Articles Posted in Arbitration & Mediation

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The Supreme Court affirmed its decision in Narayan I, in which the court held that Plaintiffs, a group of individual condominium owners, could not be compelled to arbitrate claims arising from the financial breakdown of a condominium project. Specifically, the court held in Narayan I that the arbitration clause was unenforceable because the terms of the documents at issue were ambiguous with respect to Plaintiffs’ intent to arbitrate and that portions of the arbitration clause were unconscionable. The United States Supreme Court vacated and remanded Narayan I for further consideration in light of its recent decision in DIRECTV, Inc. v. Imburgia, 577 U.S. __ (2015), which held that state law must place arbitration agreements on equal footing with all other contracts. After recognizing this principle, the Hawaii Supreme Court held that that the arbitration clause at issue in the present case was unconscionable under common law contract principles. View "Narayan v. Ritz-Carlton Development Co." on Justia Law

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Appellants, a group of individual condominium owners in the Kapulua Bay condominium, challenged the vote of the Association of Apartment Owners of Kapulua Bay Condominium to convert the residential community into a hotel. The dispute was submitted to arbitration. On appeal, Appellants challenged the adequacy of the neutral arbitrator’s disclosures in the arbitration. The circuit court concluded that vacatur was not required because the undisclosed relationships did not constitute “evident partiality.” The Supreme Court affirmed, holding that the circuit court did not clearly err in concluding that the arbitrator’s undisclosed connections with certain parties did not constitute evident partiality. View "Narayan v. Ass'n of Apartment Owners of Kapalua Bay Condominium" on Justia Law

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Under the circumstances of this case, it was unconscionable to require an employee to pay half the estimated arbitration costs up front in order to access the arbitral forum, and therefore, the requirement was unenforceable. Plaintiff signed and submitted an employment contract that contained an arbitration provision. Plaintiff, however, never did work for Defendant. Plaintiff filed a complaint alleging that Defendant refused to hire her in retaliation for her filing a sexual harassment complaint. Defendant filed a motion to compel arbitration. Plaintiff opposed the motion to compel, arguing, inter alia, that the arbitration agreement was unconscionable because it required her to pay for the arbitration costs in a civil rights matter. The circuit court ultimately granted Defendant’s motion to compel arbitration. The court found it would be unconscionable for Plaintiff to pay half the arbitration estimate to access the arbitral forum but nonetheless concluded that the arbitration clause could be enforced by requiring Defendant to pay for all arbitration fees and costs. The Supreme Court vacated the circuit court’s order, holding that the circuit court (1) correctly concluded that the parties entered into a valid arbitration agreement; but (2) improperly reformed the arbitration agreement instead of invalidating the entire agreement. View "Gabriel v. Island Pacific Academy, Inc." on Justia Law

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RT Import Inc. filed a complaint against Jesus and Mila Torres seeking damages for merchandise allegedly misdelivered by WFS to the Torreses, which was then converted by the Torreses. RT Import and the Torreses agreed to resolve their dispute through binding arbitration. The arbitrator found that the Torreses committed the intentional tort of conversion and awarded RT Import damages. The arbitrator also found that the Torreses were responsible for arbitration fees and costs. The circuit court granted RT Import’s motion to confirm the final award and awarded RT Import $106,711.62 in damages and $8,355.49 for arbitration attorney’s fees and costs. The Intermediate Court of Appeals (ICA) affirmed the circuit court’s confirmation of the final arbitration award and judgment. The Supreme Court vacated the circuit court’s judgment as to $4,738.74 of the $8,355.49 for RT’s arbitration attorney’s fees and costs and otherwise affirmed, holding that the circuit court erred by including in the judgment confirming the arbitration award $4,738.74 directly billed by RT Import to the Torreses, which was not a part of the final award. Remanded. View "RT Import, Inc. v. Torres" on Justia Law

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This case arose from a construction contract dispute between homeowners Ramon Romero and Cassie Romero and contractor Noel Madamba Contracting LLC (Madamba). The case proceeded to arbitration. Arbitrator Patrick K.S.L. Yim issued a partial final arbitration award concluding that Madamba breached the construction contract and that the Romeros were entitled to compensatory damages. Following the issuance of the partial final award, the parties learned that the law firm representing the Romeros throughout the arbitration had been retained by the administrator of Yim’s personal retirement accounts. Madamba moved to vacate the arbitration award based on this previously undisclosed information. The circuit court denied the motion, determining that Yim’s failure to disclose this information did not constitute evident partiality. The Intermediate Court of Appeals affirmed. The Supreme Court vacated the judgments of the lower courts, holding that Yim’s failure to disclose his relationship with the Romeros’ counsel’s law firm constituted evident partiality requiring vacatur of the arbitration award. Remanded with instructions to vacate the arbitration award. View "Noel Madamba Contracting, LLC v. Romero" on Justia Law

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This case arose from a dispute over the adequacy of concrete work Nordic PCL Construction, Inc. performed on a condominium construction project as a subcontractor to LPIHGC, LLC. The parties proceeded to arbitration. An arbitrator selected by the parties issued an arbitration award in favor of LPIHGC. LPIHGC moved to confirm, and Nordic moved to vacate, the arbitration award. The circuit court denied the motion to vacate and granted the motion to confirm. The Intermediate Court of Appeals (ICA) vacated the arbitration award on the grounds that the arbitrator failed to disclose various relationships with the law firms of LPIHGC’s attorneys. The Supreme Court vacated the ICA’s judgment on appeal and the circuit court’s final judgment, thereby vacating the associated orders granting LPIHGC’s motion to confirm the arbitration award and denying Nordic’s motion to vacate the arbitration award, holding that because the factual and/or legal bases upon which the circuit court denied the motion to vacate were unascertainable, the Supreme Court was unable to appropriately review the circuit court’s ruling. Remanded for an evidentiary hearing and entry of findings of fact and conclusions of law on Nordic’s motion to vacate. View "In re Arbitration of Nordic PCL Constr., Inc. v. LIPHGC, LLC" on Justia Law

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The case arose from a dispute over the adequacy of concrete work Nordic PCL Construction, Inc. performed on a condominium construction project as a subcontractor to LPIHGC, LLC. The subcontract contained a binding arbitration clause. The arbitrator entered a partial final award and final award (collectively, the arbitration award), ruling in favor of LPIHGC. LPIHGC filed a motion to confirm, and Nordic filed a motion to vacate the arbitration award. Neither party requested an evidentiary hearing to address disputed issues of material fact. The circuit court granted LPIHGC’s motion and denied Nordic’s motion and entered final judgment in favor of LPIHGC. The intermediate court of appeals (ICA) reversed, concluding that the arbitrator’s failure to disclose various relationship with the law firms of LPIHGC’s attorneys established a reasonable impression of partiality requiring vacatur of the arbitration award. The Supreme Court vacated the ICA’s judgment, holding that because the circuit court did not explain the basis of its rulings on the record or enter findings of fact or conclusions of law, the Court was unable to determine whether the circuit court erred in denying Nordic’s motion to vacate. Remanded to the circuit court for an evidentiary hearing and entry of findings of fact and conclusions of law on Nordic’s motion to vacate. View "Nordic PCL Constr., Inc. v. LIPHGC, LLC" on Justia Law

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After the County of Kaua’i and Kaua’i Police Department filled five police sergeant positions through internal promotions, the State of Hawaii Organization of Police Officers (SHOPO) challenged, through the grievance procedures of the collective bargaining agreement (CBA) governing the parties, the non-promotions of three police officers. The parties were unable to resolve the grievances, and the matter was submitted to arbitration. The arbitrator found that the promotions were subjective, arbitrary, and capricious in violation of the CBA and awarded the three officers promotions and back pay. The circuit court vacated the arbitrator’s remedy, concluding that it was beyond the scope of the arbitrator’s authority to award promotions. The intermediate court of appeals (ICA) vacated in part the circuit court’s orders and remanded to the circuit court for confirmation of the arbitrator’s decision in its entirety, concluding that the arbitrator did not exceed his authority in awarding promotions and that the circuit court erred in finding otherwise. The Supreme Court affirmed, holding that the arbitrator acted within the scope of his authority under the CBA. View "In re Grievance Arbitration Between State of Haw. Org. of Police Officers" on Justia Law

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Plaintiffs, individual condominium owners, entered into purchase agreements with the developer of a Maui condominium project. Homeowners received the condominium declaration, which contained an arbitration clause, and other documents governing the project along with their purchase agreements. When the condominium development began experiencing financial problems, Homeowners filed suit against Respondents, the development and management companies for the project. Respondents filed a motion to compel arbitration, which the circuit court summarily denied. The intermediate court of appeals (ICA) reversed, holding that a valid arbitration agreement existed, this dispute fell within the scope of that agreement, the arbitration terms were procedurally conscionable, and the arbitration clause was not an unenforceable contract of adhesion. The Supreme Court vacated the ICA’s judgment and affirmed the circuit court’s order denying Respondents’ motion to compel arbitration, holding (1) because Plaintiffs did not unambiguously assent to arbitration, the agreement to arbitrate was unenforceable; (2) the ICA erred by placing dispositive weight on procedural unconscionability without addressing the alleged substantive unconscionability of the arbitration terms; and (3) the ICA erred by concluding that Plaintiffs had failed to demonstrate procedural unconscionability. View "Narayan v. Ritz-Carlton Dev. Co." on Justia Law

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This labor dispute arose out of a negotiation between the State and other governmental entities (collectively, the State) and United Public Workers (UPW) regarding the renewal and modification of a collective bargaining agreement. The State and UPW failed to reach an agreement, and the case proceeded to arbitration. Because the parties were unable to select a neutral arbitrator, the Hawai’i Labor Relations Board (HLRB) ordered the American Arbitration Association to select the neutral arbitrator. Both parties challenged the actions of the HLRB. The circuit court affirmed the HLRB’s rulings. On appeal, UPW asserted that the circuit court had jurisdiction to resolve the dispute regarding the selection of the arbitrator. The Intermediate Court of Appeals disagreed, determining that HLRB had exclusive original jurisdiction under Haw. Rev. Stat. 89-14. UPW appealed, arguing that the circuit court had jurisdiction over the dispute regarding selection of the arbitrator under Haw. Rev. Stat. 658A. The Supreme Court affirmed, holding (1) the HLRB had jurisdiction to resolve the dispute over the selection of the arbitrator under chapter 89, as the arbitration was required by statute as part of the legislatively mandated process for resolving impasses in collective bargaining; and (2) chapter 658A was not applicable to this case. View "State v. Nakaneula" on Justia Law