Background
Dr. Alan Nomura owns Unit 3201 in the Iolani Court Plaza, a Honolulu condominium. In September 2019, the owners of the unit directly above his — the Semenovs — replaced that unit’s flooring with what their own expert described as “luxury vinyl tile” (or “luxury vinyl plank,” according to the Johnsons’ expert). Nomura alleged the new flooring disrupted the quiet enjoyment of his unit. In 2021, the Semenovs sold Unit 3301, with the new flooring in place, to the Johnsons. Nomura filed suit in 2022, alleging violations of the AOAO’s governing documents, breach of fiduciary duty, nuisance, and violations of HRS Chapters 514B and 480.
The central dispute turned on a House Rule providing that “[o]wners installing tile or hard wood floors are required to install noise insulation materials adequate to prevent sound transference to the apartments below.” The AOAO and the Johnsons argued this rule does not reach vinyl flooring; Nomura argued that “luxury vinyl tile” is a form of “tile” covered by the rule. The circuit court granted summary judgment in favor of the AOAO and the Johnsons on most counts. Separately, in December 2023, Nomura accepted a $30,000 Rule 68 settlement offer from the Semenovs conditioned on circuit court approval as a good faith settlement under HRS § 663-15.5. The circuit court denied the good faith petition, and also upheld the underlying release agreement as valid and binding despite the denial.
Nomura appealed across four related dockets, which the ICA consolidated. The Johnsons had filed a cross-claim against the Semenovs for indemnity, making the good faith settlement question consequential to all parties.
The Court’s Holding
On the summary judgment issues, the ICA reversed the grants of summary judgment in favor of the AOAO and the Johnsons on Counts I and II (declaratory/injunctive relief and HRS Chapter 514B). The court found a genuine issue of material fact as to whether the Semenovs installed “tile” within the meaning of the Tile/Wood Floor House Rule. Because the governing documents do not define “tile,” do not address “vinyl,” and do not distinguish between vinyl tile and traditional tile, the term is ambiguous and susceptible to more than one reasonable interpretation. The AOAO and the Johnsons therefore failed to meet their summary judgment burden. The court affirmed summary judgment for the AOAO on the nuisance count (Count IV), reasoning that even if the AOAO breached its governing documents, Nomura had not introduced evidence establishing that the AOAO had a legal duty to mitigate noise passing through another owner’s flooring. The court also affirmed summary judgment for the AOAO on the breach of fiduciary duty and HRS Chapter 480 counts, and upheld the circuit court’s exclusion of the AOAO’s post-2019 encumbrance agreements as irrelevant subsequent remedial measures under Hawaii Rules of Evidence Rule 407.
On the good faith settlement, the ICA affirmed the circuit court’s denial of the Semenovs’ petition. A court need not mechanically apply all nine Troyer v. Adams factors; here, focusing primarily on Factor 5 — the relative degree of fault — was not an abuse of discretion because the Semenovs created the underlying condition while the Johnsons were good-faith purchasers. The ICA then reversed the circuit court’s separate ruling that the Release Agreement was valid despite the denial: the release expressly conditioned its effectiveness on a good-faith determination under HRS § 663-15.5, so it could not stand once that certification was refused.
Key Takeaways
- An AOAO house rule requiring noise insulation for “tile or hardwood” floors is ambiguous as applied to luxury vinyl tile when the governing documents do not define “tile” or address vinyl — creating a triable issue that defeats summary judgment.
- A breach of an AOAO’s governing documents does not automatically establish nuisance; a plaintiff must separately demonstrate the association had a legal duty to abate the noise intrusion at issue.
- Hawaii courts need not apply all nine Troyer good-faith settlement factors; a circuit court may deny certification by focusing on relative fault where doing so reflects a genuine totality-of-circumstances analysis.
- A settlement agreement that expressly conditions its effectiveness on a court’s good-faith determination under HRS § 663-15.5 is not enforceable when that determination is denied — the two rulings are irreconcilable.
- Judicial estoppel requires a prior inconsistent position taken in a judicial or administrative proceeding; an AOAO’s enforcement actions against other owners do not satisfy this element without a showing of a formally adjudicated incompatible position.
Why It Matters
This decision is a practical reminder to condominium associations drafting and enforcing house rules: undefined material terms create litigation exposure. A rule that says “tile or hardwood” but says nothing about vinyl or luxury vinyl products will not support summary judgment when the factual record contains conflicting expert characterizations of the installed material. Associations seeking to regulate modern flooring products — which include vinyl planks, luxury vinyl tile, and engineered composites that mimic traditional materials — should update their governing documents to address these categories explicitly.
The good-faith settlement portion adds a cautionary note for practitioners structuring conditional releases in multi-party tort litigation. Where a release agreement explicitly incorporates the HRS § 663-15.5 good-faith condition as an operative term, counsel should not assume the release survives an adverse ruling — a denial of the petition voids the condition and, with it, the agreement. Settling parties who want a binding release regardless of court approval must draft accordingly.