Leary v. Robert's Hawaii, Inc

FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
28-APR-2026
08:31 AM
Dkt. 51 OP

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI#I

---o0o---

GENE ARTHUR LEARY, JR., IN HIS CAPACITY AS TRUSTEE
OF THE EDWARD J. SAX FAMILY PROTECTION TRUST
DATED NOVEMBER 20, 2018, Claimant-Appellee,
v.
ROBERT'S HAWAII, INC., Respondent-Appellant

NO. CAAP-XX-XXXXXXX

APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CASE NO. 1CSP-XX-XXXXXXX)

APRIL 28, 2026

NAKASONE, CHIEF JUDGE, HIRAOKA AND GUIDRY, JJ.

OPINION OF THE COURT BY HIRAOKA, J.

Gene Arthur Leary, Jr., Trustee of The Edward J. Sax

Family Protection Trust, filed a special proceeding to compel

Robert's Hawaii, Inc. to arbitrate a dispute over the price

Robert's Hawaii had to pay to buy Trust's interest in Teuila

Hawaii LLC. The Circuit Court of the First Circuit granted

Trust's motion to compel arbitration.1 Robert's Hawaii appeals.

1
The Honorable Karin L. Holma presided.
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It contends the arbitration provision in the contract that

created Trust's option to sell was ambiguous and unenforceable.

We hold that the arbitration provision, contained in a

contract jointly drafted by parties of equal sophistication and

bargaining power, was not ambiguous, and was enforceable. We

affirm the Final Judgment entered on May 24, 2024. We also

affirm the August 29, 2024 Order Granting in Part Claimant's

Motion for Fees and Costs.

I. BACKGROUND

Teuila Hawaii Inc. owned and operated Chief's Luau, a

lû#au show in Kapolei, O#ahu. Trust owned half of the

corporation's stock. Robert's Hawaii agreed to buy some of

Trust's interest if the corporation was first converted to a

limited liability company. They signed the Membership Interest

Purchase Agreement. The Purchase Agreement's effective date was

December 26, 2019. Teuila Hawaii Inc. was converted to a limited

liability company on January 2, 2020. LLC's Operating Agreement

had an effective date of January 7, 2020.2
The Purchase Agreement gave Trust the option to sell,

and obligated Robert's Hawaii to buy, Trust's remaining interest

in what would become LLC, and included a formula to determine the

price. The parties call it the Option. Trust exercised the

Option in December 2022. The parties disagreed on the price.

Trust demanded arbitration. By letter dated December 6, 2023,

Robert's Hawaii declined to arbitrate.

2
A limited liability company's operating agreement serves "to
regulate the affairs of the company and the conduct of its business, and to
govern relations among the members, managers, and company." Hawaii Revised
Statutes § 428 -103(a) (2004).

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Trust sued Robert's Hawaii to compel arbitration. The

Circuit Court granted Trust's motion to compel arbitration,

denied Robert's Hawaii's motion to stay enforcement of its order

pending disposition of this appeal, and awarded Trust attorney

fees and costs. The Final Judgment was entered on May 24, 2024.

This appeal followed.

II. POINTS OF ERROR

Robert's Hawaii challenges the orders: (1) granting

Trust's motion to compel arbitration; (2) denying Robert's

Hawaii's motion to stay enforcement of the arbitration order; and

(3) awarding Trust attorney fees and costs.

III. STANDARDS OF REVIEW

A. Order Compelling Arbitration

We review an order compelling arbitration de novo,

examining the evidence considered by the trial court and applying

the standard for a motion for summary judgment.3 Yamamoto v.

Chee, 146 Hawai#i 527, 533, 463 P.3d 1184, 1190 (2020).

Summary judgment is appropriate when the moving party

shows, by admissible evidence, that the material facts are

uncontroverted and it is entitled to judgment as a matter of law.

Nozawa v. Operating Engineers Local Union No. 3, 142 Hawai#i 331,

342, 418 P.3d 1187, 1198 (2018).

B. Motion to Stay

We review a trial court's denial of a motion to stay

enforcement of a judgment pending appeal for abuse of discretion.

3
We disregard the parties' representations and arguments about
facts that don't appear in the record on appeal.

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See Kelepolo v. Fernandez, 148 Hawai#i 182, 187, 468 P.3d 196,

201 (2020) (court has discretion to set amount of supersedeas

bond or alternative security sufficient to protect rights of

appellee).

C. Attorney Fees and Costs

We review an order granting or denying attorney fees

and costs for abuse of discretion. Deutsche Bank Nat'l Tr. Co.

v. Kozma, 140 Hawai#i 494, 497, 403 P.3d 271, 274 (2017).

IV. DISCUSSION

A. The Circuit Court correctly granted Trust's
motion to compel arbitration.

A court deciding a motion to compel arbitration answers

two questions: (1) is there an arbitration agreement between the

parties; and (2) if so, is the subject matter of the dispute

arbitrable under the agreement. Fireman's Fund Ins. Co. v. AIG

Haw. Ins. Co., 109 Hawai#i 343, 349, 126 P.3d 386, 392 (2006).

1. The Purchase Agreement's arbitration
provision is unambiguous and
enforceable.

To be valid and enforceable, an arbitration agreement

must: (1) be in writing; (2) be unambiguous about the intent to

submit disputes or controversies to arbitration; and (3) have

bilateral consideration.4 Douglass v. Pflueger Haw., Inc., 110

Hawai#i 520, 531, 135 P.3d 129, 140 (2006). The construction of,

and legal effect given to, an arbitration agreement is a question

of law. Yamamoto, 146 Hawai#i at 533, 463 P.3d at 1190.

4
Robert's Hawaii does not contend there was no bilateral
consideration.

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The Purchase Agreement contained this arbitration

provision:

14.3 Arbitration. All disputes under this Agreement
which cannot be resolved by the parties shall be settled by
arbitration in the State of Hawaii, before a single
arbitrator in accordance with Chapter 658A of the Hawaii
Revised Statutes and the Arbitration Rules, Procedures and
Protocols of Dispute Prevention & Resolution, Inc. (" DPR").
Arbitration may be commenced at any time by any party hereto
by giving written notice to each other party to a dispute
that such dispute has been referred to arbitration. The
arbitrator shall be selected by the joint agreement of the
parties, but if they do not so agree within twenty (20) days
after the date of the notice referred to above, the
selection shall be made by the executive in charge of DPR.
Any award rendered by the arbitrator shall be conclusive and
binding upon the parties hereto. This provision for
arbitration shall be specifically enforceable by the parties
and the decision of the arbitrator in accordance herewith
shall be final and binding and there shall be no right of
appeal therefrom, except as otherwise provided in HRS
Chapter 658A. The arbitrator shall award to the prevailing
party its costs and reasonable attorneys' fees incurred in
connection with such arbitration.

(Bold italics added.)

Robert's Hawaii contends the arbitration provision is

made ambiguous by other provisions of the Purchase Agreement.

Whether an arbitration agreement is ambiguous is a question of

law. Yamamoto, 146 Hawai#i at 533, 463 P.3d at 1190. We

construe the Purchase Agreement as a whole, and determine its

meaning "from the entire context and not from any particular

word, phrase, or clause." Haw. Med. Ass'n v. Haw. Med. Serv.

Ass'n, 113 Hawai#i 77, 92, 148 P.3d 1179, 1194 (2006).

Robert's Hawaii argues that sections 14.2, 14.4, and

16.7 of the Purchase Agreement make the section 14.3 arbitration

provision ambiguous. They provide:

14. DEFAULT.
. . . .

14.2 Remedies for Breach Following First Tranche
Closing. If after the First Tranche Closing, Seller or

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Buyer fails to perform any of its remaining obligations,
including obligations with respect to the purchase and sale
of the Second Tranche, and obligation [sic] remaining after
the Second Tranche Closing, then the other Party may
exercise any remedies available to it at law or in equity,
in any order it deems appropriate in its sole and absolute
discretion, including, but not limited to, seeking specific
performance or damages.
14.3 Arbitration. . . .
14.4 Costs of Enforcement. In the event either Party
brings any suit or other proceeding with respect to the
subject matter or enforcement of this Agreement, the
prevailing party (as determined by the court, agency or
other authority before which such suit or proceeding is
commenced) shall, in addition to such other relief as may be
awarded, be entitled to recover reasonable attorneys' fees,
expenses and costs of investigation as actually incurred
(including, without limitation, reasonable attorneys' fees,
expenses and costs of investigation incurred in appellate
proceedings, costs incurred in establishing the right to
indemnification, or in any action or participation in, or in
connection with, any case or proceeding under the Bankruptcy
Code, 11 United States Code Sections 101 et seq. or any
successor statutes).
. . . .

16. MISCELLANEOUS.
. . . .

16.7 Applicable Laws; Severability; Venue. This
Agreement shall be governed by and shall be construed in
accordance with the laws of the State of Hawaii. If any
provision of this Agreement is held to be invalid or
unenforceable, the validity and enforceability of the other
provisions of this Agreement will remain unaffected. The
parties agree that the venue for the enforcement of this
Agreement shall be in the Circuit Court of the First Circuit
of the State of Hawaii or the United States District Court
for the District of Hawaii. This Agreement shall be
construed in accordance with and governed by the laws of the
State of Hawaii.

(Bold italics added.)

Robert's Hawaii relies on Luke v. Gentry Realty, Ltd.,

105 Hawai#i 241, 96 P.3d 261 (2004), and Narayan v. Ritz-Carlton

Development Co., 135 Hawai#i 327, 350 P.3d 995 (2015)

(Narayan I), vacated, 577 U.S. 1056, 136 S. Ct. 800, 193

L. Ed. 2d 701 (2016), aff'd on remand, 140 Hawai#i 343, 400 P.3d

544 (2017) (Narayan II). The cases are distinguishable.

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In Luke, subdivision homeowners sued the subdivision

developer and others. The homeowners had signed the developer's

sales agreement. Under paragraph G, if the developer defaulted,

the buyer "may pursue any remedies available at law or in

equity[.]" 105 Hawai#i at 244, 96 P.3d at 264. But three pages

later, paragraph K contained a mandatory mediation and

arbitration provision. Id. at 249, 96 P.3d at 269.

The defendants moved to dismiss or compel arbitration

under the sales agreement. The circuit court stayed the lawsuit

and compelled arbitration. The plaintiffs appealed. The supreme

court, reading paragraphs G and K together, stated that "the

scope of the binding arbitration provision is unclear." Id. at

249, 96 P.3d at 269. The court held:

A reasonable buyer entering into this contract would not
know whether she or he maintained the right to judicial
redress or whether she or he had agreed to arbitrate any
potential dispute. Therefore, an ambiguity exists in the
plain language of the contract.
This ambiguity must be resolved in favor of the
Plaintiffs. This court has affirmed the general rule that,
in interpreting contracts, ambiguous terms are construed
against the party who drafted the contract . Resolving this
ambiguity in favor of the Plaintiffs, we cannot say that the
Plaintiffs agreed to submit the claims made in this
litigation to arbitration; therefore, we hold that the
circuit court erred in staying the judicial proceedings
pending arbitration.

Id. (emphasis added) (citations omitted).

In the Narayan cases, condominium homeowners signed

purchase agreements that incorporated by reference the

condominium declaration, which contained an arbitration clause.

Narayan II, 140 Hawai#i at 346-47, 400 P.3d at 547-48. After the

United States Supreme Court vacated Narayan I, the Hawai#i

Supreme Court held the arbitration clause was "unconscionable

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under common law contract principles." Id. at 357, 400 P.3d at

558. The supreme court stated that

unconscionability so pervades the arbitration clause that it
is unenforceable. As a starting point, the arbitration
clause is part of an adhesion contract whose terms were
unilaterally determined by the stronger contracting party,
and are ambiguous when read together with the other
controlling documents.

Id. at 356, 400 P.3d at 557 (emphasis added).

In Narayan I the supreme court stated:

Not only was the declaration drafted by a party with
superior bargaining strength, it was recorded in the bureau
of conveyances prior to the execution of the purchase
agreements. The Homeowners had no choice but to conform to
the terms of the declaration as recorded if they wanted to
purchase a Ritz–Carlton condominium on Maui. Thus, the
declaration is "adhesive" — in the sense that it was drafted
or otherwise proffered by the stronger of the contracting
parties "on a take this or nothing basis."

135 Hawai#i at 336–37, 350 P.3d at 1004–05 (emphasis added)

(cleaned up).

Here, Robert's Hawaii's president Roy Pfund explained:

The parties jointly drafted an agreement for Robert's
[Hawaii] to purchase [Trust]'s interest in [Teuila Hawaii].
Finalizing the agreement between the parties involved
extensive negotiations and the exchange of over ten drafts
and took over nine months. Both parties had input into the
drafting of the [Purchase Agreement] and neither party was
the drafter of the [Purchase Agreement].

"When the contract has been negotiated between two

parties of equal sophistication and equal bargaining power, the

rule of interpreting ambiguities against the drafter has been

held inapplicable." Amfac, Inc. v. Waikiki Beachcomber Inv. Co.,

74 Haw. 85, 110 n.5, 839 P.2d 10, 25 n.5 (1992). In such a case:

Where the language of a contract is susceptible of two
constructions, one of which makes it fair, customary and
such as prudent men would naturally execute, while the other
makes it inequitable, unusual, or such as reasonable men

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would not likely enter into, the interpretation which makes
a fair, rational and probable contract must be preferred.

Id. at 110, 839 P.2d at 25 (quotation marks omitted).

The Purchase Agreement provisions cited by Robert's

Hawaii can easily be reconciled with the arbitration provision.

If either party breached after the First Tranche Closing, the

non-breaching party could pursue any remedy, in any order it

deemed appropriate. If it demanded arbitration and the other

party declined, the former could sue to compel arbitration,

provided the lawsuit is venued in Hawai#i. If it waived the

arbitration provision and sued, the action had to be venued in

Hawai#i. The defendant could then move to compel arbitration or,

if it too preferred to litigate, could also waive the arbitration

provision. See Fireman's Fund, 109 Hawai#i at 354, 126 P.3d at

397 (noting that a party may waive an agreement to arbitrate by

taking action "completely inconsistent with any reliance

thereon"). We hold that the Purchase Agreement's arbitration

provision is unambiguous and enforceable.

2. LLC's Operating Agreement does not apply
to the dispute over pricing of Trust's
interest in LLC.

Robert's Hawaii also argues that sections 11.7 and 11.8

of LLC's Operating Agreement make the Purchase Agreement's

arbitration provision ambiguous. [OB @ 20] The Operating

Agreement does not contain an arbitration provision. Rather, it

mandates mediation before litigation:

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SECTION 11. MISCELLANEOUS PROVISIONS
. . . .
11.7 Governing Law; Jurisdiction. This Agreement
shall be construed and enforced in accordance with the laws
of the State of Hawaii. Each Member, by execution of this
Agreement, consents and submits to jurisdiction over the
Member by, and venue in, the courts of the State of Hawaii
in and for Honolulu, Hawaii, regarding any legal action
arising from, or otherwise related to, this Agreement.
11.8 Dispute. In the event of a dispute,
controversy, or disagreement (the "Disputes") between or
among any of the Manager, Company, and the Members, or their
Affiliates (the "Parties"), and the Parties are unable to
resolve the Disputes after a good faith effort to do so, the
concerned parties agree to attempt a resolution of all
outstanding Disputes through mediation pursuant to the rules
of a recognized neutral professional mediation service in
Hawaii, such as Dispute Prevention Resolution, Inc. or the
American Arbitration Association, prior to commencement of
any litigation in a court of competent jurisdiction. The
cost of such mediation, including the mediator's fees, shall
be split equally between the parties. If mediation is not
successful in resolving the Disputes, then the Parties are
free to proceed with any legal recourse or remedies
available to them in a court of law. The parties hereby
agree to waive any and all rights to a trial by jury.

An unexecuted form of operating agreement was attached

to the Purchase Agreement. Unlike the homeowner purchase

agreement in the Narayan cases, which incorporated the

condominium declaration by reference, the Purchase Agreement did

not incorporate the Operating Agreement. Instead, the form of

the document was attached to show what Robert's Hawaii had to

approve in writing as one of the conditions for converting Teuila

Hawaii from a corporation to a limited liability company.

LLC's members were to be Robert's Hawaii, Trust, and

Folosielu Avea. Pfund was to be LLC's manager. The Operating

Agreement states: "The Members and Manager desire to operate

[LLC] in accordance with the terms of this [Operating] Agreement

and [Hawaii Revised Statutes (HRS) Chapter 428]." Thus, if

Robert's Hawaii, Trust, Avea, or Pfund had a dispute over the

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conduct of LLC's business, or their relationships as the LLC's

members or manager, that dispute need not be arbitrated.

Robert's Hawaii points to the Purchase Agreement's non-

contravention section, which provides:

4.6 Non-Contravention. [Trust] warrants that except
for the matters addressed in Section 6 (with respect to
conversion of the Company to a limited liability company)
neither [Trust] nor Company is required to give any notice
to, make any filing with, or obtain any authorization,
consent or approval of any government or governmental agency
or any other person in order to consummate any of the
transactions contemplated in this Agreement, except for such
notices, filings, authorizations, consents or approvals, the
absence of which would not have a material adverse effect on
the Company. Neither the execution and delivery of this
Agreement nor the consummation by [Trust] of the
transactions contemplated herein will contravene, conflict
with, result in violation or breach of, or constitute a
default under: (a) the Articles of Incorporation, Bylaws, or
Operating Agreement of the Company; (b) any statute,
regulation, ordinance, regulation, rule, code, injunction,
judgment, order, or decree of any government, governmental
agency or court to which [Trust] is subject; (c) any
agreement, contract, lease or license, or other legally
binding arrangements, whether written or oral, to which
[Trust] is a party, except the violation, breach or default
would not have a material adverse effect on the Company; or
(d) result in the imposition or creation of any encumbrance
upon the [interest Trust is selling to Robert's Hawaii].

Robert's Hawaii argues Trust's representation that its

execution of the Purchase Agreement "will [not] contravene,

conflict with, result in violation or breach of, or constitute a
default under . . . the . . . Operating Agreement" creates an

inconsistency, because the dispute over the Option is subject to

arbitration under the Purchase Agreement, but not under the

Operating Agreement. The argument is not persuasive because the

Option didn't arise under the Operating Agreement; it involves

the Purchase Agreement only.

The Purchase Agreement provided:

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13. OPTION TO SELL [TRUST]'S REMAINING INTEREST.
13.1 Acknowledgments. The Parties acknowledge that
as of the Effective Date, (a) [Trust] owns fifty percent
(50%) of the stock of the Company; (b) immediately following
the conversion of the Company to a limited liability
company, [Trust] will own a fifty percent (50%) Membership
Interest, represented by 500 Membership Units, in the
Company; and (c) [Trust] has agreed to sell a forty percent
(40%) Membership Interest, represented by 400 Membership
Units, in the Company to [Robert's Hawaii], in two tranches,
as set forth in Sections 2 and 11, leaving [Trust] with a
ten percent (10%) Membership Interest, represented by 100
Membership Units, in the Company that is not subject to an
obligation to sell to [Robert's Hawaii] (the " Option
Interest").
13.2 Option to Sell. [Robert's Hawaii] hereby grants
to [Trust], effective upon the First Tranche Closing, the
option and right (the "Option to Sell") to require [Robert's
Hawaii] at any time during the five (5) year period
commencing on the First Tranche Closing Date to purchase the
Option Interest for a purchase price equal to (i) ten
percent (10%) of the amount equal to the Company's EBITDA[ 5]
for the then most recently completed fiscal year (the " Last
Fiscal"), as determined in accordance with Section 13.3,
multiplied by 4.0, from which product shall be subtracted
the amount of Company Long-Term Debt. [Trust] shall
exercise the Option to Sell by delivering written notice
thereof to [Robert's Hawaii].
13.3 Determination of EBITDA. For purposes of this
Section 13.3, EBITDA shall be determined as set forth in
Section 2.3[6] except that references to "FY2018" shall be
understood to be to "Last Fiscal;" and (b) the Last Fiscal
EBITDA shall not be subject to the cap of Two Million
Dollars ($2,000,000.00) set forth in Section 2.3(a).

Trust exercised the Option on December 14, 2022.

Robert's Hawaii responded on May 10, 2023:

5
EBITDA is an acronym for LLC's "earnings before interest, taxes,
depreciation and amortization[.]"
6
As relevant here, section 2.3 of the Purchase Agreement provided:
If the Parties are unable to reach agreement on the [Last
Fiscal] EBITDA within ten (10) calendar days following
[Robert's Hawaii]'s receipt of the [Trust]'s Proposed
EBITDA, the determination of the Company's [Last Fiscal]
EBITDA shall be submitted to N&K CPAs, Inc. or such other
certified public accountant acceptable to both parties (the
"Referee"), who shall decide which of the [Robert's
Hawaii]'s Proposed EBITDA and the [Trust]'s Proposed EBITDA
is the more correct; and that which is determined by the
Referee to be the more correct figure shall be the [Last
Fiscal] EBITDA used[.]

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Please note the following adjustments that were made to the
calculated EBITDA for 2021, the most recent completed fiscal
based on your letter dated December 14, 2022:
2021 EBITDA - $5,632,121

10% share based on 4 times multiple $2,252,848
Our calculation to determine the purchase amount of your 10%
remaining interest includes adjustments to reduce your
payment by the cost of our legal fees and settlement with
Hawaii Discount and John Fredella totaling $818,809. This
cost is directly related to your agreement with HD and John
that ended up being more than the 30 day month to month
agreement that was represented to us at the time of purchase
and your ownership and control of the domain name and other
social media accounts. The second adjustment is related to
distribution already paid in 2022 of $900.000 [sic]. These
distributions represent a prepayment on the future cash that
we are purchasing.

(Emphasis added.)

Trust replied that Robert's Hawaii improperly excluded

income from EBITDA and adjusted its payment obligation in ways

not allowed under the Purchase Agreement, and calculated the

price to be $3,421,056.

Robert's Hawaii did not respond. Trust demanded that

the EBITDA dispute be resolved by a certified public accountant

under the Purchase Agreement section 2.3's baseball arbitration

provision.7 Trust specified:

The determination of the applicable Last Fiscal EBITDA is
the only issue to be submitted to the Referee. Any effort
by Robert's [Hawaii] to apply discounts or adjustments to
the purchase price to be paid under the Option (whether
based on legal fees and settlement amounts paid,
distributions paid, or otherwise) is not before the Referee,
and shall be determined in arbitration pursuant to Section
14.3 of the [Purchase Agreement].

7
Baseball arbitration, so named for its use to set Major League
Baseball player salaries, is a type of binding dispute resolution where each
party submits a proposed figure to an arbitrator. The arbitrator must choose
one of the two figures, and cannot modify the amount. This approach
encourages both sides to be reasonable; if one party submits an outrageous
number, the arbitrator is more likely to choose the other party's more
reasonable submission. See Tex. Med. Ass'n v. U.S. Dep't of Health & Hum.
Servs., 110 F.4th 762, 768 n.8 (5th Cir. 2024) (citing Jeff Monhait, Baseball
Arbitration: An ADR Success, 4 Harv. J. Sports & Ent. L. 105, 133 (2013)).

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Trust filed a Demand for Arbitration with Dispute

Prevention & Resolution, Inc. on November 21, 2023. It alleged:

11. Based on [LLC]'s 2021 financial statements,
which were prepared by Robert's [Hawaii's] own accountants,
the purchase price under the Option equals $3,421,056.
. . . .
28. As a result of Robert's [Hawaii's] breach of the
[Purchase Agreement], the calculation of EBITDA in
accordance with the Option, including the question as to
whether 2021 grant income is to be included as income in
calculating EBITDA, must be determined by the Referee, and
the impropriety of Robert's [Hawaii's] attempt to apply
additional "adjustments" to reduce the purchase price must
be determined in this arbitration proceeding.

By letter dated December 6, 2023, Robert's Hawaii

declined to arbitrate. By letter dated December 21, 2023, it

agreed "to participate in Mediation and the Referee Process

without any waiver of legal or substantive rights or

arguments[.]"

Trust filed the proceeding below on December 22, 2023.

Its motion to compel arbitration stated:

A dispute has arisen under the [Purchase Agreement] in
relation to [Trust]'s option to sell, and Robert's
[Hawaii's] obligation to purchase, [Trust]'s ten percent
(10%) membership interest in [LLC] in accordance with the
terms of the [Purchase Agreement]. . . . [Trust]
respectfully requests that the Court issue an order
compelling Robert's [Hawaii] to participate in binding
arbitration as to all issues set forth in the Demand for
Arbitration.

(Emphasis added.)

The Demand for Arbitration was an exhibit to Trust's

motion. It alleged that Robert's Hawaii breached the Purchase

Agreement by failing to pay the Option price to Trust "in

accordance with the terms of the" Purchase Agreement. Count I

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made a claim for breach-of-contract damages. Count II requested

a declaration that:

a. [Trust] timely and effectively exercised the Option;
b. Robert's [Hawaii] is obligated to purchase the Option
Interest from [Trust] at a "purchase price equal to
(i) [sic] ten percent (10%) of the amount equal to the
Company's EBITDA for the then most recently completed
fiscal year (the "Last Fiscal"), as determined in
accordance with Section 13.3, multiplied by 4.0, from
which product shall be subtracted the amount of
Company Long-Term Debt";
c. The determination of the "Last Fiscal EBITDA,"
including the question of whether SVOG[ 8] proceeds are
properly included as income, shall be submitted to the
Referee for determination, and such determination
shall be binding on [Trust] and Robert's [Hawaii];

d. [Trust] is not liable for amounts incurred by [LLC] or
Robert's [Hawaii] in the HD Litigation,[ 9] and the HD
Litigation does not provide grounds for Robert's
[Hawaii] to reduce or avoid its obligation to pay the
purchase price as required under the Option;

e. Until the Option Closing occurs, there has been no
transfer of [Trust]'s membership interest, [Trust]
remains a member of [LLC], and [Trust] is entitled to
distributions as a member. As such, the purchase
price for the Option Interest shall not be reduced
based on 2022 distributions paid to [Trust]; and
f. The purchase price that Robert's [Hawaii] is obligated
to pay [Trust] for the Option Interest is the amount
determined by the Referee, with no reductions or other
adjustments to be applied.

The disputes Trust sought to arbitrate arose under the

Purchase Agreement, which created the Option and prescribed how

the price was to be calculated. None arose under the Operating

Agreement, which pertained to the conduct of LLC's business and

Trust's and Robert's Hawaii's relationship as LLC's members — not

as optionor and optionee under the Purchase Agreement.

8
SVOG is an acronym for a "Shuttered Venue Operators Grant," paid
to businesses affected by the COVID-19 pandemic and associated government
restrictions.
9
HD Litigation refers to a lawsuit involving Hawaii Discount and
John Fredella referred to in Robert's Hawaii's May 10, 2023 calculation of the
Option price.

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Robert's Hawaii argues that LLC's SVOG proceeds, HD

Litigation expenses, and 2022 distributions to Trust involved the

conduct of LLC's business. But the amounts, propriety, and

reasonableness of the income, expenses, and distributions were

not being disputed; the issue for arbitration was whether

Robert's Hawaii could use them to reduce LLC's 2021 EBITDA or the

price it must pay for Trust's remaining interest in LLC.

On this record, we conclude that nothing in the

Operating Agreement made the Purchase Agreement's arbitration

agreement ambiguous. We hold that the subject matter of Trust's

Demand for Arbitration was arbitrable under the Purchase

Agreement. The Circuit Court did not err by granting Trust's

motion to compel arbitration.

B. Robert's Hawaii's appeal from the order
denying its motion to stay is moot.

Robert's Hawaii's appeal from the order denying its

motion to stay the arbitration pending appeal is moot because we

are affirming the order granting Trust's motion to compel

arbitration.

C. The Circuit Court did not abuse its
discretion by awarding attorney fees to
Trust.

Trust claimed $69,810.97 in attorney fees. The Circuit

Court reduced the hourly rate of one of Trust's attorneys from

$700 to $550, and declined to award fees for time entries that

were "purely clerical in nature[.]" The court awarded $68,666.46

in fees. Robert's Hawaii contends the court erred by awarding

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any attorney fees. Robert's Hawaii alternatively contends the

court abused its discretion by not further reducing the fee

award.

1. Trust was entitled to recover attorney
fees.

HRS § 607-14 (2016) authorizes an award of attorney

fees "in all actions on a . . . contract in writing that provides

for an attorney's fee, . . . to be paid by the losing party[.]"

The Purchase Agreement's section 14.4 (quoted above) provides

that "the prevailing party" in a suit to enforce the Purchase

Agreement is entitled to recover reasonable attorney fees and

expenses.

Robert's Hawaii argues that Trust hasn't yet prevailed,

because "the issue of arbitrability was merely a procedural

threshold issue untethered to the core dispute." Trust was

entitled to attorney fees because the procedural issue — whether

Robert's Hawaii had to arbitrate the dispute over the Option

price — was not tethered to the price dispute. This is not a

case like Kozma, where our vacation of a mortgagee's summary

judgment simply put the mortgagor "back in the place he started

. . . without addressing a disputed main issue." 140 Hawai#i at

499, 403 P.3d at 276 (quotation marks omitted).

Here, Robert's Hawaii disagreed that it had to

arbitrate the Option price dispute. That disagreement was "a

matter wholly separate from the merits" of what the Option price

should be. Ass'n of Owners of Kukui Plaza v. Swinerton & Walberg

Co., 68 Haw. 98, 106, 705 P.2d 28, 34 (1985) (cleaned up). When

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the Circuit Court granted Trust's motion to compel arbitration,

it enforced the Purchase Agreement's arbitration provision.

Trust prevailed on the main and only issue presented by the

special proceeding. Trust was entitled to an award of reasonable

attorney fees and costs under section 14.4 of the Purchase

Agreement and HRS § 607-14.

2. The Circuit Court acted within its
discretion by not further reducing the
amount of the fee claim.

Robert's Hawaii contends the Circuit Court abused its

discretion by awarding excessive attorney fees. Trust's fee

request was calculated "using the lodestar method, in which the

number of hours reasonably expended are multiplied by a

reasonable hourly rate." Gurrobat v. HTH Corp., 135 Hawai#i 128,

138, 346 P.3d 197, 207 (2015). "The lodestar approach is

strongly presumed to yield a reasonable fee." Id. "[T]he party

requesting a lodestar adjustment must show that the unmodified

lodestar would lead to an unreasonable fee." Id. at 139, 346

P.3d at 208. Robert's Hawaii does not challenge Trust's

attorneys' hourly rates.

Robert's Hawaii argues that "three partner-level

attorneys" and "an associate" attorney spent "patently excessive

amounts of time" "in connection with a discrete special

proceeding"; the "Circuit Court should have disregarded or

discounted duplicate or triplicate billing entries"; and the

"Circuit Court should have disregarded or discounted block billed

entries." According to Robert's Hawaii, the issue "is whether

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such a process reasonably required four different attorneys,

including three partner-level attorneys,[10] to complete that

work and whether 213.1 hours of cumulative time on a

'four-corners' analysis of contractual documents was reasonable

and necessary."

Trust responds by citing cases for the proposition that

"[w]here there are complex issues, spending more than 200 hours

on a motion is reasonable." Trust explains that its motion to

compel arbitration had to respond to the legal authority cited in

Robert's Hawaii's December 6, 2023, letter declining to

arbitrate. Trust argues: "The fact that Robert's abandoned its

own argument after reading the Motion demonstrates that the time

that [Trust]'s counsel put into the Motion was well-spent. But

[Trust] still had to address Robert's new arguments[.]"

The Circuit Court concluded "that given all the facts

and circumstances, the time spent for the work accomplished was

reasonable. Among other things, the issues in the case were

complex, there were numerous issues that were analyzed and

evaluated, and the analysis, documents and arguments presented to

the court were in-depth." That conclusion is supported by the

record. The dispute over arbitrability was hard-fought, and both

sides had competent, experienced counsel.

Robert's Hawaii argues Trust should not have been

awarded fees "pertaining to issues first raised in the Trust's

Reply." The argument lacks merit because Robert's Hawaii's

10
We note that Robert's Hawaii was also represented by three
partner-level attorneys in the circuit court proceeding.

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opposition raised new arguments, and it was reasonable for Trust

to respond. Rule 7(b), Rules of the Circuit Courts of the State

of Hawai#i.

Robert's Hawaii argues that six time entries were

block-billed and should have been disregarded or discounted.

"Block billing" is a time-keeping method where a lawyer enters

the total daily time spent working on a case instead of itemizing

the time expended on specific tasks. Gurrobat, 135 Hawai#i at

135, 346 P.3d at 204. "Block billing may also be defined as the

practice of lumping multiple tasks into a single time entry."

Id.

Neither current Hawai#i law nor the recent practice of
American courts suggest that block billing is categorically
unacceptable, or that block billing should normally result
in denial of the block billed entries. If anything, it
appears generally accepted that block billing should not
automatically lead to the rejection of block billed entries.

. . . .

In addition, block billing can only occur where
multiple tasks are lumped together into a single billing
entry. In order to determine if multiple tasks are actually
being claimed in a single block, a certain degree of common-
sense is required; the mere inclusion of the word "and" in a
billing entry is certainly not determinative. For example,
"reviewing and drafting" a document, "reviewing and
revising" a document, "drafting and finalizing" a document,
and other such descriptions all involve the single task of
"working on" a document. Similarly, tasks such as drafting
a document and making a follow-up telephone call related to
the same document can be viewed as part of the single task
of working on the document. Billing descriptions that
merely detail the types of activities that make up a single
general task will not normally support a block billing
objection, provided the court can determine the
reasonableness of the hours expended on the general task.

Id. at 135-36, 346 P.3d at 204-05 (citations and footnote

omitted).

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Five of the six entries challenged by Robert's Hawaii

describe activities making up a single general task. The Circuit

Court acted within its discretion by not disregarding the entries

or discounting the fees.

One entry, by Andrew J. Lautenbach, was for "final

review and edits to motion to compel arbitration, and assist with

filing (1.5 [hours])." (Emphasis added.) Robert's Hawaii argued

to the Circuit Court that the second clause of the entry "appears

to be ministerial in nature" and should be disallowed.

Had the motion to compel been conventionally filed, see

Hawai#i Electronic Filing and Service Rules (HEFSR) Rule 1, the

time spent by an attorney to take the document to the circuit

court clerk for filing would not be recoverable. Cf. Haw.

Ventures, LLC v. Otaka, Inc., 116 Hawai#i 465, 479, 173 P.3d

1122, 1136 (2007) (noting that "messenger fees for the routine

task of delivering [a party]'s documents to court[ ] is

categorically outside the concept of 'costs.'" (quoting Kikuchi

v. Brown, 110 Hawai#i 204, 212, 130 P.3d 1069, 1077 (App.
2006))). Here, Lautenbach was the JEFS User, see HEFSR Rule 1,

who signed and had to electronically file the motion to compel,

see HEFSR Rules 2.2, and 5.1.

A person employed by an attorney "may register as a

JEFS user in his or her own name to electronically file documents

on behalf of the employer." HEFSR Rule 4.1(b). But "[t]he

employer shall be responsible for the actions and documents

electronically filed by the assistant or staff member." Id.

Even if Lautenbach's nonlawyer employee was the JEFS User who

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electronically filed the motion to compel, Lautenbach was still

obligated to "make reasonable efforts to ensure that the person's

conduct is compatible with the professional obligations of the

lawyer[.]" Hawai#i Rules of Professional Conduct Rule 5.3(b)

(Responsibilities Regarding Nonlawyer Assistants). Under these

circumstances, the Circuit Court acted within its discretion by

not discounting Lautenbach's fees.

V. CONCLUSION

The arbitration provision in the Purchase Agreement, a

contract jointly drafted by parties of equal sophistication and

equal bargaining power, was unambiguous and enforceable. The

Circuit Court did not err by granting Trust's motion to compel

arbitration, nor did it abuse its discretion by awarding attorney

fees to Trust. The May 24, 2024 Final Judgment and August 29,

2024 Order Granting in Part Claimant's Motion for Fees and Costs

are affirmed.

On the briefs:
/s/ Karen T. Nakasone
Joachim P. Cox, Chief Judge
Abigail M. Holden,
Brian W. Tilker, /s/ Keith K. Hiraoka
for Respondent-Appellant Associate Judge
Robert's Hawaii, Inc.
/s/ Kimberly T. Guidry
Andrew V. Beaman, Associate Judge
Trevor A. Brown,
Andrew J. Lautenbach,
for Claimant-Appellee
Gene Arthur Leary, Jr.,
in his capacity as Trustee.

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