Ward Management Development Company, LLC v. Nordic PCL Construction, Inc.

Filing 81

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS, ECF NO. 27 . Conclusion:"Nordic's Motion to Dismiss, ECF No. 27, is GRANTED because it is clear that Plaintiffs failed to comply with Hawa ii's Contractor Repair Act, HRS Chapter 672E. The court thus need not reach Nordic's jurisdictional arguments. See Sinochem, 542 U.S. at 431. The action is dismissed without prejudice. The Clerk of Court shall close the case file." Signed by CHIEF JUDGE J. MICHAEL SEABRIGHT on 8/3/2018. (afc)WRITTEN ORDER follows hearing held 4/30/2018. Minutes of hearing: ECF 39 . Motions terminated: 27 , 43 .

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII

WARD MANAGEMENT
DEVELOPMENT COMPANY, LLC,
et. al,

Civ. No. 17-00568 JMS-RLP
ORDER GRANTING
DEFENDANT’S MOTION TO
DISMISS, ECF NO. 27

Plaintiffs,
vs.
NORDIC PCL CONSTRUCTION, INC.,
Defendant.

ORDER GRANTING DEFENDANT’S MOTION TO DISMISS, ECF NO. 27
I. INTRODUCTION
Defendant Nordic PCL Construction, Inc. (“Nordic”) moves to
dismiss the First Amended Complaint (“FAC”) filed against it by Plaintiffs Ward
Management Development Company, LLC (“Ward Management”); Waiea
Management Development Company, LLC; Victoria Ward, Ltd. (“Victoria
Ward”); and 1118 Ala Moana, LLC (“1118 Ala Moana”) (collectively
“Plaintiffs”).
The Motion to Dismiss raises three grounds for dismissal: (1) the
action must be dismissed under Federal Rule of Civil Procedure 19(b) because a

1

non-party, the Association of Unit Owners of 1118 Ala Moana (“AOUO”), is
required to be joined as a Plaintiff, and the AOUO’s presence would destroy
diversity of citizenship; (2) the court lacks complete diversity of citizenship
because Victoria Ward is a Hawaii citizen (not a Texas citizen as the FAC alleges);
and (3) before filing suit, Plaintiffs failed to comply with notice and mediation
requirements of the Hawaii Contractor Repair Act (the “Act”), codified at Hawaii
Revised Statutes (“HRS”) Chapter 672E.
Much of the briefing and post-hearing activity has focused on the first
two grounds, both of which implicate the court’s subject-matter jurisdiction —
normally a threshold inquiry. As has become apparent, however, after much
thought on both issues and consideration of supplemental filings as to the Rule 19
issue, both grounds raise complicated questions that lack obvious answers. The
posture thus calls for a quintessential application of a principle explained in
Sinochem International Co. v. Malaysia International Shipping Corp., 549 U.S.
422 (2007) — “a federal court has leeway ‘to choose among threshold grounds for
denying audience to a case on the merits.’” Id. at 431 (quoting Ruhrgas AG v.
Marathon Oil Co., 526 U.S. 574, 585 (1999)).
Under Sinochem, the court need not decide the jurisdictional issues in
order to resolve Nordic’s Motion to Dismiss because it is obvious that Plaintiffs
2

did not satisfy Chapter 672E before filing suit. See Carijano v. Occidental
Petroleum Corp., 643 F.3d 1216, 1227 (9th Cir. 2011) (“The Sinochem Court . . .
promoted judicial economy by allowing the district court to dismiss the case
without first having to address complicated jurisdictional issues.”). That is, as
explained to follow, Nordic prevails on the third ground raised in its Motion, a
ground that does not rely on the merits of the dispute. The action is dismissed
without prejudice under HRS § 672E-13 (“The court . . . shall dismiss, without
prejudice, any action failing to meet the requirements of this chapter[.]”).
II. BACKGROUND
A.

Factual Background
This diversity action arises from the construction of the Waiea Tower

(the “Project”), “a 36-floor, high-rise, mixed-use building consisting of retail space
and ultra-luxury residential units located in the Kaka‘ako district of Honolulu.”
FAC ¶ 1, ECF No. 24. Plaintiffs are owners, former owners, and/or developers of
the Project, and Nordic was the Project’s construction manager and general
contractor. Id. ¶¶ 1, 9-10. Victoria Ward, the original Project owner, is a limited
signatory and third-party beneficiary to the construction management agreement
(“CMA”) between Nordic and primary signatory, Ward Management. Id. ¶¶ 7 &
10.
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The FAC alleges claims for breach of contract, breach of warranty,
and injunctive and declaratory relief, based on allegations that Nordic’s work on
the Project was substandard and untimely, and that Nordic actually obstructed
completion of the Project and sales of units. Id. ¶¶ 1-5. Specifically, Count I
alleges that Nordic breached the CMA because Nordic failed to reach “Substantial
Completion” of the Project by the required dates. Id. ¶ 87. Count II alleges that
Nordic is liable for breach of warranty provisions in the CMA regarding the
“façade of the building” which is “emitting loud popping noises.” Id. ¶¶ 94-95.
And Count III seeks a declaratory judgment regarding related contentions by
Nordic that Ward Management has improperly withheld payments due to Nordic
for work performed under the CMA. Id. ¶¶ 100-107.
B.

Procedural Background
Ward Management filed the original complaint in this action by itself

(i.e., as the sole Plaintiff) on November 21, 2017, asserting subject matter
jurisdiction under 28 U.S.C. § 1332, diversity of citizenship. Compl. ¶ 10, ECF
No. 1. Nordic moved to dismiss, arguing that Victoria Ward is a required party
under Rule 19, and that Victoria Ward is a Hawaii citizen for purposes of § 1332
whose presence would destroy diversity. ECF No. 16. Ward Management
responded by filing the FAC on January 24, 2018, adding Victoria Ward as a
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Plaintiff (along with the other Plaintiffs). See FAC ¶¶ 8 to 10. The FAC alleges,
however, that Victoria Ward is a Delaware Corporation with a principal place of
business in Texas (not Hawaii) because its executive officers with decision-making
authority direct and control the corporation’s activities from Dallas, Texas (and
thus is a Texas citizen for purposes of § 1332). Id. ¶ 10. Thus, the FAC again
bases federal jurisdiction on complete diversity of citizenship with an amount in
controversy exceeding $75,000.
On February 7, 2018, Nordic filed its Motion to Dismiss, arguing as a
factual matter that — contrary to the FAC’s allegations — Victoria Ward is a
Hawaii citizen for purposes of § 1332.1 Nordic also argues that the AOUO is a
required party under Rule 19 whose presence would also destroy diversity; and that
Plaintiffs failed to comply with provisions of HRS Chapter 672E, requiring
dismissal without prejudice under HRS § 672E-13. Plaintiffs responded on April
9, 2018, ECF Nos. 31 & 32, and Nordic filed a Reply on April 16, 2018. ECF Nos.
33 & 34. 2 The court held a hearing on April 30, 2018. ECF No. 39.

1

Nordic also filed a Motion for Abstention, ECF No. 28, asking the court to abstain
under Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976). The
court denied that Motion in open court on April 30, 2018. ECF No. 40.
2

The court also considered supplemental authorities from both parties, submitted after
the close of initial briefing. See ECF Nos. 36 & 38. In their submission, Plaintiffs also aptly
(continued . . .)
5

Under Rule 19(a)(1)(B), a person is “required to be joined if feasible”
if, among other factors, “that person claims an interest relating to the subject of the
action.” Id. (emphasis added). At the April 30, 2018 hearing, a question arose as
to whether the AOUO had or should have “claimed an interest” in the subject of
this action under Rule 19. Plaintiffs relied on the AOUO’s apparent silence in this
regard, but the court recognized that some of Plaintiffs’ officers are also directors
of the AOUO (and thus those officers might have an inevitable conflict of interest
where one or more of the Plaintiffs as developers could conceivably have potential
liability to the AOUO or some of its unit owners). See, e.g., Raven’s Cove
Townhomes, Inc. v. Knuppe Dev. Co., 171 Cal. Rptr. 334, 343 (Cal. Ct. App. 1981)
(“[A] developer and his agents and employees who also serve as directors of an
association . . . may not make decisions for the Association that benefit their own
interests at the expense of the association and its members.”) (citations omitted)).
The court thus requested that the AOUO submit a letter to the court
regarding its interest in, and intent regarding, this litigation. The AOAO submitted
(. . . continued)
objected by noting that Nordic’s Reply violated Local Rule 7.5(e)’s word limit by repeatedly
manipulating text to artificially shorten the word count (e.g., writing phrases such as
“Exs.4(Striph),39,41(Randle),45,56(Apo)&Opp.Memo.p21(Johnstone)” without spaces so that
the text is counted as one word rather than 15). The court has seen this tactic before in other
cases, and exercises its discretion not to strike Nordic’s Reply, but warns all counsel practicing
in this court to avoid such unnecessary and potentially sanctionable conduct.

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such a letter on June 18, 2018 from independent counsel, stating that “a committee
[of the Board of the AOUO] composed of the independent Directors who are not
affiliated with any of the developer entities” has “determined that it is not in the
best interest of the AOUO and the unit owners to seek to intervene in the Litigation
at this time,” although it purports to retain rights to do so in future. ECF No. 54.
The court allowed the parties to respond to that letter, see ECF No. 56, and both
parties filed supplemental briefing on July 5, 2018. ECF Nos. 64, 65.
III. DISCUSSION
A.

The Court “Bypasses” the Jurisdictional Issues
Both of the jurisdictional asserted grounds for dismissal raise

substantive questions without obvious answers. The Rule 19 question regarding
whether the AOUO is a required party whose presence would destroy diversity
involves applying a rule in the Ninth Circuit that the absent party actually and
formally “claim a legally protected interest.” Altmann v. Republic of Austria, 317
F.3d 954, 971 (9th Cir. 2002) (emphasis in original). See also, e.g., Northrop
Corp. v. McDonnell Douglas Corp., 705 F.2d 1030, 1043-44 (9th Cir. 1983)
(reasoning that the United States was not a necessary party in part because it had
not asserted a formal interest in the action and instead “meticulously observed a
neutral and disinterested posture”); Ward v. Apple Inc., 791 F.3d 1041, 1051 (9th
7

Cir. 2015) (“[I]t is not perfectly clear whether ATTM has, in fact, asserted an
interest in this action.”); Gemini Ins. Co. v. Clever Constr., Inc., 2009 WL
3378593, at *4 (D. Haw. Oct. 21, 2009) (“[W]here a party is aware of an action
and chooses not to claim an interest, the district court does not err by holding that
joinder [is] ‘unnecessary.’”) (quoting Altmann, 317 F.3d at 971) (other citations
omitted); Aliviado v. Kimoto, 2012 WL 2974225, at *8 (D. Haw. July 19, 2012)
(applying test).
Here, although the AOUO has not made a formal claim, its June 18,
2018 letter is equivocal — it tells the court that intervention is “not in [its] best
interest . . . at this time.” ECF No. 54 (emphasis added). And it implies it might
seek to intervene later, stating that it “does not waive any of its rights by declining
to intervene at this time.” Id. And so, even if the Rule 19 question is answered
now, the issues might simply arise again, albeit in a different posture, should the
AOUO seek to intervene later.
Likewise, Nordic raises a factual (not facial) challenge to Victoria
Ward’s citizenship, which — although the court could certainly resolve it now —
would still require a factual finding at a Rule 12(b)(1) stage, where the answer is
not apparent. See, e.g., Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th
Cir. 2004) (explaining differences between factual and facial challenges to subject
8

matter jurisdiction, and setting forth standards for deciding such questions). On
one hand, Plaintiffs proffer strong prima facie evidence of decision-making by
Victoria Ward that meets the relevant test of a corporation’s “principal place of
business” under Hertz Corp. v. Friend, 559 U.S. 77, 92-93 (2010) (explaining that
a corporation’s principal place of business is “the place where [the] corporation’s
officers direct, control, and coordinate the corporation’s activities. It is the place
that Courts of Appeals have called the corporation’s ‘nerve center.’”). On the
other hand, Nordic proffers extensive evidence where Victoria Ward has held itself
out in leases, deeds, and other agreements — consistent with its large landholdings
and long-standing presence in Honolulu — as having its principal place of business
in Honolulu, Hawaii. See ECF Nos. 27-24 to 27-34.
In reviewing Nordic’s Motion to Dismiss, the court contrasts these
first two grounds for dismissal (which are relatively complicated) with the third
ground (which is not). As explained to follow, the court easily concludes that
Plaintiffs failed to satisfy certain prerequisites in HRS Chapter 672E before filing
this suit. The posture thus exemplifies a prototypical application of Sinochem
where a court need not resolve complex jurisdictional questions if another basis to
dismiss is apparent and does not reach the merits of the dispute. 549 U.S. at 425

9

(holding that federal district courts may decide forum non conveniens motions
without resolving jurisdictional issues).
Sinochem reiterated that “a federal court generally may not rule on the
merits of a case without first determining that it has jurisdiction over the category
of claim in suit (subject-matter jurisdiction) and the parties (personal jurisdiction).”
Id. at 430-31 (citing Steel Co. v. Citizens for Better Env’t, 523 U.S. 83, 93-102
(1998)). A court “may not assume jurisdiction for the purpose of deciding the
merits of the case.” Id. (citing Steel Co., 523 U.S. at 94). But although
“jurisdictional questions ordinarily must precede merits determinations in
dispositional order . . . there is no mandatory ‘sequencing of jurisdictional issues.’”
Id. at 431 (quoting Ruhrgas, 526 U.S. at 584). Rather “a federal court has leeway
‘to choose among threshold grounds for denying audience to a case on the
merits.’” Id. (quoting Ruhrgas, 526 U.S. at 584). Sinochem summarized:
If . . . a court can readily determine that it lacks
jurisdiction over the cause or the defendant, the proper
course would be to dismiss on that ground. . . . But
where subject-matter or personal jurisdiction is difficult
to determine, and forum non conveniens considerations
weigh heavily in favor of dismissal, the court properly
takes the less burdensome course.
Id. at 436.

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Sinochem reasoned that, because a forum non conveniens inquiry —
directed at which forum is correct — is a “non-merits ground for dismissal,” id. at
432 (citation omitted), courts may dispose of a case on that ground and “bypass[]
questions of subject-matter and personal jurisdiction, when considerations of
convenience, fairness, and judicial economy so warrant.” Id. And Potter v.
Hughes, 546 F.3d 1051 (9th Cir. 2008) later explained that, under Sinochem, “there
are non-constitutional grounds on which we may dismiss a suit before considering
the existence of federal subject matter jurisdiction,” including “jurisdictional
grounds that are discretionary . . . grounds of prudential standing, such as statutory
standing . . . and grounds that are ‘logically antecedent to the existence of any
Article III issues[.]’” Id. at 1055 (citation omitted). That is, “[t]he Sinochem Court
. . . promoted judicial economy by allowing the district court to dismiss the case
without first having to address complicated jurisdictional issues.” Carijano, 643
F.3d at 1227.
The same reasoning applies here, where the third ground for dismissal
does not involve the merits at all — Nordic is arguing a procedural matter that
Plaintiffs failed to comply with mandatory notice and mediation provisions in the
Act before they filed suit, which has nothing to do with the substance of whether
Nordic actually breached the CMA. This failure-to-exhaust argument is “logically
11

antecedent” to Article III jurisdictional issues. Potter, 546 F.3d at 1055. In this
regard, the contention is equivalent to arguing that the parties must submit their
dispute to arbitration, also a non-merits ground for dismissal. See, e.g., Ass’n of
Owners of Kukui Plaza v. Swinerton & Walberg Co., 68 Haw. 98, 106, 705 P.2d
28, 34 (1985) (“Whether the alleged contractual violations should be presented to
an arbitrator or to the court for determination ‘is a matter wholly separate from . . .
the merits of plaintiff’s cause.’”) (quoting Local No. 438 Constr. & Gen. Laborers’
Union v. Curry, 371 U.S. 542, 548 (1963)). And other courts have concluded that
Sinochem allows a court to address arbitrability without deciding jurisdictional
issues. See Halliburton Energy Servs., Inc. v. Ironshore Specialty Ins. Co., 289 F.
Supp. 3d 819, 822 (S.D. Tex. 2017) (applying Sinochem and concluding that
arbitrability may be decided without reaching whether the court has personal
jurisdiction); Ramasamy v. Essar Glob. Ltd., 825 F. Supp. 2d 466, 467 n.1
(S.D.N.Y. 2011) (determining that a case should be dismissed in favor of
arbitration without reaching a motion to dismiss for lack of personal jurisdiction)
(citing Sinochem).
In short, it makes sense here to “bypass” the jurisdictional issues.
Sinochem, 549 U.S. at 432. The court thus proceeds to address the third ground
asserted by Nordic in its Motion to Dismiss.
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B.

Plaintiffs Failed to Comply with the Act
Nordic contends that the FAC must be dismissed because Ward

Management (or any other Plaintiff) failed to comply with notice and mediation
provisions of the Act before filing suit.
1.

The Act’s Requirements
HRS § 672E-2 provides that “[a]ll claimants filing an action alleging

construction defects shall comply with this chapter; provided that this chapter shall
not apply to any actions that include claims for personal injury or death.” The Act
defines a “claimant” as “any person, entity, partnership, corporation, or association
asserting a claim concerning an alleged construction defect.” HRS § 672E-1. And
it defines a “construction defect” as “a deficiency in, or arising out of, the design,
specifications, surveying, planning, construction, supervision, or observation of
construction of a dwelling or premises.” Id. Under those definitions, the Act
applies to the alleged construction defects at issue in this action.
///
///
///
///
///
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Before filing an “action,” the Act requires a claimant to comply with
particular written notice and dispute-resolutions provisions, as set forth in pertinent
part as follows: 3
§ 672E-3. Notice of claim of construction defect.
(a) A claimant, no later than ninety days before filing an
action against a contractor, shall serve the contractor with
a written notice of claim. The notice of claim shall
describe the claim in detail and include the results of any
testing done. . . .
(b) A contractor served with a written notice of claim
shall serve any other appropriate subcontractor with
notice of the claim. The contractor’s notice shall include
the claimant’s written notice of claim.
(c) After serving the notice of claim, a claimant shall give
to the contractor reasonable prior notice and an
opportunity to observe if any testing is done.
The Act includes various provisions for rejecting the claim, repairing
the construction defect, and making offers of settlement, see HRS §§ 672E-4 to
672E-6, including the following requirements (in relevant part):
The contractor, within thirty days after service of the
notice of claim, shall serve the claimant and any other

3

The Act defines an “action” as “any civil proceeding, including but not limited to
arbitration, in which damages or other relief may be awarded or enforced with respect to an
alleged construction defect.” HRS § 672E-1.

14

contractor that has received the notice of claim with a
written response to the alleged construction defect that:
(1) Offers to settle without inspecting the construction
defect . . . or
(2) Proposes to inspect the premises of the alleged
construction defect . . . .
HRS §672E-4(b).
Within thirty days following any proposal for inspection
under subsection (b)(2), the claimant shall provide access
to:
(1) Inspect the premises;
(2) Document any alleged construction defect; and
(3) Perform any testing required to evaluate the nature,
extent, and cause of the asserted construction defect, and
the nature and extent of any repair or replacement that
may be necessary to remedy the asserted construction
defect;
provided that if the claimant is an association under
chapter 514B . . . the claimant shall have forty-five days
to provide such access.
§672E-4(c). And if those provisions do not result in a resolution, mandatory
mediation is required:
§ 672E-7. Mediation.
If the parties are unable to resolve the claim pursuant to
section 672E-5 or 672E-6, all parties shall attempt to
resolve the dispute through mediation, even if mediation

15

is not otherwise ordered or mandated by contract or by
law.
If additional construction defects are discovered in the process, they
would be subject to the separate notice and statutory dispute-resolution procedures,
as follows:
§ 672E-9. Additional construction defects.
A construction defect discovered after the notice of claim
is served may not be alleged in an action until the
claimant has given the contractor:
(1) A written notice of claim regarding the alleged defect
under section 672E-3; and
(2) An opportunity to repair the construction defect or
reject the notice of claim under section 672E-4.
The Act also requires contracts of sale of new structures or premises
to include notice of a contractor’s rights under the Act, as follows:
§ 672E-11. Contract of sale; provisions.
(a) Upon entering into a contract for the sale of a new
structure or the construction . . . of a premises, the seller
of the new structure shall provide to the purchaser of the
new structure, and the contractor . . . shall provide to the
owner of the premises, notice of the contractor’s right to
resolve alleged construction defects before a claimant
may commence litigation against the contractor. The
notice shall be conspicuous and included as part of the
contract.

16

(b) The notice required by subsection (a) shall explicitly
reference this chapter, and shall be in substantially the
following form:
“CHAPTER 672E OF THE HAWAII REVISED
STATUTES CONTAINS IMPORTANT
REQUIREMENTS YOU MUST FOLLOW BEFORE
YOU MAY FILE A LAWSUIT OR OTHER ACTION
FOR DEFECTIVE CONSTRUCTION AGAINST THE
CONTRACTOR[.] . . . NINETY DAYS BEFORE YOU
FILE YOUR LAWSUIT OR OTHER ACTION, YOU
MUST SERVE ON THE CONTRACTOR A WRITTEN
NOTICE OF ANY CONSTRUCTION CONDITIONS
YOU ALLEGE ARE DEFECTIVE. UNDER THE
LAW, A CONTRACTOR HAS THE OPPORTUNITY
TO MAKE AN OFFER TO REPAIR AND/OR PAY
FOR THE DEFECTS. YOU ARE NOT OBLIGATED
TO ACCEPT ANY OFFER MADE BY A
CONTRACTOR. THERE ARE STRICT DEADLINES
AND PROCEDURES UNDER THE LAW, AND
FAILURE TO FOLLOW THEM MAY NEGATIVELY
AFFECT YOUR ABILITY TO FILE A LAWSUIT OR
OTHER ACTION.”
Finally, the Act requires dismissal without prejudice of an action filed prematurely:
§ 672E-13. Dismissal without prejudice.
The court . . . shall dismiss, without prejudice, any action
failing to meet the requirements of this chapter, unless:
(1) The failure to meet the requirements is the direct
result of the wrongful conduct of another party;
(2) Circumstances beyond the control of the party
prevented compliance; or

17

(3) An applicable statute of limitations on actions would
prevent the refiling of an action, in which case the action
shall be immediately stayed to provide the claimant with
an opportunity to comply with this chapter, but for no
longer than six months;
provided that the exceptions provided by this section to
any specific requirement of this chapter shall not excuse
a party from substantially complying with the remainder
of the chapter.
2.

Application of the Act
Nordic argues that prior to filing this action, Ward Management failed

to provide notice of its claim in accordance with § 672E-3, and failed to engage in
mediation as required by § 672E-7. In response, Plaintiffs first contend that Nordic
failed to include a § 672E-11(b) notice in the CMA and thus waived its right to
protection under Chapter 672E. They then argue that, in any event, Ward
Management did indeed comply with the Act. Both arguments fail.
Initially, the CMA was a contact between Ward Management and
Nordic. ECF No. 27-5. A contractor is required to provide a § 672E-11(b) notice
to “the owner of the premises.” § 672E-11(a). As alleged in the FAC, 1118 Ala
Moana is the owner of the Project, not Ward Management (which is the
“development manager”). Plainly, Nordic was not required to include a § 672E11(b)’s notice in the CMA. And Plaintiffs could hardly have been prejudiced by

18

any such failure as they clearly knew of the Act’s requirements as demonstrated by
1118 Ala Moana’s inclusion of a § 672E-11(b) notice in sales contracts with
individual unit owners. See ECF No. 27-23 at 17. Moreover, there is no basis for
Plaintiffs’ waiver argument — nothing in the Act suggests that claimants are
excused under these circumstances from compliance with the Act even assuming
such a notice was required in the CMA. 4
Second, Ward Management clearly failed to provide notice of its
claim in accordance with § 672E-3(a) prior to filing this action. Ward
Management contends that a letter to Nordic dated May 17, 2017 satisfies HRS
§ 672E-3(a). In that letter, Ward Management referenced “issues concerning the
curtain and window wall components of the façade of the Project.” ECF No. 32-28
at 3. The letter informed Nordic that “[a]n investigation of these issues has
commenced,” and that upon completion of the investigation, “further notice will be
provided.” Id. The letter demanded that “if any defective work is discovered,” it
“must be remedied.” Id.

4

Even assuming that the omission in the CMA was “wrongful conduct” under § 672E13(1), it could not have “directly resulted” in Ward Management’s failure to comply with the Act
under § 672E-13(1).

19

But the May 17, 2017 letter does not purport to be a letter under the
Act, and is not the equivalent of one. It neither “describe[d] the claim in detail”
nor “include[d] the results of any testing done” as required by § 672E-3(a). Nor
was the letter served in accordance with § 672E-1, which defines “service” as
“personal service or delivery by certified mail, return receipt requested.” See
Reply at 21, ECF No. 33. And Ward Management recently confirmed that the
Project’s AOUO also has not submitted a claim against Nordic for construction
defects related to the window façade. See ECF No. 43-3.5
Finally, Plaintiffs did not engage in mediation as that term is defined
by Chapter 672E. “Mediation” under Chapter 672E “means a process in which a
mediator facilitates communication and negotiation between parties to assist them
in reaching a voluntary agreement regarding their dispute.” § 672E-1.
Representatives of the parties had settlement discussions in an attempt to resolve
their disputes on July 21, 2017, and October 3, 2017. See Herlitz Decl. ¶ 24, ECF
5

Nordic sent a letter dated April 13, 2018 to Ward Management seeking confirmation
that the Project’s AOUO has not given notice to Ward Management, 1118 Ala Moana, or their
affiliate Howard Hughes Corporation, “of any construction defect claim pursuant to [HRS]
§ 672E-3.” ECF No. 33-19. As discussed at the April 30, 2018 hearing, Ward Management
responded on April 20, 2018 by “confirm[ing] that the Association has not made any claim
against Nordic.” ECF No. 43-3 at 2. Nordic subsequently filed a Motion to Supplement the
Record to include that response. ECF No. 43. Because the court reviewed this document and it
was discussed at the hearing, the court GRANTS Nordic’s Motion to Supplement the Record,
ECF No. 43.

20

No. 32-1. But it was not until February 26, 2018, that the parties “participated in a
mediation session . . . with . . . a third-party mediator.” Id. And even then, the
mediation did not comply with the Act — the Act requires the contractor (Nordic)
upon being served with a proper written notice of claim under § 672E-3 to then
“serve any other appropriate subcontractor” and include other contractors in
responses required under § 672E-4(b). This is required before a Chapter 672E
mediation occurs.
The Act thus clearly contemplates the involvement of all parties who
may have some responsibility for the construction defects at issue. It also requires
that contractors be given “an opportunity to observe if any testing is done.” HRS
§ 672E-3(c). And it has specific provisions regarding allowing contractors access
to the premises and access to testing as part of a process to allow contractors an
opportunity to repair defects or reject claims. See HRS § 672E-4. That these
provisions were not followed also certainly indicates that Plaintiffs did not comply
with the Act in either its May 17, 2017 letter or in any subsequent (post-suit)
mediation. See Kaneshige Decl. (Apr. 14, 2018) ¶¶ 2-12, ECF No. 33-3; Viola
Decl. (Apr. 15, 2018) ¶¶ 4-10, ECF No. 33-4.

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In sum, neither Ward Management nor any other Plaintiff complied
with the notice and mediation requirements of the Act prior to filing this action.
Thus, pursuant to HRS § 672E-13, the action is DISMISSED without prejudice. 6
IV. CONCLUSION
Nordic’s Motion to Dismiss, ECF No. 27, is GRANTED because it is
clear that Plaintiffs failed to comply with Hawaii’s Contractor Repair Act, HRS
Chapter 672E. The court thus need not reach Nordic’s jurisdictional arguments.
See Sinochem, 542 U.S. at 431. The action is dismissed without prejudice. The
Clerk of Court shall close the case file.
IT IS SO ORDERED.
DATED: Honolulu Hawaii, August 3, 2018.

/s/ J. Michael Seabright
J. Michael Seabright
Chief United States District Judge

Ward Mgmt. Dev. Co. v. Nordic PCL Constr., Inc., Civ. No. 17-00568 JMS-RLP, Order
Granting Defendant’s Motion to Dismiss, ECF No. 27
6

None of HRS § 672E-13’s exceptions to dismissal without prejudice (such as a statute
of limitations expiration that would prevent refiling of an action) are applicable.

22