An unsigned mediation term sheet is not an enforceable settlement
An unsigned mediation term sheet is not an enforceable settlement
2026-09-10 · Hawaii · Courts
An association that spent nearly seven hours in mediation, believed it had a deal, and twice persuaded a circuit court to enforce it has had both orders vacated — because nobody got the owners to sign anything.1
Association of Apartment Owners of Waikiki Banyan v. Leimkuhler and Hua, consolidated Nos. CAAP-23-0000351 and CAAP-24-0000334, summary disposition order filed February 23, 2026. Unpublished; no certiorari disposition on record as of this writing.
What the association had, and what it did not
The underlying dispute came out of remodeling work on the owners’ unit, with the association threatening a fine of $500 per day that the owners say the governing documents do not authorise. After the mediation, the owners’ then-counsel told the association’s counsel and the mediator that his clients agreed to a term sheet — one that included the association waiving roughly $71,000 in fines.
The owners never signed it. And the term sheet the association’s president approved was not the same document as the one said to embody the deal.
Why the proof failed
“the Gray Declaration asserts that Ogomori confirmed to Gray that Owners agreed to the Exhibit 1 term sheet. This statement was not based on Gray’s personal knowledge and is inadmissible hearsay.… Without the Gray Declaration’s inadmissible statement… there is no evidence of such agreement. The Exhibit 1 term sheet was not signed by Owners, and does not reflect their approval.”
The mismatch between the two term sheets independently created a fact issue under McKenna v. Association of Owners of Hokulani. And because the association “failed to meet its initial summary judgment burden as movant,” the burden never shifted — so “the circuit court must, at minimum, hold an evidentiary hearing as to those genuine issues of fact.”
The practice this decision ends
Hawaii associations settle fine and enforcement disputes in mediation constantly, and the paperwork is routinely loose: a term sheet initialled by counsel, or nothing at all, with a formal agreement to follow. That practice is unenforceable the moment the owner has second thoughts.
Three rules follow directly, and none of them costs anything:
Get the owners’ signatures before anyone leaves the mediation. Counsel’s report of what the other side’s lawyer said is worth nothing on a motion to enforce — it is, as the panel put it, not based on personal knowledge.
Make the board-approved document textually identical to the signed one. Two versions of a term sheet is a fact issue by itself, regardless of whether they differ materially.
Do not rely on a declaration from your own lawyer to prove the other side agreed. The only admissible proof of a party’s assent is that party’s signature or that party’s own testimony.
How this sits with the statutory mediation regime
Mediation is not optional in Hawaii for a large class of association disputes. Under HRS § 514B-161(a) a party may compel mediation of a dispute involving “the interpretation or enforcement of the association’s declaration, bylaws, or house rules” where the dispute is outside the § 514B-161(b) carve-outs, the same dispute has not already been mediated, and no action or arbitration has begun. A motion to compel carries fees to the prevailing party up to $1,500.
Separately, HRS § 514B-146(g) gives an owner contesting a fine thirty days from a requested written statement to demand mediation, and while that demand is live “the association shall be prohibited from attempting to collect any of the disputed charges until the association has participated in the mediation.” The mediation must be completed within sixty days.
So the statute pushes fine disputes into mediation and then leaves the enforceability of what comes out of mediation to ordinary contract proof. Waikiki Banyan is where those two facts meet.
The parallel federal case, and what it shows
The same owners had filed in federal court challenging the $500-per-day fine. In Hua v. AOAO of Waikiki Banyan, Civ. No. 23-00424 (D. Haw., February 12, 2025), the court declined to apply Rooker-Feldman — that doctrine reaches only ended state proceedings — but abstained under Colorado River because the identical dispute was pending in state court.2
The association successfully confined the fight to one forum and then lost the settlement round in it. For boards, the sequencing lesson is that abstention buys a single forum, not a favourable outcome in it.
What remains undecided
Whether the Waikiki Banyan governing documents authorise a $500-per-day fine at all is still open in both courts. The ICA did not reach the owners’ arguments that the fine threat was fraudulent or an unfair-practices violation. We do not predict any of it.
What to watch
The evidentiary hearing on remand, and whether the fining-authority question is finally reached — a Hawaii decision on whether a per-day fine of that size is within § 514B-104(a)(11)’s “reasonable fines” would matter statewide.
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