-motion for summary judgment and granted summary judgment in Casa’s favor. It concluded as a matter of law that the disputed assessments were not for limited common elements exclusive to the residential apartments, as argued by Harrison, but rather were for common elements, and were therefore expenses for which Harrison must pay her pro rata share. The circuit court further concluded Harrison was estopped from disputing the expenses because she knew or should have known that Casa had been assessing her for the disputed items for quite some time.
In its June 20, 2017 Summary Disposition Order (“SDO”), the Intermediate Court of Appeals (“ICA”) concluded the circuit court erred in granting summary judgment in favor of Casa with respect to the cable television and pest control expenses because it was unclear whether these assessments related to common elements or limited common elements. The ICA also concluded that pursuant to the Restated Declaration of Horizontal Property Regime and Hawaii Revised Statutes (“HRS”) Chapter 514A (2006), the elevators, lanai railings, drains, and cable television wires are common elements, expenses for which Harrison was required to contribute. The ICA also concluded, however, that Harrison was not estopped from disputing the assessments for cable television services and pest control expenses.
Harrison raises a single question in her Application for Writ of Certiorari (“Application”):
Did the Intermediate Court of Appeals of the State of Hawaii (“ICA”) err in affirming the Circuit Court of the Third Circuit, Kona Division’s (“Circuit Court”) granting of Summary Judgment and Final Judgment; finding that the expenses and costs
to maintain interior elevators, interior lanais and related interior improvements located solely within the residential buildings of the Casa de Emdeko Condominium Project and which are reserved exclusively for residential purposes, are “common elements” for which the commercial units of Cas[a] de Emdeko Condominium Project, located entirely in a separate building without elevators, are subject to assessments?
(Emphasis omitted.)
For the reasons explained below, we hold that the elevators and lanai railings of this project are limited common elements, expenses for which Harrison was not required to contribute as an owner of commercial apartments. We also hold that genuine issues of material fact precluded summary judgment as a matter of law as to whether Harrison is liable for the challenged expenses relating to the drains and cable television wires. We also hold that the circuit court erred in alternatively granting summary judgment based on estoppel by acquiescence as to all items, as genuine issues of material fact also exist as to that defense.
Therefore, we affirm the ICA’s SDO and its July 31, 2017 Judgment on Appeal (“JOA”) as to its rulings regarding the cable television service and pest control services expenses and otherwise vacate the SDO and JOA. The circuit court’s “Order Denying Plaintiff’s Motion for Summary Judgment, Filed 4/17/14 and Granting Defendant Casa de Em Deko, Incorporated’s Cross Motion for Summary Judgment,” filed on July 22, 2014, and the “Amended Final Judgment,” filed on October 8, 2015, are vacated in their entireties, and this case is remanded to the circuit court for further proceedings consistent with this opinion.
II. Background
A. Facts
Casa is a Hawaiʻi nonprofit corporation organized and incorporated for the purpose of managing, maintaining, protecting, and preserving 106 residential condominium apartments and three commercial apartments located in North Kona, Hawaiʻi (“the Project”). There are five buildings in the Project -- two three-story buildings, designated as Wing A and Wing B, containing only residential apartments, and three two-story buildings, designated as Building C, Building D, and Building L, each containing and constituting one commercial apartment.
The Project was first established pursuant to a Declaration of Horizontal Property Regime, with attached bylaws, dated February 19, 1969.2 Since 1995, the Project has been governed by a Restated Declaration of Horizontal Property Regime and By-Laws of Casa De Emdeko dated February 3, 1995 (“Declaration” or “Casa Declaration”).3
Since 1982, Harrison has been the owner of two commercial apartments, Apartments C and D, which are buildings C and D of the Project, and has a 6.726% ownership interest in the Project.4 Harrison also served on Casa’s Board of Directors (“Board”) from at least 2001 to 2011. Her two commercial apartment unit buildings do not have elevators, cable television, or lanais, and they are physically separated from Wings A and B, the two three-story buildings that contain residential apartments.
Pursuant to Section M of the Casa Declaration, a Maintenance Reserve Fund was created into which all apartment owners must pay to cover their respective obligations “to provide for utilities, insurance, maintenance,
are assessed dues that are deposited into Casa’s “maintenance” and “reserve” accounts for the purpose of maintenance, repair, and replacement of both “common elements” and “limited common elements” of the entire Project.
B. Procedural History
1. Circuit Court Proceedings
a. Complaint
On March 4, 2013, Harrison filed a civil complaint against Casa, seeking declaratory relief, damages, and attorneys’ fees and costs. She alleged that between 2010 and 2013, she was improperly assessed for amounts paid into the “reserve” account” for residential elevators, lanai railings and drains, which were for “limited common elements” attributable solely to residential apartments. She also asserted that between 2009 to 2013, she was improperly assessed for amounts paid into the “maintenance” account” for cable TV, pest control and elevator maintenance costs. She alleged these funds were actually for “limited common elements,” attributed solely to residential buildings and apartments, for which she was not responsible. Harrison alleged
that Casa therefore violated the Casa Declaration and applicable law.
On October 15, 2013, Casa filed its answer and a counterclaim seeking declaratory relief that (1) its assessments were lawful; and (2) Harrison had an obligation to pay the assessments.
b. Motions for Summary Judgment
On April 17, 2014, Harrison filed a motion for summary judgment. Harrison and Casa repeat their various legal arguments in the circuit court, on appeal to the ICA, and on certiorari to this court. Therefore, their arguments are discussed and analyzed in the Discussion section, Section IV below.
To summarize, in her motion, Harrison argued she was improperly assessed for costs relating to elevators, stairways, walkways, lanais, lanai railings, drains, cable television, pest control, and elevator maintenance because they related to residential building limited common elements. She attached Casa’s maintenance fee calculations from 2006 to 2013 (“maintenance fee calculations”) and Casa’s “Reserve Expenses Per Financial Statements 10/01/03 - 09/30/2012” to her motion.
In its June 12, 2014, memorandum in opposition, in summary, Casa argued the disputed expenses related to common elements, not limited common elements. In addition, Casa argued that
Harrison’s claims were barred by estoppel by acquiescence and consent since she had been an owner of the commercial apartments for 30 years and had served on the Board from at least 2001 to 2011, but had not objected to the disputed items until recently. Casa then argued that Flint v. MacKenzie, 53 Haw. 672, 673, 501 P.2d 357, 357-58 (1972) (per curiam), authorized the circuit court to enter summary judgment in its favor as a non-moving party, based on a lack of genuine issues of material fact entitling it to summary judgment as a matter of law.6
Casa attached to its memorandum a declaration from Susan Gand (“Gand”), a director
3, 2010, Harrison did not object to and voted to approve elevator modernization as a common reserve expense of $82,500; and (5) Harrison did not notify Casa in writing of any complaints or objections regarding the drains, lanai railings, pest control or cable television expenses until October 24, 2012.
On June 26, 2014, Harrison filed a reply memorandum, raising various arguments as to why the disputed expenses constituted charges for limited common elements for which she was not responsible. In response to Casa’s estoppel by acquiescence argument, Harrison argued she should not be estopped for simply being an apartment owner for thirty years and having served on the Board, because she objected after she was made aware of the Association’s method of characterizing expenses. Harrison attached a declaration asserting that (1) after she determined how Casa was wrongfully assessing her expenses relating to residential units, she complained to Gand and the Board on multiple occasions; (2) after she complained to Gand, Gand “agreed” with her complaints and brought it to the attention of the Board; (3) thereafter, Casa’s budgets included line items for limited common elements and one of the line items was for elevator modernization; (4) in the approved Casa fiscal year 2011-2012 Budget (“2011-2012 Budget”), the elevator modernization expense of $82,500 was listed as a limited common
element under reserve expenses; (5) the approved 2011-2012 Budget also contained the statement “LCD CE = Limited Common Elements which are only appurtenant to the 106 residential units”; (6) she did not know of replacements of the drain lines in the residential apartments until after the renovations to the residential apartments in 2006 and that there are seventeen three-story stacks with drain lines appurtenant to and for the use of the residential apartments only; (7) the residential apartments each have a lanai exclusive to and appurtenant to their apartment and the lanais on the second and third floors of the residential apartments have lanai railings; and (8) the lanai railings were not an issue until their replacement on or about 2006. She also attached the 2011-2012 Budget and Casa’s 2011-2012 maintenance fee calculations.
c. Circuit Court Judgment
After a hearing on July 2, 2014, on July 22, 2014, the circuit court entered an “Order Denying Plaintiff’s Motion for Summary Judgment, Filed 4/17/14 and Granting Defendant Casa De Emdeko, Incorporated’s Cross-Motion for Summary Judgment” (“Order”), stating, in relevant part, the following:
The Court concludes as a matter of law that the residential elevators, lanai railings, drains, and cable tv wires are common elements and the expenses relating to the residential elevators, lanai railings, drains, cable tv, and pest control are common expenses pursuant to Casa de Emdeko’s restated declaration and bylaws, and Hawaii Revised Statutes (“HRS”) Chapter 514A, except as provided in HRS §514B-22 and HRS §514B-23.
Further, estoppel operates to bar the Plaintiff’s claims for damages during the time she knew or should have known that the Defendant was applying funds from the reserve account and maintenance account to alleged limited common elements or limited common expenses, but delayed in bringing an action.
On August 22, 2014, the circuit court entered its final judgment. (On October 8, 2015, it entered its amended final judgment.) Harrison timely appealed to the ICA on September 19, 2014.
On appeal to the ICA, Harrison asserted four points of error in the circuit court’s Order, three of which are relevant to this certiorari proceeding: (1) the circuit court erred in concluding the disputed items were common elements and therefore constituted common expenses; (2) estoppel by acquiescence was improperly applied as there were genuine issues of material fact; (3) the circuit court erred in concluding the disputed items were assessable to both residential and commercial apartments.7
The ICA vacated the circuit court’s decision in part. Harrison v. Casa de Emdeko, No. CAAP-15-0000744 (App. June 20, 2017) (SDO). The ICA affirmed the circuit court’s conclusion
that the elevators were common elements, ruling that the elevators were not apartments or limited common elements. Casa, SDO at 4. The ICA further concluded that elevators were common elements under HRS § 514A-13(h) (2006) because they were not within the apartments themselves. Id. at 5. It also concluded that the elevators were not entries, stairways, or walkways under Section A(3) of the Casa Declaration, and were therefore not limited common elements. Id.
The ICA also ruled that lanai railings were common elements. Id. Because lanai railings were not specified as common elements or limited common elements in the Casa Declaration, the ICA looked to HRS Chapter 514A and concluded that under HRS § 514A-3(8), as lanai railings were necessary for the Project’s safety, they were common elements, regardless of whether or not they were exclusive to the residential apartments. Id.
In addition, the ICA concluded that drains were common elements under Section A(2)(d) of the Casa Declaration because they were pipes that can be used for services such as water and sewer. Id. at 6. In its decision, the ICA referred to Merriam-Webster’s definition of “drain” as “a means (as a pipe) by which usu. liquid matter is drained.” Merriam-Webster’s Collegiate Dictionary at 378 (11th ed. 2003). Casa, SDO at 6 n.3.
Furthermore, the ICA concluded that cable television wires were common elements under the Casa Declaration because the Casa Declaration provides that “[a]ll . . . wiring . . . and other central and appurtenant transmission facilities and installations over, under and across the project for services such as . . . television signal distribution” were common elements. Id.
The ICA therefore rejected Harrison’s claim that she was not liable for expenses relating to the elevators, lanai railings, drains, and cable television wires, reasoning that since they were common elements, the expenses related to them were common expenses. Id. Based on its conclusion that these were common elements, the ICA did not address the circuit court’s alternative estoppel by acquiescence ruling regarding these expenses. Id. at 7.
The ICA concluded, however, that the record was unclear as to whether cable television service and pest control expenses were common expenses for common elements. It also ruled there were genuine issues of material fact as to the estoppel by acquiescence defense regarding these expenses, and vacated and remanded the circuit court’s amended final judgment as to these expenses. Id.
3. Certiorari proceedings
On September 20, 2017, Harrison timely filed her
Application, presenting the following question:
Did the Intermediate Court of Appeals of the State of Hawaii (“ICA”) err in affirming the Circuit Court of the Third Circuit, Kona Division’s (“Circuit Court”) granting of Summary Judgment and Final Judgment; finding that the expenses and costs to maintain interior elevators, interior lanais and related interior improvements located solely within the residential buildings of the Casa de Emdeko Condominium Project
and which are reserved exclusively for residential purposes, are “common elements” for which the commercial units of Cas[a] de Emdeko Condominium Project, located entirely in a separate building without elevators, are subject to assessments?
(Emphasis omitted.)
She argues the ICA erred in concluding the elevators, lanais, and “related interior improvements” (the drains and cable television wires) were common elements because her commercial apartments are in buildings separate from the residential apartment buildings and do not have these items. She also argues that if this court reverses the ICA’s holding, the issue of estoppel is no longer moot. We accepted certiorari to address whether the circuit court and ICA erred by summarily ruling that elevators, lanai railings, drains, and cable television wires were common elements, expenses for which Harrison would be responsible. If so, we must also address whether the circuit court erred by alternatively granting summary judgment in favor of Casa based on estoppel by acquiescence.
III. Standards of Review
A. Summary Judgment
An appellate court reviews a grant of summary judgment de novo, applying the same standards as a trial court:
Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. A fact is material if proof of that fact would have the effect of establishing or refuting one of the essential elements of a cause of action or defense asserted by the parties. The evidence must be viewed in the light most favorable to the non-moving party. In other words, we must view all of the evidence and the inferences drawn therefrom in the light most favorable to the party opposing the motion.
Jou v. Dai-Tokyo Royal State Ins. Co., 116 Hawaiʻi 159, 164, 172 P.3d 471, 476 (2007) (citations omitted).
B. Interpretation of a Contract
In Laeroc Waikiki Parkside, LLC v. K.S.K. (Oahu) Ltd. P’ship, 155 Hawaiʻi 201, 213, 166 P.3d 961, 973 (2007), we stated:
When reviewing the court’s interpretation of a contract, the construction and legal effect to be given a contract is a question of law freely reviewable by an appellate court. This court has determined that it is fundamental that terms of contract should be interpreted according to their plain, ordinary and accepted use in common speech, unless the contract indicates a different meaning. Further, in construing a contract, a court’s principal objective is to ascertain and effectuate the intention of the parties as manifested by the contract in its entirety. If there is any doubt, the interpretation which most reasonably reflects the intent of the parties must be chosen.
(internal quotation marks, citations, and brackets omitted).
C. Interpretation of a Statute
Statutory interpretation is guided by the following rules:
First, the fundamental starting point for statutory interpretation is the language of the statute itself. Second, where the statutory language is plain and unambiguous, our sole duty is to give effect to its plain and obvious meaning. Third, implicit in the task of statutory construction is our foremost obligation to ascertain and give effect to the intention of the legislature, which is to be obtained primarily from the language contained in the statute itself. Fourth, when there is doubt, doubleness of meaning, or indistinctiveness or uncertainty of an expression used in a statute, an ambiguity exists.
A. Preliminary Issues
1. Issues on Certiorari
The ICA vacated the circuit court’s summary judgment ruling that cable television service and pest control service expenses were common expenses and that Harrison was alternatively estopped from arguing that they were not, concluding that there are genuine issues of material fact as to these issues. Casa did not seek certiorari review of these rulings. Therefore, we do not address these issues. Based on the ICA’s rulings, this case must already be remanded to the circuit court with respect to the cable television service and pest control service expenses.
We must determine on certiorari whether the circuit court and ICA erred by summarily ruling that elevators, lanai railings, drains, and cable television wires were common
elements, for which Harrison was proportionately liable. If we conclude summary judgment was improperly granted as to any of these items, then we must also address whether the circuit court erred by alternatively granting summary judgment in favor of Casa based on estoppel by acquiescence.
2. Condominium Law Generally and History of the Project
The starting point of determining whether part of a condominium is a common element or limited common element begins with a condominium’s declaration. Generally, the declaration and bylaws of a condominium serve as a contract between the condominium owners and the association, establishing the rules governing the condominium. See Association of Apartment Owners of Maalaea Kai, Inc. v. Stillson, 108 Hawaiʻi 2, 9, 116 P.3d 644, 651 (2005) (citing Bradford Square Condo. Ass’n v. Miller, 258 Ga.App. 240, 245, 573 S.E.2d 405, 409 (2002) (“The condominium instruments, including the bylaws and the sales agreement, are a contract that governs the legal rights between the [a]ssociation and unit owners.”)).
The Casa Declaration was first established under the provisions of the “Horizontal Property Act,” 1961 Haw. Sess. Laws Act 180, which was codified as HRS Chapter 514. The legislature then repealed Chapter 514 and passed Chapter 514A, governing Condominium Property Regimes, as Act 98 of 1977. 1977 Haw. Sess. Laws Act 98, § 3 at 181. In 2004, the legislature
sought to “update, clarify, organize, deregulate, and provide for consistency and ease of use of the condominium property regimes law,” as directed by Act 213, Session Laws of Hawaiʻi 2000. 2004 Haw. Sess. Laws Act 164, § 1 at 756. The legislature recognized that Hawaii’s “condominium property regimes law is unorganized, inconsistent, and obsolete in some areas, and micro-manages condominium associations. The law is also overly regulatory, hinders development, and ignores technological changes and the present day development process.” 2000 Haw. Sess. Laws Act 213 § 1 at 521. As a result, the legislature recodified Hawaii’s condominium property regimes law, amending the HRS by adding HRS Chapter 514B. 2004 Haw. Sess. Laws Act 164 § 2 at 756.
HRS Chapter 514A was initially scheduled to be repealed on July 1, 2006, but before it could be repealed, the repeal provisions themselves were repealed. 2005 Haw. Sess. Laws Act 93 § 6 at 237, 2006 Haw. Sess. Laws Act 273 § 33 at 1145. Therefore, HRS Chapter 514A, except as provided in HRS §§ 514B-22 (2006) and -23 (2006),8 governs
Here, the Casa Declaration specifies the Project was established pursuant to HRS Chapter 514A, as amended. Thus, if the Casa Declaration is unclear, we must turn to HRS Chapter 514A or sections of HRS Chapter 514B (2006) deemed applicable by Chapter 514A.10
the circuit court for further proceedings consistent with this opinion.
Francis L. Jung
for petitioner
Wesley H. H. Ching
for respondent
/s/ Mark E. Recktenwald
/s/ Paula A. Nakayama
/s/ Sabrina S. McKenna
/s/ Richard W. Pollack
/s/ Michael D. Wilson