Moloaa Farms LLC v. Green Energy Team LLC

NOT FOR PUBLICATION IN WEST'S HAWAIʻI REPORTS AND PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
21-JUN-2024
08:16 AM
Dkt. 116 SO

NO. CAAP-XX-XXXXXXX

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAIʻI

MOLOAA FARMS LLC, a Hawaiʻi limited liability company,
Plaintiff-Appellant, v.
GREEN ENERGY TEAM LLC, a Hawaiʻi limited liability company,
Defendant-Appellee.

APPEAL FROM THE CIRCUIT COURT OF THE FIFTH CIRCUIT
(CASE NO. 5CC141000188)

SUMMARY DISPOSITION ORDER
(By: Hiraoka, Presiding Judge, Nakasone and McCullen, JJ.)

Plaintiff-Appellant Moloaa Farms LLC (Moloaa) appeals

from the Circuit Court of the Fifth Circuit's 1 June 24, 2019

amended final judgment in favor of Defendant-Appellee Green

Energy Team LLC (Green Energy). On appeal, Moloaa contends the

circuit court erred in granting Green Energy's Hawai‘i Rules of

Civil Procedure (HRCP) Rule 52(c) 2 motion for judgment on partial

1 The Honorable Kathleen N.A. Watanabe presided.

2 HRCP Rule 52(c) provides:

If during a trial without a jury a party has been fully
heard on an issue and the court finds against the party on
(continued . . .)
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findings, which the parties and the circuit court referred to as

a motion for directed verdict. 3

Upon careful review of the record and the briefs

submitted by the parties and having given due consideration to

the issues raised and the arguments advanced, we resolve

Moloaa's arguments as discussed below.

Conclusions of law in an HRCP Rule 52(c) directed

verdict bench trial are reviewed de novo. Furuya v. Ass'n of

Apartment Owners of Pac. Monarch, Inc., 137 Hawai‘i 371, 383, 375

P.3d 150, 162 (2016). And, "[a]s a general rule, the

construction and legal effect to be given a contract is a

(. . . continued)
that issue, the court may enter judgment as a matter of law
against that party with respect to a claim or defense that
cannot under the controlling law be maintained or defeated
without a favorable finding on that issue, or the court may
decline to render any judgment until the close of all the
evidence. Such a judgment shall be supported by findings
of fact and conclusions of law as required by subdivision
(a) of this rule.

3 Moloaa raises 100 points of error challenging certain findings and
conclusions in the circuit court's March 5, 2019 "Final Findings of Fact,
Conclusions of Law and Order Granting [Green Energy's] Motion for Directed
Verdict Against [Moloaa] After Jury-Waived Trial." Moloaa does not provide
corresponding arguments in the argument section of its opening brief for each
of the 100 points of error, but instead addresses these findings and
conclusions in the context of its arguments on appeal. See Hawai‘i Rules of
Appellate Procedure Rule 28(b). We address the challenged findings and
conclusions in the same manner.

Moloaa also argues the circuit court erred in concluding it acted in
bad faith, failed to mitigate its damages, breached the Option Agreement, and
was estopped from enforcing the lease. However, based on our decision below,
we need not reach these arguments.

We do not consider Appendix B of the answering brief because it was not
included in the record on appeal and there was no request for judicial
notice.

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question of law" reviewed de novo. Kahawaiolaa v. Hawaiian Sun

Invs., Inc., 146 Hawai‘i 424, 432, 463 P.3d 1081, 1089 (2020)

(citation omitted); see generally, Clarabal v. Dep't of Educ.,

145 Hawai‘i 69, 79, 446 P.3d 986, 996 (2019) (noting questions of

law are reviewed de novo).

The "OPTION TO LEASE AGREEMENT" (Option Agreement)

gave Green Energy an option to lease almost 600 acres (the

Property) from Moloaa. Attached to the Option Agreement was the

"LEASE" (Proposed Lease) that would take effect if Green Energy

exercised its option to lease the Property.

(1) Moloaa argues the "essential terms were agreed

upon as set forth in the [Option Agreement] and the Companion

Recorded Documents." The parties agree the Proposed Lease did

not contain an effective date or set the Biomass prices for the

Percentage Rent provisions.

(a) Effective date. Section (2)(c) of the Option

Agreement determined the effective date. Once the option to

lease is timely exercised, "Optionor agrees to lease the

Property to Optionee, on or before the date that is (30) days

after Optionor's receipt of the Exercise Notice, and the Parties

shall thereupon execute the Lease, which shall enter into effect

on the effective date stated in the Lease." Thus, the Proposed

Lease would become effective on the thirtieth day after Moloaa

received the notice to exercise the option to lease, or earlier

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if Moloaa signed the Proposed Lease sooner than thirty days

after it received Green Energy's notice. Because the effective

date was set without further negotiation, the missing date did

not render the Proposed Lease unenforceable. See generally, In

re Sing Chong Co., 1 Haw. App. 236, 239-40, 617 P.2d 578, 581

(1980).

(b) Biomass prices. The Proposed Lease did not

contain Biomass prices to be applied to bone dry tons harvested

to calculate Percentage Rent. It is ambiguous whether that

meant no percentage rent was to be paid, or the Biomass prices

were subject to negotiation. Parol evidence is admissible to

resolve that ambiguity. See generally, Hawaiian Ass'n of

Seventh-Day Adventists v. Wong, 130 Hawai‘i 36, 45-46, 305 P.3d

452, 461-62 (2013). Moloaa's sole owner and manager, Jeffrey

Lindner (Lindner), testified he did not negotiate for Percentage

Rent and did not expect to be paid Percentage Rent:

• "[t]here was absolutely no discussion ever about
percentage rents";

• "I never had any expectation of percentage rent. We
never talked about it. I never included it in my
negotiation";

• "I never expected any percentage rent, but yes, it
is blank. In my mind, you know, Green Energy Team
gets off not having to pay me. That's all it is";

• "That's why I never negotiated anything. I expected
nothing, and, . . . if other people didn't fill it
in . . . I would think the interpretation would be

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that it would be -- it would be zero. If there's
nothing in there, it would be zero and . . . I
didn't expect it and I don't expect it now"; and

• the percentage rent section was "superfluous".

Exhibit J-6 is consistent with Lindner's testimony.

It shows the Percentage Rent provision was a remnant from a

lease Green Energy's attorney had prepared for Green Energy and

Hawaiian Mahogany Inc., and was used as a form for the Proposed

Lease. It also shows Lindner negotiated only the amounts he

wanted Moloaa to be paid for the option and for Annual Base

Rent.

Thus, the blanks in the Percentage Rent provision do

not support a finding or conclusion that further negotiation

over the essential terms of the Proposed Lease was required, or

that the Proposed Lease was unenforceable once Green Energy gave

timely notice it was exercising its option to lease.

(2) Next, Moloaa argues the circuit court erred in

concluding "the parties did not intend to be bound by the

Proposed Lease attached to the" Option Agreement. (Formatting

altered.)

The parties' subjective intent is irrelevant because

the Option Agreement contained an integration provision stating

it "shall not be amended, modified or discharged, nor may any of

its terms be waived, except by an instrument in writing signed

by the Parties." It clearly stated the attached Proposed Lease

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will take effect "on or before the date that is (30) days after

[Moloaa]'s receipt of the Exercise Notice, and the Parties shall

thereupon execute the Lease[.]" The Option Agreement did not

allow modification of the Proposed Lease (which also contained

an integration provision). Whatever the parties' subjective

intent may have been before the Option Agreement was executed,

once it was executed the parties were bound by its unambiguous

terms. Parol evidence of the parties' subjective intent is not

admissible to contradict these unambiguous terms. See, e.g.,

Trs. of Est. of Bishop v. Au, 141 Hawai‘i 248, 407 P.3d 1284,

CAAP-XX-XXXXXXX, 2017 WL 6614566, at *2 (App. Dec. 22, 2017)

(SDO) (noting the integration clause in a settlement agreement

precluded admissibility of parol evidence to contradict its

express terms).

We hold the circuit court erred in finding and

concluding the Proposed Lease lacked sufficiently definite terms

and Moloaa and Green Energy did not intend to be bound by the

Proposed Lease should the option to lease be invoked. We need

not address Moloaa's other arguments. We do not decide whether

Exhibit J-21 (which the circuit court referred to as the

"Purported Lease") is valid or binding, or any other legal issue

not specifically addressed in this summary disposition order.

The circuit court erred in granting Green Energy's

HRCP Rule 52(c) motion for judgment on partial findings. We

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therefore vacate the March 5, 2019 "Final Findings of Fact,

Conclusions of Law and Order Granting Defendant's Motion for

Directed Verdict Against Plaintiff After Jury-Waived Trial," the

May 30, 2019 "Order Granting in Part and Denying in Part

Defendant Green Energy Team LLC's Motion for Award of Attorneys'

Fees and Costs re Granting of Defendant's Motion for Directed

Verdict Against Plaintiff After Jury-Waived Trial on January 25,

2019, Filed March 19, 2019," and the June 24, 2019 "Amended

Final Judgment in Favor of Defendant Green Energy Team LLC and

Against Plaintiff Moloaa Farms LLC," and remand for resumption

of trial.

DATED: Honolulu, Hawai‘i, June 21, 2024.

On the briefs: /s/ Keith K. Hiraoka
Presiding Judge
George W. Van Buren,
John B. Shimizu, /s/ Karen T. Nakasone
Robert H. Shimizu, Associate Judge
(Van Buren & Shimizu),
for Plaintiff-Appellant. /s/ Sonja M.P. McCullen
Associate Judge
William M. Harstad,
Lindsay N. McAneeley,
Derek B. Simon,
(Carlsmith Ball),
for Defendant-Appellee.

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